The potential transformer is an instrumentation transformer which steps down the AC voltage to safe level of 120 V or 240 V so that relays and instrumentation devices can sense.
The potential transformer is usually referred to as a step-down or voltage transformer. It always connects in parallel to the line.
A PT can be used to sense phase to the ground as well as a phase to phase voltage. With an increase of voltage in the power system the output voltage of PT also rises. A decrease in voltage will also produce proportionate signals of voltage drop.
The image below displays a PT which senses phase to phase voltage in a power system:
PTs like above take high voltage (usually in kV’s) as input and step down to safe voltage level of 120 volts that can be directly measured with a multimeter or can be directly used with relays.