A method for dynamically controlling regenerating energy flow and direct current bus voltage for an adjustable frequency drive system includes sensing a direct current voltage of a direct current bus; and sensing a plurality of alternating currents at outputs of an inverter. The sensed alternating currents are transformed to a stationary current vector. Voltage and frequency values are converted to a stationary voltage vector and an angle. The angle and the stationary current vector are transformed to a rotating current vector including torque and flux producing current components. An induction machine generating mode is determined when the torque producing current component reverses polarity. The voltage and frequency values limit the direct current voltage of the direct current bus at a predetermined threshold responsive to the generating mode. The stationary voltage vector and the angle are converted to pulse width modulated control inputs of the inverter.