This document discusses the smart grid and how it works. It begins by defining the smart grid as an electric grid that uses communication technology to gather data and act automatically based on supplier and consumer behavior. It then explains that two-way communication between utilities and customers, along with transmission line sensing, enables a smart grid. The document outlines attributes of a smart grid like being information-based, communicating, secure, self-healing, and more. It compares traditional and smart grids and lists applications like demand response, electric transportation, and wide-area situational awareness. Benefits discussed are more efficient transmission, quicker outage restoration, reduced costs, and improved security.