At our company we will bill you for less than .85. I have to maintain a system PF of .95 lagging on peak, I can't lead at all on peak as that is a penalty also.
Off peak I have to be .95 lagging or better also and again can't lead at all. Back when our supplier (TVA) didn't have enough caps on their system to hold their system up during peak conditions they let us lead all we wanted during the summer months to help them.
I think you are right in saying that the distributor doesn't supply a PF to a customer the customer generates that themselves. We supply KWH,KW,KVA, and KVAR to the customer if they request it, there is no telling how many letters I have sent out to customers stating they could save money by adding caps and the payback would be extremely quick also. I think I could make a good living if some would let me install them at my expense and just take half the savings of the bill each month. We penalize our customers at .85 PF.
I have spent several thousand dollars getting caps under scada control at each breaker in all stations we have and wrote a script that monitors the PF at the station and brings the caps on and off as needed. The payback for this is very,very, short compared to the penalties involved.
I would contact my supplier and ask them to help with the PF correction and I bet they got somebody that will come out and give pointers for ya at no cost, after all it helps them and makes their job easier also.