Prior to deregulation, costs for building and maintaining generators were charged by utilities at rates regulated by public utility commissions (PUCs). After deregulation (and depending on the region), such costs became part of the wholesale power price charged by generation owners. When that process led to volatility in power pricing (and generators' revenues), ICAP was proposed as a way to limit it while creating an incentive to build new power plants.
Utilizing urea-based (not stored ammonia) selective catalytic reduction (SCR) technology, these systems convert NOx into harmless nitrogen and water. Doing so breathes new life (and value) into existing diesels that could otherwise be used only during rare power outages. Where ICAP charges are high (e.g., over $35/kW/yr), payback periods of only a few years (when installation is included) may be attainable. Federal or state grants covering some of those costs may also become available in 2006 under the Energy Policy Act passed in 2005.