By definition, the power factor is a dimensionless quantity between 1 and +1. Instead of positive and negative values, the terms leading and lagging are used. When the load is resistive, the power delivered to it is equal to the product of volts and amperes, so the power factor is unity. When the load is inductive, e.g. an induction motor, the current lags the applied voltage, and the power factor is said to be a lagging power factor. When the load is capacitive, e.g. a synchronous motor or a capacitive network, the current leads the applied voltage, and the power factor is said to be a leading power factor.
A power transmission system is working at its greatest efficiency when the power factor is unity. When the power factor is less than unity, the transmission losses increase and the system capacity is reduced. Power companies therefore require customers, especially those with large loads, to maintain, within specified limits, the power factors of their respective loads or be subject to additional charges.
Based on Federal Standard 1037C.
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