|The paper is focused on physical phenomena that degrade the effectiveness of the energy transfer in electrical systems when voltages and currents are nonsinusoidal and asymmetrical. The Currents’ Physical Components (CPC) – based power theory provides fundamentals for the analysis of the electric energy flow. This analysis identifies seven distinctive physical phenomena that affect this flow. Accord-ing to the CPC concept, seven current components are asso-ciated with these phenomena. Only one of them contributes to the useful transfer of the energy. Remaining six compo-nents only degrade the effectiveness of this transfer. They could be reduced by various compensators and the CPC-based power theory provides fundamentals for their synthe-sis and control. The results presented in the paper are valid for electrical systems of any complexity, meaning for single- and for three-phase systems and for any loads, meaning for linear and for nonlinear loads.