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In voltage compensation applications power active filters are commonly used. However, this type of scheme needs to sense many electrical variables for an adequate performance as used by C. Nunez et al. (2000). This paper proposes the use of a nonlinear sliding modes observer to reduce the number of sensors maintaining a good performance of the system. Furthermore, the observed variables have been used to control the active filter. The analysis of the nonlinear observer, simulations and experimental results are presented.