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» Calpine Corporation's CEO Discusses Q2 2011 Results - Earnings Call Transcript
Joining me for this morning's call are Jack Fusco, our President and Chief Executive Officer; Thad Hill, our Chief Operating Officer; and Zamir Rauf, our Chief Financial Officer. Thad Miller, our Chief Legal Officer is also with us to address any questions you may have on legal and regulatory issues.Before we begin the presentation, I encourage all listeners to review the Safe Harbor Statement included on Slide 2 of the presentation which explains the risks of forward-looking statements, and the use of non-GAAP financial measures. For additional information, please refer to our most recent SEC filings which are on file with the SEC and on Calpine’s website. Additionally, we would like to advise you that statements made during this call are made as of this date and listeners to any replay should understand that the passage of time by itself will diminish the quality of these statements. After our prepared remarks, we'll open the lines for questions. In the interest of time, each caller will be allowed one question and one follow-up only. I'll now turn the call over to Jack to lead our presentation. Jack A. Fusco Thank you, Bryan, and thank you everyone for your continued interest in Calpine. The combined cycle gas turbine recovery continues to take hold during the second quarter of 2012. According to the Energy Information administration, during April of 2012 natural gas fire power generation virtually equaled coal fire generation in America for the first time ever. As a result of our excellent operations the beneficial market conditions and the flexibility and competitiveness of our fleet, we produced a record 27 million megawatt hours during the quarter bringing our 2012 year-to-date generation to approximately 56 million megawatt hours. A 44% increase compared to the same period last year and a remarkable 60% of the total generation we produced in 2011 before we even get to the summer period, historically our best quarter of the year.
Our increased productivity drove a 30% comparable reduction in our per megawatt hour operating cost for the first half of 2012 as we held the line on non-fuel plant operating expenses despite the significant increase in generation. I’d like to take this opportunity to thank our plant, engineering and maintenance personnel for their vital contribution to our success. Their focus on our operational excellence yielded our best year-to-date forced outage factor and starting reliability on record, while also achieving the best year-to-date safety performance. I am very proud of these dedicated men and women and I appreciate the vital role they play for our company, our customers and our investors. Thad Hill, will cover our operational performance in more detail later.Meanwhile, our commercial, regulatory and legal teams have been hard at work managing the volatility in our commodity markets. Optimizing our asset portfolio and defending the integrity of wholesale competitive power markets. As evidenced by their continued progress in the second quarter. We successfully executed nearly 900 megawatts of new contracts in California and the South East, which will provide reliable capacity in energy for our customers and predictable financial results for our investors. In addition, we were able to achieve a constructive near term resolution for our Sutter Plant in California, while advancing the longer term issue of compensation for flexible capacity procurement in an increasingly intermittent renewable market. In PJM, Calpine cleared just over 4200 megawatts in the 2015, and ’16 capacity auction, at increased prices despite the attempts of two States to subsidize new capacity, exemptions to the minimum offer price rule and questionable demand response initiatives. Efforts are currently underway that should mitigate the impact of those activities in future auctions. Finally, ERCOT began to address its eminent resource adequacy issues by raising the system wide offer cap as of August 1, while also initiating proceedings to evaluate structural market changes. In each case furthering their efforts to address forecast to declining reserve margins.
Lastly, I would be remiss for not thanking the professionals here at our Houston headquarters for their dedication and hard work behind the scenes that has not only resulted in Calpine leading the IPP sector with their timely financial filings, but also developed the processes and tools to forecast our business going forward.Read the rest of this transcript for free on seekingalpha.com