【正文】 ration is expected to be much different in order to meet the spirit of deregulation and the security requirements. In a vertically integrated utility, reactive power facilities are ow ned and operated by the same utility. The costs and contribution of reactive power supply are not precisely evaluated. Under deregulation circumstance, the obligations and rights of the ow ners of reactiv e power facilities bee an essential issue that affects not only the investment returns of power industry but also the power system security. This situation is even more plicated for the interconnection of several selfsupported systems. Reactive power is always required during power delivery in an AC system even there are no reactive power loads. However, unlike real power, reactive power is not consumed by any elements of a power system. Reactive power is swapping twice per voltage cycle between capacitive elements and inductive elements. When capacitive elements are absorbing reactive power, inductive elements must be releasing reactive power, and vise versa. The capacities of these capacitive/inductive elements are not always constant. The amount of reactive power that is related to line charging is proportional , w hile that related to series reactance is proportional. Reactive power pensation can be made at different levels: distribution, transmission and generation. For a vertically integrated utility, the costs of reactive power pensation might be included into distribution cost or transmission cost depending on w here the pensation devices are installed. The costs of reactive power supplied by generators might not be listed separately, or even the reactive power capacities of generators are not considered as the costs of reactive power. When utilities are doing reactive power planning, different utilities might have different considerations. No matter how utilities treat the costs of reactive power pensation or how they carry out the planning, the electricity price always reflects this part of costs. In the deregulated power industry