* It occurs in longer transmission lines due to the effect of Inductance and Capacitance. The longer transmission lines draw a sufficient amount of charging current during transmission. When this line is open circuited or lightly loaded, the reactive power supplied by the capacitors is combined with the voltage at the receiving end. Hence the voltage at the receiving end is higher than the sending end.
By the use of shunt reactors and series capacitors, this effect can be reduced.
The answer given above is approximately correct but I would like to make just one change that it is not due to inductance or reactors it is just because of line capacitors (capacitive effect of long transmission line.)
Let us assume that 800 kv is transmitted in a transmission line and if the load on the line is negligible then the received voltage at receiving end will be slightly more than 800 kV say 802 or 803 kV this is ferranti effect.
We know that in all electric transmissions, the voltage drop at the transmitting end is always greater (because production of electricity takes place here) than the voltage drop at the receiving end (as the consumption of electricity takes place here).
A long transmission electric power lines draw a large quantity of charging current. Some time a receiving end become open circuited due to various reasons or it is very lightly loaded, then the voltage at receiving end become greater than at sending end. This phenomenon is called as Ferranti effect. The Ferranti effect takes place because of voltage drop across the line inductance ( which is responsible for charging current) being in phase with the sending end voltages.
The capacitance also equally responsible to occur phenomenon of Ferranti effect in medium distance transmission lines.
Hence the Ferranti effect always takes place in medium line and long line transmission of electricity due to both inductance and capacitance respectively, when the circuit is open or weakly loaded.