The goal of this work is to develop a conceptual framework and computational tools for the optimization of utility systems in the process industries. The emphasis is devoted to the development of systematic design techniques aimed at identifying modifications to the process and the associated utility-systems to jointly optimize the process and the utility system. The following contributions describe the specific results of this work: • Development of shortcut methods for modeling and optimizing steam systems and basic thermodynamic cycles with the objective of using these methods in the optimization of combined heat and power. To enable efficient mathematical programming formulations, simple yet accurate correlations have been developed for the thermodynamic properties of steam in the utility system. • Optimization of multi-level steam system for combined process requirements and power cogeneration. A general procedure is developed to determine rigorous cogeneration targets and the optimal configuration of the system with the associated design and operating variables. • Graph theory methods are also used to optimize the pipeline layout in the plant for the distributing the utilities. • Finally, because of the nonconvex nature of much of the developed optimization formulations, a global optimization method has also been suggested by using interval analysis and simulated annealing. The techniques proposed in this work are compared to previous works and their applicabilities are presented in case studies. These techniques outperform previously suggested ones in terms of the accuracy, computational efficiency and/or optimality.