The degradation of thermal performance is playing a significant role in the economic viability of the highly competitive merchant power plants. Since most of the gas turbines are used in Combined Cycles applications, the degradation is applicable not only to the traditional performance guaranteed values of power output and heat rate but also to exhaust flow and exhaust temperature. While the performance degradation of turbo machinery has been a widely accepted fact, an accurate quantitative assessment of the phenomenon is extremely difficult and costly. The paper will review the potential causes of degradation, related to variability in the manufacturing of the equipment, site configuration, fuel composition quality, operational requirements and maintenance practices. The article will also address the impact on the performance guarantees, due to qualifications applied to degradation process terms such as “new and clean condition”, “fired and equivalent operating hours”, and “bench mark testing”. In a combined cycle configuration, due to lengthy commissioning activities of various systems, acceptance performance tests are conducted only after a significant number of hours in operation have been accumulated. The article will discuss the viability and merits of conducting comparative testing during this commissioning period, aimed at the actual measurement of short-term deterioration. The potential obstacles and challenges of this testing program, associated with changes in the control system, hardware modifications and measurement uncertainty, will also be analyzed in details. The alternative option to account for the expected degradation is the use of correction curves supplied by the equipment manufacturers. The paper will review the suitability to specific project conditions of generically developed curves. In addition, the document will touch on how degradation evaluation may affect the Long Term Service Agreements (LTSA) between Owners and Equipment Manufacturers. Finally, the article will offer suggestions on how performance and fuel quality continuous monitoring, careful operations and maintenance scheduling could reduce the actual degradation and provide a substantial economic benefit to the Owner.