This paper describes a fast power transient management functionality incorporated into a 12.5 Gb/s maximum likelihood sequence estimation (MLSE) receiver for optical add/drop multiplexer (OADM)-based WDM networks. The receiver has a VGA with a fast automatic gain control and a high-bandwidth offset cancellation loop. Measured results indicate that the receiver IC tolerates a 10 dB/10 mu s optical power transient with 72 consecutive identical digits with no BER impact, and offers a 100X improvement over a standard CDR in tracking an 8 dB sinusoidal power transient at a BER of 10(-4).