The importance of voltage quality is continuously increasing in electrical networks due to the rising manufacturing costs resulting from system faults and disturbances in utility dynamics. Researchers generally prefer reference-frame transformation-based methods to detect and mitigate these disturbances. However, these methods are adversely affected during unbalanced loading and disturbances due to their direct dependence on system dynamics (currents and voltages). In this study, a new and simple method based on Clarke transformation is proposed to detect disturbances and generate compensation signals for Power Quality Mitigation Devices. The aim is to address the deficiencies of existing approaches. Firstly, the Clarke transformation is introduced through the vector presentation. Then, the mathematical derivation of the proposed method is provided to enhance readers’ understanding. The voltage sag detection and compensation signal extraction of its control algorithm for a Dynamic Voltage Restorer is illustrated graphically. Subsequently, a simple power system is created using a simulation program. Balanced and unbalanced voltage disturbances are applied to the test system to demonstrate the validation of the proposed method under distorted system conditions. The results of voltage sag detection and compensation signal extraction for both the proposed and existing methods are compared at the end of the case studies.