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In order to get an optimum power factor in the load compensation under distorted supply voltages, a new control strategy is proposed in this paper. In this strategy, the conductance factors for the compensated load are evaluated for the specified source current total harmonic distortion (THD) limit. The performance of this method along with perfect harmonic cancellation (PHC) and unity power factor (UPF) strategies is evaluated on a distribution system model developed using PSCAD 4.2.1. The effect of selection of control strategy in damping the harmonic resonance, which is one of the main problems for harmonic propagation in the distribution system, is verified. The simulation results are presented to evaluate the performance of these strategies in load compensation and diminishing the harmonic propagation in the distribution system.