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Operation of the power systems with high wind penetration is significantly influenced by wind variability and uncertainty. This paper examines the potential impact of distributed wind generation on operating reserve requirements in the IEEE 24-bus system. Wind and load are stochastically modeled using actual data from a balancing authority. Probabilistic optimal power flow based on the two point estimate method is used to determine the reserve required to compensate for the variable wind power output. The proposed method considers stochastic factors and their affects on the dispatch results. Different scenarios are studied to evaluate dispersed wind generation and its potential to reduce the reserve requirement and transmission congestion cost. Correlation between the power outputs of different wind farms and wind penetration level are considered as determining factors when choosing wind sites for distributed generation. The effect of this factor on the operating reserve requirement is assessed in this paper. A brief study is also carried out regarding the transmission congestion cost and the potential reduction of this cost due to dispersed wind generation.