The application of computer optimization techniques in power systems is reaching new dimensions with improvements in algorithm reliability, speed, and applicability. The problem of optimization is translated into the problem of constructing a reliable mathematical model aimed at maximizing or minimizing a certain function, within the specified constraints. Optimization has been used for the economic operation of fossil-fueled power plants, using an economic dispatch approach. In this approach, inequality constraints on voltages and power flows are ignored and real power limits on generation and line losses are accounted for. The optimization techniques are often applied off-line. For many power system problems, an off-line approach is not desirable, because optimal solution is required for immediate real-time implementation and there is a need for efficient and reliable methods.