TABLE OF CONTENTS

SECTIONS:
I. OVERVIEW ....................................................................................................................... 4
II. INTRODUCTION .................................................................................................................. 5
III. TERMINOLOGY .................................................................................................................. 6
IV. HEAT RATES AS EQUATIONS ........................................................................................ 12
V. HEAT RATES IN PRODUCTION COST MODELING ................................................... 18
VI. HEAT RATES IN MARKET MODELING ....................................................................... 27

APPENDICES
A. SUMMARY OF BLOCK HEAT RATE DATA
B. DATA FOR HEAT RATE EQUATIONS
C. INCREMENTAL HEAT RATE ERRORS
D. AVERAGE TO INCREMENTAL HEAT RATE RATIOS
E. A SIMPLISTIC MARKET MODEL
F. FR 97 NATURAL GAS PRICE FORECAST

HR-DESC.DOC; 4/17/98; PAGE 2