This paper presents a novel arcing power-based algorithm to identify failures in operations of on-load tap-changers (OLTCs). An OLTC is the solely moving part of power transformers and thus highly prone to failure. Most of the OLTC defects are originated from abnormal arcing times leading to abnormal arcing energies. The proposed algorithm utilizes the power difference between the input and output terminals of transformer to estimate the OLTC arcing power. The integration of arcing power for a tap-changing operation results in an arcing energy. This arcing energy is estimated for each operation and used as an indication of OLTC failure. By this definition, whenever the estimated arcing energy exceeds a predefined value for a tap-changing event, it shows a failure in OLTC operation. The outcomes obtained from extensive simulation studies for different internal failures and external faults prove that any malfunction or failure in the operation of OLTC can be detected by the proposed method in a timely manner.