Calpine to Cut Plants, Workforce
Electricity wholesaler Calpine Corp. said Tuesday that it would jettison about 20 power plants and lay off 775 workers, continuing to retreat from a rapid expansion that buried the company in debt and drove it into bankruptcy proceedings.
The San Jose-based company didn’t identify which of its 92 plants -- scattered across 21 states and Canada -- it hoped to sell before the end of the year. Several plants under construction might be included in the purge. Calpine’s largest clump of power plants is in California and Texas.
The projected job cuts will affect about one-fourth of Calpine’s remaining workforce of 2,900 employees, spokeswoman Katherine Potter said. About 100 employees lost their jobs Tuesday, and the remaining pink slips will be handed out as Calpine’s fleet of power plants shrinks.
Coupled with another mass layoff announced in February, Calpine will have shed more than 1,100 employees since filing for Chapter 11 bankruptcy protection in late December. Calpine doesn’t anticipate more large-scale job cuts, Potter said.
Besides selling power plants, Calpine also is closing three offices in Dublin, Calif., Atlanta and Boston.
Since its bankruptcy filing, Calpine has pruned its annual expenses by about $150 million, including a projected $100 million in savings from the latest cuts.
Shortly after Calpine’s first wave of layoffs this year, Calpine’s directors voted to nearly triple their salaries to $125,000 annually. The company also has guaranteed to pay its recently hired chief executive, Robert May, $3.75 million this year and has pledged to pay him a $12-million bonus if he can lift Calpine out of bankruptcy.
The retrenchment being led by May contrasts sharply with the expansion spree orchestrated by his predecessor, Calpine founder Peter Cartwright.
Emboldened by Calpine’s soaring profit and stock price in early 2001, Cartwright borrowed heavily to double the company’s size and establish it as one of the nation’s largest power wholesalers, with enough capacity to light more than 20 million homes.
But as Calpine grew, electricity prices and demand sagged, making it increasingly difficult for the company to repay liabilities that totaled $18 billion at the time of its bankruptcy. The adverse market conditions have saddled Calpine with losses of $926 million since 2003.
Cartwright, who was fired in November, and several Calpine directors are the targets of a class-action lawsuit alleging the company’s shareholders were misled as the business unraveled. Calpine’s shares, which peaked at nearly $60 in 2001, closed unchanged at 26 cents Tuesday.
