An economic dispatch program optimally allocates load demand specifying real power and reactive power to be generated by a power plant among various power generators in a manner so that each of the power generators are operated within its optimal operating space as defined by a reactive capability curve. Allocating a power demand with consideration of the reactive capability curves of the power generators results in optimal generation of real power and reactive power as specified by the load demand. Alternatively, the economic dispatch program allocates load demand specifying real power and reactive power to be delivered by a power grid among various power plants wherein one or more of the various power plants have capacity limits exhibited by reactive capability curves.