In this paper, the cost for capacitive reactive flower is evaluated considering the deregulation environment. For the cost assessment of reactive power, the duration curve of reactive power demand is introduced and investigated. Also, a guideline is suggested to estimate the Q-cost by using the inverse of the Q-demand duration curve. In order to obtain optimal real reactive power allocation, a new algorithm is proposed by using the piecewise linearization of the inverse of the Q-demand duration curve and the Linear Programming technique. The proposed method is tested with sample systems using MATLAB. The test results show that the algorithm yields reasonable reactive power allocation and Provides fair cost evaluation for reactive power.