Reliability assessment methods allow the evaluation of the reliability of systems and provide important information on how to improve a system‟s life to reduce risk and hazards. With the advancement in technology, the existing methods were extended and new methods were adopted. The advancement from mechanical to numerical and analog to digital system in many applications, and deregulation of energy sector brought the need to further modify the reliability analysis methods. The scope of this research is to demonstrate the advancement of the Dynamic Flowgraph Methodology (DFM) to reliability modeling of Smart Electrical Transmission System. The reason behind this is the successful operation of electric power under a deregulated electricity market depends on transmission system reliability management. Besides this, analog electro-mechanical systems in existing power system are aging and becoming obsolete. This thesis also illustrates how the electrical transmission system can be renovated into smart electrical transmission system and evaluates the reliability measures. / UOIT