Detecting harmonic source at power grid become one of the most important task for the utility. Therefore, in this paper we propose a new and efficient method for quantifying and detecting distortion sources caused on customer’s side. It is based on measuring distortion power by using modified power meter. The distortion power is a component of apparent power that exists only at nonlinear load. Different definitions for distortion power calculation are investigated. All these definitions undoubtedly show that the proposed method is feasible. Moreover, this method allows the utility to develop fair and reliable billing schemes for controlling harmonic pollution at power grid. Simulation results confirmed the effectiveness, and applicability of the method. Further verification was done by measurements at the most commonly used loads at household and office. The method proposed in this paper is suitable for software or hardware upgrade of existing electronic power meters.