THE ENERGY CRUNCH Calpine Profit Triples

Christian Berthelsen, Chronicle Staff Writer

Wednesday, February 7, 2001 ©2001 San Francisco Chronicle

URL:http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/02/07/BU75556.DTL#sections

Capitalizing on skyrocketing wholesale prices in California, Calpine Corp. said yesterday that its earnings more than tripled in the fourth quarter while its revenues quadrupled.

The robust earnings report by the San Jose company, a major player in California's electricity generating industry, comes at a time when runaway energy prices have pushed the state's two main utilities to the brink of bankruptcy.

Calpine said net income was $107.7 million during the quarter ended Dec. 31, a 250 percent increase over the same quarter the year before, when they were $30.8 million. For all of 2000, Calpine said net profit was $324.7 million, a 238 percent increase over the previous year.

Revenue for the year was up 171 percent, to $2.3 billion, from $847.7 million a year ago. Nearly half that amount, $1 billion, came in the fourth quarter alone, an increase of 304 percent over revenue of $247.5 million in the same period of 1999.

Calpine runs 26 gas-fired and geothermal power plants in California that provide more than 1,600 megawatts of power, out of the state's total generating capacity of 45,000 to 47,000 megawatts. Overall, the supplier operates 36 plants nationwide that generate nearly 6,000 megawatts.

In a prepared statement, Calpine Chief Executive Officer and President Peter Cartwright made no mention of the skyrocketing prices generators are charging for electricity in California.

Instead, Cartwright said last year was "another outstanding year for Calpine." "The execution of our successful growth strategy continues to deliver strong earnings growth and generate exceptional shareholder value," he said.

Cartwright also attributed the company's performance to a proven track record and "outstanding plant performance." Generators as a group have blamed their tired, aging plants as the reason supply has been so greatly constricted in California and prices have been driven so high.

Calpine did not break out its performance on a state-by-state basis. Bill Highlander, a spokesman for Calpine, said most of the company's power is not sold on the volatile spot market.

Rather, he said, half of Calpine's power is sold under long-term contract to Pacific Gas and Electric Co., and much of the rest is sold under bilateral contracts to large industrial customers.

"California is very important, but the number of megawatts we have in California is only 25 percent of our operating" capacity, he said.

Still, during a conference call with investors and analysts yesterday, top company officials noted that during the fourth quarter, the price they were able to fetch was higher for power sold in the West than in any other region of the country. They also said the West also sustained the largest increase in megawatt-hour prices.

The company fetched an average of $136 a megawatt in the region in the last quarter, compared with $61 in the same period a year ago. By contrast, prices in the Eastern region hit $105 compared with $68 the year before.

Calpine stock, which was at just $18 a share one year ago, hit $40.16 in trading on the New York Stock Exchange yesterday, down considerably from its 52-week high of $52.96 in the fall.

The stock has split twice in the past year. Recent instability in the California market has been the cause attributed to a recent drop in share prices for many generators.

The company's earnings per share of 34 cents in the past quarter beat Wall Street estimates by 3 cents. Earnings per share a year ago was 13 cents.

"This was even above our recently raised number," said Fred Schultz, an analyst with Raymond James in Houston, which recently raised its earnings-per- share estimate.

E-mail Christian Berthelsen at cberthelsen@sfchronicle.com.

©2001 San Francisco Chronicle Page C1

-- Swissrose (cellier@azstarnet.com), February 07, 2001