Aim of this paper is to incorporate energy market principles in large power system modeling process. The paper describes application of zonal (regional) energy price formation algorithms and interaction of power systems on energy import/export issues. The developed methodology is implemented in LDM-TG (Latvian Dynamic Model – Transmission and Generation) information technology, which was created and is being improved by the Institute of Physical Energetics, Latvia. The information technology provides the opportunity to perform dynamic optimization of system development together with operational state calculations. The authors discuss the possibilities to optimize long-term sustainable development of large electric power systems under energy market conditions.