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ARTICLE · 25 OCTOBER 2024

FERC Ends Reactive Power Compensation

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On October 17, 2024, the Federal Energy Regulatory Commission (FERC) issued Order No. 904, Compensation for Reactive Power Within the Standard Power Factor Range (the "Final Rule")...

United StatesEnergy and Natural Resources
Mark C. Williams
Mark C. Williams
Heather Feingold
Heather Feingold
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On October 17, 2024, the Federal Energy Regulatory Commission (FERC) issued Order No. 904, Compensation for Reactive Power Within the Standard Power Factor Range (the "Final Rule"), determining it unjust and unreasonable for transmission providers to charge transmission customers for a generating facility's provision of reactive power within the standard power factor range.1

The Final Rule provides that each FERC-regulated transmitting utility must revise its pro forma open-access transmission tariff, pro forma large generator interconnection agreement, and pro forma small generator interconnection agreement, to prohibit the inclusion in transmission rates of any charges related to the provision of reactive power within the standard power factor range. This effectively terminates all typical compensation for reactive power in the United States.

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