Thermal power plants dominate electric power generation in Taiwan, which causes high Green House gases (GHG) emissions. CO2 is the most important greenhouse gas that cause global warming and sea-level to rise. This paper faces the relationship between CO2 limitation and power generation expansion planning (GEP) for the utility. Modify Particle Swarm Optimization (MPSO) is presented to determine the generation expansion planning strategy of the utility with independent power providers (IPPs). The utility has to take both the IPPs¡¦ participation and environmental impact into account when a new generation unit is expanded. This problem also takes into account the CO2 reduction and reliability issues, while satisfying all electrical constraints simultaneously from the supply point of view. MPSO scheme was improved to avoid getting a premature answer. Testing results shows that MPSO can offer an efficient way in determining the generation expansion planning. Generation expansion planning is an important decision-making activity in a competitive market, all utilities including IPPs need to maximize the profit while meeting the load demand with a pre-specified reliability criterion. In order to achieve the objective, utilities will perform the generation expansion planning to determine the minimal-cost capacity power addition. For better economy and efficiency, they will consider options of either constructing new generating units or purchasing electricity from other utilities or IPPs.