ABSTRACT
This chapter focuses on the impact that merchant facilities have on wholesale power markets. For-profit independent power providers are constructing the next generation of power facilities; this is unlike the past when power generation facilities were built almost exclusively by regulated utilities. The legislation is important for two reasons. First, Energy Policy Act of 1992 (EPAct) created a whole new class of power providers called “exempt wholesale generators” that are essentially competitive independent power plants and not subjected to traditional rate- making regulation. Second, the EPAct allowed the Federal Energy Regulatory Commission to require regulated electric utilities to “wheel” power across their regulated power transmission grids. The power generation sector has seen a virtual explosion in announced construction activity. One important factor changing the nature of electric power markets has been the advent of competitive opportunities for new sources of power generation.
