This paper is proposed an optimal shunt capacitor planning of a transmission system using genetic algorithm. The genetic algorithm is used to find optimal shunt capacitor single unit capacity of various voltages rank and the install positions for peak power system and control the bus voltage to the reasonable range. The genetic algorithm has the advantages of simply, easy to access, and fast. In reactive power dispatch, the goal we defined is the 1.0 p.u. of bus voltage. In order to reach the goal, the penalty factors are used for fitness function. Simulation results show that the proposed algorithm obtains the good performances on the power system reactive dispatch and planning.