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Calpine Says Profit Will Top Forecasts

March 30, 2001|JAMES F. PELTZ | TIMES STAFF WRITER

Calpine Corp., a fast-growing operator and developer of power plants, said Thursday that its first-quarter profit would well exceed earlier forecasts because of higher electricity prices nationwide and its own expansion.

But it wasn't immediately clear exactly how much of the San Jose-based company's gain stemmed from California's power crisis and its attendant soaring prices, although the company and analysts said it is definitely a contributor.

Investors cheered the revision, sending Calpine's shares up $3.04 to an all-time closing high of $55.92 on the New York Stock Exchange. The stock is among the relative few setting new highs amid a plunging market this year.

Calpine isn't providing specifics until its quarterly results are announced April 26, spokesman Bill Highlander said. But he said "the California market is a very good market for us" and that "we're benefiting from the prices."

About 20% of Calpine's generating capacity is in California, producing enough electricity to power about 1.2 million homes.

Calpine said its first-quarter earnings would be 20 to 25 cents per diluted share, well above the 13-cent consensus of analysts surveyed by First Call/Thomson Financial. The company also raised its profit forecast for all of 2001 to about $1.80 a share, compared with analysts' earlier estimate of $1.52.

The improvement "is a function of a good pricing environment throughout the country," not just in California, said Michael Worms, an analyst with Gerard Klauer Mattison & Co. in New York.

Analysts said another reason Calpine is thriving is that it deftly bought natural gas reserves before prices for the fuel surged in recent months, thus helping to limit the firm's operating costs.

Calpine, founded in 1984, has grown rapidly by developing and acquiring power plants that are mostly fueled by gas and geothermal power. It has 50 plants in operation and plans to open an additional 13 this year in nine states--including two in California and one in Arizona that could sell electricity to California.

Calpine does not sell to Edison International or its Southern California Edison division, but it does have a long-term contract with PG&E Corp., the parent of Pacific Gas & Electric. That contract accounts for about half its California generating capacity, Highlander said.

But because of the financial woes of Edison and PG&E, Calpine currently is not getting paid for power it is delivering to PG&E under that pact.

"We feel confident that we will be paid," and "right now we're negotiating on how this will be resolved," said Katherine Potter, a Calpine spokeswoman.

Federal regulators have alleged that some suppliers of wholesale electricity have overcharged the state to benefit from the spike in power prices, but Calpine has not been identified as one of them.

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High Voltage

Shares of power generator Calpine soared last year, pulled back and then resurged amid rising optimism about its earnings outlook.

Thursday: $55.92, up $3.04

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Monthly closes and latest for Calpine shares (ticker symbol: CPN) on NYSE

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Source: Bloomberg News

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