Loss Widens for Power Plant Operator Calpine

Calpine Corp., owner of power plants in 20 states including California, recorded its fifth net loss in seven quarters as profit margins shrank and plants ran less.

The second-quarter loss widened to $28.7 million, or 7 cents a share, from $23.4 million, or 6 cents, a year earlier, San Jose-based Calpine said Thursday. Revenue increased 6.9% to $2.31 billion as the company completed new plants.

Calpine’s profit margins narrowed because of the expiration of contracts signed when wholesale power prices were higher. The company has refinanced debt to stave off repayment while signing lower-priced contracts it says will become profitable as the economy improves, boosting demand.

“They’re layering in current pricing to balance off some contracts signed during the heyday of energy shortages,” said Kathleen Vuchetich, an analyst at W.H. Reaves, an investment management company in Jersey City, N.J., that owns about 3.2 million Calpine shares. “We’re a year or two away from seeing substantially stronger electricity pricing.”

Sluggish power demand in the quarter kept the company’s plants idle more than half the time, Calpine said.

Calpine shares fell 24 cents to $3.48 on the New York Stock Exchange.

Power prices tumbled in 2002 as a power plant building spree by Calpine, Duke Energy Corp. and other generators created a glut of electricity. At the same time, the cost of natural gas used to fuel Calpine’s plants soared, squeezing margins.

The company’s debt ballooned to $18.1 billion at the end of the second quarter from $4.75 billion in 2000. As of June 30, Calpine had $800 million in cash or cash equivalents, down from $1 billion at the end of the first quarter.