Load compensation is the management of reactive power to improve power quality i.e. V profile and pf. Here the reactive power flow is controlled by installing shunt compensating devices (capacitors/reactors) at the load end bringing about proper balance between generated and consumed reactive power.
This is most effective in improving the power transfer capability of the system and its voltage stability. It is desirable both economically and technically to operate the system near unity power factor.
This is why some utilities impose a penalty on low pf loads. Yet another way of improving the system performance is to operate it under near balanced conditions so as to reduce the flow of negative sequence currents thereby increasing the system’s load capability and reducing power loss.
A transmission line has three critical loadings
(i) natural loading
(ii) steady-state stability limit and
(iii) thermal limit loading.
For a compensated line the natural loading is the lowest and before the thermal loading limit is reached, steady-state stability limit is arrived.