Summary Distribution companies attempt to present better services, while reducing investment costs, by promoting consumers' participation in demand response programs. They increase the rate of consumers' participation in demand response programs by taking advantage of reward and punishment policies. Increasing consumers' participation in demand response programs is justifiable when it does not have negative impacts on network technical parameters nor decrease the electricity sale rate. Therefore, it seems necessary to determine the maximum level of consumers' optimal participation in implementation of demand response programs. In this article, a new model is presented based on distribution companies' profit maximization considering the technical and economic limitations of distribution networks so that the desired level of consumers' participation in demand response programs can be determined. Since focus on improving any technical parameter of distribution networks may result in damage to other parameters, the proposed model focuses on improving the overall efficiency of distribution networks. This model presents a comprehensive perspective which considers all the parameters of distribution networks in order to find the rate of optimal participation of any consumer based on its consumption group. Finally, the outcome of simulation resulting from implementation of the proposed model on the RBTS‐BUS5 distribution network in the MATLAB software approves the true functionality of the proposed model.

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