Inductive consumer loads such as, but not limited to, freezers and refrigerators cause a lagging power factor on the power distribution system.
Commercial and industrial users are metered on KVARHrs (which cause poor power factor) and are charged a penalty to induce them to install corrective capacitors.
The relatively small amount of kVARHrs consumed by residential users in not enough individually to make metering and penalties a viable option. Collectively, these KVARHrs add up and cause increased current and associated line losses in the distribution system. The capacitors that you see on the power poles from place to place are generally to offset the KVARs consumed by a fairly large number of residential and small commercial users.
yours
Waross is right but just another way of saying would be (assuming you are talink about distribution applications):
utility company would install capacitors for reactive power support to correct the undervoltage conditions at the end of the heavily loaded and/or long distribution lines.
One of the main reason utility use capacitor along distribution lines is to reduce losses and maintain voltage within the limits allow to the utility company as mentioned in the previous posts.
Below are typical graphical data of voltage performance and loss reduction in power distribution line that may help to enlighten the discussion in this topic.
