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In this paper five level multilevel inverter based shunt active power filter is presented. Use of high voltage nonlinear load is considerably increased in industry and elimination of harmonics in HV system has become an important aspect. Implementation of multilevel inverter (MLI) for active power filter (APF) in HV system eliminates use of bulky and high cost transformer. The reference signal is generated by using average power method which successfully eliminates harmonics even the supply voltage is distorted. A PLL based unit vector template is used to obtain fundamental mains voltage and used to calculate average load power. Carrier phase shifted pulse width modulation (CPS-PWM) scheme is implemented to generate switching signals which reduces the individual device switching frequency. Simulated results prove the effective elimination of harmonics with multilevel inverter in high voltage system.