The invention discloses a LTE (Long Term Evolution) network based power distribution and utilization communication system and a communication method thereof. The communication method of the LTE network based power distribution and utilization communication system comprises that a power distribution and utilization terminal sends communication data after session key encryption to network access point equipment; the network access point equipment decodes the communication data through a session key, performs L2TP (Layer 2 Tunnel Protocol) packaging on the decoded communication data according to an L2TP tunnel configuration negotiation result and sends an L2TP data packet generated by packaging to a master station server; the master station server analyzes the communication data from the received L2TP data packet according to the L2TP tunnel configuration negotiation result. The session key is formed by the network access point equipment according to a public key, a private key and a key negotiation parameter; the L2TP tunnel configuration negotiation result is formed by the network access point equipment according to a first tunnel configuration parameter and a third tunnel configuration parameter which are sent from the power distribution terminal and the master station server. The communication method of the LTE network based power distribution and utilization communication system can improve the safe reliability of the power distribution and utilization communication system.