Crucial Plan (LSE:CPN)
Historical Stock Chart

From Jun 2019 to Jun 2024

Independent power producer Calpine Corp. (CPN) is more focused on building its own power generation business rather than merging with another company, Calpine's top executive said Tuesday.

"I have a history in 'M&A,'" but Calpine's "high-return organic growth prospects" such as its natural gas and geothermal power plants have more value than fleets of other companies, said Calpine President and Chief Executive Jack Fusco, speaking with analysts in Houston.

Calpine is pursuing development of new power plants for which the company is close to signing power purchase agreements, said Thad Hill, executive vice president and chief commercial officer.

Calpine also plans to invest about $100 million over the next three years to upgrade up to 34 power-plant turbines with more powerful turbines made by Siemens AG (SI) that will improve economic returns, Hill said. These investments are expected to yield earnings of about $30 million a year before taxes, Hill said.

The company expects California regulators to approve soon a contract it signed with PG&E Corp. (PCG) unit Pacific Gas & Electric for the output from its 600-megawatt Russell City gas-fired power plant in Hayward, Calif. General Electric Co.'s (GE) GE Financial Services unit is an investor in that plant.

Fusco said there were "several" merger or acquisition opportunities available, but that Calpine was looking at individual assets, such as power plants, for any purchases. He also suggested that tight credit markets have made raising capital difficult and expensive for Calpine.

"The credit markets haven't been kind to the high-yield community in which Calpine participates," he said.

Calpine reiterated its 2009 earnings guidance of $1.6 billion to $1.7 billion before taxes, depreciation and amortization.

-By Cassandra Sweet, Dow Jones Newswires; 415-439-6468; cassandra.sweet@dowjones.com