Over the last several decades, electricity consumption and generation have continually grown. Investment in the Transmission and Distribution (T&D) infrastructure has been minimal and it has become increasingly difficult and expensive to permit and build new power lines. At the same time, a growing increase in the penetration of renewable energy resources is causing an unprecedented level of dynamics on the grid. Consequently, the power grid is congested and under stress. To compound the situation, the utilities do not possess detailed information on the status and operating margins on their assets in order to use them optimally. The task of monitoring asset status and optimizing asset utilization for the electric power industry seems particularly challenging, given millions of assets and hundreds of thousands of miles of power lines distributed geographically over millions of square miles. The lack of situational awareness compromises system reliability, and raises the possibility of power outages and even cascading blackouts. To address this problem, a conceptual Power Line Sensor Network (PLSN) is proposed in this research. The main objective of this research is to develop a distributed PLSN to provide continuous on-line monitoring of the geographically dispersed power grid by using hundreds of thousands of low-cost, autonomous, smart, and communication-enabled Power Line Sensor (PLS) modules thus to improve the utilization and reliability of the existing power system. The proposed PLSN specifically targets the use of passive sensing techniques, focusing on monitoring the real-time dynamic capacity of a specific span of a power line under present weather conditions by using computational intelligence technologies. An ancillary function is to detect the presence of incipient failures along overhead power lines via monitoring and characterizing the electromagnetic fields around overhead conductors. This research integrates detailed modeling of the power lines and the physical manifestations of the parameters being sensed, with pattern recognition technologies. Key issues of this research also include design of a prototype PLS module with integrated sensing, power and communication functions, and validation of the Wireless Sensor Network (WSN) technology integrated to this proposed PLSN.