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To avoid the needless trip by magnetizing inrush current, the second harmonic component is commonly used for blocking differential relay in power transformers. However, the main problems of the current comparison method are in the very high inrush currents and relatively small fault currents regarding winding short circuits. Also The second harmonic component in fault current is increased in long lines which may blocks the relay operation. This paper describes a method to discriminate internal fault from inrush current and faults with a high second harmonic component by the sum of active power flowing into the transformer from each terminal. The average power is almost negligible for energizing, but an internal fault consumes large amounts of power.