An active optical cable is provided that incorporates a power management solution. The AOC has plugs are configured to mate with respective USB sockets. The AOC is used to interconnect a USB host with a USB device. To the USB host and to the USB device, the AOC appears to be a standard USB electrical cable. Each of the plugs of the AOC has an optical-to-electrical and an electrical-to-optical (OE/EO) conversion module that converts electrical USB signals output from the USB host or USB device into optical signals and converts optical signals carried on the optical fibers of the AOC into electrical USB signals. The plugs include controllers that monitor certain conditions of the AOC and that select the power levels to be used in the plugs based on detected conditions.