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An active power compensator (APC) based on single-phase back-to-back power converter is proposed in this paper to solve problems of power quality of electric railway power supply system. This system adopts a single-phase feeding connection, which is called cophase power supply scheme. In this scheme, APC connects the balance transformer between feeding phase for power supply and another phase for compensation. It has some characteristics, such as active power balancing, reactive power compensating, and harmonics filtering. In order to achieve these characteristics, the control scheme requires seven combination models. In this paper, a multifunctional control algorithm is proposed to realize every conceivable model. A cophase system with APC based on field programmable gate array (FPGA) and YNvd balance transformer is also designed and evaluated. The experimental results obtained from this prototype illustrate that the compensating ability is extremely high in steady-state and dynamic responses, and the power quality of a substation with distorted loads can be improved integrally.