Increased competition brought about by market forces and new legislation is prompting electric utilities to rethink traditional business practices. Several issues will have a significant effect on the industry's ability to operate more efficiently, including proposed changes in federal regulation, a shift to more open transmission access, and state regulators' emphasis on cost reductions.
As competitive barriers fall, one area poised for continued growth is non-utility generators, more commonly known as independent power producers (IPPs). Accounting for approximately 5.0% of the nation's generating capacity, this figure should more than double by the year 2000, with annual funding requirements exceeding $5 billion. IPPs are expected to contribute an even higher percentage of installed electric generation in the mid-Atlantic states, upper Midwest, and West Coast.