The objectives of power system operations are to preserve system stability and reliability as well as to supply proper electric power. For an activation of these objectives, voltage and reactive power should be considered. There are a number of types about reactive power sources, and an insertion of shunt capacitor banks are one of the method to support bus voltage adjacent. This paper includes the design procedure to determine the hybrid type capacitor bank configurations on power system to improve stability and reliability. This procedure includes the capacitor bank capacity calculation, reactor type selection, and reactor capacity calculation. The total capacity calculation of capacitor bank is based on the reactive power margin which is calculated through system studies such as, contingency analysis and Q-V analysis. In the second step, the reactor type and its capacity can be determined through the harmonic analysis. This paper shows that the harmonics are decreased by the proposed hybrid type capacitor bank, especially 5th and 7th harmonics.