The ideas in this paper are motivated by an increased need for systematic data-enabled resource management of large-scale electric energy systems. The basic control objective is to manage uncertain disturbances, power imbalances in particular, by optimizing available power resources. To that end, we start with a centralized optimal control problem formulation of system-level performance objective subject to complex interconnection constraints and constraints representing highly heterogeneous internal dynamics of system components. To manage spatial complexity, an inherent multi-layered structure is utilized by modeling interconnection constraints in terms of unifed power variables and their dynamics. Similarly, the internal dynamics of components and sub-systems (modules), including their primary automated feedback control, is modeled so that their input–output characterization is also expressed in terms of power variables. This representation is shown to be key to managing the multi-spatial complexity of the problem. In this unifying energy/ power state space, the system constraints are all fundamentally convex, resulting in the convex dynamic optimization problem, for typically utilized quadratic cost functions. Based on this, an interactive multi-layered modeling and control method is introduced. While the approach is fundamentally based on the primal–dual decomposition of the centralized problem, this is formulated for the frst time for the couple real-reactive power problem. It is also is proposed for the frst time to utilize sensitivity functions of distributed agents for solving the primal distributed problem. Iterative communication complexity typically required for convergence of pointwise information exchange is replaced by the embedded distributed optimization by the modules when creating these functions. A theoretical proof of the convergence claim is given. Notably, the inherent multi-temporal complexity is managed by performing model predictive control (MPC)-based decision making when solving distributed primal problems. The formulation enables distributed decision-makers to value uncertainties and related risks according to their preferences. Ultimately, the distributed decision making results in creating a bid function to be used at the coordinating market-clearing level. The optimization approach in this paper provides a theoretical foundation for next-generation Supervisory Control and Data Acquisition (SCADA) in support of a Dynamic Monitoring and Decision Systems (DyMonDS) for a multi-layered interactive market implementation in which the grid users follow their sub-objectives and the higher layers coordinate interconnected sub-systems and the high-level system objectives. This forms a theoretically sound basis for designing IT-enabled protocols for secure operations, planning, and markets.