Wireless sensor networks (WSNs) have been confirmed as one of the most promising technologies for many smart grid (SG) applications due to their low complexity and inexpensive costs. A typical WSN is formed with numerous battery limited sensor nodes mounted on critical components of a SG system for monitoring applications. Acquired monitoring data by sensor nodes are conveyed to the base station generally by using multihop communication techniques. WSN-based SG applications encounter severe propagation losses due to extreme channel conditions of the SG environment. In order to reduce possible packet errors caused by channel variations, transmission power control approaches can be adopted where the set size of available transmission power levels differs among the utilized hardware platforms. Usage of low transmission power levels can reduce the energy dissipation of nodes, which may lead to high packet drops. On the other hand, usage of high transmission power levels can prevent packet errors. Nonetheless, this alternative solution may lead to premature death of sensor nodes. Depending on the networking conditions, it is possible to confront applications such that the utilization of all available power levels provided by the node hardware may be unnecessary. In order to overcome this issue, determination of optimal transmission power levels set size for WSN-based SG applications becomes a critical research topic to prolong the network lifetime. In this work, we propose an optimization model to maximize the network lifetime while limiting the size of the transmission power levels set. Furthermore, we propose two strategies that are built on top of the optimization model to investigate the impact of the most used and optimal power levels on WSN lifetime considering several SG environments under various networking conditions.