A system for generating updated reactive capability curves of a generator operates the generator at a number of operating load levels and at a number of different power factors to collect data regarding the real and reactive power generated at each of the various operating load levels and power factors. Subsequently, the system analyzes the collected data to determine an actual reactive capability curve of the generator. The system also provides generator health monitoring and identifies changes and trends in the capability curves of the generator. The updated reactive capability curves may be used by an economic dispatch program in determining optimum MW and MVAR setpoints for the generator.