This paper focuses on the designing procedure of a regulatory framework in distribution networks with the main goal being to facilitate the integration of distributed generation (DG) units. The proposed framework is based on the concept of the reward penalty scheme (RPS) and creates effective financial incentives for distribution companies (DISCOs) in improving the quality of their services by applying DG units. To achieve this goal, reliability indices and annual energy losses of a distribution network are considered as two significant measures used in designing the structure of several RPSs. Employing these schemes, the regulators can quantify the quality of services provided by DISCOs. In order to examine the abilities of the proposed method, a case study on a test distribution system connected to bus 6 of the RBTS is performed. The obtained results show that a well-designed regulatory scheme can motivate DISCOs to adopt higher penetration of DG in such a way that their technical criteria can be improved.