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The diminishing trend of reliability owing to possible power system failures has become a serious concern for the power system as a whole. It has necessitated the development of advanced protection methodologies employing advanced information technology and substation monitoring system (SMS) constitutes an integral part of such methodologies. The proposed scheme for condition monitoring of insulators, which serves as an augmented feature of SMS, aims at alleviating overall system reliability as well as power quality because cracked insulators cause disruption of power, thereby incurring heavy loss to the power system utilities. The image processing based video surveillance (VS) is incorporated to dispense with the cumbersome and time consuming conventional manual on-site detection using discrete orthogonal S-transform (DOST) in conjunction with some intelligent classification algorithms to ascertain the condition of the insulators.