In an ideal AC power system, the voltage and frequency at every supply point would be the constant and free from harmonics, and the power factor would be unity. Most Industrial loads have lagging power factors. That is they absorb reactive power. The load current therefore tends to be larger than is required to supply the real power alone. Only the real power is ultimately useful in energy conversion and the excess load current represents a waste to the consumer, who has to pay not only for the excess cable capacity to carry it but also for the excess joule loss produced in the supply cables.

The supply utilities also have good reasons for not transmitting unnecessary reactive power from generators to loads. Their generators and distribution networks cannot be used at full efficiency, and the control of voltage in the supply system can become more difficult. Supply tariffs to industrial consumers almost always penalize low power factor loads.

Most AC power systems are three-phases, and are designed for balanced operation. Unbalanced operation gives rise to components of current in the wrong phase sequence (i.e. negative and zero sequence components). Such components can have undesirable effects, including additional losses in motor and generator units, oscillating torque in AC machines, increased ripple reactive in rectifier, malfunctions of several types of equipment, saturation of transformers, and excessive neutral currents.

The load compensation improves the phase balancing and power factor correction of unsymmetrical loads. Many utilities need this particular course, which cover the illustration of main concepts of reactive power management using actual case studies.