An active power filter with dynamic control method is used for harmonic elimination and power factor correction of an Electric Arc Furnace (EAF). This new control technique is very suitable for suppressing harmonics of nonlinear loads. In addition, other parameters such as the power factor can also be controlled. A nonlinear model of EAF and its Box-Jenkins model are used and compared. These models are parameterized by actual field data. The stability of the entire system is analyzed by using “Stable Equilibrium Area Existence” lemma.