We use simulations and experiments to delineate the mechanism by which the addition of a small number of polar -OH groups to a nonpolar polymer increases the static relative permittivity (or dielectric constant) by a factor of 2, but more importantly while keeping the dielectric loss in the frequency regime of interest to power electronics to less than 1%. Dielectric properties obtained from experiments on functionalized polyethylenes and polypropylenes as a function of -OH doping are in quantitative agreement with one another. Molecular dynamics simulations for the static relative permittivity of "dry" -OH functionalized Polyethylene (in the absence of water) are apparently in quantitative agreement with experiments. However, these simulation results would further imply that there should be considerable dielectric loss beyond simulation time scales (>0.1 mu s). Since there are minimal experimentally observed dielectric losses for times as short as a microsecond, we believe that a small amount of adsorbed water plays a critical role in this attenuated loss. We use simulations to derive the water concentration at saturation, and our results for this quantity are also in good agreement with experiments. Simulations of the static relative permittivity of PE-OH incorporating this quantity of hydration water are found to be in quantitative agreement with experiments when it is assumed that all the dipolar relaxations occur at time scales faster than 0.1 mu s. These results suggest that improved polymeric dielectric materials can be designed by including -OH groups on the chain, but the mechanism requires the presence of a stoichiometric quantity of hydration water.