This is the submission made before the Maharashtra Electricity Regulatory Commission (MERC) on the proposed power purchase from bagasse cogeneration projects by MSEB. The submission analyses the reasonable tariff that should be paid to cogeneration power. Based on analysis of representative models of cogeneration (covering different types of cogeneration plants, financial and operating parameters) it is argued that the tariff demanded by project promoters (as per MNES guidelines, Rs. 3.3 / unit in 2002-03 increasing at 5 % p.a.) and that proposed by MSEB (Rs. 3.1 / unit in year 2002-03 with 11 paise per year increase for 10 years, no increase for 3 years after that and again an increase of 11 paise per year for remaining 7 years) is excessive and would lead to unreasonable profits for even inefficient projects. A reasonable tariff of Rs. 2.60 / unit with 10 paise per unit increase is proposed and it is demonstrated that relatively efficient projects would get reasonable returns with this tariff. Such tariff is comparable to the cost of generation from a typical new coal thermal plant.