Alarmingly low pulp prices in early 2009 left pulp and paper mills across North America desperate for any way to improve thin profit margins. One solution that continues to gain popularity among the industry is improved energy management systems for cogeneration systems, which use steam for two purposes - to provide heat for the pulping process and to generate electricity for sale to regional providers. This paper presents an energy optimization algorithm for use in a pulp and paper mill cogeneration system. The algorithm is applicable to a number of popular mill configurations, power sale contracts, and fuel purchasing scenarios. The method is also extended to address weather-dependent cooling limitations encountered by a mill cogeneration facility, in which case an iterative solution is proposed in order to maintain convexity of the optimization problem. Results are presented in the form of three case studies. (C) 2010 Elsevier Ltd. All rights reserved.