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The technological development of electrified railway systems during recent decades has demanded higher and higher quality performances of the supply subsystem. For this purpose, the recourse to electronics and to automation techniques can represent the right way to secure a reliable and efficient electric supply to the railway. The paper summarises the general problems of quality in railway electrification and proposes a new configuration of traction substations for single-phase AC-supply railways, based on the use of a two-phase inverter with nonlinear and variable-structure control system. Such an advanced technical solution allows one to obtain full compensation of load unbalances, constant load voltage, satisfactory power factor and a remarkable reduction of both disturbances and nonlinear-load effects. Some numerical applications show the efficacy of the proposed controlled compensator in containing disturbances and power-parameter variations, as well as its high performances in terms of fast response time, accuracy in steady-state conditions and general low sensitivity to disturbances.