In a week that saw it sign a 10-year supply deal with the stateof California, double its gas reserves with a billion-dollarCanadian acquisition and dip into the financial markets for morethan a billion, it seemed only fitting that San Jose, CA-basedCalpine Corp. should announce bullish earning results for 2000.
It attributed all the success to the company’s continuedsuccessful implementation of its aggressive growth strategy,announcing Feb. 6 triple-digit percentage increases in revenues,net income and earnings-per-share. Net income, before anextraordinary charge, were $324.7 million in 2000, compared to$96.2 million in 1999, a 238% increase; revenues were $2.3 billion,compared to $847.7 million in 1999, a 171% increase; andearnings-per-share were $1.11, compared to 43 cents/share in 1999,a 158% increase.
“Today Calpine has the largest construction and developmenteffort ever undertaken in the electricity industry,” said PeterCartwright, Calpine CEO. Last week, the company increased its goalfor the end of 2005 to 70,000 MW total among the power plantportfolio it plans to have in operation. In 2000, the company morethan doubled its assets, growing to $9.7 billion compared to $4billion at the end of 1999.
For the fourth quarter, net income jumped to $107.7 million,compared to $30.7 million for the comparable period in 1999;revenues were $1 billion, compared to $247.4 million in the fourthquarter of 1999; earnings-per-share were 38 cents vs. 13 cents.
Calpine said it expected to sign a 10-year contract with thestate of California Tuesday at attractive rates, and it expects tobe able to get paid by the two near-insolvent Californiainvestor-owned utilities by the early spring this year. Calpine has400 MW of qualifying facility (QF) generation that is at risk untilthe utility financial problems are resolved.
“Market fundamentals continue to be very strong in California,”said Calpine vice president Jim Macias who oversees the firm’soperations in the state. “We’re very confident that we are going toget full payment for all accounts due, which are principally tiedto Pacific Gas and Electric Co.”
Projecting the highest growth rate of any merchant power plantdeveloper in the nation, Calpine in 2000 made acquisitions of someexisting power plants and the power plant developer, SkyGen Energy,but also added to its natural gas portfolio with the purchase ofTriGas Exploration, Calgary, adding 30 MMcf/d of strategic gasreserves.
“We’ve set a target to have equity gas of about 25% of what weconsume,” Cartwright said. “We’re doing this as a means ofincreasing our net income. We have been very successful inproducing gas at substantially below market indexes. We willcontinue to look to expand our ownership in the whole value chainin gas.”
Cartwright said that Calpine now has the “financial resources toacquire larger positions” in natural gas, but he said that thecompany will continue to look for gas properties in which it canreduce the production costs to the advantage of their power plantswith lower-than-market-based energy supplies.
Calpine’s has 24 plants now under construction totaling 13,400MW, and another 24 plants announced totaling another 14,200 MW in2000. Five plants totaling 1,500 MW started operating in 2000 inNew England, Texas and the Midwest.
Richard Nemec, Los Angeles
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