Optimal installation of electrical distribution transformers has always been a challenging task for distribution operator (DSO)s due to load variations, particularly for seasonal loads. Depending on the quality of distribution systems in different regions and countries, a considerable number of installed transformers may be oversized or have capacity lower than critical standard. In this study, IEC 60076-7 is used to calculate the temperature limitations for distribution transformer capacities and determine optimal transformer capacity for an electrical distribution substation based on the critical values and limitations given in the standard. A data logger is installed on the substation and the load data is recorded for one year. Additionally, the impact of different parameters like ambient temperature is investigated for optimal determination of transformer capacity.