Voltage stability and power factor control are two key points in steady state operation of electrical systems. STATCOM and its control system can be used to improve the power system performance. A model predictive controller with a new approach of reference generation is used. The proposed control method compensates the imaginary power required to maintain a chosen power factor at the end of the transmission line. To evaluate the performance of the proposed control method, 10 kV distribution network is examined in simulation. Simulation results demonstrate that the proposed control strategy improves the power factor and stabilize the voltage at the Point of Common Coupling.