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Today, electrical arc furnaces (EAF) are used widely to produce steel and its alloys. This kind of furnace has a noticeable superiority over the other types of furnaces because of its steel production procedure. Nevertheless EAF emerges as a large, nonlinear and time-varying load in the power system which causes many power quality problems such as current unbalance, harmonic pollution and poor power factor. On the other hand, especial equipments such as the furnace transformer with the endurance of durable short circuit currents and a tap changer with many steps must be used. Also a sluggish mechanical control system is used to move the electrodes. These equipments increase the overall cost of EAF and give it slow response. In order to solve some of the aforementioned problems, a dynamic voltage restorer (DVR) can be installed near the EAF. The DVR is capable of improving power quality, reducing the overall cost and enhancing the system controllability by elimination of the tap changer and modification in the electrode movement controller. An appropriate control system is introduced to manage this DVR and its effectiveness is testified by computer simulation using MATLAB/simulink software.