hmmm... I can answer general questions for you on the subject, but the detail is very vague - I'm in IT now, it has been years since I was doing power engineering, and that was at the power generation/transmission stage, rather than reticulation and consumption.

In short - power factor is not relevant to purely resistive loads, but across capacitive or inductive loads (in all households to some extent, motors and other coils of conductor are inductive, things like fluoro tubes are capacitive), the current cycle gets phase shifted relative to the voltage cycle - same thing happens in speakers which causes frequency response changes, hence the speakers are rated as "impedance" rather than "resistance".

As power is the multiplication of voltage and current, if both do not peak at the same time, conventional power (in Watts) isn't as efficient as the 2 highest possible numbers for voltage and current never get multiplied together - that sentence was crap! Does it make sense?

Anyway, this is expressed as a second type of power - imaginary power (in vars), which combined with conventional power (in watts) gives you complex power (in VA - Volt-Amps, which you sometimes see written on the specs for electrical equipment, a sure sign that it is an inductive/capacitive load)

The power grid then needs to compensate for inductive loads absorbing vars, and capacitive loads generating them, otherwise the system voltage will fall or rise, respectively. This in the same way the power grid needs to compensate for increases or decreases in straight power consumption (watts) otherwise the system frequency will slow or speed up, respectively.

Industrial loads tend to have power meters that calculate the power factor (90 degs, or perfectly in phase is a power factor of 1, then as they go out of phase it goes down as a Cosine(?) function of the difference in angle between voltage and current) - this allows them to be more fairly metered for their usage as they tend to be highly inductive loads. This even means that some plants install their own capacitor/shunt farms to correct their own power factor and save money!

Wikipedia would surely have heaps on this stuff... will look to see what I can find...

Edit:BTW, imaginary power isn't as flippant a term as it sounds, it just reflects the mathematics - imaginary numbers + real numbers create complex numbers, a vector, meaning a magnitude plus an angle on an X-Y 2d graph...

Edit2: Here is something, not sure if it helps or hinders!

http://en.wikipedia.org/wiki/Complex_power#Power_factorEdit3: Ahhh, this bit talks a little bit about what I was trying to say!

http://en.wikipedia.org/wiki/Complex_power#Reactive_power_flow