• Journal of the Korean Institute of Illuminating and Electrical Installation Engineers
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• v.20 no.5
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• pp.78-84
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• 2006

As electric power systems have been moving from a vertically integrated structure to a deregulated environment, calculating reactive power service charges is a new challenging theme for market operators. This paper examines various methods for reactive power management adopted in some deregulated foreign and domestic markets and then proposes a new method to calculate reactive power service charges using a reactive power market. The reactive power market is operated based on bids from the generating sources and is settled on uniform prices by running reactive OPF programs after the day-ahead electricity market. The proposed method takes into account recovering not only the costs of installed capacity but also the lost opportunity costs incurred by reducing active power output to increase reactive power production. A numerical sample study is carried out to illustrate the processes and appropriateness of the proposed method.