This paper presents an implementation of a smart power system using inter-device communication and supervisory control through Simulink integrated with the physical system. This control includes features of real-time control, load management, fault detection and self-healing. The prototype is designed in hardware which takes in required parameter via sensors to PC via RS-232 power meter interface and actuator interfaced with Arduino microcontroller board which is integrated with Simulink. Simulink simulates the model and predict control signals depending upon input parameters and it sends control signal back to Arduino which then control the hardware through hardware in the loop (HIL) simulation. In the case of a severe fault, these control techniques detect system variation and compensate for this variation or remove the faulty part by using relays, which represents the self-healing nature of the developed model.