This paper provides a methodology to characterize the accuracy of PMU data (GPS-synchronized) and the applicability of this data for monitoring system stability. GPS-synchronized equipment (PMUs) is in general higher precision equipment as compared to typical SCADA systems. Conceptually, PMU data are time tagged with precision better than 1 microsecond and magnitude accuracy that is better than 0.1%. This potential performance is not achieved in an actual field installation due to errors from instrumentation channels and system imbalances. Presently, PMU data precision from substation installed devices is practically unknown. On the other hand, specific applications of PMU data require specific accuracy of data. Applications vary from simple system monitoring to wide area protection and control to voltage instability prediction and transient stability monitoring. The paper focuses on the last application, i.e. transient stability monitoring. We propose an approach that is based on the energy functions (Lyapunov indirect method). Specifically, we provide a methodology for determining the required data accuracy for the reliable real time estimation of the energy function. When the data meet these requirements, the estimated energy function can be visualized and animated providing a powerful visual tool for observing the transient stability or instability of the system.