The present electric power system structure has lasted for decades; it is still partially proprietary, energy-inefficient, physically and virtually (or cyber) insecure, as well as prone to power transmission congestion and consequent failures. Recent efforts in building a smart grid system have focused on addressing the problems of global warming effects, rising energy-hungry demands, and risks of peak loads. One of the major goals of the new system is to effectively regulate energy usage by utilizing the backbone of the prospectively deployed Automatic Meter Reading (AMR), Advanced Meter Infrastructure (AMI), and Demand Response (DR) programs via the advanced distribution automation and dynamic pricing models. The function of the power grid is no longer a system that only supplies energy to end users, but also allows consumers to contribute their clean energy back to the grid in the future. In the meantime, communications networks in the electric power infrastructure enact critical roles. Intelligent automation proposed in smart grid projects include the Supervisory Control And Data Acquisition/Energy Management Systems (SCADA/EMS) and Phasor Management Units (PMU) in transmission networks, as well as the AMR/AMI associated with field/neighborhood area networks (FAN/NAN) and home area networks (HAN) at the distribution and end-use levels. This article provides an overview of the essentials of the progressive smart grid paradigm and integration of different communications technologies for the legacy power system. Additionally, foreseeable issues and challenges in designing communications networks for the smart grid system are also rigorously deliberated in this paper.