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The arc fault circuit interrupter (AFCI) is expected to be one of the most essential components in smart grid systems for providing physical security and safety against electrical fire hazards caused by arc faults. As AFCIs are widely deployed as a part of mandatory installation requirements, a hierarchy consisting of multilevel AFCIs has been established, where a portable AFCI is connected serially to an outlet box AFCI. However, this multilevel AFCI structure causes serious problems when the AFCI detects arc faults in the surveillance area of its descendant AFCIs. This can cause de-energizing of the entire area covered by the upper-level AFCI, which may lead to blackouts over large areas. This paper proposes an integrated security framework comprised of physical and logical security measures as a solution for this problem. Firstly, the problem is tackled through communication between the hierarchy levels. Since the proposed system deals with physical security and safety, the communication must guarantee reliable message delivery within the specified deadlines. A controller area network (CAN) is chosen as the communication technology because it provides deterministic message delivery that meets the system requirements. Moreover, CAN has the advantages of verified performance and cost competitiveness through accelerated industrial adoption. Along with the physical security framework, a logical security framework is also proposed with group key management that prevents unauthorized access. Finally, this paper reports an integrated methodology for optimizing the design parameters satisfying the bandwidth and security demands of physical and logical measures because both demands competitively share a common communication resource.