In this paper a decentralized reactive power control scheme is proposed to optimally control the switched capacitor in the system in order to minimize system losses and maintain acceptable voltage profile. The proposed technique is based on placing a remote terminal unit (RTUs) at each DG and each at line capacitor. These RTUs being coordinated together through communication protocols form a multiagent system. Novel decentralized algorithm is proposed to estimate the voltage profile change as a result of injecting reactive power at the capacitor bus. Simulation results are presented to show the validity and the effectiveness of the proposed technique.