Calpine Flexes Major Muscle in the U.S. and U.K. Energy Markets

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Written by William Whitney, Senior Correspondent for Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). Marking their 20-year anniversary, the San Jose, California based, Calpine (NYSE: CPN) has risen from a million dollars in seed money to the threshold of almost 30 thousand megawatts of gas-fired energy production in 22 American states, Canada, and the United Kingdom.

Going public in 1996, the company continued with an aggressive plan in clean merchant energy production. According to Fortune Magazine - which added Calpine to its Most Admired Company list earlier this year saying, "Calpine ranked first in its industry in several key areas, including innovation, employee talent, social responsibility, quality of management, and quality of products and services. Calpine ranked second for its use of corporate assets and long-term investment strategy."

Earlier this month at the Baltimore Electric Power 2004 Conference, Chairman, CEO and President Peter Cartright, co-chaired a widely attended executive roundtable and Calpine Vice Chairman and Executive Vice President, Ann B. Curtis was named one of the 50 Key Women in Global Energy.

Seemingly, in the post energy crisis years, Calpine must be doing something right. With 88 facilities in operation, and ten more under construction, the company owns more than 1.0 trillion cubic feet of natural gas reserves.

And the ledger side is equally impressive with a 74% annual growth in capacity rate since 1997 (the year following their IPO) and a 34% increase on earning per share.

In an exclusive interview with Industrialinfo.com, Calpine Regional Power Vice President, Donald Walters expanded upon the company's stake in the global marketplace and growth plans.

"We see increasing demand for electricity not only in major urban U.S. markets, but in selected European countries as well," says Mr. Walters. "And, as a result of continuing environmental displacement and attrition due to poor efficiency of some existing plants (both coal and oil), we see continued growth," he continues.

According to one industry report, "Calpine's natural gas-fired plants produce 95% less nitrogen oxide, 99% less sulfur dioxide, 64% less carbon dioxide, 98% less mercury, and 83% less particulate matter than the average U.S. fossil-fuel plant.

Additionally, the company is the world's leading producer of geothermal power. While representing only a small portion of Calpine's overall production, the "green" geothermal process has proven cost efficient in both U.S. (mostly western region states) and European markets where the natural resources are readily available.

Addressing the ever volatile regulation vs. deregulation controversy, Mr. Walters is a proponent of a laissez faire' marketplace saying, "We think deregulation is the right model," adding "The customer virtually always wins at every level in a competitive marketplace...at the end of the day its all about the rate payer. We want to provide reliable, economically, socially responsible low cost power."

Equally controversial is the issue of the recent price and well-published increases of natural gas, to which Mr. Walters is quick to point out, "Look at the increases in the cost of coal as well, Appalachian coal prices have risen almost 75% in the past quarter...which you don't hear much about in the newspapers!"

While essentially a natural gas-based electric power producer, the Calpine organization diversifies through some eight related business units addressing exploration, maintenance, and trading.