About Calpine Corporation

Calpine may get hot, but it also knows how to blow off some steam. In 2015 the independent power producer and marketer controlled 27,000 MW of generating capacity (and 760 MW under construction) through interests in 84 primarily natural gas-fired power plants in 19 US states and Canada. This fleet also includes 14 geothermal power plants in California. Calpine, the leading geothermal power producer in North America, owns 760 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.

Geographic Reach

Serving customers in 19 US states and Canada, Calpine's operating segments are West (including geothermal), Texas, and East (including Canada). The company has regional office in Dublin (California), Wilmington (Delaware), Pasadena (Texas), Washington DC, Sacramento, and Austin (Texas).

California, Texas and the Northeast region are the largest wholesale power markets in the US.

Operations

The company's segments are West (including geothermal), Texas and East (including Canada). Texas accounted for 36% of Calpine's revenues in 2015; East, 32%; and West, 32%.

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.

Its subsidiaries include Calpine Newark, LLC; Calpine Northbrook Holdings Corporation; Calpine Northbrook Investors, LLC; Calpine Northbrook Project Holdings, LLC; and Calpine Operating Services Company, Inc.

Sales and Marketing

The company sells wholesale power, steam, capacity, renewable energy credits and ancillary services to their customers, which include utilities, independent electric system operators, industrial and agricultural companies, retail power providers, municipalities, power marketers and others.

Calpine's utility electricity is distributed via its distribution network, underground lines, and transmission system.

Calpine sells electricity to wholesalers, and end-users, primarily through long-term contracts; the firm also trades power on the wholesale market. In 2015 grid operator PJM accounted for more than 10% of Calpine's total revenues.

Financial Performance

In 2015 the company's net revenues decreased by 19% due to significant declines in power and natural gas prices in East segment. In the West, revenues decreased due to lower power prices and on-peak Spark Spreads resulting from lower natural gas prices; a wildfire in northern California which negatively impacted Geysers Assets and the expiration of the operating lease related to the Greenleaf power plants.
 
Commodity margin in the Texas segment declined due to lower contribution from summer hedges partially offset by the positive impact from hedging through aretail subsidiary beginning in the fourth quarter of 2015 and lower on-peak Spark Spreads despite higher market heat rates resulting from lower natural gas prices, partially offset by a 24% increase in generation from power plants resulting from higher off-peak spark spreads and lower natural gas prices that drove lower system-wide coal-fired generation from competitors and a full year of operation of the 1,000 MW Guadalupe Energy Center and Deer Park and Channel Energy Center expansions.
 
Revenues from the East segment dropped due to a significant decrease in power and natural gas prices and lower regulatory capacity revenue in PJM, partially offset by higher regulatory capacity revenues in PJM during the remaining seven months of 2015.
 
Calpine's net income decreased by 75% due to lower revenues.
 
Cash from operating activities increased by 1% due to changes in accounts receivable.

Strategy

The company’s goal is to continue to grow its generation presence in core markets with an emphasis on acquisitions, expansions or modernization of existing power plants. Calpine is also actively seeking divestiture opportunities of non-core assets in order to pay down debt.

In 2016, the company entered into an asset sale agreement for the sale of substantially all of the assets comprising South Point Energy Center to Nevada Power Company. This transaction supports effort to divest non-core assets outside our strategic concentration.
 
Calpine also plans to focus on competitive wholesale power markets and advocate for market-driven solutions that result in nondiscriminatory forward price signals for investors.
 
As part of its expansion strategy, the company originated new contracts with customers in East segment related to Morgan and RockGen Energy Centers and announced an expansion of the service territory for Champion Energy.
 
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 by making selected acquisitions supported by asset sales to ensure financial stability.
 
To raise cash to pay down debt, in 2014 Calpine sold six of its power plants (with 3,500 MW) to privately-held LS Power Equity Advisors for $1.6 billion.
 
In 2014 Calpine had two power plants under construction. In 2015, they began construction of 760 MW York 2 Energy Center and expect commercial operations to commence during the second quarter of 2017.
 
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).

To raise cash to pay down debt, in 2014 Calpine sold six of its power plants (with 3,500 MW) to privately-held LS Power Equity Advisors for $1.6 billion.

In 2014 Calpine had two 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).

Mergers and Acquisitions

In 2016 Calpine acquired the Granite Ridge Energy Center from Granite Ridge Holdings, LLC, a natural gas-fired, combined-cycle power plant located in Londonderry, New Hampshire, the cost of deal was $500 million. The addition of Granite Ridge strategically enhances its footprint in New England.

In 2015 Calpine acquired retail electric provider Champion Energy Marketing for $240 million plus working capital adjustments. Champion’s presence in Texas and the Northeast made it the ideal retail complement to the company's wholesale generation portfolio.

Growing its generating capacity in Texas, in 2014 Calpine bought a power plant owned by MinnTex Power Holdings, LLC with a nameplate capacity of 1,050 MW for $625 million. It also purchased a 1,050 MW, combined-cycle power plant from a unit of Wayzata Investment Partners for $625 million. The natural gas-fired plant is 30 miles northeast of San Antonio.

That year the company also bought a 809 MW combined-cycle power plant from Exelon for $530 million. The natural gas-fired plant in North Weymouth, Massachusetts, expands Calpine’s footprint in the New England competitive wholesale power market.

Company Background

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 the company acquired an 800-MW natural gas-fired, combined-cycle power plant in Central Texas from Bosque Power Co., for $432 million. That year it sold the Broad River Energy Center to Broad River Power LLC, an affiliate of Energy Capital Partners LLC, for $427 million.

In 2010 Calpine 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.

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Calpine Corporation

717 Texas St Ste 1000
Houston, TX 77002-2743
Phone: 1 (713) 830-2000
Fax: 1 (713) 830-2001

Stats

  • Employer Type: Public
  • Stock Symbol: CPN
  • Stock Exchange: NYSE
  • President and CEO: John B. Hill
  • EVP, Power Operations: Charlie Gates
  • President and CEO: John B. Hill

Major Office Locations

  • Houston, TX

Other Locations

  • Decatur, AL
  • Mohave Valley, AZ
  • Cloverdale, CA
  • Dublin, CA
  • Fairfield, CA
  • Middletown, CA
  • Sacramento, CA
  • Washington, DC
  • Wilmington, DE
  • Zion, IL
  • North Weymouth, MA
  • Westbrook, ME
  • Carneys Point, NJ
  • Hermiston, OR
  • Delta, PA
  • Baytown, TX
  • Corpus Christi, TX
  • Deer Park, TX
  • Edinburg, TX
  • Fairfield, TX
  • Freeport, TX
  • Marion, TX
  • Pasadena, TX
  • Richmond, TX
  • Beloit, WI
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