Calpine (CPNLQ) expects to take more than $7 billion in one-time charges to write down the value of assets on its balance sheet.

The San Jose, Calif., power company, which filed for Chapter 11 bankruptcy protection in December, said Monday it would take $5.5 billion in noncash impairment charges for the year ended Dec. 31, 2005. Calpine also expects to record additional noncash valuation allowances of $1.6 billion against deferred tax assets, which will be reflected in the tax provision for 2005.

"Calpine can no longer conduct business as usual," said CEO Robert May. "We're taking the tough but necessary actions to rebuild our company while focusing on the core power assets and markets where we can best compete. We believe the new Calpine will be leaner and more focused -- and ultimately a more competitive and profitable power company. Near-term, our goal is to achieve positive cash flow in 2007. And we're taking the right steps to get there -- optimizing our power portfolio, reducing operating and interest costs, and streamlining our organization. I am confident that Calpine has the strong operating assets, dedicated workforce and committed leadership to emerge from Chapter 11 a powerful competitor positioned for growth."

The charges will not affect Calpine's liquidity position, the company said, adding that it continues to take action to stabilize and improve its business. In February, Calpine announced that it was taking action to strengthen its operations, reduce operating costs and focus on its core business -- power generation. Earlier this month, Calpine announced additional steps to reduce costs and address assets that are no longer considered part of its core operations.