In the conventional method of electricity metering, the active energy (kWh) is measured. And the tariff is fixed by most of the utilities (duly authorized by the regulatory authority) for active energy consumed. Static capacitors are insisted along with inductive loads to improve the power factor to a specified value. For HT/EHT consumers, penalty is imposed for maintaining the average power factor below a minimum specified value which is 0.9 in KSEB. Incentives are given for improving the average power factor above the specified value up to unity. In kWh metering and tariff system, if penalty is not imposed, the consumers are less bothered to maintain their load power factor close to unity.