In the process of evaluation and comparison of the proposed alternative power generation sites, the transmission network required to carry power effectively and reliably from the plant to the load centers requires careful consideration. The existing transmission network must be reinforced to accommodate these generation expansion plans and then should further be expanded as the load level increases. Therefore, a need exists for a transmission network expansion algorithm to provide a transmission network expansion plan over several planning periods for a given load and generation profile. The transmission network planning method developed here uses the same logical steps followed in practice by utility planning engineers and uses sensitivity matrices to supplement the experience of the planning engineers. The network is modeled either by a DC power flow model or by a Fast-Decoupled AC power flow model. To every branch a cost factor is associated which reflects capital costs and operational cost of the branch. Also included in the cost factor, is an environmental cost associated with increasing the capacity of the branch. The environmental cost in turn may include such factors as political and geographical constraints. To enable the planner to concentrate on a small area of interest, or to reduce the system size, a classical network reduction algorithm is utilized to model the external system by simple equivalents.