This paper proposes a small low-cost power quality compensator to be installed at the electricity supply inlet of residential customer. The compensator is composed of a single-phase active power filter with a simple controller using analog electronics, which can correct the power factor and damp out the harmonics. The operation and performance of proposed compensator was verified through simulations with PSCAD/EMTDC and experimental works with hardware prototype. The proposed compensator can offer reduction of power loss and improvement of power quality to the residential customer.