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Faulted Inter Bus Transformer (IBT) can cause power system instability. Therefore, it will be isolated to prevent the spreading of disturbance. IBT at the Paiton Substation which supplies Paiton – Grati and Bali Subsystem is discussed in this paper. The event discussed is 2 of 3 IBTs are out of work so that only one left. So, load shedding of Bali Subsystem is required to avoid further disturbance. However, after it is applied, the voltage at the Bali Subsystem will increase beyond the allowed rating because some substations in Bali Subsystem have capacitor banks to increase voltage during normal operation. Therefore, further action is required by releasing some capacitor banks of several substations that have the highest rated voltage until the voltage in all substations is within the permitted rating. Finally, it is shown that the proposed method can restore system stability by evaluating the rated capacity at IBT Paiton and rated voltage at Bali Subsystem.