Technicians working with low voltage power systems face a high risk of being exposed to arc flashes due to their inadvertence. Reducing arc flash energy level can provide increased safety for the technicians. To avoid injury, the energy source must be completely shut-down when working on some electrical equipment. Nonetheless, power distribution systems in mission critical facilities such as commercial buildings, industries, institutes and data centers must occasionally remain energized while being maintained. In recent years the arc flash analysis has become an important safety tool that provides skilled technicians with useful information on the energy level at the equipment to be maintained and recommends appropriate protective equipment to wear. Because of codes, standards and historically acceptable design methods, the estimated arc flash energy level is often overly traditional and higher than the true level. This thesis presents different scenarios and employs alternative strategies to be implemented at the design stage of a 380 volt power distribution system facility in order to reduce the arc flash energy level. Arc flash energy can be reduced by (in order of effect): decreasing the trip times, reducing fault currents, and increasing the worker distance. The values of incident energy and the trip time would vary, depending on the available fault current at the location under consideration and the characteristics of the upstream low voltage circuit breakers. We had to insert low voltage circuit breakers different configuration and used to two smaller transformers in the facility which reduced currents and energy levels. In this thesis 20-bus power system is used as an example to illustrate how simulation based analysis of arc flash energy level can be carried out by using typical mainstream code acceptable methods. In order to show the implementation of arc flash reduction techniques at the system design level, the system model (20bus) will be changed to 5bus. Use of optimization techniques facilitates significant reductions in arc flash energy level as verified by computer simulations in ETAP software. A cost analysis which compares the cost of replaced transformers and the required circuit breakers related safety equipment against arc flash with and without applying optimization methods is also carried out. The results should be stated in this section energy level before and after optimization. The cost of optimization of transformers is 23,775 birr, while the cost of optimization of circuit breakers is birr 39000, so the total cost would be 62,775 birr. The results show that applying these techniques may lead to significant cost savings.