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Problems occur when zones overlap in the conventional step distance protection scheme. If the same zones from different relays overlap, discriminating between the real fault location and the virtual one is difficult, and malfunction can occur. In this case, the zone length or time delay is usually modified to separate the overlapped zones. However, these changes affect the coordination of the power protection system. A clear example of this involves transformer backup protection. Generally, when Zone 2 of a transformer backup protection relay overlaps Zone 2 of an adjacent line backup protection, the method of modifying this zone may not be obvious. To overcome this problem, this paper describes an improved operating scheme using an IEC61850-based distance relay for transformer backup protection.