Power factor is an indicator of the power system efficiency as efficient generation of power at present is crucial because wastage of power is a global concern. The increase in inductive loads using by utilities and industrial applications leads to poor power factor which causes increase of line current, resulting in more line losses and greater voltage drop, which result in weak reliability, safety problems, and higher energy cost. Various methods have been developed to tackle this problem; actually power factor correction is usually achieved by adding capacitive load to offset the inductive loads present in the system. The chief aim of this project is to build a three phase automatic power factor correction panel based on optimization method which chooses the most appropriate combination of capacitors to improve the power factor to reach a reference specified level. The general modified optimization method reduces the number of switching contactors operation by 4 times at Least -until the third dynamic power factor correction- comparing with stages method (checks and modify). Moreover, it obtains the least possible transient by using different operation techniques of inserting or removing capacitors in order to achieve greater accuracy and stability while maintaining both of them at acceptable rates.