Calpine may get hot, but it also knows how to blow off some steam. In 2012 the independent power producer and marketer controlled more than 27,000 MW of generating capacity through interests in more than 90 primarily natural gas-fired power plants in 20 US states and Canada. This fleet also includes 15 geothermal power plants in California. Calpine, the leading geothermal power producer in North America, owns 725 MW of capacity at the largest geothermal facility in the US (the Geysers in northern California), and which accounts for 40% of the country's geothermal energy. The company has major presence in the wholesale power markets in California, the Mid-Atlantic, and Texas.
Serving customers in 20 US states and Canada, the company's reportable segments are West (including geothermal), Texas, North (including Canada), and Southeast.
Other Calpine operations include construction, consulting, and management services; turbine component manufacturing; and critical power provision for high-tech companies.
Its indirect subsidiaries include Calpine Construction Finance Company L.P., (and its units Hermiston Power LLC and Brazos Valley Energy LLC) and Calpine Development Holdings, Inc.
Sales and Marketing
Calpine sells electricity to utilities, wholesalers, and end-users, primarily through long-term contracts; the firm also trades power on the wholesale market. In 2012 grid operator PJM accounted for more than 10% of Calpine's total revenues.
Calpine's revenues slumped by 19% in 2012 due to a 20% drop in commodity sales as the result of a higher contribution from hedges in Texas and lower regulatory capacity revenues as the result of the expiration of contracts. Lower gas prices also took their toll despite increased generation in the Texas and North segments (due to lower natural gas prices) and higher generation in the West segment due to better market conditions.
The company reported $199 million in net income in 2012 (a 205% increase over 2011) due to decreased operating expenses, despite a nuclear power plant outage in California. (An extreme cold weather event in Texas in early 2011, resulted in unplanned outages at some of Calpine's power plants, hurting its net income that year). In 2012 the company also reported a gain on the sale of assets and higher interest income.
The company has disposed of most of its natural gas reserves and gathering and transportation assets in order to focus on power generation. It is seeking to grow organically and through negotiating supply contracts and making selected acquisitions supported by asset sales to ensure financial stability.
To raise cash to pay down debt, in 2014 Calpine announced plans to sell six of its power plants (with 3,500 MW) to privately-held LS Power Equity Advisors for $1.6 billion.
In 2013 Calpine had four power plants under construction.
That year the company agreed to supply electric generation capacity and power to American Electric Power Service Corporation, as agent for Public Service Company of Oklahoma, from Calpine’s Oneta Energy Center (a natural gas fired power plant).
In 2013, to raise cash, Calpine sold its Riverside Energy Center (a 600 MW natural gas plant in Beloit, Wisconsin, to Wisconsin Power and Light for $400 million. In 2012 it sold the Broad River Energy Center to Broad River Power LLC, an affiliate of Energy Capital Partners LLC, for $427 million.
Mergers and Acquisitions
Growing its generating capacity, in 2012 the company acquired an 800-MW natural gas-fired, combined-cycle power plant in Central Texas from Bosque Power Co., for $432 million.
SPO Advisory Corp owns about 13% of Calpine; Luminus Management LLC 12%.
In 2010 the company purchased 4,490 MW of power plants from Pepco Holdings for about $1.7 billion. The acquisition added Conectiv Energy's power plants (18 operating and one under construction) to Calpine's fleet, helping to strengthen its market position in the Eastern US.