Compensation for Reactive Power Within the Standard Power Factor Range

Key metadata

Document number

2024-24528

Type

Rule

Publication date

2024-11-26

Effective date

2025-01-27

Agencies

Energy Department, Federal Energy Regulatory Commission

CFR references

18 CFR part 35

Original source

Federal Register

FERC: New Reactive Power Compensation Rules, US, Effective January 27, 2025

The Federal Energy Regulatory Commission (FERC) has issued a final determination, effective January 27, 2025, that significantly changes how reactive power is compensated on the transmission grid. This decision impacts all generating facilities, including battery storage projects, and transmission providers.

Why it matters

No Charges for Standard Reactive Power: FERC has deemed it unjust and unreasonable for transmission providers to charge generators (including battery storage) for providing reactive power within the standard power factor range. This means generators will no longer incur these specific charges, potentially leading to a slight reduction in operating costs for new and existing facilities. No Payments for Standard Reactive Power: Conversely, transmission providers will no longer be required to pay generators for reactive power provided within the standard range. This establishes that providing reactive power within the standard range is a fundamental operational requirement for generators, not a separately compensable service. Payments for Out-of-Range Reactive Power: Generators will only be compensated for reactive power if the transmission provider specifically requests or directs them to operate outside the standard power factor range. Interconnection Agreements: These changes will be incorporated into the pro forma Large Generator Interconnection Agreement (LGIA) and Small Generator Interconnection Agreement (SGIA). This clarifies the financial terms related to reactive power for new battery storage and other generation projects seeking to interconnect to the grid, simplifying future agreements.

Who is affected

Public utility transmission providers and all generating facilities (including battery storage) that interconnect to the transmission grid.

Key timing

The changes are effective January 27, 2025. Transmission providers are required to make compliance filings to update their Open Access Transmission Tariffs (OATTs) and interconnection agreements accordingly.