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A novel co-operative agents approach, ant colony optimization (ACO) algorithm, for solving problems of combinatorial optimization, is put forward by M. Dorigo. The main characteristics of ACO are positive feedback, distributed computation. Preliminary study has shown that it has many promising futures. This paper reviews recent work on ant algorithms and applications, the chaos ant colony optimization (CACO) algorithm is used in reactive power optimization problem in electric power system. The model of reactive power optimization is established taking the minimum network losses as the objective. Its validity is verified through arithmetic examples of IEEE30 node and the practical area network of Puyang city.