%0 Magazine Article
%K Market mechanisms
%K Reliability management
%K RM12-002
%A Robert J Thomas
%A Timothy D Mount
%A Richard Schuler
%A William Schulze
%A Ray Zimmerman
%A Fernando L Alvarado
%A Bernard Lesieutre
%A Philip Overholt
%A Joseph H Eto
%B The Electricity Journal
%D 2008
%I Elsevier
%N 1
%P 70–81
%R 10.1016/j.tej.2007.12.002
%T Efficient and Reliable Reactive Power Supply and Consumption - Insights from an Integrated Program of Engineering and Economics Research
%V 21
%2 LBNL-63782
%8 01/2008
%X <p>In 2005, the Federal Energy Regulatory Commission (FERC) began discussing regulatory policy for reactive-power procurement and pricing in competitive electricity markets. This paper summarizes findings from a unique, interdisciplinary program of public-interest research that lays a formal foundation for evaluating aspects of FERC staff recommendations and offers early insights that should be useful in guiding policy implementation, specifically by:</p><ul><li>clarifying the consumers and economic characteristics of reactive power as a basis for creating incentives to appropriately price it,</li><li>defining specific challenges in creating a competitive market for reactive power as well as new tools needed to help ensure such a market functions efficiently, and</li><li>demonstrating the importance of accounting for the physical characteristics of the transmission network in planning for reactive power and avoiding the exercise of market power by suppliers.</li></ul>