Energy supply and use is of fundamental importance to society. Although the interactions between energy and environment were originally local in character, they have now widened to cover regional and global issues, such as acid rain and the greenhouse effect. It is for this reason that there is a need for covering the direct and indirect economic and environmental impacts of energy acquisition, transport, production and use. In this paper, particular attention is directed to ways of resolving conflict between economic and environmental goals by encouraging a power plant to consider co-firing biomass and refuse-derived fuel (RDF) with coal simultaneously. It aims at reducing the emission level of sulfur dioxide (SO(2)) in an uncertain environment, using the power plant in Michigan City, Indiana as an example. To assess the uncertainty by a comparative way both deterministic and grey nonlinear mixed integer programming (MIP) models were developed to minimize the net operating cost with respect to possible fuel combinations. It aims at generating the optimal portfolio of alternative fuels while maintaining the same electricity generation simultaneously. To ease the solution procedure stepwise relaxation algorithm was developed for solving the grey nonlinear MIP model. Breakeven alternative fuel value can be identified in the post-optimization stage for decision-making. Research findings show that the inclusion of RDF does not exhibit comparative advantage in terms of the net cost, albeit relatively lower air pollution impact. Yet it can be sustained by a charge system, subsidy program, or emission credit as the price of coal increases over time.