In developing a power generation facility, there are numerous tasks Capital Power must complete. These include obtaining government permits and approvals, site agreements, construction contracts, access to power grids, electrical transmission agreements, fuel supply and transportation agreements, equipment, and financing. There can be no assurance that Capital Power will be successful in completing such tasks on a timely basis or at all. The development and future operation of power generation facilities can be adversely affected by changes in government policy and regulation, environmental concerns, stakeholder activism, increases in capital costs, increases in interest rates, competition in the industry, labour availability, labour disputes, increases in material costs and other matters beyond the control of Capital Power. In the event that a project is not completed or does not operate at anticipated performance levels, Capital Power may not be able to recover its investment. Strategies for managing competition, acquisition and development risk Ongoing research and development activities improve upon existing power technologies and reduce the cost of alternative methods of power generation. As identified by ongoing research and development activities, Capital Power’s plants may over time be unable to compete with newer more efficient plants utilizing improvements to existing power technologies and cost-efficient new technologies. Environmental risk is disclosed in several different types of risks discussed in other areas of this Risk and Risk Management section including political, legislative and regulatory risk, technology risk, physical (such as weather) risk, litigation risk and reputation risk. Capital Power requires energy from sources such as coal, natural gas, water, wind, wood waste and tire derived fuel to generate electricity. A disruption in the supply or a significant increase in the price of any fuel supplies required by Capital Power could have a material adverse impact on Capital Power's business, financial condition and results of operation. The price of fuel supplies is dependent upon a number of factors, including: (i) the supply and demand for such fuel supplies, (ii) the quality of the fuel, and (iii) the cost of transporting such fuel supplies to Capital Power’s facilities. Changes in any of these factors could increase Capital Power's cost of generating electricity or decrease Capital Power’s revenues due to production cutbacks. Coal for the Genesee and Keephills 3 plants is supplied under long-term agreements where the price is based on a cost-of-service model with annual updates for inflation, interest rate and capital budget parameters and is therefore not subject to coal market price volatility. A shortage of coal supply resulting from significant disruption of the coal mine equipment and operation could negatively impact generation and revenues from these plants. Most of Capital Power's natural gas-fired plants are operated as merchant facilities and as such are susceptible to the risks associated with the volatility of natural gas prices and the prevailing electricity market prices. Natural gas purchases for these power plants are made under variable price contracts and when facility heat rates $^{(1)}$do not meet expectations, unit profitability is affected. Island Generation operates under a long term PPA with fuel cost flow- through provisions. Capital Power's wind power facilities are dependent on the availability and constancy of sufficient wind resources to meet generation capacity. Decreases in wind speed or duration could have a material negative impact on revenues for these facilities.  Perform detailed project analyses, risk assessments and due diligence prior to and during construction or acquisition.  Perform post-implementation evaluation of all major acquisition and development projects to improve internal capabilities and processes and to leverage lessons learned for future projects. When necessary, corrective actions are taken to increase the likelihood of investment recovery.  Enter into favourable long-term contracts for the projects’ output, whenever possible. Environmental risk External factors risk (1) Heat rate is a measure of the efficiency of the conversion of fuel into electricity. Capital Power Corporation Management’s Discussion and Analysis 2012 51