Hi jpeelectric
Please accept my apology for my previous flipant answer.
The utility charges a penalty when the power factor falls below 0.9 or 90%
90% is the minimum, not the maximum.
If the power factor is poor they must transmit more current to deliver the same power.
A simple example would be two loads side by side, one at 100% power factor and the other at 50% power factor.
If they are both using the same amount of Kilowatt hours, the load with 50% power factor will be drawing twice as much current. That means that the transformers, switches, cables, and generators must be twice as large so as not to overheat.
However, the revenue from both loads is based on kilowatt hours, and is the same.
Because of the added costs of supplying bigger equipment to cope with the poor efficiency of a poor power factor, the utilities charge a penalty if the power factor is poor. The figure of 0.9 or 90% is common but by no means the only figure. Some states in India charge a penalty if the power factor drops to 99%.
The actual ammount of the penalties also is subject to variation.
respectfully