The results of experimental study on excess-air-dependent heat losses and gaseous emissions (NOx, SO2 and CO) for a 310 MW fuel oil-fired boiler operating at full and reduced (75 and 50%) loads, are discussed. For the 100% boiler load, data on NOx emissions indicate the formation of thermal NO along with the fuel and prompt NO. The material balance for SOx points out the minor formation of SO3 in fuel oil combustion. The CO emission from the boiler is detected when firing the fuel at excess air of less than 4%. A cost-based method for excess air optimization is presented. The boiler fuel consumption is incorporated into "internal" (or fuel) costs whereas the experimentally found gaseous emissions are associated with "external" costs (or costs of damage done by the boiler to the environment and humans). The minimum total sum of "internal" and "external" costs for the fully loaded boiler was found to correspond to the (residual) oxygen concentration of 0.73% O2 in flue gas at the economizer outlet. However, the "compromise" value of 1.1% O2 was selected as the recommended O2 set point in boiler operation taking into account the desired diminishing of the total costs as well as the constraints concerning minimized soot formation at extremely low excess air values. Switching the boiler to firing the fuel at the "compromise" excess air ensures a substantial saving of the total costs per unit boiler per year.