New Jersey-based NRG Energy is taking a very bullish bet on natural gas prices with its recently agreed purchase of power producer Texas Genco, says Hugh Welton, senior director in the global power group at Fitch Ratings. NRG may well benefit substantially from the deal, mainly due to the high profit margins for coal- and nuclear-fired generation at present, but the purchase is certainly not without risk, he says.

While much of Texas Genco's forward generating capacity is hedged,