A power transmission system can be represented by a network with nodes and links representing buses and electrical transmission lines, respectively. Each line can be given a weight, representing some electrical property of the line, such as line admittance or average power flow at a given time. We use a hierarchical spectral clustering methodology to reveal the internal connectivity structure of such a network. Spectral clustering uses the eigenvalues and eigenvectors of a matrix associated to the network, it is computationally very efficient, and it works for any choice of weights. When using line admittances, it reveals the static internal connectivity structure of the underlying network, while using power flows highlights islands with minimal power flow disruption, and thus it naturally relates to controlled islanding. Our methodology goes beyond the standard -means algorithm by instead representing the complete network substructure as a dendrogram. We provide a thorough theoretical justification of the use of spectral clustering in power systems, and we include the results of our methodology for several test systems of small, medium and large size, including a model of the Great Britain transmission network.