Abstract: With the continuous pursuing of electric power system reform, reliability pricing based on the differentiated demand of users has become an important part of the improvement of the electricity price system. In this paper, a reliability pricing method of distribution network is proposed based on the improved long-run incremental cost method, which comprehensively considers the system operation modes and the interruptible response factor. Combined with the proposed economic investment strategy, the influence of the unit power injection on the economic investment horizon is analyzed in different operation modes with the proposed method, the incremental reliability costs are deduced according to the smaller investment horizon in the different operation modes,and the regional reliability price with different interruptible response factors is calculated according to the incremental reliability costs. Finally, considering the differentiated energy consumption demand of users, the formulation method of the incremental reliability price is developed based on the incremental reliability cost per unit. Case analysis results show that the pricing system based on the combination of regional reliability price and incremental price can reasonably take into account the power supply reliability of power supply zones and the differentiated demand of users.