Transformer power factor in service is mostly determined by the connected load, not the transformer itself. To improve overall system power factor, engineers install shunt capacitors, synchronous condensers or active filters near inductive loads. These devices supply reactive power locally, reducing reactive current through the transformer. At no load, transformers show low power factor because magnetizing current is mostly reactive, but this has small real power impact. In insulation testing, lowering dielectric losses through proper drying and oil treatment improves the measured insulation power factor.