All generation facilities have to report their generator un-availabilities to their respective Independent System Operators (ISOs). The un-availability of a generator is determined in terms of its probability of failure. Generators may serve the role of two kinds, base units which operates all the time and the others are peaking units which operate only for periods of time depending on load requirement. Calculation of probability of failure for peaking units using standard formulas gives pessimistic results owing to its time spent in the reserve shut down state. Therefore the normal two state representation of a generating unit is not adequate. A four state model was proposed by an IEEE committee to calculate the forced outage rate (unavailability) of such units. This thesis examines the representation of peaking units using a four-state model and performs the analytical calculations and Monte Carlo simulations to examine whether such a model does indeed represent the peaking units properly.