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Active power used in KWH = VICOS Ø
Where V - Voltage I - Current drawn Ø - Angle between voltage & current.
The cos Ø is defined as power factor. As the maximum value of cos Ø is 1, maximum value of power factor would be 1. With low power factor, any electrical system draws more current for same power. Electrical authority imposes penalty, if power factor is less than a minimum standard.

Function of the relay:
To improve power factor, capacitors need to install in ratio with power factor and load. If capacitor are less/more than required, power factor becomes low. The power factor correction relay works automatically and senses the requisite power factor. Accordingly uses the exact quantity of capacitor in the circuit as per the power factor.

Dead Band:
Set Power Factor = Setting of P.F. Dial ± Dead Band.
For example, suppose setting P.F. Dial is at 0.9 and Dead Band is 0. At P.F. 0.89, the relay will sense low and switch on the capacitors. Again if P.F. becomes 0.91, the relay will sense high and switch off capacitors. This process is called Hunting