AbstractElectrocoalescence has long been known for the separation of a water‐in‐oil emulsion. An associated challenge with electrocoalescers is the undesired noncoalescence and consequently chain formation of aqueous phase droplets. This leads to low separation efficiency and damage of electrical equipment. Recently Hasib et al. proposed an electric field modulated scheme that showed significant improvement in dehydration of water‐in‐oil emulsions. They investigated the range of modulation parameters when the scheme is most effective. The fundamental process in electrostatic dehydration of an emulsion is the interaction between a pair of water droplets. In the present study, two suspended aqueous drops in insulated oil experiments are compared for their behavior under unmodulated and modulated electric fields. Further, a model is developed and the experimental behavior under unmodulated and modulated electric fields is compared with numerical solutions. The model predicts the experimental observations accurately by balancing electrostatic, electrophoresis, dipolar, and resisting viscous drag forces, ignoring the end (bridge) effect during the contact. The study shows that the increase in the rate of dehydration of a water‐in‐oil emulsion under modulated electric fields with an increase in duty ratio and its near independence on the modulation time period can be explained by the two‐drop studies. However, several other processes such as multidrop interactions as well as scavenging of fine droplets by charged droplets created as intermediates in the interaction of two droplets cannot be explained by the two‐drop studies.