The method determines the optimal settings for the controllable taps ut of voltage regulating transformers and the capacitor bank switches uc in a distribution network. Var optimization is calculated with the controllable tap settings ut fixed at an initial value, or the best value found so far, to output an optimized set of control settings uc. Voltage optimization is calculated with the control settings uc fixed at the best solution found so far, to output an optimal set of control settings ut. Using an objective function, system performance is evaluated using the optimal set of control settings ut and uc and repeating the steps until either the control values ut and uc do not change from one iteration to the next, the objective function value does not change or if the new objective function value is greater than the last. The control values ut and uc are then output to a distribution control system.