RT Journal Article SR Electronic T1 Merchant Power Finance JF The Journal of Structured Finance FD Institutional Investor Journals SP 9 OP 18 DO 10.3905/jsf.2002.320268 VO 8 IS 1 A1 James F. Guidera A1 Daniel Gal YR 2002 UL https://pm-research.com/content/8/1/9.abstract AB Because power price fluctuations are so well linked to fuel-price movements most of the time, the spark spread, the margin between power prices and fuel costs measured in dollar volume per kilowatt-year, is a better measure of power markets than power prices. Overbuilding in a given market may lead to declining spark spreads and debt service coverage. Declining heat rates, or increased efficiency, in a market also may be evidence of overbuilding. This article analyzes the risk of overbuilding in three U.S. regions. It also discusses the impact of electricity price volatility and hedging on spark spreads.