Calpine Still Expects to Be Paid

Calpine Corp., which did not set aside reserves for debts owed by Pacific Gas & Electric Co., said Monday that it expects to be paid $267 million for power it sold to the state’s largest utility, which filed for bankruptcy protection Friday.

Calpine said it is confident the utility owned by PG&E; Corp. will pay for power sold through March 31 and for new purchases. The utility owes Calpine an additional $68 million, but that payment isn’t due until next year, spokesman Bill Highlander said.

Shares of San Jose-based Calpine, which sells enough power in California to light about 1.3 million homes, fell 7.2% on Friday on concerns it won’t be paid in full for power sold to Pacific Gas & Electric. The company may have to take charges against earnings to cover bad debt from the California utility, analysts said.

“Most of the energy suppliers took reserves in the fourth quarter, and I would not be surprised if Calpine did” in the first quarter, said analyst Andre Meade of Commerzbank Capital Markets Co.

Other large sellers to California’s utilities, including Reliant Energy Inc., Mirant Corp. and Duke Energy Corp., took charges or set aside reserves in the fourth quarter to cover utility-payment defaults.

In New York Stock Exchange trading Monday, shares of Calpine rose $1.20 to close at $48.20. They’ve more than doubled in the last year. Shares of San Francisco-based PG&E; fell 30 cents to close at $6.60 after touching $6.50. They had fallen 37% on Friday.

Pacific Gas & Electric owes money for power from Calpine’s “qualifying facilities,” which produce 600 megawatts of electricity for the utility’s Northern California customers under long-term contracts, Calpine said. The company plans to sell power on the open market if the utility can’t pay while in bankruptcy. A megawatt is enough power to light 1,000 U.S. homes.

Calpine also can “seek damages from PG&E; for breach of contract,” its statement said.

“There will be no negative impact on Calpine as a result of [the utility] filing for bankruptcy,” Chief Executive Peter Cartwright said during a conference call with investors and analysts.

Under bankruptcy proceedings, the utility is required to pay Calpine in full for long-term purchases, Calpine Executive Director James Macias said. Calpine will ask the bankruptcy judge this week to order the utility to decide whether it will continue payments, Macias said.

Calpine might earn an extra $380 million this year by selling power on the open market, instead of the price guaranteed to the utility under term contracts signed before California’s power crisis began, Macias said. PG&E; pays Calpine about $93.77 a megawatt-hour under the term contracts, Macias said.