Calpine Achieves Records in Third Quarter Despite Lower Profit of $136 Million

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Researched by Industrial Info Resources (Sugar Land, Texas)--Power generator Calpine Corporation (NYSE:CPN) (San Jose, California) has posted a third-quarter profit of $136 million, down from $197 million in the second quarter and from $3.8 billion year over year. The 2007 income figure reflected gains from reorganization, as the company worked to emerge from Chapter 11 bankruptcy. This quarter, President and CEO Jack Fusco said the company made several achievements. "Calpine has delivered record financial results for the third quarter despite cooler weather and major hurricanes in our primary markets, as well as a slowdown in the economy," he said. "Importantly, despite considerable turbulence in the financial markets, we have been able to substantially improve liquidity, which will enable us to continue to execute on our business plan."

Even with the effects of Hurricanes Gustav and Ike, the company's commodity margin in Texas increased by $104 million, or 62%, mainly because of higher spark spreads in July and August, compared with the same months last year. Although spark spreads decreased in September year over year because of Hurricane Ike, the company said it bought replacement power at prices below generation costs and also hedged prices during that period. "Our forced-outage factor was under 2%, less than half the factor reported for the prior-year period," Chief Commercial Officer Thad Hill said in regard to Hurricane Ike.

Overall Performance

• Operating revenue: $3.2 billion, up 37%
• Commodity margin: $842 million, up 15%
• Adjusted earnings before interest, taxes, depreciation and amortization: $593 million, up 17%
• Net cash from operating activities: $941 million, up 268%
• Total liquidity: $1.6 billion, up 135% from June 30

As part of our Power Tracker, Industrial Info is monitoring 31 active Calpine projects worth $2.12 billion across the United States. Included in the database is information on the 596-megawatt Otay Mesa Energy Centre, which is currently under construction near San Diego. Fusco said the facility is on track to begin commercial operation in the third quarter of 2009. Calpine has signed a 10-year power-purchase agreement with San Diego Gas & Electric for electricity generated from this site, he said.

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