Degradation of XLPE cable by water trees gives rise to harmonics in the loss current. The authors are engaged in development of diagnostic methods for water tree degradation utilizing these harmonic components. As a result of this development, the following was discovered. The harmonic components occurring in the loss current provide an extremely good indication of the state of degradation. Harmonic components arise as a result of the nonlinear voltage-current characteristic of water trees. An equivalent circuit which incorporates this nonlinearity of water trees faithfully reproduces the loss current waveforms obtained in experiments. When a voltage at a frequency differing from commercial frequencies is superposed, a degradation signal occurs at a characteristic frequency.