----- Original Message -----
From: "Ben Paulos" <ben@ef.org>
To: <calrps@yahoogroups.com>; "Don Fields" <FLAK2@aol.com>
Sent: Tuesday, August 28, 2001 4:04 PM
Subject: [calrps] Calpine brags about "very favorable margins" in DWR
contracts


> Calpine Benefiting From California Energy Crisis, Official Says
> By Daniel Taub
>
>
> San Jose, California, Aug. 28 (Bloomberg) -- Calpine Corp., a California
> power producer, has benefited from the state's energy crisis by locking in
> ``very favorable margins'' on long-term electricity sales, Senior Vice
> President James Macias said.
>
> About 90 percent of the electricity Calpine is generating this year is
being
> sold under long-term agreements to the state, Macias said on a conference
> call with analysts. A year ago, about 30 percent of Calpine's power was
> under contract, he said.
>
> Calpine, one of the largest U.S. power-plant builders, has been buying
> natural-gas fields to supply its power plants, spending about $1.9 billion
> from March last year to July to boost gas reserves to 1.5 trillion cubic
> feet. It also has bought gas in futures markets to help fix margins on
> electricity sales, Macias said.
>
> ``The California crisis, while not desired, has been a tremendous
> opportunity,'' Macias said. ``Calpine may be the only player emerging from
> the crisis with no overhang issues. We are emerging stronger than ever.''
>
> The long-term contracts have an average ``spark spread,'' or the
difference
> between revenue and the cost of fuel to generate the electricity, of
$26.50
> a megawatt-hour, Macias said. One megawatt-hour is enough energy to light
> 750 typical California homes for an hour.
>
> California has $43 billion in long-term energy contracts with Calpine and
> other generators. The state's Department of Water Resources began buying
> power on behalf of its three investor-owned utilities in January after the
> two largest, owned by PG&E Corp. and Edison International, became
insolvent
> buying power for more than they were allowed to charge customers.
>
> San Jose, California-based Calpine expects $16 billion in revenue over the
> next 20 years from contracts with the department, PG&E, the city of San
> Francisco, the Sacramento Municipal Utility District and other agencies.
> Most of the contracts are for 10 years or less.
>
> PG&E Payment
>
> Calpine is owed $267 million by PG&E's Pacific Gas & Electric, the state's
> largest utility, which filed for bankruptcy protection in April after
> accruing $9 billion in power-buying losses. Calpine expects to be paid
with
> interest after Pacific Gas submits its reorganization plan later this
year,
> Lisa Bodensteiner, Calpine's general counsel, said on the call.
>
> Calpine isn't owed money by Edison's Southern California Edison, which is
> negotiating a rescue plan with state lawmakers to keep California's No. 2
> utility out of bankruptcy, Macias said.
>
> Shares of Calpine fell 45 cents to $33.25. They have dropped 26 percent
this
> year.
> --
> *-*-*-*-*-*-*-*-*-*-*-*
>
> Bentham Paulos
> Energy Foundation
> ben@ef.org
>
>
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