I. Introduction
The cost and the quality of electrical energy is always one of the priority topics in power systems. Transmission losses are one the important part of the facts that affects the cost of transmitted power and energy. The main source of the transmission losses is the heat, which is caused by overloading and harmonics. Increasing prosperity with development of social life has promoted usage of some units as coolers and ventilations causing increment in reactive power consumption in residential areas. As a consequence of increasing reactive power, the line current is increased. Therefore the power loss and voltage drop in the line are also increase. It is obvious that the overloading of the line due to increased reactive power should be prevented in order not to cause high power loss and voltage drop. If the power losses decrease, the system acquires a longer operating life and an increased performance. Therefore, shunt capacitors are prevalently used in distribution systems. In addition to total power loss reduction and voltage profile enhancement, power factor correction and feeder capacity release are ensured with placement of shunt capacitors in radial distribution feeders. Nevertheless, in order to obtain these advantages, it is necessary to determine proper location and optimal sizing of shunt capacitor.