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Merchant Power: Back to the MPP future
01 January 2000
By James Levine, Jane Stein and Barton Ford of Winthrop Stimson's
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[project finance]
[project finance]
[power projects]
[power projects]
The US power industry continues its transformation from a system of monopoly providers of electricity at regulated rates to a system in which diverse companies compete to provide electric service at competitive rates.
This transformation began 15 years ago when relatively small "Qualifying Facilities" developed by relatively small companies began to replace new construction of large coal and nuclear generating stations by large integrated utilities. Now, it is larger and larger generating companies ("Genco's") developing and buying large numbers of larger plants, who are replacing both the generating capacity of integrated, regulated utilities and are displacing the small single project developers.
The techniques for financing additions to generating capacity have changed with the industry. For more than 60 years, integrated utilities financed the nation's utility systems with fixed rate first mortgage bonds that provided to the lenders a lien on essentially all of the issuer's fixed assets. On...
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