Combinational pricing method for active and reactive power in power system

This paper proposes a price mechanism with one price assigned for each level of bundled real and reactive power. The better allocation under this pricing method raises system efficiency via better allocation of the reactive power reserves, neglected in the traditional pricing approach. Pricing reactive power separately is not very practical since its cost is highly dependent on real power output. Equilibrium allocation of the bundled pricing is simulated on the simple 3-bus system power auction and compared with free reactive power optimal power flow solution. The efficiency of this approach is shown in the general case, and tested on the 30-bus IEEE network with piecewise linear cost functions of the generators.