Over the years, power and water cogeneration plants have become popular in the gulf region. This is because of the perceived potential for the technology to drastically reduce the unit costs of fresh water and power. While potential benefits of such installations have been realized, additional benefits can be accrued by critically examining the operating performances of installed capacity in power/water cogeneration plants. In this paper, potentials for improving plant operating efficiencies in cogeneration power/water production plants are investigated. Unlike the usual thermodynamics approach, it is shown that by implementing more effective and more efficient methods and techniques in the day-to-day operations of power/water cogeneration plants the potential to reduce the unit costs of water and electricity exist. However, this potential is subject to local and/or regional power and water regulatory market valuations. The approach taken in this paper is to analyze and identify improvements in operating practices that affect; primary fuel utilization, non-fuel variable production costs, and non-fuel operation and maintenance costs. The underlying logic is that by improving plant performances in areas mentioned above, improvements in plant operating efficiencies can be realized. The research unfolds by analyzing plant operating efficiencies for improvement options. Relationships between operational practices, their effects and influences on overall plant operating efficiencies are discussed. Estimates of operating efficiency best practice measures in power/water cogeneration plants are used to assess and evaluate the potential for efficiency improvements in power/water cogeneration plants. The results of case study shows that by improving plant operating efficiencies through more effective and more efficient operational practices, production operations can realize significant savings in fuel utilization, reductions in non-fuel variable production costs and reductions in operation and maintenance costs.