This paper evaluated the impact of smart inverter Volt-VAR function on voltage reduction energy saving and power quality in electric power distribution systems. A methodology to implement the voltage reduction optimization was developed by controlling the substation LTC and capacitor banks, and having smart inverters participate through their autonomous Volt-VAR control. In addition, a power quality scoring methodology was proposed and utilized to quantify the effect on power distribution system power quality. All of these methodologies were applied to a utility distribution system model to evaluate the voltage reduction energy saving and power quality under various PV penetrations and smart inverter densities.