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Switching sequence, available restoration resources and customer reliability requirements have an important impact on customer interruption times in distribution system failure restoration. An optimal restoration sequence based on the minimum interruption cost of customers has been proposed and incorporated in the reliability evaluation of distribution systems. A fault-traversal algorithm has been used to dynamically trace the affected areas of failure events and the switches involved for the failure isolation and supply restoration. Multi-state models for sequential, parallel and hybrid switching processes have been proposed to determine variable restoration times of different load points. A test distribution system is used to illustrate the technique.