International Journal of Electrical and Computer Engineering (IJECE) Vol. 13, No. 2, April 2023, pp. 1272~1280 ISSN: 2088-8708, DOI: 10.11591/ijece.v13i2.pp1272-1280  1272 Journal homepage: http://ijece.iaescore.com Optimal reactive power pricing with transformer variable taps using genetic algorithm Ahmad Kor 1 , Hossein Zeynal 2 , Zuhaina Zakaria 3 , Seyed Hamid Hosseini 4 1 Tehran Farayand Dena Engineering Co., Tehran, Iran 2 Department of Electrical and Computer Engineering, Buein Zahra Technical University, Qazvin, Iran 3 School of Electrical Engineering, College of Engineering, Universiti Teknologi MARA, Shah Alam, Malaysia 4 Department of Electrical Engineering, Sharif University of Technology, Tehran, Iran Article Info ABSTRACT Article history: Received Apr 9, 2022 Revised Oct 7, 2022 Accepted Oct 28, 2022 Ancillary services in interconnected networks are crucial to secure real power transfers, maintaining network reliability, improving power quality as well as network stability. Reactive power has always been of special importance as one of the most substantial ancillary services required to control the voltage in power grid. This paper presents a fresh reactive power pricing approach by embedding variable transformer taps into voltage ampere reactive (var) pricing method. To carry out the resultant optimization problem with a set of complicating constraints, the genetic algorithm takes part and guarantees the global optimal solution. The simulation results show that when transformer tap works as a control variable, the total cost of reactive power can be decreased. However, the incorporation of transformer taps in the pricing model can slightly complicates voltage profiles as the sensitivity of bus voltages to the reactive power variations in the system is increased. Further, the findings reiterate that by optimal position of transformer taps, technically, the security index of the system can be enhanced while the var price for end-users (lowest purchase cost for independent system operator) being more reasonable. To simulate the proposed reactive pricing method, the standard IEEE 30-bus system is employed to analyze the proposed method. Keywords: Genetic algorithm Marginal prices Reactive power Restructuring Transformer variable taps This is an open access article under the CC BY-SA license. Corresponding Author: Zuhaina Zakaria School of Electrical Engineering, College of Engineering, Universiti Teknologi MARA 40450 Shah Alam, Malaysia Email: zuhainaz@uitm.edu.my 1. INTRODUCTION In the last two decades, the electricity industry in some countries of the world has undergone various changes. Recently, it has been found that creating competition in the electricity industry is one of the most important factors to make the best use of the power system. This has turned the electricity industry into a competitive market in which different companies compete with each other in terms of generation, distribution and sales [1]–[5]. More than a century has passed since the birth of the first power system. Since the inception of these systems, the government or one or more quasi-governmental bodies have been responsible for generation, transmission, distribution and selling electricity. The term "electricity industry" is used for such systems. At present, in many countries of the world such as Iran, the operation mechanism of power system is still traditional [5], [6].