**Abstract:**
Arc furnaces are used in industries for induction heating and welding. Due to the rapid growth of non - linear loads, such as power electronic control equipments and Electric arc furnace (EAF) power quality problems such as harmonics and voltage flicker are introduced in the power system. It occurs because of the time-varying and non-linear behaviour of the electric arc furnace operation. Hence an Electric arc furnace model is needed to analyze the power quality. In this paper, a time domain model called hyperbolic model for electric arc furnace is analyzed using MATLAB. The model is used to study its behaviour on the power system using MATLAB. To improve the power quality D-STATCOM is proposed, in which the control strategies used are Direct, Indirect control and Hysteresis controller. Direct control technique uses P-Q theory in which transformation is based on orthogonal reference frame. Indirect control technique uses d-q theory in which transformation is based on synchronous reference frame. Hysteresis controller uses Hysteresis Bandwidth to produce the switching signals.

**Keywords:**
Control strategies. D-statcom, MATLAB/SIMULINK.