This paper proposes a mixed-integer stochastic programming approach to the solution of generation expansion planning problem. Generation and Transmission line expansion planning including system reliability considerations is considered a challenging problem. The optimal solution is expected to yield a favorable trade off between system reliability and cost. This helps guide the development of additional generation capacity that is optimal with respect to cost and reliability. The problem is

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... hastic due to random uncertainties in area generation, transmission lines, and area loads. The problem is formulated as a two-stage recourse model. Reliability index used in this problem is expected cost of load loss. The objective is to minimize the expansion cost in the first stage and the expected loss of load cost in the second stage. The problem is then solved by L-shaped algorithm. The method is illustrated by application to a threearea power system.