This paper proposes a fundamental phase reference current calculation method for a static synchronous compensator (STATCOM) with delta-connected cascade multilevel converter. This STATCOM is applied to compensate reactive current, unbalance current and harmonics in a threephase three-wire system. In previous work, instantaneous power theory was used to calculate the phase reference current. Zerosequence injection method was adopted to modify the reference current, so that active power was redistributed among deltaconnected clusters for balancing dc voltages. Steinmetz theory is applied to calculate fundamental phase reference current in this paper. The obtained reference current has a 90 degree phase difference with the line voltage. There is no active power exchange between the inverter and grid even unbalance currents are compensated. As a result, the dc voltage of the cascade multilevel converter can be easily balanced. Simulation results are provided to show the effectiveness of the proposed method.