The authors are proposing a transmission cost allocation mechanism for generators and consumers. The objects of analysis are the components of reactive power. The method allocates transmission cost using system matrix and heaving as object real and reactive power tracing and their losses. The results for the components associated with reactive power will be analyzed. In order to calculate the transmission cost for generators and consumers the authors use MVAr-km method. The case study refers to the 12 buses test power system, heaving 6 P-U buses and 9 P-Q buses.
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