We describe a formulation of the thermal unit commitment problem that inclu
des AC network constraints, which allows taking into account VAr production
as a criterion for generator commitment for the first time. The formulatio
n makes it possible to use the Lagrangian Relaxation technique as a solutio
n algorithm even though the network constraints are not linear. Although th
e solution method is computationally intensive, the problem exhibits a sepa
ration structure and a price coordination schedule that suggest several way
s of improving the performance. Preliminary test results are reported. (C)
1999 Elsevier Science B.V. All rights reserved.