Adequate and reliable supply of energy is essential to ensure maintainable development of anyrncountry. However, the use and conversion of primary energy results in energy waste, high costrnenergy and emission. In addition, developing countries, like Ethiopia, have low consciousnessrnon energy conservation and faced to generate more energy rather than to use the existing energyrnefficiently. This thesis studies on energy audit and power quality related issues in Debre BerhanrnBlanket Factory. rnA detailed assessment of energy consumption and loss has been analysed. Based on the losses,rnenergy efficiency assessments on the major energy intensive equipmentâ€™s like electric motors,rnair compressors, boilers, and lightings have been done.rnIt has been found from energy audit results that there exists a difference of 3.14 kWh/kgrnaverage electric energy intensity between the benchmarks and what exists at Debre BerhanrnBlanket Factory; the factory spends US $ 17,475.55 per year on this account. Using MotorrnMaster + International software it has been seen that some under loaded motors has beenrnreplaced with proper sized motors and energy efficient motors. This brings energy savings ofrn120,265.00 kWh per year and money savings of US $ 8545.00 per year with some paybackrnyear ranging from 1.52 to 6.29 years. Also through improving, the lighting systems resulted inrnmoney savings of US $ 2644.81 annually. Moreover, a similar analysis is taken for airrncompressor that result in energy saving of 72,536.76 kWh, and money saving of US $ 1552.27rnannually and, for a boiler, fuel oil saving of 2197.52 Lit and a money saving of US $ 1,302.23rnper year with almost zero or negligible pay back periods.rnIn addition, measurements and simulations have been made to assess power quality relatedrnproblems of the factory. Moreover, a comparison of the measured values with standards isrnmade which shows that the current harmonic pollution was found out of the standard limit.rnThis thesis also presents the design of passive filters to reduce the current harmonics producedrnby non-linear loads in the factory. MATLAB/Simulink software has been used for thernsimulation purpose with and without installation of filters. As a result, all the harmonicrndistortion levels the 3rnrdrnthrn, 5rnthrn, and the 7rn are reduced from 3.18% to 0.15%, 15.84% to 0.06%, rnand 16.28% to 0.03% respectively. Moreover, the current total harmonic distortion THDIrnreduces from 22.94% to 0.16% values.