This paper proposes a novel method for determining the kind and rating of power quality solutions. To determine the kind of solution, event cause and direction are utilized. According to the event cause and direction, an adequate type of solution is determined for effective compensation. To rate the required capacity of solution, the concept of lost energy is adopted. Lost voltage, lost power and lost energy are calculated and the rating of the solution is determined to compensate a specific event. The rating method that utilizes the result of stochastic diagnosis is also proposed. A power quality index such as CP95 is adopted for solution suggestion. The method developed in this paper is applied to the test system and proved to be useful for enhancing the power quality of the customer system. It can provide customers with information pertaining to what is a proper and cost-effective solution among various compensating devices.