Calpine enters into agreement to purchase ERCOT power plant

SAN JOSE, Calif., Feb. 18, 2004 — Calpine Corp. entered into an agreement Wednesday with the owners of the Brazos Valley Power Plant to purchase the Fort Bend County, Texas, facility for approximately $175 million in cash.

Calpine expects its wholly owned subsidiary, Calpine Construction Finance Company, L.P. (CCFC I), will acquire the 570-megawatt, natural gas-fired facility using the net proceeds of approximately $150 million from the January sale of its 50-percent interest in the Lost Pines 1 Power Project, plus cash on hand.

The special purpose companies that own Brazos Valley are indirectly owned by the consortium of banks that had provided construction financing for the power plant and had taken possession of the plant from the original developer in 2003. ABN AMRO Bank N.V., which was advised on this deal by Lehman Brothers, acts as the manager of the current plant owners.

The acquisition is subject to obtaining Federal Trade Commission approval and final CCFC I bondholder consent.

Calpine Chief Financial Officer Bob Kelly said, “The purchase of Brazos Valley with proceeds from the sale of our half-interest in Lost Pines 1 provides CCFC I with an outstanding opportunity to defer tax liabilities by conducting a like-kind exchange to reinvest in a strong operating asset at an attractive price. We had two options for reinvesting the net proceeds from the Lost Pines 1 sale: purchase another asset or repurchase CCFC I bonds. With the expected cash flow and earnings from the plant, the asset purchase option clearly represents the best result for Calpine, CCFC I and CCFC I bondholders.”

Calpine is the largest independent power producer in the Electric Reliability Counsel of Texas (ERCOT) and has the cleanest, most fuel-efficient fleet of natural gas-fired facilities.

Following this transaction, Calpine will have 11 power plants generating more than 6,700 megawatts of electricity serving the growing ERCOT market and selling the power under both short- and long-term contracts to wholesale and industrial power customers.

Brazos Valley, a 570-megawatt natural gas-fired, combined-cycle facility, is located about 25 miles southwest of Houston. It entered commercial operations in July 2003 and is powered by two General Electric 7FA turbines.

Upon completion of the transaction, the Brazos Valley Power Plant will become part of the collateral package for CCFC I bondholders. Calpine expects the deal to close in the second quarter upon obtaining the required approvals.

Calpine Corporation, celebrating its 20th year in power in 2004, is a North American power company dedicated to providing electric power to wholesale and industrial customers from clean, efficient, natural gas-fired and geothermal power facilities.

The company generates power at plants it owns or leases in 21 states in the United States, three provinces in Canada and in the United Kingdom. Calpine is also the world’s largest producer of renewable geothermal energy, and owns or controls approximately one trillion cubic feet equivalent of proved natural gas reserves in the United States and Canada.

The company was founded in 1984 and is publicly traded on the New York Stock Exchange under the symbol CPN. For more information about Calpine, visit

Previous articleMaryland consortium leverages electric choice to generate savings opportunity with Strategic Energy
Next articleNYISO Bid-to-Bill controls receive second straight positive audit
The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at

No posts to display