In the nearest years, the consumption and generation of electricity in Latvia will certainly change. Electricity will be increasingly generated from renewable energy sources and the consumers will change their habits. This means that the electric energy system has to be developed, yet which is the most effective way to do this? The author has tried to analyse a number of issues in relation to network development, so as to meet the requirements posed by the new situation in this combined study. Creation of new power networks as well as expansion of existing ones requires considerable material, financial and labour resources. These are required for performing construction, assembly and installation of electrical equipment as well as for other works. For this purpose, technical and economic feasibility calculations have to be conducted, determining the proportions of means to be allotted to the construction of new energy facilities and the reconstruction of the existing ones. Optimal development of networks requires in-depth scientific research by using systems analysis methods and considering the dynamics of change of the equipment characteristics and the increase in the consumers’ loads for the whole power supply system. The complexity of the solution of tasks related to optimal development and rational construction of city networks can be explained by the fact that these tasks are solved at the conditions of incomplete and indeterminate information about the commissioning terms of individual facilities, without plausible data about the loads of the future consumers and without developed detailed building plans in some districts. The goal of the thesis is, by using the possibilities provided by smart grids, to promote economically efficient operation and development of the power system. The study is intended to facilitate the solutions of distribution network designing, construction and operation.