In the Generation step of the value chain, we address operation of all electric generation equipment feeding into the transmission system, including facilities run by vertically integrated utilities that also participate in marketing, transmission, and distribution activities, as well as “merchant generators,” whose only role in the power markets value chain is to generate electricity and sell into the wholesale market. We generically discuss activities relevant to all facility types, including renewable and fossil fuel generation. All generators partake in the fundamental activity of operating an electric generation resource to earn revenue, and are subject to constraints of regulations and markets, as well as physical constraints of transmission infrastructure. The market structure for generators is quite varied across the U.S., in part due to the fact that some areas have deregulated electricity markets and some do not. Various firms performing generation activities include: vertically integrated utilities, companies that have unregulated arms that operate generators in areas other than their service territories (e.g., Duke, Entergy, etc.), merchant generators, owners of cogeneration or combined heat and power facilities, and federally owned hydroelectric resources.
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