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A fault detection and isolation system for monitoring voltage and current sensors in balanced three-phase systems is presented. It exploits the inherent redundancy of a model of the balanced three-phase signals (sinusoidal or not) through a residual generator based on the generalised observer scheme. A decision system made of a combination of vector cumulative sum (CUSUM) algorithms is used to process the residual vector and achieve detection and isolation of incipient (small magnitude) faults. The approach is validated using signals obtained from a test bench and from simulations.