This work presents a study of the steady-state and transient effects of power factor correction capacitors on the utility and on the customer. In the presence of harmonic-producing loads, capacitors used for power factor correction can cause parallel or series resonance problems which tend to increase the total harmonic distortion (THD) of the voltage and current waveforms. The cases studied in this work considers the addition of a power factor correction capacitor, in the presence of downstream harmonic loads and at the harmonic load site. In both cases the resonance created by the addition of the capacitor caused the harmonic distortion of the voltage and current waveforms to increase. Another problem is transient overvoltages created by switching the capacitor. A case study is reported where the operation of a semiconductor controlled motor drive is effected by transient overvoltages. >