Of the 36,600 MW of new electric generating capacity underconstruction or planned in the U.S., more than 93% will be fueledby natural gas, according to a new analysis by Boulder, CO-basedResource Data International (RDI). And of the projects identified,about 90% do not yet have gas supply contracts.

“Ten merchant plants representing some 1,500 MW of capacity[are] up and running across the U.S., another six plants with 1,900MW of capacity [are] under construction. And 78 plants with acombined capacity of 33,200 MW [are] proposed,” RDI noted. The nextthree years likely will be peak construction years for merchantplants. By year-end, as many as eight plants with a combinedgenerating capacity of 1,033 MW may be built, RDI said. “Thatnumber doubles to 17 plants with 4,026 MW of capacity in 1999, 17plants with 9,600 MW of capacity in 2000 and 15 plants with 8,200MW of capacity in 2001,” RDI added.

The likelihood, however, is that not all of the proposedmerchant generating plants will be built. Because merchant plantdevelopment is “driven almost entirely by market economics, evensubtle regional price changes may be enough to prevent some plantsfrom going forward. In this sense, merchant plant developers arenot unlike commercial real estate developers who announce a newbuilding, look for tenants to lease space, and take a handful ofsigned leases (capacity commitments) to a lender for constructionfinancing. If for some reason the pool of available tenantsdwindles or if market economics turn south, the project stops untilconditions improve,” RDI noted.

Over half of the planned capacity is targeted for northeasternstates, represented by the Northeast Power Coordinating Council(NPCC), a power pool. Of the 97 merchant power plants underdevelopment or construction, the NPCC is home to about 38 of theunits. Total current and proposed merchant capacity the NPCC is18,750 MW, with Massachusetts the most active state with 11projects representing 6,800 MW of capacity. Maine follows with 11projects representing 3,700 MW; Connecticut has six of theprojects, representing 3,500 MW; and New Hampshire has four,totaling 1,950 MW.

RDI attributed the attractiveness of the Northeast to threefactors: “First, the region’s generating capacity is largelyoil-fired and aging. Second, the region is opening to competitionmore rapidly than any other part of the country outside ofCalifornia. And third, the region has severe transmissionconstraints which have led to relatively high electricity prices.”

The NPCC is followed by Western States Coordinating Council(WSCC), where 23 announced projects totaling 7,600 MW are underway.Within the WSCC, California is the most active with nine projectsrepresenting 3,950 MW. The next most active region is the ElectricReliability Council of Texas (ERCOT) with 12 announced merchantplants and almost 5,700 MW.

The remaining proposed capacity is scattered outside NPCC, WSCCand ERCOT: the Southeastern Electric Reliability Council has some1,240 MW of planned merchant capacity; East Central AreaReliability Coordinating Agreement 616 MW; Mid-Atlantic AreaCouncil 518 MW; Florida Electric Power Coordinating Group 500 MW;Mid-Continent Area Power Pool 363 MW; and Mid-AmericaInterconnected Network 200 MW. Only the Southwest Power Pool has nomerchant plant capacity planned between now and the end of 2001,RDI noted.

Theo Mullen

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