"If all the world were resistors,
But it's not! Even simply distributing electricity involves the use of wires, and wires have inductance. Then comes the complication of transformers, which are sets of coupled inductors. And finally, lo and behold, the user wants to turn something, and again insists on using an inductor (even if he complicates it a little more and asks that the inductor spins!).
With all this inductance about, it comes as no surprise that the UK has an average power factor of 0.8 (that means our wires are carrying over 20% more current than they should!). And here is a scary thought; If all heavy industry in the UK were to install the correct level of power factor correction, the UK would satisfy its portion of the Kyoto agreement!
In essence, using inductors is not an issue apart from the inherent characteristic - the current flowing through them lags the voltage injected. This causes the current to go up with "no return on investment" as shown in the section on "artificial consumption". What was also shown is how 'power factor' is the relationship of volt-amps and true energy usage expressed in watts.
The only real danger is the consumption meter turns a little quicker, and wires may get a little warm owing to undue currents being conducted. To correct this, items known as "power factor correction capacitors" are used as the means to fool the supply into believing that the load is resistive.
Correcting power factor does not fall within the realms of power quality per se. Please make a serious note of this. I have seen far too many people call themselves power quality businesses when they actually do nothing more than reduce losses and therefore make the consumption meter spin or wink a little slower. If anything, implementing power factor correction can cause power quality issues, and it is this I deal with now.
What I will not deal with is power factor correction as such - not because I don't understand it, but because it does not fall within the boundaries of power quality.