Abstract Accurate modelling of the Electric arc furnace (EAF) is necessary to study its impact on the power systems. Here, a new model for the EAF is presented in which both non‐linearity and time‐varying characteristics are taken into account. The model consists of seven parallel current sources which represent the fundamental and harmonic currents. Magnitude and phase of the fundamental harmonic and magnitude of the second to seventh harmonics are considered as time‐varying which are updated every 0.01 s. To do so, the actual data recorded from eight EAFs in the Mobarakeh steel company (MSC), Isfahan, Iran are used. Autoregressive moving average (ARMA) models are employed to derive the parameters of the time‐varying model. Also, different orders and coefficients of the ARMA model are considered at each run of the model, which enables the proposed model to predict the non‐stationary and stochastic behaviours of the EAF over long‐time periods. It is shown that the proposed combined time‐varying‐harmonic model can even model the generated inter‐harmonics. To evaluate the accuracy of the proposed model, the derived power spectral density (PSD) of the EAF time‐varying parameters, the instantaneous flicker, and short‐term flicker by the proposed model are compared with the actual recorded data.