A proposal for the spinning reserve assessment and allocation for El Salvador¡¦s Deregulated Electricity Market is formulated. Traditionally, the Independent System Operator calculates the spinning reserve as percentage of the forecast demand. And Automatic Generation Control (AGC) is allocated based on the partition factor. The reserve calculation neither reflects consistency achieving its main objective, reliability, nor is optimum performance control reached by the allocating mechanism. In the proposed method, the spinning reserve is estimated taking into account the generators outage ratio and AGC is allocated based on the North American Electric Reliability Corporation¡¦s Control Performance Standard-1. The allocation problem is solved with an improved Particle Swarm Optimization algorithm with a technique to modify the inertial factor on each iteration. The proposed method exhibits better results and it matches the Salvadorian technical requirements and market characteristics.