Not only people with little to no technical expertise at all are the ones confused by the difference between Watts, VAs and VArs. Most people who study computers, small-scale electronics and other similar subjects quite often believe that Volt-Amperes are equal to Watts, which is actually true but only when working under DC voltage / current. On the other hand, when making calculations on any AC circuit there are three types of power to consider: Apparent (or Complex) power, Real (or True or Effective) power and Reactive (or Magnetic) power.

For DC circuits, power is calculated by using the definition: P (Power in Watts) = V (Volts) * I (Amperes). This definition is not valid for AC circuits because the vast majority of power loads will cause a phase shift between voltage and current (related reading: AC and DC current: Fundamental differences and a simple explanation).

For AC systems, a very similar definition is used to calculate Apparent power: S (Power in Volt-Amperes) = V (Volts RMS) * I (Amperes RMS). Apparent power has little to no meaning for residential and business users; however it is absolutely necessary for sizing any and all AC power equipment ranging from your household safety fuses and simple UPS systems to immense transformers and power generators, which is why even the least adept of electricians who work on AC systems should be trained to be able to measure and calculate it.

Apparent power is of little concern to home users, so what about Real Power? Real power is, much like the name suggests, the actual amount of power used by your equipment and it is commonly used to calculate the thermal loading generated by the equipment. For AC circuits, real power is calculated by using the following definition: P (Power in Watts) = V (Volts RMS) * I (Amperes RMS) * cos(φ). Real power is all that residential and business users care about because that is the amount of power you purchase from the utility company; unless of course the cabling/safety systems are sized incorrectly and high Apparent Power caused them to fail even though Real Power is low enough.

Reactive power is something not widely known and rarely ever used because it usually only matters to electrical engineers designing and sizing electric power transmission and distribution systems or working in the industrial sector and on large electric motors/generators. Any inductive and/or capacitive load which will cause a phase shift between the current and voltage waveforms will cause reactive power to be drawn by the equipment, even though the equipment will not actually use it. Reactive power moves no energy at all, which is why it is often referred to as the "imaginary" power; it is simply transferred from the utility company to you and from you back to the utility company, merely causing losses along the way. It can be calculated by using the following definition: Q (Power in VArs) = V (Volts RMS) * I (Amperes RMS) * sin(φ).

To summarize, apparent power is the total amount of power that will move through your equipment and therefore it is critical to size all wiring, circuit breakers and any other equipment according to it, yet residential and business users will not be charged based on their apparent power but by their real power consumption. Real power is the effective power used by your equipment and moves energy. Reactive power moves no energy but it will still be the cause of a higher, useless current. Even so, for the most part of the world only large businesses and industrial consumers are being penalized if reactive power exceeds a certain portion of their total power consumption at this point of time.