For reducing threat propagation within an inter-connected network, it is essential to distribute the defense investment optimally. Most electric power utilities are resource constrained, yet how to account for costs while designing threat reduction techniques is not well understood. Hence, in this work, a vulnerability propagation and a defense model is proposed based on an epidemic model. The new defense mechanism is then validated through sensitivity of the propagation parameters on the optimal investment with two-node and N-node cases. Further, the model efficacy is evaluated with implementation in one of the communication networks of a cyber-physical power system. Topological impact on the optimal nodal investment is also emphasized. Optimal investment of the neighbors with less degree were found to be highly sensitive to fluctuation in vulnerability exploitability probability.