Rigorous assessment of uncertainties associated with capacitor installation in distribution systems is the aim of the present paper. Interval mathematics provides a powerful tool for modeling uncertainties. To account for such uncertainties, a heuristic method coupled with interval mathematics is developed with the aim of maximizing a cost saving function. The effects of uncertain inputs within the proposed model are examined for various assumed levels of overall uncertainties. To assess the relative contribution of each uncertain input, an interval sensitivity analysis is carried out. While catering for uncertainties, the proposed method offers utilities with alternatives for selecting the standard capacitor sizes to be used and the associated costs to be saved. This should enable utilities to make informed decisions regarding installing capacitors for reactive power compensation in their distribution systems. A procedure is devised in order to produce sharp bounds of the interval outcomes. Successful implementation of the proposed method is described using a nine- bus radial distribution system.