This paper illustrates the impact of typical distribution capacitor banks on high frequency fault transient signals. Fault location methods based on the analysis of fault originated travelling waves are affected by the installation of capacitor banks in distribution networks. Especially Continuous Wavelet Transform (CWT) is adopted to analyze fault transient signals and calculate their energy contents. Faults have high density around certain frequencies in the signal energy and these frequencies have a direct relationship with path characteristic frequencies through distribution networks. Finally, matching between certain frequencies of the CWT signal energy and path characteristic frequencies results in fault location. To clarify the impact of capacitor banks on these types of fault location procedures, the IEEE 34-bus test distribution network is modeled in EMTP-RV and the relevant fault transient signals are analyzed in MATLAB software.