Your second guess is correct.

The transmission lines are basically capacitive and the loads are in general inductive.

So as the load increases, the inductive portion increases, the capacitive portion remains constant.

http://www.allaboutcircuits.com/vol_2/chpt_14/3.html

http://en.wikipedia.org/wiki/Transmission_line

especially

http://www.siemens.co.in/en/about_us/index/our_business_segments/energy/power_transmission_and_distribution/introduction.htm

the portion under heading "Shunt Inductive Compensation"

SB Quote " The transmission lines are basically capacitive and the loads are in general inductive."

I think I am going to disagree with your statement as it is posted. Transmission lines are mostly R + XL. There is shunt capacitive reactance between the conductors but its magnitude is much higher than that of the inductive reactance and many times it is neglected. If you look at the link below, the tables shows Xc with a value much greater that Xl. If you are including the capacitors that are install on the system for PF correction and reduction in line loss, then you statement is correct. The loading on a substation during heavy loads may be inductive and capacitive during light loads. This is because the correcting capacitors are still online and the inductive loads are not.

http://www.cable.alcan.com/NR/rdonlyres/BC388B10-A9C3-45B6-AA90-F5A9BA9D203D/0/ACSRweb.pdf