The accepted methodology for BPDB's power system planning is to prepare a least-cost system expansion plan. This approach assumes the demand function to be a given, postulates system expansion sequences to meet the demand and then goes on to analyze the alternatives, eventually selecting the sequence that has the lowest economic cost. This basic approach was also followed in the Power System Master Plan (PSMP) .

The Power System Master Plan (PSMP) was updated by BPDB in 2005 with the help of Nexant,USA as consultants under the Technical Assistance from Asian Development Bank (ADB). In the PSMP of 2005 least-cost power system expansion, especially generation and transmission expansion plans were prepared covering a period of 20 years (2005-2025). The addition sequences are being reviewed by BPDB incorporating latest changes in power developments. BPDB has got short-term, mid-term and long-term plan for Power Development. The projects under short-term plan are at various stages of implementation.