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Higher Prices for Electricity Boost Calpine's Profit, Revenue

April 27, 2001|From Bloomberg News

Calpine Corp., a U.S. electricity generator and power-plant developer, said Thursday first-quarter profit surged more than fivefold because of higher electricity prices in California and revenue from new plants.

Net income rose to $94.8 million, or 30 cents a share, from $18.1 million, or 7 cents, a year earlier, the company said in a statement. Revenue also increased fivefold to $1.2 billion from $235.4 million. Calpine was expected to earn 24 cents, the average estimate of analysts polled by First Call/Thomson Financial.

San Jose-based Calpine benefited as electricity prices surged in California, and new power plants came on line at a time when power demand was strong across the U.S. The company also has insulated itself from rising fuel costs by buying natural-gas fields to supply its plants.

Shares of Calpine, rose $1.39 to $54.99 in trading on the New York Stock Exchange. They have more than doubled in the last year.

Prices at California's border with Oregon, a key delivery point for electricity moving into the state, rose more than ninefold to an average of $288.47 per megawatt hour for the quarter, based on Bloomberg Energy Service figures. A megawatt is enough power to light about 1,000 typical U.S. homes.

As of April 6, Calpine was owed $270 million in cash and held $69 million in notes from Pacific Gas & Electric, which sought bankruptcy protection earlier this month. Calpine said it expects to be paid in full and has not established a reserve to cover potential losses.

Calpine said it's now being paid by the utility for current power deliveries. Payments on the notes aren't due to start until February 2003.

The company has signed two 10-year fixed-price agreements to sell 2,000 megawatts of capacity to the California Department of Water Resources, which is buying power on behalf of Pacific Gas & Electric and Southern California Edison, for $9.8 billion.

Calpine runs, or is building, power plants in 28 states and Canada that provide enough electricity to light 5 million homes. It's begun an expansion aimed at boosting its capacity to 70,000 megawatts, or enough to light 70 million homes, by 2005.

Calpine's earnings probably will continue to rise as energy prices in the U.S. go higher, analysts said.

"There is a tremendous need for power, and Calpine has the largest new plant construction program in the industry," analyst Neil Stein of Credit Suisse First Boston said.

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