Calpine completes sale of six power plants to LS Power

Calpine Corp. (NYSE: CPN) said July 3 that it has completed the previously announced sale of six power plants to an affiliate of LS Power for $1.57bn plus adjustments.

The portfolio of divested assets comprises 3,498 MW of combined-cycle generation capacity across five states mostly in the Southeastern U.S., which Calpine is calling a non-core market for the company. As a result of this sale, Calpine said it has further aligned its portfolio with its strategic focus on competitive wholesale power markets.

“The closing of this transaction represents an important milestone in our ongoing efforts to allocate capital effectively,” said Thad Hill, Calpine’s President and Chief Executive Officer. “By divesting these non-core assets, we have captured significant value for our shareholders, freeing capital for redeployment into higher return opportunities.”

Calpine expects to record a net book gain of approximately $750m in the third quarter as a result of the sale. Taxable gains are expected to be almost entirely offset by federal and state net operating losses. As a result, the transaction is expected to result in net cash proceeds of about $1.53bn.

The Federal Energy Regulatory Commission on June 10 approved this deal. Calpine announced April 18 that it is selling this nearly 3,500 MW of generating capacity in its Southeast portfolio.

On April 28, Calpine Oneta Power LLCDecatur Energy Center LLCMobile Energy LLCSanta Rosa Energy Center LLC and Calpine Energy Services LP (these are Calpine companies), and NatGen Southeast Power LLC asked for commission authorization for a deal under which NatGen would directly or indirectly acquire all of the membership interests of Oneta, Decatur, Mobile, Santa Rosa, Carville Energy LLC and Columbia Energy LLC. NatGen is an LS Power affiliate.

Those affected power plant companies are:

  • Oneta, an exempt wholesale generator (EWG) that owns and operates an approximately 1,082-MW facility located in Oklahoma, in the Southwest Power Pool (SPP) market;
  • Decatur, an EWG that owns and operates an approximately 725-MW facility located in Alabama, in the Tennessee Valley Authority (TVA) balancing authority area (BAA);
  • Mobile, an EWG that owns and operates an approximately 230-MW facility (the Hog Bayou Energy Center) located in Alabama, in the Southern Company Services BAA;
  • Santa Rosa, an EWG that owns and operates an approximately 236-MW facility located in Florida, in the Southern Company Services BAA;
  • Carville, a qualifying facility (QF) that owns and operates an approximately 473-MW facility in Louisiana, in the Midcontinent Independent System Operator (MISO) market; and
  • Columbia, a QF that owns and operates an approximately 409-MW facility located in South Carolina, in the South Carolina Electric & Gas (SCEG) BAA.

Calpine is America’s largest generator of electricity from natural gas and geothermal resources. Its fleet of 87 power plants in operation or under construction represents approximately 26,000 MW of capacity.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.