Induction generators are most suitable for renewable energy conversion systems such as micro/pico hydro & wind power generation systems due to their advantages over conventional synchronous generators. These induction generators are of small ratings when used for pico-hydro power plants in remote mountainous locations and mostly feed the single-phase domestic load using 3-phase 4-wire system. However, the growing use of non-linear electronic loads in domestic applications such as CFLs, LEDs, computers etc., various harmonics are generated which adversely affects the power quality at the AC supply mains. This paper presents a solution for harmonic mitigation in a 3-φ self-excited induction generator (SEIG) based pico-hydro power plant operated in isolated mode, using star-delta and zigzag transformers feeding non-linear load. The complete system is modeled and its performance is simulated in MATLAB/Simulink environment. The performance simulation results are presented to demonstrate the effectiveness of star-delta and zigzag transformers in power quality control.