Electric power quality, which is a current interest to several power utilities all over the world, is often severely affected by harmonics and transient disturbances. There is no unique model which can assess the power quality problem and to identify and classify them properly. Existing automatic recognition methods need improvement in terms of their versatility, reliability, and accuracy. The FUZZY LOGIC based tools have been applied for the PQ classification. This paper addresses Power quality problem classification by wavelet and fuzzy expert system. Major Key issues and challenges related to these advanced techniques in automatic classification of PQ problems are highlighted. New intelligent system technologies using DSP, expert systems, AI and machine learning provide some unique advantages in intelligent classification of PQ distortions. © (2012) Trans Tech Publications.