Active harmonic filter is connected in parallel with non-linear loads, and uses one set of CT to detect the load current. It calculates each order harmonic current by FFT algorithms in its DSP microchips, and then generates a compensating current with the same amplitude but opposite phase angles to the detected harmonic current, which cancels out the original load harmonics. Not only eliminates harmonic current from the load side, but it also mitigates harmonic voltage caused by harmonic currents. The AHF system can also improve power factor (PF) and correct load imbalances in the power system.