The medium to low voltage transformer substation is a key element in the distribution system. Therefore, smart transformer substations will play a crucial role in the evolution of distribution towards the smart grid. Smart transformer substations can provide a significant improvement of continuity of supply. However, a large investment is required, so the optimal degree of automation must be determined. The main objective of this paper is to quantify the impact of smart MV/LV transformer substations on continuity of supply, which is essential to determine the optimal automation degree. The analysis has considered different degrees of implementation of smart MV/LV substations for different configuration schemes of urban distribution networks. Furthermore, sensitivity analyses have been performed for the main parameters involved so that conclusions on reliability improvement achieved by MV/LV transformer substation automation can be scaled up.