This document discusses a unified power quality conditioner (UPQC) integrated with an ultracapacitor (UCAP) for reactive power compensation. The UPQC uses a p-q theory based control method where fundamental frequency positive sequence voltages are extracted using a generalized cascaded delay signal cancellation technique. The shunt converter compensates for part of the load reactive power while the series converter shares part of the reactive power load even under normal grid conditions. The UCAP integrated at the DC bus provides active power capability. Simulation results verify the dynamic performance of the proposed UPQC-UCAP system under linear and non-linear load conditions with voltage sags/swells and distortions.