Law & Lawyers

Approximately 65 percent of capacity additions in the last few years have been gas-fired, combined-cycle units. Recent market conditions have been hard on these new resources, which have suffered from significantly low capacity factors. A better metric would measure a unit's ability to capture peak prices while minimizing shoulder period and off-peak losses. Furthermore, it would measure the extent to which a unit dispatches according to favorable market conditions.

A group of executives and analysts tell Fortnightly that the outlook for generation is positive, because it has to be. But making generation work well—affordably, cleanly, and reliably—won’t be easy.

Domestic and international groups have pushed the industry toward mark-to-market accounting, creating significant opportunities for earnings swings and distortions and making good model risk management more essential now than ever before.

Business Versus Financial Risk: Debt is thought to be less risky than equity because debt holders have priority over equity holders as to: (1) distribution of assets in the case of dissolution of the company; and (2) distribution of earnings in the case of everyday operations.