Three phase four wire system is more viable of different power quality problems. In past various methodologies were presented by the researchers to address power quality problems, these problems are namely harmonic distortion, THD levels, load balancing. Recent years the design of Distributed- Static Compensator (D-Statcom) plays an effective role to mitigate load balancing issues. In this paper these problems are taken with a reduced capacity D-Statcom. A zig-zag transformer based DStatcom is employed to handle power quality issues like poor
voltage regulation, compensation of neutral currents and load balancing. This paper presents a Carrier less Hysteresis Control based D-STATCOM to compensate the neutral current in three phase four wire distribution network. Load balancing is also achieved by the controller under different loading conditions. The Simulation studies are performed on MATLAB with Simpower block set.