Re-powering and site recycling in a competitive environment

Re-powering and site recycling are strategies designed to expand electric generating capacity by using depreciated assets. The resource base for the these strategies is large. By 1995, over 170,000 MW of fossil-fired capacity will be in excess of thirty years old, and approaching the end of its conventional economic lifetime. This paper explores how these assets might be developed using competitive market forces. While some re-powering is being pursued under traditional ratebase regulation, there are four other generic alternatives. These are: (1) utility investment at fixed prices with regulatory pre-approval, (2) utility investment under competitive bidding, (3) utility leasing for private producer development, and (4) utility sale of sites for private producer development. Issues associated with each alternative are explored and illustrated with examples. State regulatory policy will be the critical determinant of whether a market develops for depreciated power plants. Financial incentives will stimulate utilities to re-deploy depreciated assets. This means some form of profit-sharing between customers and shareholders of the grains from asset sales. Different approaches to profit sharing are reviewed. These developments are still in an experimental state, however, and no single approach appears to have emerged as a dominant trend. 36 refs., 1 tab