In this paper a method for the development of a static VAR compensator (SVC) control algorithm is presented. The proposed algorithm has been designed with the objective of eliminating the negative impact of electric arc furnaces on the power system. First, a mathematical model of the proposed SVC controller in the d-q synchronous rotating coordinate system is developed. An analysis under dynamic and steady state conditions is also carried out. The efficiency of the presented controller is demonstrated by means of computer simulations of an actual steel-factory network model. The major advantages of the proposed controller are better flicker compensation, increased ability to regulate voltage and the need for only one-point network measurements.