Against the backdrop of weak capacity markets throughout the U.S., LAI helps our clients craft economic and engineering solutions to the problem of tenuous generation supply. The convergence between gas and electric markets has induced ISOs to grapple with financial mechanisms designed to revitalize generators' operating revenues.  The dysfunctionality of vertical demand curves characteristic of deregulated markets has heightened pressure on ISOs and FERC to forge acceptable compromises that keep "iron on the ground" while stimulating new investment.  The transition to "sloped" demand curves for capacity pricing has begun to revitalize wholesale power markets. Defining curve parameters requires engineering, economic, financial, and regulatory expertise.  Our consultants have the complement of skills to derive locational energy and capacity forecasts along with fuel arrangements to determine generation viability and long-term system adequacy.

Gas-electric arbitrage during winter cold snaps has created new challenges.  LAI monitors pipeline operational flow orders and maintains contacts with pipelines, marketers, and storage companies to provide tactical advice to our ISO and utility clients.

LAI can help our clients:

	Forecast spark spreads and market-implied heat rates
	Understand ICAP valuation for DSM, wind, and other resources
	Analyze locational gas prices and basis differentials
	Test generation economics under stochastic fuel conditions
	Obtain insight from the futures markets and fundamental supply statistics
	Assess supply constraints to specific power plants or trading hubs
	Evaluate the economics of storage, interruptible / secondary transportation, and peaking services