A system and method are presented to detect and account for regenerated voltage in a three phase power source failures. The method involves monitoring a power source for phase voltage unbalances to determine the presence of a single phase failure. If the voltage unbalance caused by the single phase failure is restored before a sensing timer expires, a regenerated voltage condition is detected and retransfer to the power source is inhibited. Retransfer to the power source may be delayed by a period determined by a retransfer time value, in order to prevent transfer cycling between the preferred power source and an alternate power source. In addition, retransfer inhibiting may be terminated due to user interaction, power source voltage readings indicating a repair state, or by failure of an alternate source.