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The paper presents a novel methodology for optimal reactive power pricing in deregulated market. A new method is presented in this paper which aims to supply electricity to the consumer by the supplier in the most economically beneficial way. The objective function is formulated in terms of social welfare function, maximization of which results in the most economical generation and consumption. However compared with real power, the idea of reactive power costing and pricing is still not well defined. This paper is based on the equilibrium theory of the electricity power market to deal with reactive power pricing along with the active power. In this method the total cost of production of active and reactive power and investment cost of capacitor banks as well as active and reactive demands are included in the objective function of the optimal power flow problem. The method used for solving OPF problem is Newton Raphson Decoupled Load Flow. This project uses Genetic Algorithm as optimization technique. This paper is an attempt to create a win-win condition for both the supplier and consumer.