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To deal with the deregulated challenges in future power system operations, Taiwan Power Company (Taipower) has taken a strategic approach to implement an extensive Distribution Automation (DA) project including feeder automation (FA), trouble call management, load management, and remote metering functions in its Tai-Chung District. The project was completed in December 2002. For future extension purposes, Taipower tries to develop a comprehensive generalized step-by-step methodology for the economic evaluation of the DA project. This paper presents the methodology and results for the economic evaluation of the Tai-Chung DA project. The potential benefits of the implemented DA functions are quantified using standard mathematic formulas. An economic evaluation method using value-based analysis and present-worth analysis is performed to identify the most beneficial functions in the Taipower's implemented DA functions. Those DA functions that have great benefits should have high priority to be implemented in other distribution districts. Moreover, to find the candidate feeders for further FA extension, the sensitivity analysis of the benefit/cost ratio with respect to different customer types, feeder loads, feeder lengths, numbers of switch, and failure rates is also conducted. Accordingly, the optimum number of switch can be determined under the expected service reliability. The results and formulas obtained in this paper can also be used for return-of-investment or possible performance measure of the DA systems.