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ARTICLE · 01 APRIL 2024

FERC Proposes To Eliminate Reactive Power Compensation For Generation Resources

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On March 21, 2024, the Federal Energy Regulatory Commission (FERC or the Commission) issued its Compensation for Reactive Power Within the Standard Power Factor Range Notice of Proposed Rulemaking...

United StatesEnergy and Natural Resources
Stephen Hug
Stephen Hug
Emily P. Mallen
Emily P. Mallen
Ben N. Reiter
Ben N. Reiter
Scott Johnson
Scott Johnson
Angelica Gonzalez
Angelica Gonzalez
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On March 21, 2024, the Federal Energy Regulatory Commission (FERC or the Commission) issued its Compensation for Reactive Power Within the Standard Power Factor Range Notice of Proposed Rulemaking,1 which proposes to prohibit generators from receiving compensation from transmission providers for providing reactive power within the standard power factor range or "deadband." The NOPR, if adopted, would represent a departure from the Commission's current policy that requires transmission providers to compensate generators for providing reactive power within the deadband if the transmission provider pays its own or affiliated generation for reactive power.2 The Commission's proposal to eliminate reactive power compensation comes at a time when numerous markets are facing imminent resource adequacy shortfalls as a result of the retirement of existing generation resources.sup>3

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