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In this paper, the modified subgradient algorithm based on feasible values (F-MSG) is applied to a security constrained environmental/economic dispatch problem for a power system area including limited energy supply thermal units. A nonlinear programming model is set up for the problem solution. Power system transmission loss is inserted into this model as equality constraints via load flow equations Unit generation constraints, transmission line capacity constraints, bus voltage magnitude constraints, off-nominal tap ratio constraints are added into the optimization problem as inequality constraints. Limited energy supply thermal units are assumed to be fueled under take-or-pay (T-O-P) agreement. The fuel constraint, which can take place due to T-O-P fuel agreement, is handled by using the effect of the scaling factor on the total fuel consumption by the limited energy supply thermal units. Usage of the scaling factor decreases the number of independent variables that is used in the solution of considered dispatch problem as well. Since all constraints in the nonlinear programming model are functions of complex bus voltages and off-nominal tap ratios (once there are off-nominal tap changing transformers in the power system), they are taken as independent variables. The proposed approach is tested on IEEE 30-bus test system. A portion of the dispatch problem was also solved by another dispatch technique that uses differential evaluation algorithm. Results obtained from both algorithms are also compared.