The processes and variation of parameters inside an equilibrium MHD channel used as a generator or propulsion device are presented and examined. The performance and internal processes can be described by a set of equations comprising a two-level particle model for the seeding substance, coupled with the transport equations for the carrier gas. The one-dimensional model assumes uniform properties over the channel cross-sectional area and allows for variations of velocity, pressure, temperature, density, electric field, current density and electrical conductivity in the direction of the flow. The plasma composition is determined by particle balance equations which include collisional, radiative, diffusion and flow processes. This comprehensive model should aid and result in an accurate description of the processes inside a MHD channel and allow for a better interpretation of experimental results. An example of a linear constant Mach number segmented electrode generator operating in the Faraday mode with a helium, seeded with a few percent caesium, gaseous mixture is presented in this study. The calculations for typical MHD generator values of pressure, temperature, velocity, magnetic field, seed fraction and electrical efficiency show large deviations on predicted performance between the particle balance and Saha-Boltzmann models. The generator performance is also sensitive to the seed radiation and convection processes.