In an Electrical power system, whenever the voltage level goes below the desired level, there is need to improve the voltage profile. This increasing voltage can be obtained by using capacitor bank/s, as switching ON a capacitor bank/s causes increase in voltage while switching OFF a capacitor bank/s causes decrease in voltage. But these switching actions, if not specifically controlled give rise to transients which are undesirable and hazardous for the power system. This paper introduces a voltage disturbance detection approach based on wavelet transform. The proposed approach (1) Identifies voltage disturbances, and (2) discriminates the type of event which has resulted in the voltage disturbance, e.g. either a fault or a capacitor-switching incident. Feasibility of the proposed disturbance detection approach is demonstrated based on digital time-domain simulation of a distribution power system using the PSCAD software package. Finally by using wavelet transform discriminates the type of event on the basis of energy levels.