Calpine counts net loss after mild weather and weak power prices

(AP Photo/Paul Sakuma)
(AP Photo/Paul Sakuma)

Calpine Corp. recorded a $47 million net loss for the fourth quarter on Friday after a period of mild weather, low power prices, and even a spate of California wildfires cut into its profits.

Houston-based Calpine, which is the nation’s largest owner natural gas-fired power plants, saw its net earnings dip from a $210 million profit in the year prior. Calpine’s quarterly revenues shrunk from $1.94 billion down to $1.44 billion for a 26 percent decrease.

Calpine attributed much of its net income loss in the quarter on lowered gains from hedges in the power market. The company also took a $36 million hit in the quarter from having part of its geothermal power complex, The Geysers, offline from the California Valley fire.

Calpine maintained its projections for 2016 operating profitability — called earnings before interest, taxes, depreciation, and amortization — at a range of $1.8 billion to $1.95 billion. The guidance was previously reduced in October from up to $2 billion.

Calpine President and CEO Thad Hill contended the company is still best positioned moving forward with its “modern, flexible and clean fleet” of gas-fired power plants that he said is more sustainable than coal-fired and nuclear plants.

“We are doing very well. There’s an environment out there that’s creating a lot of disruption,” Hill said.

“Power markets are evolving more today than at any point since deregulation, primarily due to sustained low natural gas prices, continued subsidization of renewable generation, a growing focus on resource reliability and the proliferation of environmental regulations,” Hill said in a prepared statement. “This evolution has weighed upon the public equity markets as investors consider its impacts.”

Calpine still counted a quarterly gain when looking at its adjusted operating profitability of $390 million, up from $345 million the year prior. That accounting measure discounts difference from sales and acquisition, taxation abnormalities and more.

Considering the weak overall market for power generation companies, Calpine had a relatively strong year with a good advantage going forward, said the Tudor, Pickering, Holt & Co. investing banking firm in an analyst note.

The quarter saw Calpine purchase Houston-based Champion Energy Services as its new retail electricity subsidiary. Calpine also opened its new Garrison power plant in Delaware prior to the fourth quarter.

On the full year, Calpine’s $235 million in net income came in 75 percent below its $946 million gain in 2014. However, that difference is largely from the sale of six power plants in July 2014 that did not recur in 2015.

Earlier in February, Calpine completed the acquisition of the Granite Ridge power plant in New Hampshire.

Calpine stock traded as high as $24 a share as recently as late 2014, but closed Thursday at $13.21 a share. The stock was down about 7 percent in early trading Friday.

Calpine came out of bankruptcy in 2008 and it’s stock on Friday is at its lowest point since 2010.

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