A security-constrained power dispatch problem with non-convex cost function for a lossy electric power system area including limited energy supply thermal units fueled under a take-or-pay agreement is formulated. Then, an iterative solution method based on a modified subgradient algorithm based on feasible values and common pseudo scaling factor for limited energy supply thermal units is proposed and used to solve the problem. In the iterative proposed solution method, a modified subgradient algorithm based on feasible values is used to solve the dispatch problem in each subinterval, while the common pseudo scaling factor for limited energy supply thermal units is employed to adjust the amount of fuel consumed by the limited energy supply units during the considered operation period. Since all equality and inequality constraints in the non-linear optimization model of a subinterval are functions of bus voltage magnitudes and phase angles (the off-nominal tap settings), they are taken as independent variables except for those belonging to the reference bus. Load flow equations are added to the model as equality constraints. The unit generation constraints, transmission line capacity constraints, bus voltage magnitude constraints, and off-nominal tap setting constraints are added into the optimization problem as inequality constraints. Since the modified subgradient algorithm based on feasible values requires that all inequality constraints should be expressed in equality constraint form, all inequality constraints are converted into equality constraints by the method given in this article before application of the modified subgradient algorithm based on feasible values to the optimization model. The proposed technique is tested on an IEEE 30-bus test system with a non-convex total cost rate curve. A portion of the dispatch problem considered in this article, where only a loading of the system in a subinterval is considered, was also solved by some other recently reported dispatch techniques. First, minimum total fuel cost rates and solution times obtained from the modified subgradient algorithm based on feasible values versus other techniques are compared, and the outperformance of the modified subgradient algorithm based on feasible values in terms of both total cost rate and solution time is demonstrated. After that, the optimal total fuel cost value and solution time of the system for the operation period for the cases where the fuel constraint is ignored and not ignored are presented, and it is shown that adding the fuel constraint into the dispatch problem further decreases the optimal total fuel cost for the considered dispatch problem. Finally, the modified subgradient algorithm based on feasible values was applied to the fuel constrained dispatch problem directly. It is demonstrated that the proposed solution method, where the modified subgradient algorithm based on feasible values is employed to solve an interval's dispatch problem, gives a solution time that is smaller than that obtained from the direct application of the modified subgradient algorithm based on feasible values to the dispatch problem.