This paper proposes an improved merit order (IMO) combined with an augmented Lagrangian Hopfield network (ALHN) for solving short term hydrothermal scheduling (HTS) with pumped-storage hydro plants. The proposed IMO-ALHN consists of a merit order based on the average production cost of generating units enhanced by heuristic search algorithm for finding unit scheduling and a continuous Hopfield neural network with its energy function based on augmented Lagrangian relaxation for solving constrained economic dispatch (CED). The proposed method is applied to solve the HTS problem in five stages including thermal, hydro and pumped-storage unit commitment by IMO and heuristic search, constraint violations repairing by heuristic search and CED by ALHN. The proposed method is tested on the 24-bus IEEE RTS with 32 units including 4 fuel-constrained, 4-hydro, and 2 pumped-storage units scheduled over a 24-h period. Test results indicate that the proposed IMO-ALHN is efficient for hydrothermal systems with various constraints. (C) 2009 Elsevier Ltd. All rights reserved.