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:

Pic Credits: Tony R. Kuohaldt Lessons in Industrial instrumentation

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.