Anatomy of a cogeneration deal : natural gas contracts and regulatory issues

The special features of gas contracts for cogeneration projects were discussed. It was recommended that a gas power purchase contract should be entered early in a project development cycle to justify requests for new pipeline facilities. Issues regarding buyer's commitments, market prices, and volumes were also discussed. In the event of failure to deliver, the contract should include provisions which would make it possible to source gas elsewhere, terminate the contract or seek damages. This paper also discussed various pricing provisions in a gas commodity contract, security of supplies, gas transportation arrangements, regulatory considerations, outstanding issues, and IMO (independent market operator) requirements