The sheath in underground power cables serves as a layer to prevent moisture ingress into the insulation layer and provide a path for earth return current. Nowadays, owing to the maturity of manufacturing technologies, there are normally no problems for the quality of the sheath itself. However, after the cable is laid in the cable tunnel and is operating as part of the transmission network, due to network construction and some unexpected factors, some problems may be caused to the sheath. One of them is the high sheath circulating current. In a power cable system, the uniform configuration of the cables between sections is sometimes difficult to achieve because of the geometrical limitation. This will cause the increase of sheath circulating current, which results in the increase of sheath loss and the decrease of permissible current. This paper will study the various characteristics and effects of sheath circulating current, and then will prove why the sheath current rises on the underground power cable system. A newly designed device known as the Power Cable Current Analyser, as well as ATP simulation and calculation equation are used for this analysis.