A system and method of generating electrical power wherein a mixture of carbonaceous material and water is heated to initiate and sustain the endothermic reaction of carbon and water thereby providing a gasified stream containing carbon monoxide, hydrogen and nitrogen and waste streams of hydrogen sulfide and ash. The gasified stream and an ionizing seed material and pressurized air from a preheater go to a burner for producing ionized combustion gases having a temperature of about 5000.degree. to about 6000.degree. F. which are accelerated to a velocity of about 1000 meters per second and passed through an MHD generator to generate DC power and thereafter through a diffuser to reduce the velocity. The gases from the diffuser go to an afterburner and from there in heat exchange relationship with the gasifier to provide heat to sustain the endothermic reaction of carbon and water and with the preheater to preheat the air prior to combustion with the gasified stream. Energy from the afterburner can also be used to energize other parts of the system.