Transmission Expansion Planning (TEP) is an important issue in power system studies. It involves decisions on location and number of new transmission lines. Before deregulation of the power system, the goal of TEP problem was investment cost minimization. But in the restructured power system, nodal prices, congestion management, congestion surplus and so on, have been considered too. In this paper, an AC model of TEP problem (AC-TEP) associated with Reactive Power Planning (RPP) is presented. The goals of the proposed planning problem are to minimize investment cost and maximize social benefit at the same time. In the proposed planning problem, in order to improve the reliability of the system the Expected Energy Not Supplied (EENS) index of the system is limited by a constraint. For this purpose, Monte Carlo simulation method is used to determine the EENS. Particle Swarm Optimization (PSO) method is used to solve the proposed planning problem which is a nonlinear mixed integer optimization problem. Simulation results on Garver and RTS systems verify the effectiveness of the proposed planning problem for reduction of the total investment cost, EENS index and also increasing social welfare of the system. Crown Copyright (C) 2011 Published by Elsevier Ltd. All rights reserved.