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This paper discusses the control of the compensation voltages in dynamic voltage restorers (DVR). It first analyzes the power circuit of a DVR system in order to come up with appropriate control limitations and control targets for the compensation voltage control. Based on this power stage analysis, a combined feed forward and state feedback control structure for the compensation voltages of DVRs is developed. This paper also discusses the time delay problems inherent in the digital control system of a DVR. Digital control systems normally have control delay from the sampling period, the switching frequency of the inverter, the sensor transmission time, etc. The control delay increases the dimension of the system transfer function. This makes the control system more unstable. This paper analyzes the control performance related with the control delay, closed loop damping factor, and the output filter parameters in DVR systems. Based on the control system analysis, design guidelines are proposed for the control gains and the inverter switching frequency of DVRs. The proposed theory is verified by an experimental DVR system with a full digital controller.