A battery pack and method for operating a battery system. The battery pack (10) includes a rechargeable battery having one or more battery cells, and a processor (22) for monitoring the condition and operation of the battery. The processor (22) receives data values representing battery parameters and performs a series of calculations using those data values. The processor (22) has normal, standby and sleep modes. In the normal mode, the processor (22) performs a series of calculations at a first regular cycle, and in the standby mode, the processor (22) performs a series of calculations at a second regular cycle. The processor (22) is provided with procedures to determine when to switch between modes, for learning the number of cells in the battery pack (10) and for adjusting values used in the calculations. Also the processor (22) includes a shelf sleep mode for conserving battery power during initial shipment and storage.