Dive Brief:
- Calpine is planning to sell at least some of its ten power plants in the Southeast, which total 5,236 MW, company officials said during an earnings conference call with analysts.
- Calpine, which owns 28,100 MW, is open to buying and selling other power plants. The independent power producer expects to buy a 1,050-MW power plant in Texas this quarter. It is building another 700 MW in Texas and Delaware.
- Calpine believes the power markets in Texas must be changed to support new power plant development. In Texas, there is about 10,000 MW that is more than 30 years old and is used less than 10% of the time, Thad Hill, Calpine president and COO, said.
Dive Insight:
Selling power plants in the Southeast has gone more slowly than expected, but Calpine expects the interest to pick up soon. "We would expect though, as the EPA begins to put out some new tougher rules, that we'll see a whole another pick up in discussions there in the Southeast," Jack Fusco, Calpine CEO, said.
Calpine remains bullish on Texas. “The reports of the death of load growth had been much exaggerated,” Hill said. “Very limited new capacity will be constructed in the current environment of high regulatory uncertainty, and there's reason to believe that without a dramatic change in the gas price or other appropriate market structure change, many older units will be under increased margin pressure and could face more mothballing or even retirements, a point of view that has not been considered at all in the recent dialogue. In other words, the fundamentals continue to be very strong.”
For now, Calpine plans to focus on the PJM market. “I like where they're headed, with transparency and competition in trying to level the playing field there, and I think you should expect that to be a real focus of ours,” Fusco said.
