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This paper presents an implementation of the discrete wavelet transform (DWT) using passive LC filters for operating a dynamic voltage restorer (DVR) system. The proposed implementation is based on designing Butterworth passive LC filters with cutoff frequencies that are identical to cutoff frequencies of DWT associated digital filters. These passive LC filters can detect abnormal conditions that may disrupt the quality of the power supplied to sensitive loads in a power system. Detecting any abnormal condition is realized through extracting high- and low-frequency components present in system voltages using high-pass and low-pass filters, respectively. The designed Butterworth passive LC passive filters are third-order systems to simplify their practical implementation as well as their integration with the test power system and the DVR. Simulation and experimental test results for transient voltage dip and steady-state harmonic distortion cases show significant performance improvement of the DVR system operated by the designed Butterworth passive LC filters. The proposed DWT-operated DVR system using Butterworth passive LC filters is implemented and tested for improving the power quality under different abnormal conditions.