Einfach E-Mail-Adresse eintragen und auf "Abschicken" klicken - willkommen!
Calpine: Strong Q2 Results
Die untenstehende Meldung ist eine Original-Meldung des Unternehmens. Sie ist nicht von der ECOreporter.de-Redaktion bearbeitet. Die presserechtliche Verantwortlichkeit liegt bei dem meldenden Unternehmen.
Houston - Calpine Corporation reported second quarter 2014 Adjusted EBITDA of $413 million, compared to $343 million in the prior year period, and Adjusted Free Cash Flow of $99 million, or $0.23 per diluted share, compared to $38 million, or $0.08 per diluted share, in the prior year period. Net Income1 for the second quarter of 2014 was $139 million, or $0.33 per diluted share, compared to a Net Loss1 of $70 million, or $0.16 per diluted share, in the prior year period. Net Loss, As Adjusted2, for the second quarter of 2014 was $3 million compared to $33 million in the prior year period. The improvements in Adjusted EBITDA, Adjusted Free Cash Flow and Net Loss, As Adjusted2, were driven primarily by higher Commodity Margin resulting from portfolio changes, stronger market conditions in the West and Texas, higher contribution from hedges and higher regulatory capacity revenue.
Year-to-date 2014 Adjusted EBITDA was $859 million, compared to $629 million in the prior year period, and Adjusted Free Cash Flow was $229 million, or $0.54 per diluted share, compared to $(5) million, or $(0.01) per diluted share, in the prior year period. Net Income1 for the first half of 2014 was $122 million, or $0.29 per diluted share, compared to a Net Loss1 of $195 million, or $0.43 per diluted share, in the prior year period. Net Income, As Adjusted2, for the first half of 2014 was $53 million compared to a Net Loss, As Adjusted2,of $103 million in the prior year period. The increases in Adjusted EBITDA, Adjusted Free Cash Flow and Net Income, As Adjusted2, compared to the prior year period were primarily due to higher commodity margin resulting from stronger market conditions, including colder than normal weather during the first quarter, our ability to capture the value of our dual-fuel capable plants in the North during extreme commodity pricing conditions, portfolio changes and higher regulatory capacity revenue.
“Our strong second quarter results reflect ongoing portfolio management, effective hedging and operational excellence,” said Thad Hill, Calpine’s President and Chief Executive Officer. “We increased generation volumes, achieved a record-low forced outage factor and maintained our focus on safety, with no lost time incidents reported this year. On the commercial front, since the first quarter, we have entered into four new contracts, most notably a ten-year PPA with Southern California Edison for 225 MW of capacity and renewable energy from our Geysers geothermal fleet beginning in 2017, subject to regulatory approval. In addition, we have advanced our growth pipeline and are today announcing plans for our York 2 Energy Center, a new 760 MW combined-cycle power plant, scheduled to achieve commercial operations in PJM in 2017. York 2 will be co-located with our existing York Energy Center, allowing us to leverage the infrastructure to build at a significant discount with attractive returns. Finally, on July 3, we closed on the previously announced Southeast asset sale, which generated approximately $1.53 billion in net proceeds.
“Looking at the balance of the year, our solid operations and robust hedging program continue to mitigate the effects of an unseasonably mild summer in Texas and the Mid-Atlantic, enabling us to reaffirm our 2014 guidance. Longer-term, Calpine remains well positioned to capture value as the sound fundamentals in each of our core markets reassert themselves,” said Hill.
“Complementing our strong operating and financial performance, we have also made significant progress on capital allocation and balance sheet management,” added Zamir Rauf, Calpine’s Chief Financial Officer. “Over the past several months, we have deployed or committed more than $1 billion of capital to growth projects, share repurchases and refinancings. More specifically, we repurchased $500 million of our stock, including more than $300 million from our largest shareholder pursuant to a repurchase authorization that supplemented our previously announced $1 billion program. In total, since 2011, we have repurchased approximately 19% of outstanding shares, including 5% since the end of the first quarter, and we still have $566 million authorization remaining. Finally, we recently completed a transformational refinancing through an inaugural unsecured debt offering that will improve our financial flexibility, extend our maturities and generate approximately $60 million in annual interest savings. In addition, we materially enhanced our liquidity by increasing our revolver capacity from $1 billion to $1.5 billion. Overall, we continue to execute on our commitment to maintain a balanced approach to capital allocation by investing in accretive growth and returning capital to shareholders, while prudently managing the balance sheet.”
1 Reported as Net Income (Loss) attributable to Calpine on our Consolidated Condensed Statements of Operations.
2 Refer to Table 1 for further detail of Net Income (Loss), As Adjusted.
3 Assuming midpoint of 2014 guidance.
4 Includes generation from power plants owned but not operated by Calpine and our share of generation from unconsolidated power plants.
5 Net of spare parts, certain planned maintenance events and other transaction costs.
SUMMARY OF FINANCIAL PERFORMANCE
Second Quarter Results
Adjusted EBITDA for the second quarter of 2014 was $413 million compared to $343 million in the prior year period. The year-over-year increase in Adjusted EBITDA was primarily related to a $99 million increase in Commodity Margin, which was largely due to:
+ our Russell City and Los Esteros power plants commencing commercial operations during the third quarter of 2013, the acquisition of Guadalupe Energy Center in February 2014 and the completion of the expansions of our Deer Park and Channel Energy Centers in June 2014
+ stronger market conditions resulting in higher market spark spreads in the West and Texas
+ higher contribution from hedges and
+ higher regulatory capacity revenue in the North, partially offset by
–
the expiration of a tolling contract associated with our Delta Energy Center in December 2013.
Net Income1 was $139 million for the second quarter of 2014, compared to a Net Loss1 of $70 million in the prior year period. As detailed in Table 1, Net Loss, As Adjusted2, was $3 million in the second quarter of 2014 compared to $33 million in the prior year period. The year-over-year improvement was driven largely by:
+ higher Commodity Margin, as previously discussed, partially offset by
– higher income tax expense resulting from a decrease in income tax benefit associated with various state and foreign jurisdiction income taxes primarily related to an increase in our pre-tax income.
Adjusted Free Cash Flow was $99 million in the second quarter of 2014 compared to $38 million in the prior year period. Adjusted Free Cash Flow increased during the period primarily due to the increase in Adjusted EBITDA, as previously discussed.
Year-to-Date Results
Adjusted EBITDA for the six months ended June 30, 2014, was $859 million compared to $629 million in the prior year period. The year-over-year increase in Adjusted EBITDA was primarily due to a $283 million increase in Commodity Margin which was primarily due to:
+ stronger market conditions resulting in higher market spark spreads
+ higher contribution from our dual-fueled power plants in the North during the first quarter of 2014 when fuel oil prices were lower than natural gas prices
+ our Russell City and Los Esteros power plants commencing commercial operations during the third quarter of 2013, the acquisition of Guadalupe Energy Center in February 2014 and the completion of the expansions of our Deer Park and Channel Energy Centers in June 2014, and
+ higher regulatory capacity revenue in the North, partially offset by
– lower contribution from hedges and
– the expiration of a tolling contract associated with our Delta Energy Center in December 2013.
Net Income1 was $122 million for the six months ended June 30, 2014, compared to a Net Loss1 of $195 million in the prior year period. As detailed in Table 1, Net Income, As Adjusted2, was $53 million in the six months ended June 30, 2014, compared to a Net Loss, As Adjusted2, of $103 million in the prior year period. The year-over-year improvement was driven largely by:
+ higher Commodity Margin, as previously discussed, partially offset by
– lower income tax benefit driven by an increase in our pre-tax income during the first half of 2014, and
– higher plant operating expense driven primarily by portfolio changes, and to a lesser extent, higher equipment failure expense related to outages and the reversal of previously recognized regulatory fees that benefited the first half of 2013 and did not recur in the first half of 2014.
Adjusted Free Cash Flow was $229 million for the six months ended June 30, 2014, compared to $(5) million in the prior year period. The increase in Adjusted Free Cash Flow during the period was primarily due to the increase in Adjusted EBITDA, as previously discussed.
Cash flows from operating activities in the six months ended June 30, 2014, resulted in net inflows of $349 million compared to net outflows of $175 million in the prior year period. The increase in cash provided by operating activities was primarily due to an increase in income from operations (adjusted for non-cash items). Also contributing to the increase was a decrease in working capital employed, largely due to lower net margin requirements partially offset by an increase in net accounts receivable/payable balances resulting from higher Commodity Margin. Also contributing to the increase, cash paid for interest decreased due to the timing of interest payments, and debt extinguishment payments decreased due to refinancing activity from the first half of 2013 that did not recur in the first half of 2014.
Cash flows used in investing activities during the six months ended June 30, 2014, were $900 million compared to $281 million in the prior year period. The increase in outflows was primarily due to the $656 million purchase of our Guadalupe Energy Center in 2014 with no corresponding acquisition activity in the first quarter of 2013.
Cash flows provided by financing activities were $52 million and were primarily related to the issuance of CCFC Term Loans used to fund a portion of the purchase price of our Guadalupe Energy Center, partially offset by payments associated with execution of our share repurchase program.
CAPITAL ALLOCATION
Sale of Six Southeast Power Plants
On July 3, 2014, we completed the sale of six of our power plants in the Southeast segment for a purchase price of approximately $1.57 billion in cash, subject to working capital and other adjustments. The divestiture of these power plants has better aligned our asset base with our strategic focus on competitive wholesale markets.
Share Repurchase Program
In November 2013, our Board of Directors authorized a new $1.0 billion multi-year share repurchase program, under which we have repurchased a total of 21,063,743 shares of our common stock for approximately $434 million at an average price of $20.60 per share, leaving $566 million of remaining authorization. In addition, our Board of Directors authorized the repurchase of 13,213,372 shares of our common stock from a shareholder for approximately $311 million in a private transaction that was completed in July 2014.
Refinancing of First Lien Notes with Senior Unsecured Notes
On July 22, 2014, we refinanced $2.8 billion of senior secured notes with an equivalent amount of senior unsecured notes. We issued $1.25 billion in aggregate principal amount of 5.375% senior unsecured notes due 2023 and $1.55 billion in aggregate principal amount of 5.75% senior unsecured notes due 2025 in a public offering, representing the inaugural issuance of unsecured debt within our capital structure. We used the net proceeds, together with cash on hand, to repurchase our 2019 First Lien Notes, 2020 First Lien Notes and 2021 First Lien Notes, which carried interest rates of 7.50% - 8.00%. In connection with this refinancing, we incurred approximately $350 million in early retirement premiums and fees, and we expect to achieve annual interest savings of approximately $60 million.
PLANT DEVELOPMENT
Texas:
Channel and Deer Park Expansions: In the second quarter of 2014, we completed the construction to expand the baseload capacity of our Deer Park and Channel Energy Centers by approximately 260 MW6 each. Each power plant featured an oversized steam turbine that, along with existing plant infrastructure, allowed us to add capacity and improve the power plant’s overall efficiency at a meaningful discount to the market cost of building new capacity.
Guadalupe Energy Center: On February 26, 2014, we, through our indirect, wholly owned subsidiary Calpine Guadalupe GP, LLC, completed the purchase of a power plant owned by MinnTex Power Holdings, LLC with a capacity of 1,000 MW, for approximately $625 million, excluding working capital adjustments. We funded the acquisition with $425 million in incremental CCFC Term Loans and cash on hand. The addition of this modern, natural gas-fired, combined-cycle power plant increased capacity in our Texas segment, which is one of our core markets. We also paid $15 million to acquire the rights to an advanced development opportunity for an approximately 400 MW quick-start, natural gas-fired peaker. Development efforts are ongoing and we are continuing to advance entitlements (such as permits, zoning and transmission).
North:
Garrison Energy Center: Garrison Energy Center is a 309 MW combined-cycle project located in Delaware on a site secured by a long-term lease with the City of Dover. Construction commenced in April 2013, and we expect commercial operations to commence during the second quarter of 2015. The project’s capacity has cleared each of PJM’s three most recent base residual auctions. We are in the early stages of development of a second phase (309 MW) of this project. PJM has completed the feasibility and system impact studies for this phase, and the facilities study is currently underway.
York 2 Energy Center: York 2 Energy Center is a nominal 760 MW dual-fueled combined-cycle power plant that will be co-located with our York Energy Center in Peach Bottom Township, Pennsylvania. PJM has completed the project’s feasibility and system impact studies, and the facilities study is underway. The project’s capacity cleared PJM’s 2017/2018 base residual auction, and we expect commercial operations to commence during the second quarter of 2017. The project’s key permits and approvals are being actively pursued, and the air permit has been filed with the Pennsylvania Department of Environmental Protection.
Mankato Power Plant Expansion: We are proposing a 345 MW expansion of the Mankato Power Plant in response to a competitive resource acquisition process established by the Minnesota Public Utilities Commission (“MPUC”) to acquire up to approximately 500 MW of new capacity. The initial stage of the proceeding was managed via a contested case hearing. On March 27, 2014, the MPUC agreed in part and disagreed in part with the recommendation of the Administrative Law Judge and directed Xcel Energy (Northern States Power) to negotiate in parallel PPAs with Calpine and certain other entities, subject to final review and approval by the MPUC. A decision is expected in late 2014 or early 2015.
PJM Development Opportunities: We are currently evaluating opportunities to develop additional projects in the PJM market area that feature cost advantages such as existing infrastructure and favorable transmission queue positions. These projects are continuing to advance entitlements (such as permits, zoning and transmission) for their potential future development.
All Segments:
Turbine Modernization: We continue to move forward with our turbine modernization program. Through June 30, 2014, we have completed the upgrade of thirteen Siemens and eight GE turbines totaling approximately 210 MW and have committed to upgrade approximately three additional turbines. Similarly, we have the opportunity at several of our power plants in Texas to implement further turbine modernizations to add as much as 500 MW of incremental capacity across the region at attractive prices. In addition, we have begun a program to update our dual-fueled turbines at certain of our power plants in our North segment. Our decision to invest in these turbine modernizations depends upon, among other things, further clarity on market design reforms currently being considered.
___________
6 Represents incremental baseload capacity at annual average conditions. Incremental summer peaking capacity is approximately 200 MW per unit, supplemented by incremental efficiencies across the balance of plant.
OPERATIONS UPDATE
Second Quarter 2014 Power Operations Achievements
Safety Performance:
— Maintained top quartile7 safety metrics: 0.83 Total Recordable Incident Rate year-to-date
— No lost-time incidents year-to-date, a record low
Availability Performance:
— Achieved record-low fleetwide forced outage factor: 1.5%
— Delivered record-high fleetwide starting reliability: 99%
Power Generation:
— Provided approximately 1.5 million MWh of renewable baseload generation from our Geysers geothermal plants
— Successfully brought online additional efficient natural gas-fired capacity upon completion of expansions at Deer Park and Channel Energy Centers
— Channel Energy Center: 100% starting reliability and 0% forced outage factor
Second Quarter 2014 Commercial Operations Achievements:
Customer-oriented Growth:
— Entered into a new ten-year PPA, subject to approval by the CPUC, with Southern California Edison to provide 225 MW of capacity and renewable energy from our Geysers assets commencing in June 2017
— Entered into a new five-year PPA with Dairyland Power Cooperative to provide capacity and energy from our RockGen Energy Center commencing in June 2018. The capacity under contract will initially be 135 MW, then will increase to 235 MW for the final four years of the contract
— Entered into a new six-year PPA with the City of San Marcos to provide power from our Texas power plant fleet commencing in July 2015
— Entered into a new two-year PPA with Pedernales Electric Cooperative to provide approximately 70 MW of power from our Texas power plant fleet commencing in August 2016
ABOUT CALPINE
Calpine Corporation is America’s largest generator of electricity from natural gas and geothermal resources. Our fleet of 87 power plants in operation or under construction represents approximately 26,000 megawatts of generation capacity. Serving customers in 17 states and Canada, we specialize in developing, constructing, owning and operating natural gas-fired and renewable geothermal power plants that use advanced technologies to generate power in a low-carbon and environmentally responsible manner. Our clean, efficient, modern and flexible fleet is uniquely positioned to benefit from the secular trends affecting our industry, including the abundant and affordable supply of clean natural gas, stricter environmental regulation, aging power generation infrastructure and the increasing need for dispatchable power plants to successfully integrate intermittent renewables into the grid. We focus on competitive wholesale power markets and advocate for market-driven solutions that result in nondiscriminatory forward price signals for investors. Please visit www.calpine.com to learn more about why Calpine is a generation ahead - today.
Houston - Calpine Corporation reported second quarter 2014 Adjusted EBITDA of $413 million, compared to $343 million in the prior year period, and Adjusted Free Cash Flow of $99 million, or $0.23 per diluted share, compared to $38 million, or $0.08 per diluted share, in the prior year period. Net Income1 for the second quarter of 2014 was $139 million, or $0.33 per diluted share, compared to a Net Loss1 of $70 million, or $0.16 per diluted share, in the prior year period. Net Loss, As Adjusted2, for the second quarter of 2014 was $3 million compared to $33 million in the prior year period. The improvements in Adjusted EBITDA, Adjusted Free Cash Flow and Net Loss, As Adjusted2, were driven primarily by higher Commodity Margin resulting from portfolio changes, stronger market conditions in the West and Texas, higher contribution from hedges and higher regulatory capacity revenue.
Year-to-date 2014 Adjusted EBITDA was $859 million, compared to $629 million in the prior year period, and Adjusted Free Cash Flow was $229 million, or $0.54 per diluted share, compared to $(5) million, or $(0.01) per diluted share, in the prior year period. Net Income1 for the first half of 2014 was $122 million, or $0.29 per diluted share, compared to a Net Loss1 of $195 million, or $0.43 per diluted share, in the prior year period. Net Income, As Adjusted2, for the first half of 2014 was $53 million compared to a Net Loss, As Adjusted2,of $103 million in the prior year period. The increases in Adjusted EBITDA, Adjusted Free Cash Flow and Net Income, As Adjusted2, compared to the prior year period were primarily due to higher commodity margin resulting from stronger market conditions, including colder than normal weather during the first quarter, our ability to capture the value of our dual-fuel capable plants in the North during extreme commodity pricing conditions, portfolio changes and higher regulatory capacity revenue.
“Our strong second quarter results reflect ongoing portfolio management, effective hedging and operational excellence,” said Thad Hill, Calpine’s President and Chief Executive Officer. “We increased generation volumes, achieved a record-low forced outage factor and maintained our focus on safety, with no lost time incidents reported this year. On the commercial front, since the first quarter, we have entered into four new contracts, most notably a ten-year PPA with Southern California Edison for 225 MW of capacity and renewable energy from our Geysers geothermal fleet beginning in 2017, subject to regulatory approval. In addition, we have advanced our growth pipeline and are today announcing plans for our York 2 Energy Center, a new 760 MW combined-cycle power plant, scheduled to achieve commercial operations in PJM in 2017. York 2 will be co-located with our existing York Energy Center, allowing us to leverage the infrastructure to build at a significant discount with attractive returns. Finally, on July 3, we closed on the previously announced Southeast asset sale, which generated approximately $1.53 billion in net proceeds.
“Looking at the balance of the year, our solid operations and robust hedging program continue to mitigate the effects of an unseasonably mild summer in Texas and the Mid-Atlantic, enabling us to reaffirm our 2014 guidance. Longer-term, Calpine remains well positioned to capture value as the sound fundamentals in each of our core markets reassert themselves,” said Hill.
“Complementing our strong operating and financial performance, we have also made significant progress on capital allocation and balance sheet management,” added Zamir Rauf, Calpine’s Chief Financial Officer. “Over the past several months, we have deployed or committed more than $1 billion of capital to growth projects, share repurchases and refinancings. More specifically, we repurchased $500 million of our stock, including more than $300 million from our largest shareholder pursuant to a repurchase authorization that supplemented our previously announced $1 billion program. In total, since 2011, we have repurchased approximately 19% of outstanding shares, including 5% since the end of the first quarter, and we still have $566 million authorization remaining. Finally, we recently completed a transformational refinancing through an inaugural unsecured debt offering that will improve our financial flexibility, extend our maturities and generate approximately $60 million in annual interest savings. In addition, we materially enhanced our liquidity by increasing our revolver capacity from $1 billion to $1.5 billion. Overall, we continue to execute on our commitment to maintain a balanced approach to capital allocation by investing in accretive growth and returning capital to shareholders, while prudently managing the balance sheet.”
1 Reported as Net Income (Loss) attributable to Calpine on our Consolidated Condensed Statements of Operations.
2 Refer to Table 1 for further detail of Net Income (Loss), As Adjusted.
3 Assuming midpoint of 2014 guidance.
4 Includes generation from power plants owned but not operated by Calpine and our share of generation from unconsolidated power plants.
5 Net of spare parts, certain planned maintenance events and other transaction costs.
SUMMARY OF FINANCIAL PERFORMANCE
Second Quarter Results
Adjusted EBITDA for the second quarter of 2014 was $413 million compared to $343 million in the prior year period. The year-over-year increase in Adjusted EBITDA was primarily related to a $99 million increase in Commodity Margin, which was largely due to:
+ our Russell City and Los Esteros power plants commencing commercial operations during the third quarter of 2013, the acquisition of Guadalupe Energy Center in February 2014 and the completion of the expansions of our Deer Park and Channel Energy Centers in June 2014
+ stronger market conditions resulting in higher market spark spreads in the West and Texas
+ higher contribution from hedges and
+ higher regulatory capacity revenue in the North, partially offset by
–
the expiration of a tolling contract associated with our Delta Energy Center in December 2013.
Net Income1 was $139 million for the second quarter of 2014, compared to a Net Loss1 of $70 million in the prior year period. As detailed in Table 1, Net Loss, As Adjusted2, was $3 million in the second quarter of 2014 compared to $33 million in the prior year period. The year-over-year improvement was driven largely by:
+ higher Commodity Margin, as previously discussed, partially offset by
– higher income tax expense resulting from a decrease in income tax benefit associated with various state and foreign jurisdiction income taxes primarily related to an increase in our pre-tax income.
Adjusted Free Cash Flow was $99 million in the second quarter of 2014 compared to $38 million in the prior year period. Adjusted Free Cash Flow increased during the period primarily due to the increase in Adjusted EBITDA, as previously discussed.
Year-to-Date Results
Adjusted EBITDA for the six months ended June 30, 2014, was $859 million compared to $629 million in the prior year period. The year-over-year increase in Adjusted EBITDA was primarily due to a $283 million increase in Commodity Margin which was primarily due to:
+ stronger market conditions resulting in higher market spark spreads
+ higher contribution from our dual-fueled power plants in the North during the first quarter of 2014 when fuel oil prices were lower than natural gas prices
+ our Russell City and Los Esteros power plants commencing commercial operations during the third quarter of 2013, the acquisition of Guadalupe Energy Center in February 2014 and the completion of the expansions of our Deer Park and Channel Energy Centers in June 2014, and
+ higher regulatory capacity revenue in the North, partially offset by
– lower contribution from hedges and
– the expiration of a tolling contract associated with our Delta Energy Center in December 2013.
Net Income1 was $122 million for the six months ended June 30, 2014, compared to a Net Loss1 of $195 million in the prior year period. As detailed in Table 1, Net Income, As Adjusted2, was $53 million in the six months ended June 30, 2014, compared to a Net Loss, As Adjusted2, of $103 million in the prior year period. The year-over-year improvement was driven largely by:
+ higher Commodity Margin, as previously discussed, partially offset by
– lower income tax benefit driven by an increase in our pre-tax income during the first half of 2014, and
– higher plant operating expense driven primarily by portfolio changes, and to a lesser extent, higher equipment failure expense related to outages and the reversal of previously recognized regulatory fees that benefited the first half of 2013 and did not recur in the first half of 2014.
Adjusted Free Cash Flow was $229 million for the six months ended June 30, 2014, compared to $(5) million in the prior year period. The increase in Adjusted Free Cash Flow during the period was primarily due to the increase in Adjusted EBITDA, as previously discussed.
Cash flows from operating activities in the six months ended June 30, 2014, resulted in net inflows of $349 million compared to net outflows of $175 million in the prior year period. The increase in cash provided by operating activities was primarily due to an increase in income from operations (adjusted for non-cash items). Also contributing to the increase was a decrease in working capital employed, largely due to lower net margin requirements partially offset by an increase in net accounts receivable/payable balances resulting from higher Commodity Margin. Also contributing to the increase, cash paid for interest decreased due to the timing of interest payments, and debt extinguishment payments decreased due to refinancing activity from the first half of 2013 that did not recur in the first half of 2014.
Cash flows used in investing activities during the six months ended June 30, 2014, were $900 million compared to $281 million in the prior year period. The increase in outflows was primarily due to the $656 million purchase of our Guadalupe Energy Center in 2014 with no corresponding acquisition activity in the first quarter of 2013.
Cash flows provided by financing activities were $52 million and were primarily related to the issuance of CCFC Term Loans used to fund a portion of the purchase price of our Guadalupe Energy Center, partially offset by payments associated with execution of our share repurchase program.
CAPITAL ALLOCATION
Sale of Six Southeast Power Plants
On July 3, 2014, we completed the sale of six of our power plants in the Southeast segment for a purchase price of approximately $1.57 billion in cash, subject to working capital and other adjustments. The divestiture of these power plants has better aligned our asset base with our strategic focus on competitive wholesale markets.
Share Repurchase Program
In November 2013, our Board of Directors authorized a new $1.0 billion multi-year share repurchase program, under which we have repurchased a total of 21,063,743 shares of our common stock for approximately $434 million at an average price of $20.60 per share, leaving $566 million of remaining authorization. In addition, our Board of Directors authorized the repurchase of 13,213,372 shares of our common stock from a shareholder for approximately $311 million in a private transaction that was completed in July 2014.
Refinancing of First Lien Notes with Senior Unsecured Notes
On July 22, 2014, we refinanced $2.8 billion of senior secured notes with an equivalent amount of senior unsecured notes. We issued $1.25 billion in aggregate principal amount of 5.375% senior unsecured notes due 2023 and $1.55 billion in aggregate principal amount of 5.75% senior unsecured notes due 2025 in a public offering, representing the inaugural issuance of unsecured debt within our capital structure. We used the net proceeds, together with cash on hand, to repurchase our 2019 First Lien Notes, 2020 First Lien Notes and 2021 First Lien Notes, which carried interest rates of 7.50% - 8.00%. In connection with this refinancing, we incurred approximately $350 million in early retirement premiums and fees, and we expect to achieve annual interest savings of approximately $60 million.
PLANT DEVELOPMENT
Texas:
Channel and Deer Park Expansions: In the second quarter of 2014, we completed the construction to expand the baseload capacity of our Deer Park and Channel Energy Centers by approximately 260 MW6 each. Each power plant featured an oversized steam turbine that, along with existing plant infrastructure, allowed us to add capacity and improve the power plant’s overall efficiency at a meaningful discount to the market cost of building new capacity.
Guadalupe Energy Center: On February 26, 2014, we, through our indirect, wholly owned subsidiary Calpine Guadalupe GP, LLC, completed the purchase of a power plant owned by MinnTex Power Holdings, LLC with a capacity of 1,000 MW, for approximately $625 million, excluding working capital adjustments. We funded the acquisition with $425 million in incremental CCFC Term Loans and cash on hand. The addition of this modern, natural gas-fired, combined-cycle power plant increased capacity in our Texas segment, which is one of our core markets. We also paid $15 million to acquire the rights to an advanced development opportunity for an approximately 400 MW quick-start, natural gas-fired peaker. Development efforts are ongoing and we are continuing to advance entitlements (such as permits, zoning and transmission).
North:
Garrison Energy Center: Garrison Energy Center is a 309 MW combined-cycle project located in Delaware on a site secured by a long-term lease with the City of Dover. Construction commenced in April 2013, and we expect commercial operations to commence during the second quarter of 2015. The project’s capacity has cleared each of PJM’s three most recent base residual auctions. We are in the early stages of development of a second phase (309 MW) of this project. PJM has completed the feasibility and system impact studies for this phase, and the facilities study is currently underway.
York 2 Energy Center: York 2 Energy Center is a nominal 760 MW dual-fueled combined-cycle power plant that will be co-located with our York Energy Center in Peach Bottom Township, Pennsylvania. PJM has completed the project’s feasibility and system impact studies, and the facilities study is underway. The project’s capacity cleared PJM’s 2017/2018 base residual auction, and we expect commercial operations to commence during the second quarter of 2017. The project’s key permits and approvals are being actively pursued, and the air permit has been filed with the Pennsylvania Department of Environmental Protection.
Mankato Power Plant Expansion: We are proposing a 345 MW expansion of the Mankato Power Plant in response to a competitive resource acquisition process established by the Minnesota Public Utilities Commission (“MPUC”) to acquire up to approximately 500 MW of new capacity. The initial stage of the proceeding was managed via a contested case hearing. On March 27, 2014, the MPUC agreed in part and disagreed in part with the recommendation of the Administrative Law Judge and directed Xcel Energy (Northern States Power) to negotiate in parallel PPAs with Calpine and certain other entities, subject to final review and approval by the MPUC. A decision is expected in late 2014 or early 2015.
PJM Development Opportunities: We are currently evaluating opportunities to develop additional projects in the PJM market area that feature cost advantages such as existing infrastructure and favorable transmission queue positions. These projects are continuing to advance entitlements (such as permits, zoning and transmission) for their potential future development.
All Segments:
Turbine Modernization: We continue to move forward with our turbine modernization program. Through June 30, 2014, we have completed the upgrade of thirteen Siemens and eight GE turbines totaling approximately 210 MW and have committed to upgrade approximately three additional turbines. Similarly, we have the opportunity at several of our power plants in Texas to implement further turbine modernizations to add as much as 500 MW of incremental capacity across the region at attractive prices. In addition, we have begun a program to update our dual-fueled turbines at certain of our power plants in our North segment. Our decision to invest in these turbine modernizations depends upon, among other things, further clarity on market design reforms currently being considered.
___________
6 Represents incremental baseload capacity at annual average conditions. Incremental summer peaking capacity is approximately 200 MW per unit, supplemented by incremental efficiencies across the balance of plant.
OPERATIONS UPDATE
Second Quarter 2014 Power Operations Achievements
Safety Performance:
— Maintained top quartile7 safety metrics: 0.83 Total Recordable Incident Rate year-to-date
— No lost-time incidents year-to-date, a record low
Availability Performance:
— Achieved record-low fleetwide forced outage factor: 1.5%
— Delivered record-high fleetwide starting reliability: 99%
Power Generation:
— Provided approximately 1.5 million MWh of renewable baseload generation from our Geysers geothermal plants
— Successfully brought online additional efficient natural gas-fired capacity upon completion of expansions at Deer Park and Channel Energy Centers
— Channel Energy Center: 100% starting reliability and 0% forced outage factor
Second Quarter 2014 Commercial Operations Achievements:
Customer-oriented Growth:
— Entered into a new ten-year PPA, subject to approval by the CPUC, with Southern California Edison to provide 225 MW of capacity and renewable energy from our Geysers assets commencing in June 2017
— Entered into a new five-year PPA with Dairyland Power Cooperative to provide capacity and energy from our RockGen Energy Center commencing in June 2018. The capacity under contract will initially be 135 MW, then will increase to 235 MW for the final four years of the contract
— Entered into a new six-year PPA with the City of San Marcos to provide power from our Texas power plant fleet commencing in July 2015
— Entered into a new two-year PPA with Pedernales Electric Cooperative to provide approximately 70 MW of power from our Texas power plant fleet commencing in August 2016
ABOUT CALPINE
Calpine Corporation is America’s largest generator of electricity from natural gas and geothermal resources. Our fleet of 87 power plants in operation or under construction represents approximately 26,000 megawatts of generation capacity. Serving customers in 17 states and Canada, we specialize in developing, constructing, owning and operating natural gas-fired and renewable geothermal power plants that use advanced technologies to generate power in a low-carbon and environmentally responsible manner. Our clean, efficient, modern and flexible fleet is uniquely positioned to benefit from the secular trends affecting our industry, including the abundant and affordable supply of clean natural gas, stricter environmental regulation, aging power generation infrastructure and the increasing need for dispatchable power plants to successfully integrate intermittent renewables into the grid. We focus on competitive wholesale power markets and advocate for market-driven solutions that result in nondiscriminatory forward price signals for investors. Please visit www.calpine.com to learn more about why Calpine is a generation ahead - today.