The successful operation of compensation dispatch among hydro-power plants greatly depends on the reasonable allocation of compensation benefits in market environment.

Based on the theory and methods of compensation dispatch, the power generation compensation benefits of cascade hydroelectric power stations on Yellow River upstream are studied by using principle of system science.

According to the algorithm and applying Object Oriented Technology, the related compensation regulation model of cascaded hydropower stations is established.

Based on the results of reservoirs compensative regulation in main stream of the Yellow River, combined qualitative with quantitative analysis, active and negative functions to environment on mid-downstream of the Yellow River were impersonality discussed by Longyangxia and Liujiaxia reservoirs regulation.

According to the principle of optimal compensative regulation of water power stations and the feature of hydropower systems, this paper formulates a model of compensative regulation of water power stations.

An algorithm of man machine interaction based on equal power compensation adjustment is proposed to solve the difficulties in the application of the model.

Considering the features of multiannual reservoir, this paper establishes a compensation adjustment and joint operation model, and presents an algorithm of man-machine interaction, which is based on equal power compensation adjustment calculating and attended by decision makers.