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This paper presents a theory to explain the characteristics of a sequential phase energization based inrush current reduction scheme. The scheme connects a resistor at the transformer neutral point and energizes each phase of the transformer in sequence. It was found that the voltage across the breaker to be closed has a significant impact on the inrush current magnitude. By analyzing this voltage using steady-state circuit theory, the simulation and experimental results presented in a companion paper are explained. The results lead to the establishment of a guide to select the optimal value of the neutral resistor. The applicability of the proposed scheme to different transformer configurations has also been investigated in this paper. It is shown that the idea of sequential phase energization leads to a new class of techniques for limiting switching transients.