This paper proposes an agent-oriented design methodology specific to power system automation domain. The existing agent-oriented methodologies have some deficiencies when applied in industrial automation. Besides, there is lack of models, methods and guidelines for their systematic application. The proposed methodology combines familiar to domain engineer design process of the IEC 61850 standard and design flow of agent-oriented methodologies. The resultant agent-based system is modelled and implemented with IEC 61499. The transformation of IEC 61850 models into the IEC 61499 solution models is guided by the set of rules and supported by automated transformation tool. The methodology has a set of models, their transformation methods and well defined steps that enable systematic design of the agent-based solutions for power system. The methodology is exemplified here on a Smart Grid protection application