A method and system is provided for optimizing the performance of a power generation and distribution system that monitors the performance of a power system, detects disturbances and calculates statistical information, uses historical performance data and economic factors to analyze and control the production of power. Load demands are predicted by utilizing very short term load forecasts that are based on historical load data, demand patterns and short term load forecasts. Generating units are each assigned a temporal trajectory of output power over consecutive time intervals. The allocation of available resources is assigned so as to minimize costs associated with meeting changing loads.