Transmission and distribution (T&D) systems for electric power are assembled with a large amount of aged apparatus, the deterioration of which may cause a decrease in reliability. In order to maintain high efficiency and high quality in T&D systems, it is important to minimize both present performance costs and future performance costs. Typical present performance costs are T&D losses, and typical future performance costs are failure losses and apparatus maintenance for overall T&D system optimization. We have to consider concurrently two concepts that are an asset management system and a smart grid. This integrated concept, which we have proposed as Intelligent Grid Management System (IGMS), achieves optimum control that includes the present power flow and the future maintenance of the T&D system. In this paper, the effect of temperature rises in transformer windings is formulated and integrated into an objective function to determine transformers with power flow control. The derived power flow control optimizes the load sharing of each transformer by keeping a balance between the T&D loss and degradation in the transformers. The degradation of aged transformers is prevented by reducing their load factor, or the aged transformer is replaced with a new one that accepts a relatively high load factor.