In a purely resistive AC circuit, voltage and current waveforms are in cycle, changing polarity at the same time. Where reactive loads are present, (such as with capacitors and inductors) energy storage in the loads result in a time difference between the current and voltage waveforms. This stored energy must return to the source (back onto Westar's system) and is unable to do work at the load. A circuit with a low power factor will have higher currents to transfer a given quantity of power than a circuit with a high power factor.

Energy losses in transmission lines increase with increasing current. Where a load has a power factor lower than 1, more current is required to deliver the same amount of useful energy. Power companies therefore require that customers, especially those with large loads, maintain the power factors of their respective loads within specified limits or be subject to additional charges.

Westar corrects the Power Factor to 90%. Meaning that if the customers Power Factor is less that 90% the following formula will be used to figure the demand charge.

Demand x 0.9      = Demand
Power Factor