IN A RESTRUCTURED POWER SYSTEM, ONE OF THE MOST IMPORTANT ANCILLARY SERVICES IS REACTIVE POWER WHICH IS PRODUCED BY GENERATORS. PROLIFERATION OF BILATERAL TRANSACTION LEADS TO NEW PROBLEMS SUCH AS REACTIVE POWER ALLOCATION. BECAUSE OF LOCAL NATURE OF REACTIVE POWER, IT CANNOT TRANSFERRED OVER LONG DISTANCES SO GENERATORS WHICH ARE NOT INVOLVE IN A PARTICULAR TRANSACTION MAY SUPPORT ITS REACTIVE POWER REQUIREMENTS.
IN THIS PAPER AN EXACT AND PRACTICAL METHOD FOR REACTIVE POWER ALLOCATION TO BILATERAL TRANSACTIONS IS PRESENTED. FOR THIS PURPOSE, FIRST DIRECT USE OF AC LOAD FLOW AND FAIR ALLOCATION ALGORITHM IS INTRODUCED AND DISCUSSED AND NEXT, THE MODIFIED METHOD IS PRESENTED. THE PERFORMANCE AND CAPABILITIES OF SUGGESTED METHOD IS TESTED ON A TYPICAL NETWORK BY MATLAB (PST) SOFTWARE.