Calpine Posts Red Ink for Quarter, Predicts ’05 Loss
Calpine Corp., owner of power plants in 21 U.S. states, on Thursday reported a fourth-quarter net loss of $172.8 million as it wrote down the value of natural-gas reserves. The company also forecast a loss this year amid high fuel costs and slumping electricity prices.
The per-share net loss in the fourth quarter was 39 cents, which compared with net income of $119.6 million, or 29 cents, a year earlier, San Jose-based Calpine said. It was the company’s sixth loss in the last nine quarters. Sales rose 22% to $2.34 billion.
Calpine forecast a loss of 80 to 90 cents a share for 2005, compared with a loss of 51 cents last year.
Soaring natural-gas prices have boosted fuel costs at Calpine’s power plants as a glut of U.S. generating capacity weighs on wholesale electricity prices.
Investors are disappointed “that they’re not seeing the earnings turnaround that they’d like to see,” said Gary Hindes, manager of the Deltec Recovery Fund, which owns an undisclosed number of Calpine bonds.
Shares of Calpine fell 17 cents, or 5%, to $3.26 on the New York Stock Exchange.
Calpine, which also produces natural gas, had said on Jan. 20 that it would report a fourth-quarter loss of 48 cents to 56 cents a share as it cut its estimated reserves of the fuel by 6% after a review by an outside engineering firm. The cost of the write-down, which related to deposits in South Texas, was about $201.5 million, the company said Thursday.
Calpine’s debt has swelled eightfold in the last five years, to $18 billion on Dec. 31, as the company expanded its generating fleet, adding plants in Colorado, South Carolina and Washington last year.
“The margins for our product remained low in certain markets,” Chief Executive Peter Cartwright said. The higher sales were “offset by increased operating costs, depreciation and interest associated with additional capacity coming into service.”
Calpine has about 15% of its generating capacity in California, with two more plants set to start up before summer, he said.
