Calpine Leaves Door Open to Inbound M&A Interest, Deals with Low Prices in ERCOT

Calpine Leaves Door Open to Inbound M&A Interest, Deals with Low Prices in ERCOT

May 2, 2017

by Margarita Fournier; Copyright 2016 by Competitive Assets, LLC.  All rights reserved

On 4/28/17, S&P Global reported that on the earnings call, “Calpine Corp. executives dismissed the prospect of pursuing large-scale acquisitions, but stopped short of dismissing the possibility the generator itself would not entertain inbound strategic interest.” In striving for a turnaround, “Calpine outlined specific asset-level decisions in Texas, including the retirement of the 400-MW Clear Lake gas plant, and the signing of a 10-year power purchase agreement with Guadalupe Valley Electric Cooperative Inc. for 200MW in lieu of developing a 418-MW peaker project in the locality. In Texas, the generator acknowledged its decisions were driven largely as the result of rationalization of its portfolio, avoiding unnecessary capital spend at a time when Electric Reliability Council of Texas energy prices are challenged from excess wind and legacy coal assets. Calpine saw its volume in Texas lower to 9,710GWh relative to 11,476GWh in the first-quarter 2016, emblematic of volume losses in other markets from mild weather and weaker spark spreads.”

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