This paper presents the results of study and analysis of the harmonic content and overall performance of a system including Variable Frequency Drives along with capacitive compensator and Static VAr Compensator. Specifically, the cases of no compensation, capacitive compensation, and power electronic based static VAr compensation will be examined. A small-scale model of a system for the study was constructed in lab. Several cases were then performed and tested to simulate a system which contained both fixed and power electronic based harmonic generating loads. The performance of each case was evaluated based on total harmonic current and voltage distortions, true power factor, and RMS current levels at different points in the system. Comparative analysis based on the results will also be presented.