An integrated environmental and operational evaluation model is constructed by data envelopment analysis (DEA) to examine seven thermal power plants operating in Taiwan during 2001–2008. Inputs and desirable outputs along with undesirable outputs, including CO2, SOx, and NOx emissions, were simulated. A slack variable analysis was conducted to identify possible ways to improve the inefficient power plants. In addition, three models were compared to identify the actual magnitude of inefficiency. The results indicate that the integrated efficiency and production scale of some plants were inefficient during 2001–2008. Reductions in fuel consumption and CO2 emissions are identified as the major strategies to improve efficiency. Other options include modifying pre-existing management measures, installing pollution prevention controls and resizing the scale of the power plant. It is anticipated that the findings of this study will help policymakers to achieve better environmental and operational performance with regard to existing thermal power plants.