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In this paper, load compensation using multilevel inverter-based distribution static compensator (DSTATCOM) is presented. The DSTATCOM is connected to a three-phase four-wire (3p4w) distribution system. Two different multilevel inverter topologies are used to realize the DSTATCOM. They are diode-clamped multilevel inverter (DCMLI) and flying capacitor multilevel inverter (FCMLI). A compensating technique has been derived, which uses the state feedback control to the multilevel inverters-based DSTATCOMs. A switching strategy for the multilevel inverters that ensures utilization of all output voltage states of the inverter for efficient tracking of references has been proposed. The schemes of dc-link capacitor voltage control for DCMLI and flying capacitor voltage control for FCMLI have been discussed. Comparative studies of performances of the two DSTATCOM topologies are performed. The simulation studies are performed using PSCAD/EMTDC to validate the efficacy of the proposed control scheme.