Calpine Corp., which is one of the nation’s largest independent electricity generators, has experienced major impacts on its mostly natural gas-fired generation plant fleet from continuing low gas prices, according to senior executives who reported more red ink during a conference call with financial analysts Friday.
On an adjusted basis for the 4Q2011 and the entire year, Calpine reported losses, compared to profits for the same periods in 2010. Quarterly and full-year losses in 2011 were $43 million and $13 million, respectively, compared with profits of $62 million in 4Q2010 and $87 million for all of that year.
Nevertheless, CEO Jack Fusco and COO Thad Hill said the independent generator was in a good position to thrive in what they think will continue to be a low-gas price market environment. Fusco said the company, which he has led since it emerged from Chapter 11 bankruptcy four years ago. finds itself in “nontraditional times, or uncharted territory.”
Unusually low gas prices are creating high demand for Calpine’s gas-fired power, said Fusco, emphasizing that this is creating opportunities for the company’s “volume growth” in the power sector, which is struggling with ever-narrowing margins.
“I realize that investors are challenged to understand the opportunities that these market forces present to Calpine, especially when the sector overall is struggling,” he said. One of Calpine’s strengths is “its resilience in an extremely low gas price environment,” Fusco said. Despite the red ink, he called Calpine’s 2011 performance “solid.”
Fusco and Hill said Calpine’s efficient, gas-fired plants are going to continue to take off-peak generation load away from its competitors, especially coal-fired competitors. The other growth opportunity is found in replacing aging coal-fired generation plants that are being retired more quickly in the low gas price market.
“Our fleet continues to respond well under the low gas price conditions,” Hill said. “We are far less negatively exposed to low gas prices than any of our peers, and in fact, we can benefit from low prices.”
Â©Copyright 2012Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.
© 2023 Natural Gas Intelligence. All rights reserved.
ISSN © 1532-1231 | ISSN © 2577-9877 |