A power system energy management system with dynamic state estimation (DSE) is disclosed wherein system dynamic states are estimated using SCADA measurements, PMU measurements, signals of controllers, digital recorders, protection devices, and smart electronic devices. The DSE is solved first by Unscented Kalman Filter, and if the Unscented Kalman Filter is failed, weighted lease square is used to solve the DSE. If weighted lease square is failed, integration method is used to calculate the dynamic states. In another aspect, Unscented Kalman Filter, weighted lease square, and integration calculation are applied to solve the DSE by nodal parallel computing for each generation system.