Wholesale utility play,
) closed its Broad River Energy Center divestiture for an amount
of $427 million plus adjustments (roughly $504 per kilowatt) to
Broad River Power LLC, an associate of Energy Capital Partners
LLC. Calpine received the go-ahead for the sale from the Federal
Energy Regulatory Commission ("FERC") on December 18, 2012.
The news of the divestment was earlier divulged during
November 2012 at the time of the company's third quarter earnings
release. The Broad River Energy Center, situated in Gaffney,
South Carolina is an 847 megawatt simple-cycle, natural gas-fired
Calpine has planned to realign its asset portfolio via a
string of non-core asset sales. The Broad River Energy sell off
was made to complement Calpine's $432 million acquisition of
Bosque Power Plant, which happens to be a combined cycle gas
turbine ("CCGT") facility in Central Texas. The CCGT acquisition
will enable Calpine to achieve thermal efficiency of about 60%
compared to a simple cycle plant.
Followed by the Broad Energy sale, Calpine expects to earn
$392 million from the year-end divestment of its Riverside Energy
Center in Wisconsin. The company intends to plough back the
proceeds from these sales for the development of its high-return
Other key initiatives include the company's development of the
proposed 309 megawatt Garrison Energy Center, an energy-efficient
natural gas based facility in Dover, Delaware.
With natural gas becoming a hotshot energy source in the U.S.
utility market, we believe Calpine's purchase of high-quality gas
units will certainly boost the near-term earnings stream and
bring future growth opportunities.
However, weather-induced demand volatilities leading to price
fluctuations and unplanned outages resulting from winter storms
could act as negative catalysts to growth. The Zacks Consensus
Estimates for the fourth quarter and full year 2012 presently
stand at a loss of 4 cents and earnings of 43 cents per share,
Another utility player,
Alliant Energy Corporation
) is also eyeing to enhance its natural gas prospects. The
company recently sought regulatory approval for the planned
building of a 650 megawatt Marshalltown Generating Station
("MGS") with the Iowa Utilities Board.
With a market capitalization of $8.38 billion, Texas-based
Calpine Corp. has 2,101 employees in total. It owns and operates
natural gas-fired and geothermal power plants in North America
and currently retains a short-term Zacks #3 Rank (Hold
CALPINE CORP (CPN): Free Stock Analysis
ALLIANT ENGY CP (LNT): Free Stock Analysis
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