LAST YEAR, RESOURCE DATA INTERNATIONAL PREDICTED THAT merchant plant activity was poised for explosive growth as deregulation created opportunities for a new breed of highly efficient generators. (See "Merchant Plant Activity Set to Explode," April 15, 1997, p. 14.) This prediction has proved true, with nearly 30,000 megawatts of publicly announced merchant plants under development.
More than 50 percent of this development is concentrated in New England, a particularly attractive market for merchant plant development. About 60 percent of existing generation in this region was built more than 25 years ago. These older, inefficient oil- and gas-fired plants cause high market prices. Closure of Maine Yankee and Haddam Neck nuclear plants removed excess capacity from the market; additional closures could create a need for more capacity.
New England is relatively isolated from other power markets due to limited transmission interconnections. Finally, most states in this region are moving rapidly to introduce retail competition, increasing the pool of potential buyers for merchant plant power.