Reactice power pricing in competitive electric markets using a methodology based on the theory of marginal costs with sequential linear programming

In this paper a method based on the marginal cost theory is presented for calculation of the pricing of active and reactive power at each bus in competitive electric markets. In this method the production cost of reactive power is included in the objective function of the optimal power flow problem and sequential linear programming method is used to solve the optimal problem. The proposed method is tested on the 9-bus system using Matlab program.