In this paper, a novel configuration for the railway traction substation (TSS) is proposed to mitigate the grid-side PQ indices. In order to overcome the mentioned drawbacks of the conventional traction transformer, a new balanced transformer is designed. The new balanced transformer is utilized in a TSS of electrified railway distribution system together with a half-bridge railway PQ conditioner (HBRPQC) to improve the grid-side power factor, and lower the grid-side total harmonic distortion and most importantly the grid-side NSC and NSV. The proposed configuration reduces the total kVA rating of the HBRPQC compared to the conventional TSS comprised of unbalanced traction transformers. The simulation results are presented to validate the performance of the proposed scheme.