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The paper develops a short-term hydrothermal scheduling algorithm based on the simulated annealing technique. In the algorithm, the power balance constraint, total water discharge constraint, reservoir volume limits and constraints on the operation limits of the hydrothermal generator and the thermal generator are fully accounted for. The relative operation capacities of the hydroplant and the thermal plant are also considered. A relaxation method for checking the limits is proposed and included in the algorithm. The performance of the algorithm is demonstrated through a test example.