This paper presents a compensation method for unbalanced voltage through active and reactive power control by utilizing a smart inverter that improves the voltage unbalance index and detects an unbalanced state of voltage magnitude and phase, and thus enhances power quality by minimizing the voltage imbalance. First of all, this paper presents an analysis of a mathematical approach, which demonstrates that the conventional voltage unbalanced factor (VUF) using the symmetrical component cannot correctly detect the imbalanced state from index equations; and by only minimizing the VUF value, it cannot establish a balanced condition for an unbalanced state of the voltage profile. This paper further discusses that intermittent photovoltaic (PV) output power and diversified load demand lead to an unexpected voltage imbalance. Therefore, considering the complexity of unbalanced voltage conditions, a specific load and an PV profile were extracted from big data and applied to the distribution system model. The effectiveness of the proposed scheme was verified by comparing VUF indices and controlling the active and reactive power of a smart inverter through a numerical simulation.