This paper presents a new method which applies low leakage reactance transformer and low voltage shunt active power filter to compensate for the side of high voltage. According to the field condition and the phase-shift characteristic of transformer, the original control strategy is improved by using a new type of digital phase-locked loop technology. The harmonic suppression and reactive power compensation of high voltage bus are realized by low voltage active power filter. Without changing the internal structure of low voltage active power filter, it can accomplish some compensation tasks of high voltage power filter, thereby reducing equipment investment. Due to the low voltage grade of filter, the difficulty of equipment maintenance is reduced, and the safety of the operators is also improved. The PSCAD/EMTDC simulation tool and field test are adopted to verify the effectiveness and feasibility of the proposed approach.