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A previous paper presented a new smart grid infrastructure for active distribution systems that will allow continuous and accurate monitoring of distribution system operations and customer utilization of electric power. This paper presents the utilization of this system for the purpose of optimizing the operation of the system over a rolling planning horizon. Specifically, we propose the use of a hierarchical optimization method that optimizes the operation of the system by scheduling the operation of various resources with storage capability. The hierarchical method has three levels: (a) distribution feeder optimization, (b) substation level optimization, and (c) system optimization. At the lowest level (feeder optimization) the problem is formulated as a quadratic optimization problem that is solved via barrier methods. At the higher levels the problem is formulated as a stochastic dynamic programming problem. The proposed method captures the uncertainty associated with many resources in the system resulting from the integration of renewables. Finally, a method is proposed for the business case analysis of the benefits of the proposed scheme and results for a hypothetical system are presented.