The Relation of power heat losses with V & I in transmission lines
simulate this circuit &ndash; Schematic created using CircuitLab

Figure 1. A comparison between power transmitted (a) directly and (b) via step-up and step-down transformers on the same pair of wires as (a).


In Figure 1a the power loss per cable is given by \$ P = I^2R = 1^2\cdot 1 = 1\,\mathrm{W} \$ (assuming they're in phase).
In Figure 1b the power loss per cable is given by \$ P = I^2R = 0.1^2\cdot 1 = 0.01\,\mathrm{W} \$ (again, assuming they're in phase).


By using a 1:10 step-up and 10:1 step-down line losses are reduced by a factor of 100. 

In general, line losses will be reduced to \$ \frac {1}{n^2} \$ where n is the transformer ratio.