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The static var compensator (SVC) has fast dynamic characteristics that can support effective system voltage following disturbances. Keeping reactive power reserve in an SVC during steady-state operation is always needed to provide reactive power requirements during system dynamics. This paper presents a new SVC control strategy with two stages of regulation slopes and two voltage regulation controls, which are fixed-voltage reference control and variable (floating) voltage reference control. The aim of this control is to limit the reactive power output from the SVC to the desired value during the steady-state voltage range and compensate the reactive power requirement from the upstream networks via the coordination with the under-load tap changer (ULTC). However, when the voltage deviates the steady-state voltage range, the SVC will react to support the system voltage using the SVC reactive power reserve. When a disturbance results in a new operating point, with a steady-state reactive-power output, the variable voltage reference control effectively changes the SVC output slowly and returns it within the steady-state margin.