Environmental constraints have an impact in the operation of the electric power system and therefore should be taken into consideration while determining the optimum operation and estimating the generation cost. In this paper a new algorithm is proposed, which is based on the concept of shadow prices and the computational aspects to incorporate constraints on CO/sub 2/ emissions into a probabilistic production simulation model, developed at National Technical University of Athens, are discussed. The updated version of the model is applied to the Hellenic electroproduction system.