This study describes the feasibility of using the penalty-function nonlinear programming neural network method to find the optimal power generating output which minimizes both the costs of generating power and power transmission losses. This method depends on neural network technology in acquiring exterior penalty function. Employing nonlinear function in equality and inequality constraints, the model is established using a neural network and additional objective functions; these additional objective functions expand cost function by using an appropriate penalty function. In this study, a 26-busbar including six generators was used to test the penalty function nonlinear programming neural network method. A comparison with the sequential unconstrained minimization technique (SUMT) demonstrates the reliability and precision of the optimal solution obtained using the new method.