To explore the clustered voltage balancing mechanism of the star-connected cascaded H-Bridge (SCHB) STATCOM, this paper analyzes the relationship between the active power and the control variables-modulation reference voltages in a dq frame through positive and negative sequence component decomposition. The derived relationship in the dq frame reveals that the negative sequence modulation reference voltage is capable of redistributing the active power among three phases and also the SCHB STATCOM features the clustered voltage self-stabilizing without any additional clustered voltage balancing control. To eliminate the differences of three clustered voltages, a new clustered voltage balancing control is proposed by regulating negative sequence modulation reference voltage in the dq frame. Its balancing mechanism is analyzed in detail and a simple implementation is presented as well. The effectiveness of the proposed control is verified by experimental results on a 400 V/15 kvar SCHB STATCOM.