This document outlines a new control strategy for distributed static compensators (DSTATCOMs) that regulates reactive power (VAR) flow at a transmission point. The control strategy uses a slow reset regulator to gradually adjust the DSTATCOM's VAR setpoint to maintain output within limits while keeping sufficient VAR reserve for dynamic events. It also presents an algorithm to calculate constraints for the regulator based on allowable VAR thresholds for the transmission flow. Modeling shows the new control and algorithm function properly as intended to optimize DSTATCOM operation.