The study elaborates and proposes a comprehensive concept of a model for managing and optimizing the operation of the hydropower system (HES) of the Lika and Gacka river basins. The basic principles of water management, the system for planning the operation of the Lika and Gacka HES, forecasting models, basic principles of water regulation, operational planning and optimization of the basin’s operation, and the concept of an appropriate process database and knowledge base are presented.