An electric power system and a management method thereof. The electric power system includes a plurality of battery packs and a battery management apparatus. Each of the battery packs includes a casing, a battery cell assembly disposed in the casing, an encoder, and a monitoring unit, wherein the encoder could generate one of a plurality of encoding configurations and has an operating section which is adapted to be manually set the encoding configuration by a user; the monitoring unit senses a state of the battery cell assembly and generates an identification code according to the encoding configuration of the encoder, and outputs a state signal including the identification code. The battery management apparatus receives the state signal of each of the monitoring unit and obtain the state of the corresponding battery cell assembly according to the identification code of the received state signal.