Hell and high water-financing electric generation in the `90`s

Electric utilities have long been one of this country`s most capital-intensive industries. For years the capital needed to construction generating facilities was obtained primarily through traditional means: investor-owned utilities issued equity securities and first mortgage bonds. However in the past decade changes have altered how capita is formed. In 1970 utilities built and financed virtually all electric generation. By 1990 nonutilities power producers accounted for 6% of all generating capacity, financed primarily by non traditional methods. An understanding of the history and transitions in utility capital formation provides insights for both transaction and regulatory specialists into how regulators may choose to restructure and deregulate the industry. Topics covered include the following: contract-based financing; cogeneration-contract-based financing comes into its own; utility capital formation in the 90`s, strains and gains; implication for regulatory change.