Risk and benefits assessment of long and short term capacity contract strategies

A planning methodology is developed for purchasing firm capacity. The methodology evaluates the risk and benefits associated with long- and short-term capacity contracts. It facilitates the selection of a contract strategy that satisfies the capacity requirements of a utility company within its financial and operating constraints. In simplified form the issue addressed in this study is when a utility company should sign its next capacity contract, for how many megawatts, at what price, and for what duration