Power Quality is a major concern within power industry and consumers. Poor quality of supply will affect the performance of customer equipment such as computers, microprocessors, adjustable speed drives, power electronic controllers, life saving equipment in hospitals, etc. and result in heavy financial losses to customers due to loss of production or breakdown in industries or loss of life in a hospital. The two major power quality disturbances are voltage sag and harmonic distortion. In this paper, a Quality Power Provider (QPP) based on voltage source inverter is modeled by simulation to compensate the power quality disturbances such as voltage sag and voltage harmonics in the distorted supply condition. The phase locked loop (PLL) is an important control unit of the QPP control scheme. To obtain accurate phase information and frequency of the input supply, the dqPLL method has been proposed. Simulation results based on MATLAB and PSCAD software are presented to verify the performance of the proposed QPP. QPP has improved the quality of power supply at the sensitive load end. © 2005 - 2011 JATIT & LLS. All rights reserved.