This study presents a tie line planning and its effects on the operating cost and environmental issues of power systems via a novel multi-area active-reactive optimal power flow (MA-AROPF) model. In this study, the authors focus on the significant role of tie line planning on power system operation. To select an appropriate tie line, a modified sensitivity index is used, which not only reduces the operating cost and emissions, but also enhances the voltage stability of individual areas and the entire power system. These benefits are obtained by increasing the degree of freedom of the power system through providing uniform economic and emission dispatch. Moreover, in this study, to address the drawbacks of commonly used decomposition methods for solving MA-AROPF, an integrated model is proposed. An AROPF that considers the environmental effects is a highly non-linear problem, and the multi-area consideration of such problems via tie line planning makes it an even more complicated and exceedingly non-linear problem. For didactic purposes and to verify the model, a small two-area system is considered in detail, while to show the effectiveness of the proposed approach, a three-area system consisting of 14-, 30-, and 118-bus IEEE test systems is conducted.