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Calpine Reports Fourth Quarter And Full Year 2012 Results, Raises Adjusted Free Cash Flow Per Share Guidance And Increases Share Repurchase Authorization By $400 Million

Stocks in this article: CPN

(1) Shown net of tax, assuming a 0% effective tax rate for these items.

(2) In addition to changes in market value on derivatives not designated as hedges, changes in unrealized (gain) loss also includes de-designation of interest rate swap cash flow hedges and related reclassification from AOCI into earnings, hedge ineffectiveness and adjustments to reflect changes in credit default risk exposure.

(3) Other items include realized mark-to-market losses associated with the settlement of non-hedged interest rate swaps totaling nil and $156 million for the three months and year ended December 31, 2012, respectively, and $42 million and $189 million for the three months and year ended December 31, 2011, respectively. Other items for the three months and year ended December 31, 2012, include a $13 million tax refund associated with our 2004 amended federal income tax return. Other items for the year ended December 31, 2011, include a $76 million federal deferred income tax benefit associated with our election to consolidate our CCFC subsidiary for tax reporting purposes.

(4) See “Regulation G Reconciliations” for further discussion of Net Income, As Adjusted.

REGIONAL SEGMENT REVIEW OF RESULTS

Table 2: Commodity Margin by Segment (in millions)

  Three Months Ended December 31,     Year Ended December 31,
2012   2011   Variance 2012   2011   Variance
West $ 246 $ 263 $ (17 ) $ 994 $ 1,061 $ (67 )
Texas 98 112 (14 ) 570 469 101
North 138 126 12 729 704 25
Southeast 33   52   (19 ) 245   240   5  
Total $ 515   $ 553   $ (38 ) $ 2,538   $ 2,474   $ 64  

West Region

Fourth Quarter: Commodity Margin in our West segment decreased by $17 million in the fourth quarter of 2012 compared to the prior year period. Primary drivers were:

              lower contribution from hedges and
lower revenue due to the expiration of contracts, partially offset by
+ an increase in Commodity Margin on our open position driven by higher market spark spreads on higher generation volumes.

Full Year: Commodity Margin in our West segment decreased by $67 million in 2012 compared to 2011. Primary drivers were:

              lower contribution from hedges
lower market power prices associated with our Geysers assets and
lower revenue due to the expiration of contracts, partially offset by
+ an increase in Commodity Margin on our open position driven by higher market spark spreads and
+ increased generation driven primarily by improved market conditions, less hydroelectric generation and a nuclear power outage in California during 2012.

Texas Region

Fourth Quarter: Commodity Margin in our Texas segment decreased by $14 million in the fourth quarter of 2012 compared to the prior year period. Primary drivers were:

              lower contribution from hedges and
weak market pricing conditions due to mild weather.

Full Year: Commodity Margin in our Texas segment increased by $101 million in 2012 compared to 2011. Primary drivers were:

            +   higher contribution from hedging activities that secured favorable pricing despite lower market prices driven by milder weather in the third quarter of 2012 compared to the prior year period
+ higher generation driven by lower natural gas prices in the first half of 2012 and
+ an extreme cold weather event in Texas in February 2011 that negatively impacted our Commodity Margin in the first quarter of the prior year, which did not recur in the current year.

North Region

Fourth Quarter: Commodity Margin in our North segment increased by $12 million in the fourth quarter of 2012 compared to the prior year period. Primary drivers were:

            +   higher regulatory capacity revenues and
+ to a far lesser extent, increased generation.

Full Year: Commodity Margin in our North segment increased by $25 million in 2012 compared to 2011. Primary drivers were:

            +   York Energy Center achieving commercial operation in March 2011
+ higher contribution from hedges and
+ increased generation driven by lower natural gas prices, partially offset by
lower regulatory capacity revenues and
lower nodal pricing in PJM during 2012.

Southeast Region

Fourth Quarter: Commodity Margin in our Southeast segment decreased by $19 million in the fourth quarter of 2012 compared to the prior year period. The primary drivers were:

             

expiration of a PPA during the third quarter of 2012, which has since been recontracted, and

lower contribution from hedges.

Full Year: Commodity Margin in our Southeast segment increased by $5 million in 2012 compared to 2011. Primary drivers were:

            +   higher contribution from hedges and
+ higher generation resulting from lower natural gas prices, largely offset by
the negative impact from the expiration of a PPA during the third quarter of 2012, which has since been recontracted.
 

LIQUIDITY AND CAPITAL RESOURCES

Table 3: Liquidity

 
December 31,   December 31,
2012 2011
(in millions)
Cash and cash equivalents, corporate (1) $ 1,153 $ 946
Cash and cash equivalents, non-corporate 131   306
Total cash and cash equivalents 1,284 1,252
Restricted cash 253 194
Corporate Revolving Facility availability 757 560
Letter of credit availability (2)   7
Total current liquidity availability $ 2,294   $ 2,013

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