Power quality is essential for smooth functioning of industrial process. As industries expand, utilities become more interconnected and usage of electrically equipment increases, power quality is jeopardized. The quality of power in the power system is severely affected by the presence of harmonics. This harmonics adversely effects the power system performance. Some of the effects are over heating of metal parts, noise in motors, low efficiency in motors etc. The effects produced by the harmonics are reduced by adopting some corrective measures. VFD users have many choices when it comes to harmonic filtering. Of course they may do nothing, or they may choose to employ one of the many techniques of filtering available. Each filtering technique offers specific benefits and has a different cost associated with it. Some may have the potential to interfere with the power system while others will not. For best overall results when using reactors or harmonic filters, be sure to install them as close as possible to the non-linear loads which they are filtering. When you minimize harmonics directly at their source you will be cleaning up the internal facility mains wiring. This will also reduce the burden on upstream electrical equipment such as circuit breakers, fuses, disconnect switches, conductors and transformers. The proper application of harmonic filtering techniques can extend equipment life and will often improve equipment reliability and facility productivity.