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Providing clean, continuous and reliable power to many industrial customers has become a necessity. Where possible, sensitive customers are supplied by two low-voltage utility feeders one of which is used as backup. Bus Transfer is able to provide the sensitive loads with a fast transfer to the backup feeder when the main one fails. This paper presents a new method to optimize harmonic estimation in bus transfer systems that use thyristor-based static transfer switch. The method uses filter bank property of Discrete Wavelet Packet Transform to measure the effective values of harmonics which are compatible with IEC standards, and implements them in power quality indices for operation of bus transfer systems. Implementation of wavelet packet transform has the benefit of inter-harmonic recognition, low spectral leakage, and the use of inappropriate length of a sampling window. The proposed method decomposes the voltage and current waveforms into uniform frequency bands corresponding to harmonics, and uses an optimized method to reduce the spectral leakage due to imperfect frequency response of the applied wavelet filter bank. As a case study, by using PSCAD software linked with MATLAB, the method is implemented and tested on a harmonic polluted network. The simulation results show the high accuracy of the proposed method.