Recently with improvement of SMART Grid, AMI network security has been affecting the environment for Electric information and communication. The system and communication protection consists of steps taken to protect the AMI components and the communication links between system components from cyber intrusions.The addition of two way communications between SUN and HAN introduces additional risk for unauthorized access to the AMI system. In this paper, we propose new AMI device authentication infrastructure, key establishment and security algorithm based on public key encryption to solve AMI network security problems.