This paper provides a comprehensive state-of-the-art overview on power infrastructure defense systems. A review of the literature on the subjects of critical infrastructures, threats to the power grids, defense system concepts, and the special protection systems is reported. The proposed Strategic Power Infrastructure Defense (SPID) system methodology is a real-time, wide-area, adaptive protection and control system involving the power, communication, and computer infrastructures. The SPID system performs the failure analysis, vulnerability assessment, and adaptive control actions to avoid catastrophic power outages. This paper also includes a new concept for bargaining by multiagents to identify the decision options to reduce the system vulnerability. The concept of a flexible configuration of the wide-area grid is substantiated with an area-partitioning algorithm. A 179-bus system is used to illustrate the area partitioning method that is intended to minimize the total amount of load shedding.