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AC adjustable-speed drives (ASDs) have become the primary choice for most new and retrofit precision motor-control applications with increased system efficiencies and reduced system losses. The significant increase in the use of ASDs brings the need for understanding compatibility issues between them and their electrical environment in order to design the electrical systems appropriately. Even though there have been numerous studies on ASD effects on power systems, models for predicting the effect of the source voltage sags or unbalance have been limited. This paper is devoted to analyze the characteristics of power quality indices such as input power factor, input current crest factor (CF), and the distribution transformer K-factor for practical ASD systems under input voltage unbalance and sag conditions. The relationships between the unbalanced input voltages and input currents, the input inductance and the input current unbalance, the input inductance and the input power factor, CF, and transformer K-factor are explored for 5-, 100-, and 600-hp power distribution systems with ASDs. The results can be used as a design guide for power distribution system design with ASDs. Theoretical derivations and simulation and experimental results are presented in this paper.