In recent years, Plugged-in Electric Vehicles (PEVs) have become more popular due to the growing interest in energy security and emission reduction. In addition to fulfilling these objectives, PEVs can play a crucial role in balancing the active power as well as compensating the reactive power of the smart power grid. These ancillary services provided by PEVs, not only help in improving the reliability and quality of the power, but also benefit the grid operators and PEV owners financially. In this paper, a PEV-based reactive power compensation and a novel phase-detector-based feedback control system is proposed. The effects of reactive power compensation on the battery's State-Of-Charge (SOC) are investigated. Also, detailed analyses are carried out to assess the impacts of various components of a reactive power compensation circuit. Simulation results are provided to support the analysis and demonstrate the effectiveness of the proposed approach.