This paper presents the results of measurement of harmonics in utility power distribution systems and proposes a harmonics suppression method based on capacity modulation of capacitors. Three years of survey with newly developed measuring instruments in a commercial area found that the peak harmonic value as high as 10% can occur during the time zone between 19:00 and 23:00 hours of any day as the power-factor angle leads prominently due to excessive quantities of capacitor at night when the electrical loads is low. The primary cause was identified with the resonance of harmonics from many sources. To suppress harmonics in the distribution system, the authors suggest that resonance frequencies are controlled by modulating the capacities of high-voltage customers' capacitors. Simulation showed the proposed method can reduce the harmonic voltage by half.