This paper proposes a new method to solve the problem of optimal reactive power dispatch (ORPD) using particle swarm optimization (PSO). The objective of the proposed method is to minimize the system active power loss. The control variables are generator bus voltages, transformer tap positions and switchable shunt capacitor banks. The proposed method has been applied to practical Ward Hale 6-bus system and IEEE 30-bus system. The optimal reactive power dispatch was solved by traditional and non -traditional methods. The proposed approach is much simpler than these methods. The results obtained by using the PSO method are compared with the genetic algorithm (GA) for Ward Hale 6-bus system and evolutionary programming (EP) for IEEE 30-bus system in terms of solution quality.