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Urban district heating and cooling (DHC) systems operate large freezers, heat exchangers, and boilers to stably and economically supply hot and cold water, steam, etc., based on customer demand. We formulate an operation-planning problem as a nonlinear integer programming problem for an actual DHC plant. To reflect actual decision making appropriately, we incorporate contract-violation penalties into the running cost consisting of fuel and arrangements expenses. We, then, solve operation-planning problems with and without penalties, demonstrating the effectiveness of taking penalties into consideration.

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