In AC power systems, electrical load is comprised of resistive and reactive loads. The resistive component of the load is the one that produces actual work (active power). This is measured in watts or kilowatts.
The reactive component of energy is alternately stored and returned to the system and is used to charge capacitors or induce magnetic fields. The reactive component does not produce useful work like turning a motor. (reactive power)
The combination of active and reactive power components makes up the apparent power that is supplied by the utility. This is measured in KVA (kilovolt amperes)
However, the power utility company still needs to generate and supply the reactive component. This is measured in VAR’s (reactive volt amperes).
And needless to say the utility company also bills for the reactive power demand that the consumers system places on the utility.
Power factor is a ratio of the active power consumed to the apparent power supplied by the utility company. The utility companies impose heavy financial penalties on consumers who have inefficient load profiles around the world.