Reactive Service Compensation

Reactive Service Working Group

May 20, 2005

PJM ©2005
 Reactive Power Background

• Reactive power component of electric power supports system voltages that

must be managed for system reliability.
• System voltages must be controlled at all key points of the power network
within acceptable limits. This control is accomplished by the supply or by the
consumption of reactive power at these points.
• Large amount of the reactive power that is produced is consumed by power
grid infrastructure to support the transmission of power over long distances.
• The transmission of reactive power over long distances is not efficient
because reactive power losses in transmission lines and transformers
increase dramatically as demand and power flows increase.
• The high transportation loss characteristic and the fact that voltage magnitude
tolerances are narrow at all points on the power grid essentially require that
reactive power supply be more distributed across the network.

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 Types of Reactive Power Supply

• Static Reactive Power

– Produced by equipment that cannot quickly change reactive power output level
– Reactive power output level drops when system voltage level drops
– Provided by bulk system capacitors and distribution system capacitors
– Under normal operating conditions, most reactive requirements should be
supplied by capacitors located on transmission and distribution system.
• Dynamic Reactive Power
– Produced by equipment that can quickly change reactive power output level
– Reactive power output level can increase when system voltage level drops
– Provided by generators, static var compensators and synchronous condensers
– Under normal operating conditions, dynamic reactive power supplies should
operate with substantial reactive power reserves in order to quickly provide
reactive power to the system during power system disturbances.

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 Reactive Power Demand

• Includes customer load requirements and reactive losses that occur on

transmission system and distribution system components as power is
transmitted from generator to load.
• Distribution System
– Reactive power does not travel far therefore reactive supply must be
located near the location of the reactive demand (via distribution system
capacitors)
– designed/operated to minimize reactive support from transmission system
• Transmission System
– High voltage lines produce reactive power at low power transfer levels
and consume reactive power at high power transfer levels.
– Bulk power system static capacitors needed at key locations to provide
voltage support for power transfers.
– For contingency events, power flows instantly increase on remaining lines
rapidly increasing reactive power consumption
– Dynamic reactive support and voltage control needed to maintain proper
voltage profile during system disturbances.

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 Principles for Reactive Power Compensation

• Balance between reactive power supply, reactive power demand

of customers and reactive power losses in the transmission and
distribution system is necessary for the reliable operation of the
power system.
• Common set of reactive power supply standards across the PJM
market.
• Appropriate performance compliance measurements and
performance incentives for meeting reactive power supply
standards.
• Generator compensation commensurate with actual reactive
capability
• All market participants share the responsibility for and the
benefits of optimal reactive power planning and supply.
• Similar compensation for similar reactive supply types.

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 Principles for Reactive Power Compensation (cont.)

• Standards for key interconnection points (generator to transmission

and transmission to distribution).
• Capacity type compensation structure coupled with variable
component dependent on performance compliance.
• Reactive capability of all generators provides some reliability benefit
(marginal value today could be critically important in future)
• Efficient load power factor to minimize transmission system support
of the distribution system
• Common set of load power factor standards across the PJM market.
• Appropriate performance compliance measurements and
performance incentives for meeting load power factor standards

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 Recommendations

• Develop common standard, method for measuring compliance

with the standard and incentive for meeting or exceeding the
standard for :
– generator reactive capability and voltage control
– load power factor efficiency
• Ensure consistent compensation for similar reactive supply types
• Be cautious with moving forward with a ‘needs’ test

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 Generator Reactive Standards/Compensation

Standards
• reactive capability requirement of .9 lag to .95 lead
• must operate with AVR in service at all times
Compensation
• generator compensation should be commensurate with actual
reactive capability
• reactive allocation factor of (1 - PF2) should be adjusted by actual
power factor to prorate original FERC approved costs.
– actual power factor obtained from periodic reactive capability tests
• generator AVR status should become a required SCADA point
• regularly monitor generator response to operator requests for
reactive and automatic response to contingency events

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 Generator Reactive Standards/Compensation (cont.)

Compensation (cont)
• incorporate AVR availability rate and actual operational response
into compensation structure
• repeated unsatisfactory performance should disqualify generator
from reactive compensation
Other Issues
• Fixed $/MVAR-year rate for capability versus FERC-approved rate
• Should existing contracts continue or fall into new rate structure?
• How to apply power factor adjustments to black-box settled units

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 Load Power Factor Standards
Reactive power consumption is an equally important component of
maintaining an adequate voltage profile – not just a supply matter
Standards
• develop a standard power factor requirement for the interconnection point
between transmission and distribution systems
• develop method of measuring compliance with the standard
Compensation
• Compliance measure could be used to adjust reactive service payments
• generator compensation should be commensurate with actual reactive
capability
• Enforcement of standards can start with PJM holding zonal customers to
standard
• Sub-zonal customers held accountable through interconnection agreements
with EDC

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 Needs Test?

• PJM recommends caution in this area since the reactive

capability of all generators provide some reliability benefit
• Reactive sources are long-lived assets and system reactive
needs change over time
• reactive supply of marginal value today may be of critical
importance in the future
• A granular needs test designed to avoid compensating for
reactive supply that is redundant must try to anticipate a daunting
array of possible system states each of which may result in a
different conclusion

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 Consistent Compensation for Similar Supply Types

• Schedule 2 provides compensation for generators

• Not clear if synchronous generators and newer technologies like
SVC are covered in Schedule 2
• Explore one single and consistent compensation approach for all
types or at least similar types of reactive power sources

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