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A new topology for active power filters (APF) using an 81-level converter is analyzed. Each phase of the converter is composed of four three-state converters, all of them connected to the same capacitor dc link voltage and their output connected in series through output transformers. The main advantages of this kind of converter are the negligible harmonic distortion obtained and the very low switching frequency operation. The single-phase equivalent circuit is analyzed and their governing equations derived. The dc link voltage control, based on manipulating the converter's voltage phase, is analyzed together with the circuit's characteristics that determine the capability to draw or deliver active and reactive current. Simulation results for this application are compared with conventional pulsewidth-modulated (PWM) converters, showing that this filter can compensate load current harmonics, keeping better-quality sinusoidal currents from the source. The simulated configuration uses a 1-F ultracapacitor in the dc link, making it possible to store energy and deliver it during short voltage dips. This is achieved by applying a modulation control to maintain a stable ac voltage during dc voltage drops. A prototype of the filter was implemented and tested, and the obtained current waveforms showed to be as good as expected.