Economies of voltage regulation

Summary form only given as follows. When imports into an area are the result of voltage problems the first set of actions are to use "free" available tools to resolve the problem of switched capacitors, re-dispatch the reactive power of those generators that are online, and adjust tap settings of transformers. However, there are other situations where the solution to the problem requires the start of a new generator in the problem area. Such an action can be done either as a "side contract" in which the generator is operated as an "out of market" unit and compensated for its services but is not used to "set prices". The goal of having the "right generators" started can also be accomplished by limiting the imports into the voltage problematic area and in effect replacing the voltage constraint with an equivalent corresponding flow constraint. Yet a third alternative to accomplish voltage regulation is the direct pricing of reactive supplies themselves, in effect creating a nodal congestion pricing system for both active and reactive power. This presentation explores the alternative economic effects of achieving voltage regulation in problematic situations by each of the three alternatives, and illustrates the inefficiencies that result from "incorrect" decisions.