The increased integration of Distributed Energy Resources (DER) and intelligent control technologies to distribution networks have succeeded in framing foundation for smart power grids. Design of protection systems and voltage regulation methodologies for an interactive smart grid will face new challenges with the introduction of new grid codes, active network management schemes and islanded operation. The active network management and optimal sizing of distributed sources shall change the operating point of the smart inverter-based DER in the islanded electric power system (EPS) continuously. This paper assesses the impact of such schemes on fault current magnitudes for various fault cases and voltage regulation at various nodes of an islanded EPS with distributed energy resources. © 2018 IEEE.