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ARTICLE · 14 MAY 2024

FERC Proposes Prohibiting Reactive Power Compensation

On March 21, 2024, the Federal Energy Regulatory Commission (FERC) proposed rulemaking that will change the way in which generators receive compensation.

United StatesEnergy and Natural Resources

On March 21, 2024, the Federal Energy Regulatory Commission (FERC) proposed rulemaking 1 that will change the way in which generators receive compensation. Specifically, FERC proposed to prohibit compensation for reactive power produced within the standard power factor range.

Though it has been the standard for transmission providers to compensate generators for reactive power, FERC decided that this compensation is unjust and unreasonable. 2 The proposed rule states that:

transmission providers would be required to pay an interconnection customer for reactive power only when the transmission provider asks the interconnection customer to operate its facility outside the standard power factor range set forth in its interconnection agreement. 3

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