This paper presents a new model for optimally sizing and locating distribution substations and feeders in a time-dynamic power distribution system. Recognizing that both linear and nonlinear loads are present within the system, the model's objective is to minimize the combined costs of the construction of substations and feeders with that of losses occurring at fundamental and harmonic frequencies. System specifications include power demand, power capacity, and logical restrictions. Two main contributions of this paper are: (1) the model captures the nonlinear costs due to power flow, as opposed to simplifying linear assumptions found in the literature; and (2) the effects of harmonics are considered. The model is a mixed 0-1 quadratic program, whose mathematical structure permits the application of generalized Benders' decomposition as a solution methodology. The effectiveness of the developed model and solution procedure is illustrated by application of a test example from the literature. The effects of nonlinear power losses and harmonic distortion are shown to influence the planning strategy.