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A mathematical formulation of the optimal reactive power control (optimal VAR control) problem and results from tests of the algorithm are presented in this paper. The model minimizes the real power losses in the system. The constraints include the reactive power limits of the generators, limits on the load bus voltages, and the operating limits of the control variables, i.e., the transformer tap positions, generator terminal voltages and switchable reactive power sources. Real power economic dispatch is accomplished by standard techniques.