Trends

Fortnightly Magazine - April 15 1997
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Recharge the Economy with Renewable Energy Tax Credits

According to a new study we have conducted at Resource Data International, the continuing transformation from a regulated industry to a fully competitive industry will create substantial opportunities for new generating companies. With the implementation of the Energy Policy Act of 1992 and the FERC's Orders 888 and 889, competition has been introduced into wholesale power markets. It is limited in scope, however, as utilities are still able to recover their fixed generation costs and embedded cost of capital from their captive retail markets. The guaranteed recovery of fixed costs gives utilities a competitive advantage over new market entrants and creates distorted competition in wholesale power markets. When each generator must recover all of its costs from market-based revenues, new opportunities will be created for merchant power plants.

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