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The unbalanced and nonlinear characteristic of many loads connected to the power system can cause power quality problems, which in turn affects other consumers. Electric arc furnaces (EAF) are among the loads that cause major problems for system power quality. The use of static var compensator (SVC) is a way to reduce power quality problems caused by EAF. Since precise quantification of the SVC susceptance function can greatly influence the optimization of the reactive power, in this paper proposed using of a fuzzy logic controller to optimize the susceptance function to further improve the voltage profile and reduce SVC capacitance. The results from simulations show that the SVC based fuzzy method optimally determines the coefficient of the susceptance function. The results show that the proposed method with the proposed method has good performance in reduction of harmonic currents and improving the voltage profile of the system. So, the results clear that in case of EAF load, the SVC is capable of rapidly compensating its effect and improve the system power quality. By maintaining the bus voltage and eliminating voltage oscillations, the active power received is quickly stabilised and power oscillations are removed. Thus, power quality problems of EAF application is eliminated with application of optimized SVC based fuzzy method. In addition, the performance of the proposed method compared to mathematical methods in previous studies has been evaluated, which presents superiority of the proposed method in reducing voltage oscillations and reducing harmonic currents. [ABSTRACT FROM AUTHOR]