Calpine Down -3:Without Funding Some See Projects Stalled
25 Feb 15:00
There has been much speculation in the market about why Calpine hasn't closed
on its extension of the corporate revolver, according to Andre Meade, an
analyst at Commerzbank Securities. "I'm not sure what's driving (the delays),"
he said.
Calpine currently has a credit rating that is below investment grade. Like
others in the sector, it has been pinched by lower energy prices, and has
announced plans to lower its cost structure and reduce debt.
If Calpine isn't able to close on the pending $1 billion credit line, the
company will be forced to raise money in other ways, including halting
construction on some plants or asset sales, Meade said.
Calpine already has announced a divestiture plan, but progress will be
difficult because many of its rivals also are in the process of selling assets
as well.
As for the California contracts, most expect the deals to stand despite the
latest efforts by California utility regulators.
State regulators aren't expected to provide any new information suggesting
that power suppliers manipulated energy market prices. Also, the deals were
negotiated over a long-period of time under much public scrutiny.
Still, it is possible that state regulators are using the decision to involve
FERC as a bargaining tactic to force power suppliers to strike new deals.
Calpine, the biggest supplier, and the state have already held talks to
revise the previous deal, but the company has stressed it would try to preserve
the economics of the previous deal.
Other companies involved in the filing with FERC include Mirant Corp. (MIR),
Williams Cos. (WMB) and Dynegy Inc. (DYN) among others.
According to Calpine's Barraza, the contracts cover about 550 megawatts, or
5% of its total electricity output. In subsequent years, the company provides
higher amounts of power, eventually ramping up to 2,000 megawatts over time,
Barraza said.
-ByChristina Cheddar, Dow Jones Newswires; 201-938-5166;
christina.cheddar@dowjones.com
(END) DOW JONES NEWS 02-25-02
03:00 PM |
