Increasing numbers of devices of various types are now connected to power lines. Their nonlinear nature harms the operation of the lines, as the line voltage is distorted from a sine wave, which causes disturbances in the operation of other loads. This study proposes a method of active parallel compensation that can be realised using a power supply. The proposed device is a dual-function system: it supplies the load connected to its DC link, and operates as a parallel active filter. This kind of device, with a relatively low value of the rated output power, could be implemented in electrical systems to provide distributed compensation. The second novel aspect of this work is the use of a tunable inductive filter, which is included at the input of the power electronics controlled current source and forms a main part of the power supply. The use of this tunable inductive filter increases the frequency response of the current source, while at the same time, in the quasi-steady state of power supply operation, the pulse modulation component of the input current source remains at a minimum level. This paper discusses the structure of an electrical system with the proposed power supply and the rules of operation for the system, and presents test results based on both a simulation and a laboratory model of the system.