|
[X]
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
|
|
|
OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
For the quarterly period ended September 30, 2018
|
||
|
|
|
|
|
Or
|
|
|
|
[ ]
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
|
|
|
OF THE SECURITIES EXCHANGE ACT OF 1934
|
Large accelerated filer
|
[X]
|
|
Accelerated filer
|
[ ]
|
Non-accelerated filer
|
[ ]
|
|
Smaller reporting company
|
[ ]
|
Emerging growth company
|
[ ]
|
|
|
|
|
|
|
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ABBREVIATION
|
|
DEFINITION
|
2008 Director Plan
|
|
The Amended and Restated Calpine Corporation 2008 Director Incentive Plan
|
|
|
|
2008 Equity Plan
|
|
The Amended and Restated Calpine Corporation 2008 Equity Incentive Plan
|
|
|
|
2017 Form 10-K
|
|
Calpine Corporation’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 16, 2018
|
|
|
|
2017 Director Plan
|
|
The Calpine Corporation 2017 Equity Compensation Plan for Non-Employee Directors
|
|
|
|
2017 Equity Plan
|
|
The Calpine Corporation 2017 Equity Incentive Plan
|
|
|
|
2017 First Lien Term Loan
|
|
The $550 million first lien senior secured term loan, dated December 1, 2016, among Calpine Corporation, as borrower, the lenders party thereto, Morgan Stanley Senior Funding, Inc., as administrative agent and MUFG Union Bank, N.A., as collateral agent, repaid in a series of transactions on March 16, 2017, August 31, 2017, September 29, 2017, October 31, 2017 and November 30, 2017
|
|
|
|
2019 First Lien Term Loan
|
|
The $400 million first lien senior secured term loan, dated February 3, 2017, among Calpine Corporation, as borrower, the lenders party thereto, Morgan Stanley Senior Funding, Inc., as administrative agent and MUFG Union Bank, N.A., as collateral agent
|
|
|
|
2022 First Lien Notes
|
|
The $750 million aggregate principal amount of 6.0% senior secured notes due 2022, issued October 31, 2013
|
|
|
|
2023 First Lien Notes
|
|
The $1.2 billion aggregate principal amount of 7.875% senior secured notes due 2023, issued January 14, 2011, repaid in a series of transactions on November 7, 2012, December 2, 2013, December 4, 2014, February 3, 2015, December 7, 2015, December 19, 2016 and March 6, 2017
|
|
|
|
2023 First Lien Term Loans
|
|
The $550 million first lien senior secured term loan, dated December 15, 2015, among Calpine Corporation, as borrower, the lenders party thereto, Morgan Stanley Senior Funding, Inc., as administrative agent and Goldman Sachs Credit Partners L.P., as collateral agent and the $562 million first lien senior secured term loan, dated May 31, 2016, among Calpine Corporation, as borrower, the lenders party thereto, Citibank, N.A., as administrative agent and MUFG Union Bank, N.A., as collateral agent
|
|
|
|
2023 Senior Unsecured Notes
|
|
The $1.25 billion aggregate principal amount of 5.375% senior unsecured notes due 2023, issued July 22, 2014
|
|
|
|
2024 First Lien Notes
|
|
The $490 million aggregate principal amount of 5.875% senior secured notes due 2024, issued October 31, 2013
|
|
|
|
2024 First Lien Term Loan
|
|
The $1.6 billion first lien senior secured term loan, dated May 28, 2015 (as amended December 21, 2016), among Calpine Corporation, as borrower, the lenders party thereto, Morgan Stanley Senior Funding, Inc., as administrative agent and Goldman Sachs Credit Partners L.P., as collateral agent
|
|
|
|
2024 Senior Unsecured Notes
|
|
The $650 million aggregate principal amount of 5.5% senior unsecured notes due 2024, issued February 3, 2015
|
|
|
|
2025 Senior Unsecured Notes
|
|
The $1.55 billion aggregate principal amount of 5.75% senior unsecured notes due 2025, issued July 22, 2014
|
|
|
|
ABBREVIATION
|
|
DEFINITION
|
2026 First Lien Notes
|
|
Collectively, the $625 million aggregate principal amount of 5.25% senior secured notes due 2026, issued May 31, 2016, and the $560 million aggregate principal amount of 5.25% senior secured notes due 2026, issued on December 15, 2017
|
|
|
|
Accounts Receivable Sales Program
|
|
Receivables purchase agreement between Calpine Solutions and Calpine Receivables and the purchase and sale agreement between Calpine Receivables and an unaffiliated financial institution, both which allows for the revolving sale of up to $250 million in certain trade accounts receivables to third parties
|
|
|
|
AOCI
|
|
Accumulated Other Comprehensive Income
|
|
|
|
Average availability
|
|
Represents the total hours during the period that our plants were in-service or available for service as a percentage of the total hours in the period
|
|
|
|
Average capacity factor, excluding peakers
|
|
A measure of total actual power generation as a percent of total potential power generation. It is calculated by dividing (a) total MWh generated by our power plants, excluding peakers, by (b) the product of multiplying (i) the average total MW in operation, excluding peakers, during the period by (ii) the total hours in the period
|
|
|
|
Btu
|
|
British thermal unit(s), a measure of heat content
|
|
|
|
Calpine Equity Incentive Plans
|
|
Collectively, the Director Plans and the Equity Plans, which provided for grants of equity awards to Calpine non-union employees and non-employee members of Calpine’s Board of Directors
|
|
|
|
Calpine Receivables
|
|
Calpine Receivables, LLC, an indirect, wholly-owned subsidiary of Calpine, which was established as bankruptcy remote, special purpose subsidiary and is responsible for administering the Accounts Receivable Sales Program
|
|
|
|
Calpine Solutions
|
|
Calpine Energy Solutions, LLC, an indirect, wholly-owned subsidiary of Calpine, which is the third largest supplier of power to commercial and industrial retail customers in the United States with customers in 20 states, including presence in California, Texas, the Mid-Atlantic and the Northeast
|
|
|
|
CCFC
|
|
Calpine Construction Finance Company, L.P., an indirect, wholly-owned subsidiary of Calpine
|
|
|
|
CCFC Term Loan
|
|
The $1.0 billion first lien senior secured term loan entered into on December 15, 2017 among CCFC as borrower, the lenders party thereto, and Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent
|
|
|
|
CCFC Term Loans
|
|
Collectively, the $900 million first lien senior secured term loan and the $300 million first lien senior secured term loan entered into on May 3, 2013, and the $425 million first lien senior secured term loan entered into on February 26, 2014, between CCFC, as borrower, and Goldman Sachs Lending Partners, LLC, as administrative agent and as collateral agent, and the lenders party thereto, repaid on December 15, 2017
|
|
|
|
CDHI
|
|
Calpine Development Holdings, Inc., an indirect, wholly-owned subsidiary of Calpine
|
|
|
|
CFTC
|
|
Commodities Futures Trading Commission
|
|
|
|
Champion Energy
|
|
Champion Energy Marketing, LLC, which owns a retail electric provider that serves residential, governmental, commercial and industrial customers in deregulated electricity markets in 14 states and the District of Columbia, including presence in California, Texas, the Mid-Atlantic and Northeast
|
|
|
|
Cogeneration
|
|
Using a portion or all of the steam generated in the power generating process to supply a customer with steam for use in the customer’s operations
|
|
|
|
Commodity expense
|
|
The sum of our expenses from fuel and purchased energy expense, commodity transmission and transportation expense, environmental compliance expenses, ancillary retail expense and realized settlements from our marketing, hedging and optimization activities including natural gas and fuel oil transactions hedging future power sales
|
|
|
|
ABBREVIATION
|
|
DEFINITION
|
Commodity Margin
|
|
Measure of profit reviewed by our chief operating decision maker that includes revenue recognized on our wholesale and retail power sales activity, electric capacity sales, REC sales, steam sales, realized settlements associated with our marketing, hedging, optimization and trading activities, fuel and purchased energy expenses, commodity transmission and transportation expenses, environmental compliance expenses and ancillary retail expense. Commodity Margin is a measure of segment profit or loss under FASB Accounting Standards Codification 280 used by our chief operating decision maker to make decisions about allocating resources to the relevant segments and assessing their performance
|
|
|
|
Commodity revenue
|
|
The sum of our revenues recognized on our wholesale and retail power sales activity, electric capacity sales, REC sales, steam sales and realized settlements from our marketing, hedging, optimization and trading activities
|
|
|
|
Company
|
|
Calpine Corporation, a Delaware corporation, and its subsidiaries
|
|
|
|
Corporate Revolving Facility
|
|
The approximately $1.69 billion aggregate amount revolving credit facility credit agreement, dated as of December 10, 2010, as amended on June 27, 2013, July 30, 2014, February 8, 2016, December 1, 2016, September 15, 2017, October 20, 2017, March 8, 2018 and May 18, 2018 among Calpine Corporation, the Bank of Tokyo-Mitsubishi UFJ, Ltd., as successor administrative agent, MUFG Union Bank, N.A., as successor collateral agent, the lenders party thereto and the other parties thereto
|
|
|
|
Director Plans
|
|
Collectively, the 2008 Director Plan and the 2017 Director Plan
|
|
|
|
Equity Plans
|
|
Collectively, the 2008 Equity Plan and the 2017 Equity Plan
|
|
|
|
Exchange Act
|
|
U.S. Securities Exchange Act of 1934, as amended
|
|
|
|
FASB
|
|
Financial Accounting Standards Board
|
|
|
|
FDIC
|
|
U.S. Federal Deposit Insurance Corporation
|
|
|
|
FERC
|
|
U.S. Federal Energy Regulatory Commission
|
|
|
|
First Lien Notes
|
|
Collectively, the 2022 First Lien Notes, the 2024 First Lien Notes and the 2026 First Lien Notes
|
|
|
|
First Lien Term Loans
|
|
Collectively, the 2019 First Lien Term Loan, the 2023 First Lien Term Loans and the 2024 First Lien Term Loan
|
|
|
|
Geysers Assets
|
|
Our geothermal power plant assets, including our steam extraction and gathering assets, located in northern California consisting of 13 operating power plants
|
|
|
|
Greenfield LP
|
|
Greenfield Energy Centre LP, a 50% partnership interest between certain of our subsidiaries and a third party which operates the Greenfield Energy Centre, a 1,038 MW natural gas-fired, combined-cycle power plant in Ontario, Canada
|
|
|
|
Heat Rate(s)
|
|
A measure of the amount of fuel required to produce a unit of power
|
|
|
|
IRS
|
|
U.S. Internal Revenue Service
|
|
|
|
ISO(s)
|
|
Independent System Operator which is an entity that coordinates, controls and monitors the operation of an electric power system
|
|
|
|
ISO-NE
|
|
ISO New England Inc., an independent, nonprofit RTO serving states in the New England area, including Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont
|
|
|
|
KWh
|
|
Kilowatt hour(s), a measure of power produced, purchased or sold
|
|
|
|
LIBOR
|
|
London Inter-Bank Offered Rate
|
|
|
|
Lyondell
|
|
LyondellBasell Industries N.V.
|
|
|
|
ABBREVIATION
|
|
DEFINITION
|
Market Heat Rate(s)
|
|
The regional power price divided by the corresponding regional natural gas price
|
|
|
|
Merger
|
|
Merger of Volt Merger Sub, Inc. with and into Calpine pursuant to the terms of the Merger Agreement, which was consummated on March 8, 2018
|
|
|
|
Merger Agreement
|
|
Agreement and Plan of Merger, dated, August 17, 2017, by and among Calpine Corporation, Volt Parent, LP and Volt Merger Sub, Inc.
|
|
|
|
MMBtu
|
|
Million Btu
|
|
|
|
MW
|
|
Megawatt(s), a measure of plant capacity
|
|
|
|
MWh
|
|
Megawatt hour(s), a measure of power produced, purchased or sold
|
|
|
|
NOL(s)
|
|
Net operating loss(es)
|
|
|
|
North American Power
|
|
North American Power & Gas, LLC, an indirect, wholly-owned subsidiary of Calpine, which was acquired on January 17, 2017 and is a retail energy supplier for homes and small businesses primarily concentrated in the Northeast U.S.
|
|
|
|
OCI
|
|
Other Comprehensive Income
|
|
|
|
OMEC
|
|
Otay Mesa Energy Center, LLC, an indirect, wholly owned subsidiary that owns the Otay Mesa Energy Center, a 608 MW power plant located in San Diego County, California
|
|
|
|
OTC
|
|
Over-the-Counter
|
|
|
|
PJM
|
|
PJM Interconnection is a RTO that coordinates the movement of wholesale electricity in all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia
|
|
|
|
PPA(s)
|
|
Any term power purchase agreement or other contract for a physically settled sale (as distinguished from a financially settled future, option or other derivative or hedge transaction) of any power product, including power, capacity and/or ancillary services, in the form of a bilateral agreement or a written or oral confirmation of a transaction between two parties to a master agreement, including sales related to a tolling transaction in which the purchaser provides the fuel required by us to generate such power and we receive a variable payment to convert the fuel into power and steam
|
|
|
|
REC(s)
|
|
Renewable energy credit(s)
|
|
|
|
Risk Management Policy
|
|
Calpine’s policy applicable to all employees, contractors, representatives and agents, which defines the risk management framework and corporate governance structure for commodity risk, interest rate risk, currency risk and other risks
|
|
|
|
RTO(s)
|
|
Regional Transmission Organization which is an entity that coordinates, controls and monitors the operation of an electric power system and administers the transmission grid on a regional basis
|
|
|
|
SDG&E
|
|
San Diego Gas & Electric Company
|
|
|
|
SEC
|
|
U.S. Securities and Exchange Commission
|
|
|
|
Securities Act
|
|
U.S. Securities Act of 1933, as amended
|
|
|
|
Senior Unsecured Notes
|
|
Collectively, the 2023 Senior Unsecured Notes, the 2024 Senior Unsecured Notes and the 2025 Senior Unsecured Notes
|
|
|
|
Short Term Credit Facility
|
|
The $300 million aggregate amount credit agreement, dated as of April 11, 2018, among Calpine Corporation, Morgan Stanley Senior Funding, Inc., as administrative agent, and the lenders party thereto, which was terminated on August 17, 2018
|
|
|
|
ABBREVIATION
|
|
DEFINITION
|
Spark Spread(s)
|
|
The difference between the sales price of power per MWh and the cost of natural gas to produce it
|
|
|
|
Steam Adjusted Heat Rate
|
|
The adjusted Heat Rate for our natural gas-fired power plants, excluding peakers, calculated by dividing (a) the fuel consumed in Btu reduced by the net equivalent Btu in steam exported to a third party by (b) the KWh generated. Steam Adjusted Heat Rate is a measure of fuel efficiency, so the lower our Steam Adjusted Heat Rate, the lower our cost of generation
|
|
|
|
U.S. GAAP
|
|
Generally accepted accounting principles in the U.S.
|
|
|
|
VAR
|
|
Value-at-risk
|
|
|
|
VIE(s)
|
|
Variable interest entity(ies)
|
|
|
|
Whitby
|
|
Whitby Cogeneration Limited Partnership, a 50% partnership interest between certain of our subsidiaries and a third party, which operates Whitby, a 50 MW natural gas-fired, simple-cycle cogeneration power plant located in Ontario, Canada
|
•
|
The effect of the Merger on our customer relationships, operating results and business;
|
•
|
Financial results that may be volatile and may not reflect historical trends due to, among other things, seasonality of demand, fluctuations in prices for commodities such as natural gas and power, changes in U.S. macroeconomic conditions, fluctuations in liquidity and volatility in the energy commodities markets and our ability and extent to which we hedge risks;
|
•
|
Laws, regulations and market rules in the wholesale and retail markets in which we participate and our ability to effectively respond to changes in laws, regulations or market rules or the interpretation thereof including those related to the environment, derivative transactions and market design in the regions in which we operate;
|
•
|
Our ability to manage our liquidity needs, access the capital markets when necessary and comply with covenants under our Senior Unsecured Notes, First Lien Notes, First Lien Term Loans, Corporate Revolving Facility, CCFC Term Loan and other existing financing obligations;
|
•
|
Risks associated with the operation, construction and development of power plants, including unscheduled outages or delays and plant efficiencies;
|
•
|
Risks related to our geothermal resources, including the adequacy of our steam reserves, unusual or unexpected steam field well and pipeline maintenance requirements, variables associated with the injection of water to the steam reservoir and potential regulations or other requirements related to seismicity concerns that may delay or increase the cost of developing or operating geothermal resources;
|
•
|
Extensive competition in our wholesale and retail businesses, including from renewable sources of power, interference by states in competitive power markets through subsidies or similar support for new or existing power plants, lower prices and other incentives offered by retail competitors, and other risks associated with marketing and selling power in the evolving energy markets;
|
•
|
Structural changes in the supply and demand of power, resulting from the development of new fuels or technologies and demand-side management tools (such as distributed generation, power storage and other technologies);
|
•
|
The expiration or early termination of our PPAs and the related results on revenues;
|
•
|
Future capacity revenue may not occur at expected levels;
|
•
|
Natural disasters, such as hurricanes, earthquakes, droughts, wildfires and floods, acts of terrorism or cyber attacks that may affect our power plants or the markets our power plants or retail operations serve and our corporate offices;
|
•
|
Disruptions in or limitations on the transportation of natural gas or fuel oil and the transmission of power;
|
•
|
Our ability to manage our counterparty and customer exposure and credit risk, including our commodity positions;
|
•
|
Our ability to attract, motivate and retain key employees;
|
•
|
Present and possible future claims, litigation and enforcement actions that may arise from noncompliance with market rules promulgated by the SEC, CFTC, FERC and other regulatory bodies; and
|
•
|
Other risks identified in this Report, in our 2017 Form 10-K and in other reports filed by us with the SEC.
|
Item 1.
|
Financial Statements
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Operating revenues:
|
|
|
|
|
|
|
|
||||||||
Commodity revenue
|
$
|
2,845
|
|
|
$
|
2,506
|
|
|
$
|
7,362
|
|
|
$
|
6,714
|
|
Mark-to-market gain (loss)
|
40
|
|
|
76
|
|
|
(220
|
)
|
|
224
|
|
||||
Other revenue
|
5
|
|
|
4
|
|
|
16
|
|
|
13
|
|
||||
Operating revenues
|
2,890
|
|
|
2,586
|
|
|
7,158
|
|
|
6,951
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Fuel and purchased energy expense:
|
|
|
|
|
|
|
|
||||||||
Commodity expense
|
1,912
|
|
|
1,711
|
|
|
5,128
|
|
|
4,757
|
|
||||
Mark-to-market (gain) loss
|
(66
|
)
|
|
10
|
|
|
(143
|
)
|
|
185
|
|
||||
Fuel and purchased energy expense
|
1,846
|
|
|
1,721
|
|
|
4,985
|
|
|
4,942
|
|
||||
Operating and maintenance expense
|
248
|
|
|
228
|
|
|
765
|
|
|
812
|
|
||||
Depreciation and amortization expense
|
179
|
|
|
179
|
|
|
566
|
|
|
542
|
|
||||
General and other administrative expense
|
31
|
|
|
37
|
|
|
122
|
|
|
117
|
|
||||
Other operating expenses
|
23
|
|
|
23
|
|
|
79
|
|
|
63
|
|
||||
Total operating expenses
|
2,327
|
|
|
2,188
|
|
|
6,517
|
|
|
6,476
|
|
||||
Impairment losses
|
—
|
|
|
12
|
|
|
—
|
|
|
41
|
|
||||
(Gain) on sale of assets, net
|
—
|
|
|
—
|
|
|
—
|
|
|
(27
|
)
|
||||
(Income) from unconsolidated subsidiaries
|
(5
|
)
|
|
(7
|
)
|
|
(16
|
)
|
|
(17
|
)
|
||||
Income from operations
|
568
|
|
|
393
|
|
|
657
|
|
|
478
|
|
||||
Interest expense
|
158
|
|
|
156
|
|
|
466
|
|
|
469
|
|
||||
Debt extinguishment costs
|
1
|
|
|
1
|
|
|
1
|
|
|
26
|
|
||||
Other (income) expense, net
|
3
|
|
|
7
|
|
|
72
|
|
|
16
|
|
||||
Income (loss) before income taxes
|
406
|
|
|
229
|
|
|
118
|
|
|
(33
|
)
|
||||
Income tax expense (benefit)
|
128
|
|
|
(2
|
)
|
|
78
|
|
|
—
|
|
||||
Net income (loss)
|
278
|
|
|
231
|
|
|
40
|
|
|
(33
|
)
|
||||
Net income attributable to the noncontrolling interest
|
(6
|
)
|
|
(6
|
)
|
|
(14
|
)
|
|
(14
|
)
|
||||
Net income (loss) attributable to Calpine
|
$
|
272
|
|
|
$
|
225
|
|
|
$
|
26
|
|
|
$
|
(47
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
|
(in millions)
|
||||||||||||||
Net income (loss)
|
$
|
278
|
|
|
$
|
231
|
|
|
$
|
40
|
|
|
$
|
(33
|
)
|
Cash flow hedging activities:
|
|
|
|
|
|
|
|
||||||||
Gain (loss) on cash flow hedges before reclassification adjustment for cash flow hedges realized in net income (loss)
|
13
|
|
|
(3
|
)
|
|
76
|
|
|
(44
|
)
|
||||
Reclassification adjustment for loss on cash flow hedges realized in net income (loss)
|
—
|
|
|
11
|
|
|
7
|
|
|
37
|
|
||||
Foreign currency translation gain (loss)
|
1
|
|
|
7
|
|
|
(7
|
)
|
|
13
|
|
||||
Income tax benefit (expense)
|
1
|
|
|
(1
|
)
|
|
(3
|
)
|
|
(3
|
)
|
||||
Other comprehensive income
|
15
|
|
|
14
|
|
|
73
|
|
|
3
|
|
||||
Comprehensive income (loss)
|
293
|
|
|
245
|
|
|
113
|
|
|
(30
|
)
|
||||
Comprehensive (income) attributable to the noncontrolling interest
|
(7
|
)
|
|
(7
|
)
|
|
(17
|
)
|
|
(15
|
)
|
||||
Comprehensive income (loss) attributable to Calpine
|
$
|
286
|
|
|
$
|
238
|
|
|
$
|
96
|
|
|
$
|
(45
|
)
|
|
|
September 30,
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||||
|
|
(in millions, except share and per share amounts)
|
||||||
ASSETS
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents ($65 and $39 attributable to VIEs)
|
|
$
|
534
|
|
|
$
|
284
|
|
Accounts receivable, net of allowance of $11 and $9
|
|
936
|
|
|
970
|
|
||
Inventories
|
|
546
|
|
|
498
|
|
||
Margin deposits and other prepaid expense
|
|
244
|
|
|
203
|
|
||
Restricted cash, current ($128 and $74 attributable to VIEs)
|
|
213
|
|
|
134
|
|
||
Derivative assets, current
|
|
159
|
|
|
174
|
|
||
Other current assets
|
|
36
|
|
|
43
|
|
||
Total current assets
|
|
2,668
|
|
|
2,306
|
|
||
Property, plant and equipment, net ($3,943 and $4,048 attributable to VIEs)
|
|
12,494
|
|
|
12,724
|
|
||
Restricted cash, net of current portion ($15 and $24 attributable to VIEs)
|
|
16
|
|
|
25
|
|
||
Investments in unconsolidated subsidiaries
|
|
119
|
|
|
106
|
|
||
Long-term derivative assets
|
|
207
|
|
|
218
|
|
||
Goodwill
|
|
242
|
|
|
242
|
|
||
Intangible assets, net
|
|
440
|
|
|
512
|
|
||
Other assets ($27 and $22 attributable to VIEs)
|
|
274
|
|
|
320
|
|
||
Total assets
|
|
$
|
16,460
|
|
|
$
|
16,453
|
|
LIABILITIES & STOCKHOLDERS’ EQUITY
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
743
|
|
|
$
|
777
|
|
Accrued interest payable
|
|
138
|
|
|
104
|
|
||
Debt, current portion ($462 and $175 attributable to VIEs)
|
|
512
|
|
|
225
|
|
||
Derivative liabilities, current
|
|
222
|
|
|
197
|
|
||
Other current liabilities
|
|
557
|
|
|
571
|
|
||
Total current liabilities
|
|
2,172
|
|
|
1,874
|
|
||
Debt, net of current portion ($1,861 and $2,238 attributable to VIEs)
|
|
10,795
|
|
|
11,180
|
|
||
Long-term derivative liabilities
|
|
126
|
|
|
119
|
|
||
Other long-term liabilities
|
|
255
|
|
|
213
|
|
||
Total liabilities
|
|
13,348
|
|
|
13,386
|
|
||
|
|
|
|
|
||||
Commitments and contingencies (see Note 11)
|
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
|
||||
Common stock, $0.001 par value per share; authorized 5,000 and 1,400,000,000 shares, respectively, 105.2 and 361,677,891 shares issued, respectively, and 105.2 and 360,516,091 shares outstanding, respectively
|
|
—
|
|
|
—
|
|
||
Treasury stock, at cost, nil and 1,161,800 shares, respectively
|
|
—
|
|
|
(15
|
)
|
||
Additional paid-in capital
|
|
9,582
|
|
|
9,661
|
|
||
Accumulated deficit
|
|
(6,526
|
)
|
|
(6,552
|
)
|
||
Accumulated other comprehensive loss
|
|
(36
|
)
|
|
(106
|
)
|
||
Total Calpine stockholders’ equity
|
|
3,020
|
|
|
2,988
|
|
||
Noncontrolling interest
|
|
92
|
|
|
79
|
|
||
Total stockholders’ equity
|
|
3,112
|
|
|
3,067
|
|
||
Total liabilities and stockholders’ equity
|
|
$
|
16,460
|
|
|
$
|
16,453
|
|
|
Common
Stock
|
|
Treasury
Stock
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Noncontrolling
Interest
|
|
Total
Stockholders’
Equity
|
||||||||||||||
Balance, December 31, 2017
|
$
|
—
|
|
|
$
|
(15
|
)
|
|
$
|
9,661
|
|
|
$
|
(6,552
|
)
|
|
$
|
(106
|
)
|
|
$
|
79
|
|
|
$
|
3,067
|
|
Treasury stock transactions
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
41
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|||||||
Effects of the Merger
|
—
|
|
|
22
|
|
|
(120
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(98
|
)
|
|||||||
Contribution from the noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
2
|
|
|||||||
Distribution to the noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
(6
|
)
|
|||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
26
|
|
|
—
|
|
|
14
|
|
|
40
|
|
|||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
70
|
|
|
3
|
|
|
73
|
|
|||||||
Balance, September 30, 2018
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,582
|
|
|
$
|
(6,526
|
)
|
|
$
|
(36
|
)
|
|
$
|
92
|
|
|
$
|
3,112
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(in millions)
|
||||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income (loss)
|
|
$
|
40
|
|
|
$
|
(33
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
(1)
|
|
642
|
|
|
691
|
|
||
Debt extinguishment costs
|
|
1
|
|
|
26
|
|
||
Deferred income taxes
|
|
69
|
|
|
12
|
|
||
Impairment losses
|
|
—
|
|
|
41
|
|
||
Gain on sale of assets, net
|
|
—
|
|
|
(27
|
)
|
||
Mark-to-market activity, net
|
|
73
|
|
|
(40
|
)
|
||
(Income) from unconsolidated subsidiaries
|
|
(16
|
)
|
|
(17
|
)
|
||
Return on investments from unconsolidated subsidiaries
|
|
5
|
|
|
22
|
|
||
Stock-based compensation expense
|
|
57
|
|
|
31
|
|
||
Other
|
|
16
|
|
|
(4
|
)
|
||
Change in operating assets and liabilities, net of effects of acquisitions:
|
|
|
|
|
||||
Accounts receivable
|
|
35
|
|
|
(86
|
)
|
||
Derivative instruments, net
|
|
61
|
|
|
(10
|
)
|
||
Other assets
|
|
(260
|
)
|
|
60
|
|
||
Accounts payable and accrued expenses
|
|
81
|
|
|
95
|
|
||
Other liabilities
|
|
69
|
|
|
64
|
|
||
Net cash provided by operating activities
|
|
873
|
|
|
825
|
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Purchases of property, plant and equipment
|
|
(314
|
)
|
|
(248
|
)
|
||
Proceeds from sale of Auburndale Peaking Energy Center and Osprey Energy Center
|
|
10
|
|
|
162
|
|
||
Purchase of North American Power, net of cash acquired
|
|
—
|
|
|
(111
|
)
|
||
Other
|
|
(9
|
)
|
|
35
|
|
||
Net cash used in investing activities
|
|
(313
|
)
|
|
(162
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Borrowings under First Lien Term Loans
|
|
—
|
|
|
396
|
|
||
Repayment of CCFC Term Loan, CCFC Term Loans and First Lien Term Loans
|
|
(31
|
)
|
|
(435
|
)
|
||
Repurchase of First Lien Notes
|
|
—
|
|
|
(453
|
)
|
||
Borrowings under Corporate Revolving Facility
|
|
325
|
|
|
25
|
|
||
Repayments of Corporate Revolving Facility
|
|
(325
|
)
|
|
(25
|
)
|
||
Repayments of project financing, notes payable and other
|
|
(89
|
)
|
|
(90
|
)
|
||
Distribution to noncontrolling interest holder
|
|
(6
|
)
|
|
(8
|
)
|
||
Financing costs
|
|
(12
|
)
|
|
(26
|
)
|
||
Stock repurchases
|
|
(79
|
)
|
|
—
|
|
||
Shares repurchased for tax withholding on stock-based awards
|
|
(7
|
)
|
|
(6
|
)
|
||
Other
|
|
(16
|
)
|
|
1
|
|
||
Net cash used in financing activities
|
|
(240
|
)
|
|
(621
|
)
|
||
Net increase in cash, cash equivalents and restricted cash
|
|
320
|
|
|
42
|
|
||
Cash, cash equivalents and restricted cash, beginning of period
|
|
443
|
|
|
606
|
|
||
Cash, cash equivalents and restricted cash, end of period
(2)
|
|
$
|
763
|
|
|
$
|
648
|
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(in millions)
|
||||||
Cash paid during the period for:
|
|
|
|
|
||||
Interest, net of amounts capitalized
|
|
$
|
401
|
|
|
$
|
412
|
|
Income taxes
|
|
$
|
10
|
|
|
$
|
10
|
|
(1)
|
Includes amortization recorded in Commodity revenue and Commodity expense associated with intangible assets and amortization recorded in interest expense associated with debt issuance costs and discounts.
|
(2)
|
Our cash and cash equivalents, restricted cash, current and restricted cash, net of current portion are stated as separate line items on our Consolidated Condensed Balance Sheets.
|
1.
|
Basis of Presentation and Summary of Significant Accounting Policies
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
|
Current
|
|
Non-Current
|
|
Total
|
|
Current
|
|
Non-Current
|
|
Total
|
||||||||||||
Debt service
|
$
|
24
|
|
|
$
|
7
|
|
|
$
|
31
|
|
|
$
|
11
|
|
|
$
|
8
|
|
|
$
|
19
|
|
Construction/major maintenance
|
32
|
|
|
6
|
|
|
38
|
|
|
28
|
|
|
16
|
|
|
44
|
|
||||||
Security/project/insurance
|
153
|
|
|
—
|
|
|
153
|
|
|
92
|
|
|
—
|
|
|
92
|
|
||||||
Other
|
4
|
|
|
3
|
|
|
7
|
|
|
3
|
|
|
1
|
|
|
4
|
|
||||||
Total
|
$
|
213
|
|
|
$
|
16
|
|
|
$
|
229
|
|
|
$
|
134
|
|
|
$
|
25
|
|
|
$
|
159
|
|
|
September 30, 2018
|
|
December 31, 2017
|
|
Depreciable Lives
|
|||||||
Buildings, machinery and equipment
|
$
|
16,405
|
|
|
$
|
16,506
|
|
|
1.5
|
–
|
46
|
Years
|
Geothermal properties
|
1,500
|
|
|
1,494
|
|
|
13
|
–
|
58
|
Years
|
||
Other
|
268
|
|
|
236
|
|
|
3
|
–
|
46
|
Years
|
||
|
18,173
|
|
|
18,236
|
|
|
|
|
|
|
||
Less: Accumulated depreciation
|
6,698
|
|
|
6,383
|
|
|
|
|
|
|
||
|
11,475
|
|
|
11,853
|
|
|
|
|
|
|
||
Land
|
121
|
|
|
117
|
|
|
|
|
|
|
||
Construction in progress
|
898
|
|
|
754
|
|
|
|
|
|
|
||
Property, plant and equipment, net
|
$
|
12,494
|
|
|
$
|
12,724
|
|
|
|
|
|
|
2.
|
Merger
|
3.
|
Revenue from Contracts with Customers
|
|
Three Months Ended September 30, 2018
|
||||||||||||||||||||||
|
Wholesale
|
|
|
|
|
|
|
||||||||||||||||
|
West
|
|
Texas
|
|
East
|
|
Retail
|
|
Elimination
|
|
Total
|
||||||||||||
Third Party:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Energy & other products
|
$
|
369
|
|
|
$
|
470
|
|
|
$
|
221
|
|
|
$
|
543
|
|
|
$
|
—
|
|
|
$
|
1,603
|
|
Capacity
|
51
|
|
|
23
|
|
|
190
|
|
|
—
|
|
|
—
|
|
|
264
|
|
||||||
Revenues relating to physical or executory contracts – third party
|
$
|
420
|
|
|
$
|
493
|
|
|
$
|
411
|
|
|
$
|
543
|
|
|
$
|
—
|
|
|
$
|
1,867
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Affiliate
(1)
:
|
$
|
9
|
|
|
$
|
11
|
|
|
$
|
20
|
|
|
$
|
—
|
|
|
$
|
(40
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenues relating to leases and derivative instruments
(2)
|
|
|
|
|
|
|
|
|
|
|
$
|
1,023
|
|
||||||||||
Total operating revenues
|
|
|
|
|
|
|
|
|
|
|
$
|
2,890
|
|
|
Nine Months Ended September 30, 2018
|
||||||||||||||||||||||
|
Wholesale
|
|
|
|
|
|
|
||||||||||||||||
|
West
|
|
Texas
|
|
East
|
|
Retail
|
|
Elimination
|
|
Total
|
||||||||||||
Third Party:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Energy & other products
|
$
|
744
|
|
|
$
|
1,100
|
|
|
$
|
473
|
|
|
$
|
1,437
|
|
|
$
|
—
|
|
|
$
|
3,754
|
|
Capacity
|
105
|
|
|
72
|
|
|
479
|
|
|
—
|
|
|
—
|
|
|
656
|
|
||||||
Revenues relating to physical or executory contracts – third party
|
$
|
849
|
|
|
$
|
1,172
|
|
|
$
|
952
|
|
|
$
|
1,437
|
|
|
$
|
—
|
|
|
$
|
4,410
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Affiliate
(1)
:
|
$
|
22
|
|
|
$
|
24
|
|
|
$
|
62
|
|
|
$
|
2
|
|
|
$
|
(110
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenues relating to leases and derivative instruments
(2)
|
|
|
|
|
|
|
|
|
|
|
$
|
2,748
|
|
||||||||||
Total operating revenues
|
|
|
|
|
|
|
|
|
|
|
$
|
7,158
|
|
(1)
|
Affiliate energy, other and capacity revenues reflect revenues on transactions between wholesale and retail affiliates excluding affiliate activity related to leases and derivative instruments. All such activity supports retail supply needs from the wholesale business and/or allows for collateral margin netting efficiencies at Calpine.
|
(2)
|
Revenues relating to contracts accounted for as leases and derivatives include energy and capacity revenues relating to PPAs that we are required to account for as operating leases and physical and financial commodity derivative contracts, primarily relating to power, natural gas and environmental products. Revenue related to derivative instruments includes revenue recorded in Commodity revenue and mark-to-market gain (loss) within our operating revenues on our Consolidated Condensed Statements of Operations.
|
4.
|
Variable Interest Entities and Unconsolidated Investments
|
|
Ownership Interest as of
September 30, 2018
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Greenfield LP
|
50%
|
|
$
|
101
|
|
|
$
|
92
|
|
Whitby
|
50%
|
|
12
|
|
|
6
|
|
||
Calpine Receivables
|
100%
|
|
6
|
|
|
8
|
|
||
Total investments in unconsolidated subsidiaries
|
|
|
$
|
119
|
|
|
$
|
106
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Greenfield LP
|
$
|
(2
|
)
|
|
$
|
(5
|
)
|
|
$
|
(6
|
)
|
|
$
|
(11
|
)
|
Whitby
|
(3
|
)
|
|
(2
|
)
|
|
(11
|
)
|
|
(6
|
)
|
||||
Calpine Receivables
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Total
|
$
|
(5
|
)
|
|
$
|
(7
|
)
|
|
$
|
(16
|
)
|
|
$
|
(17
|
)
|
5.
|
Debt
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Senior Unsecured Notes
|
$
|
3,421
|
|
|
$
|
3,417
|
|
First Lien Term Loans
|
2,981
|
|
|
2,995
|
|
||
First Lien Notes
|
2,399
|
|
|
2,396
|
|
||
Project financing, notes payable and other
|
1,419
|
|
|
1,498
|
|
||
CCFC Term Loan
|
976
|
|
|
984
|
|
||
Capital lease obligations
|
111
|
|
|
115
|
|
||
Subtotal
|
11,307
|
|
|
11,405
|
|
||
Less: Current maturities
|
512
|
|
|
225
|
|
||
Total long-term debt
|
$
|
10,795
|
|
|
$
|
11,180
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
2023 Senior Unsecured Notes
|
$
|
1,241
|
|
|
$
|
1,239
|
|
2024 Senior Unsecured Notes
|
644
|
|
|
644
|
|
||
2025 Senior Unsecured Notes
|
1,536
|
|
|
1,534
|
|
||
Total Senior Unsecured Notes
|
$
|
3,421
|
|
|
$
|
3,417
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
2019 First Lien Term Loan
|
$
|
389
|
|
|
$
|
389
|
|
2023 First Lien Term Loans
|
1,060
|
|
|
1,064
|
|
||
2024 First Lien Term Loan
|
1,532
|
|
|
1,542
|
|
||
Total First Lien Term Loans
|
$
|
2,981
|
|
|
$
|
2,995
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
2022 First Lien Notes
|
$
|
743
|
|
|
$
|
741
|
|
2024 First Lien Notes
|
486
|
|
|
485
|
|
||
2026 First Lien Notes
|
1,170
|
|
|
1,170
|
|
||
Total First Lien Notes
|
$
|
2,399
|
|
|
$
|
2,396
|
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Corporate Revolving Facility
(1)
|
$
|
524
|
|
|
$
|
629
|
|
CDHI
|
245
|
|
|
244
|
|
||
Various project financing facilities
|
232
|
|
|
196
|
|
||
Other corporate facilities
(2)
|
143
|
|
|
—
|
|
||
Total
|
$
|
1,144
|
|
|
$
|
1,069
|
|
(1)
|
The Corporate Revolving Facility represents our primary revolving facility.
|
(2)
|
During the second quarter of 2018, we executed two unsecured
$50 million
letter of credit facilities with third party financial institutions, each maturing on June 20, 2020. On July 26, 2018, we upsized one of the letter of credit facilities to
$100 million
.
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
||||||||
Senior Unsecured Notes
|
$
|
3,126
|
|
|
$
|
3,421
|
|
|
$
|
3,294
|
|
|
$
|
3,417
|
|
First Lien Term Loans
|
3,019
|
|
|
2,981
|
|
|
3,043
|
|
|
2,995
|
|
||||
First Lien Notes
|
2,347
|
|
|
2,399
|
|
|
2,437
|
|
|
2,396
|
|
||||
Project financing, notes payable and other
(1)
|
1,351
|
|
|
1,330
|
|
|
1,439
|
|
|
1,409
|
|
||||
CCFC Term Loan
|
994
|
|
|
976
|
|
|
1,000
|
|
|
984
|
|
||||
Total
|
$
|
10,837
|
|
|
$
|
11,107
|
|
|
$
|
11,213
|
|
|
$
|
11,201
|
|
(1)
|
Excludes a lease that is accounted for as a failed sale-leaseback transaction under U.S. GAAP.
|
6.
|
Assets and Liabilities with Recurring Fair Value Measurements
|
|
Assets and Liabilities with Recurring Fair Value Measures as of September 30, 2018
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
(1)
|
$
|
196
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
196
|
|
Commodity instruments:
|
|
|
|
|
|
|
|
||||||||
Commodity exchange traded derivatives contracts
|
595
|
|
|
—
|
|
|
—
|
|
|
595
|
|
||||
Commodity forward contracts
(2)
|
—
|
|
|
416
|
|
|
223
|
|
|
639
|
|
||||
Interest rate hedging instruments
|
—
|
|
|
82
|
|
|
—
|
|
|
82
|
|
||||
Effect of netting and allocation of collateral
(3)(4)
|
(595
|
)
|
|
(330
|
)
|
|
(25
|
)
|
|
(950
|
)
|
||||
Total assets
|
$
|
196
|
|
|
$
|
168
|
|
|
$
|
198
|
|
|
$
|
562
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Commodity instruments:
|
|
|
|
|
|
|
|
||||||||
Commodity exchange traded derivatives contracts
|
$
|
584
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
584
|
|
Commodity forward contracts
(2)
|
—
|
|
|
588
|
|
|
135
|
|
|
723
|
|
||||
Interest rate hedging instruments
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
||||
Effect of netting and allocation of collateral
(3)(4)
|
(584
|
)
|
|
(362
|
)
|
|
(25
|
)
|
|
(971
|
)
|
||||
Total liabilities
|
$
|
—
|
|
|
$
|
238
|
|
|
$
|
110
|
|
|
$
|
348
|
|
|
Assets and Liabilities with Recurring Fair Value Measures as of December 31, 2017
|
||||||||||||||
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
(in millions)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
(1)
|
$
|
131
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
131
|
|
Commodity instruments:
|
|
|
|
|
|
|
|
||||||||
Commodity exchange traded derivatives contracts
|
746
|
|
|
—
|
|
|
—
|
|
|
746
|
|
||||
Commodity forward contracts
(2)
|
—
|
|
|
327
|
|
|
265
|
|
|
592
|
|
||||
Interest rate hedging instruments
|
—
|
|
|
29
|
|
|
—
|
|
|
29
|
|
||||
Effect of netting and allocation of collateral
(3)(4)
|
(746
|
)
|
|
(206
|
)
|
|
(23
|
)
|
|
(975
|
)
|
||||
Total assets
|
$
|
131
|
|
|
$
|
150
|
|
|
$
|
242
|
|
|
$
|
523
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Commodity instruments:
|
|
|
|
|
|
|
|
||||||||
Commodity exchange traded derivatives contracts
|
$
|
790
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
790
|
|
Commodity forward contracts
(2)
|
—
|
|
|
461
|
|
|
68
|
|
|
529
|
|
||||
Interest rate hedging instruments
|
—
|
|
|
34
|
|
|
—
|
|
|
34
|
|
||||
Effect of netting and allocation of collateral
(3)(4)
|
(790
|
)
|
|
(224
|
)
|
|
(23
|
)
|
|
(1,037
|
)
|
||||
Total liabilities
|
$
|
—
|
|
|
$
|
271
|
|
|
$
|
45
|
|
|
$
|
316
|
|
(1)
|
At
September 30, 2018
and
December 31, 2017
, we had cash equivalents of
$49 million
and
$21 million
included in cash and cash equivalents and
$147 million
and
$110 million
included in restricted cash, respectively.
|
(2)
|
Includes OTC swaps and options and retail contracts.
|
(3)
|
We offset fair value amounts recognized for derivative instruments executed with the same counterparty under a master netting arrangement for financial statement presentation; therefore, amounts recognized for the right to reclaim, or the obligation to return, cash collateral are presented net with the corresponding derivative instrument fair values. See Note 7 for further discussion of our derivative instruments subject to master netting arrangements.
|
(4)
|
Cash collateral posted with (received from) counterparties allocated to level 1, level 2 and level 3 derivative instruments totaled
$(11) million
,
$32 million
and
nil
, respectively, at
September 30, 2018
. Cash collateral posted with (received from) counterparties allocated to level 1, level 2 and level 3 derivative instruments totaled
$44 million
,
$18 million
and
nil
, respectively, at
December 31, 2017
.
|
(1)
|
Power contracts include power and heat rate instruments classified as level 3 in the fair value hierarchy.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Balance, beginning of period
|
|
$
|
131
|
|
|
$
|
303
|
|
|
$
|
197
|
|
|
$
|
416
|
|
Realized and mark-to-market gains (losses):
|
|
|
|
|
|
|
|
|
||||||||
Included in net income (loss):
|
|
|
|
|
|
|
|
|
||||||||
Included in operating revenues
(1)
|
|
(99
|
)
|
|
26
|
|
|
(84
|
)
|
|
125
|
|
||||
Included in fuel and purchased energy expense
(2)
|
|
18
|
|
|
(12
|
)
|
|
27
|
|
|
(1
|
)
|
||||
Change in collateral
|
|
—
|
|
|
4
|
|
|
—
|
|
|
(4
|
)
|
||||
Purchases and settlements:
|
|
|
|
|
|
|
|
|
||||||||
Purchases
|
|
4
|
|
|
1
|
|
|
12
|
|
|
2
|
|
||||
Settlements
|
|
37
|
|
|
(40
|
)
|
|
(56
|
)
|
|
(129
|
)
|
||||
Transfers in and/or out of level 3
(3)
:
|
|
|
|
|
|
|
|
|
||||||||
Transfers into level 3
(4)
|
|
(1
|
)
|
|
3
|
|
|
—
|
|
|
(5
|
)
|
||||
Transfers out of level 3
(5)
|
|
(2
|
)
|
|
(3
|
)
|
|
(8
|
)
|
|
(122
|
)
|
||||
Balance, end of period
|
|
$
|
88
|
|
|
$
|
282
|
|
|
$
|
88
|
|
|
$
|
282
|
|
Change in unrealized gains (losses) relating to instruments still held at end of period
|
|
$
|
(81
|
)
|
|
$
|
14
|
|
|
$
|
(57
|
)
|
|
$
|
124
|
|
(1)
|
For power contracts and other power-related products, included on our Consolidated Condensed Statements of Operations.
|
(2)
|
For natural gas and power contracts, swaps and options, included on our Consolidated Condensed Statements of Operations.
|
(3)
|
We transfer amounts among levels of the fair value hierarchy as of the end of each period. There were
no
transfers into or out of level 1 for each of the three and nine months ended
September 30, 2018
and
2017
.
|
(4)
|
We had
$(1) million
in losses and
$3 million
in gains transferred out of level 2 into level 3 for the three months ended
September 30, 2018
and
2017
, respectively, and
nil
and
$(5) million
in losses transferred out of level 2 into level 3 for the nine months ended
September 30, 2018
and
2017
, respectively, due to changes in market liquidity in various power markets.
|
(5)
|
We had
$2 million
and
$3 million
in gains transferred out of level 3 into level 2 for the three months ended
September 30, 2018
and
2017
, respectively, and
$8 million
and
$122 million
in gains transferred out of level 3 into level 2 for the nine months ended
September 30, 2018
and
2017
, respectively, due to changes in market liquidity in various power markets.
|
7.
|
Derivative Instruments
|
Derivative Instruments
|
|
Notional Amounts
|
|
||||||
|
September 30, 2018
|
|
December 31, 2017
|
|
|||||
Power (MWh)
|
|
(150
|
)
|
|
(119
|
)
|
|
||
Natural gas (MMBtu)
|
|
1,181
|
|
|
405
|
|
|
||
Environmental credits (Tonnes)
|
|
20
|
|
|
12
|
|
|
||
Interest rate hedging instruments
|
|
$
|
4,600
|
|
|
$
|
4,600
|
|
|
|
|
September 30, 2018
|
||||||||||
|
|
Gross Amounts of Assets and (Liabilities)
|
|
Gross Amounts Offset on the Consolidated Condensed Balance Sheets
|
|
Net Amount Presented on the Consolidated Condensed Balance Sheets
(1)
|
||||||
Derivative assets:
|
|
|
|
|
|
|
||||||
Commodity exchange traded derivatives contracts
|
|
$
|
478
|
|
|
$
|
(478
|
)
|
|
$
|
—
|
|
Commodity forward contracts
|
|
367
|
|
|
(243
|
)
|
|
124
|
|
|||
Interest rate hedging instruments
|
|
35
|
|
|
—
|
|
|
35
|
|
|||
Total current derivative assets
(2)
|
|
$
|
880
|
|
|
$
|
(721
|
)
|
|
$
|
159
|
|
Commodity exchange traded derivatives contracts
|
|
117
|
|
|
(117
|
)
|
|
—
|
|
|||
Commodity forward contracts
|
|
272
|
|
|
(112
|
)
|
|
160
|
|
|||
Interest rate hedging instruments
|
|
47
|
|
|
—
|
|
|
47
|
|
|||
Total long-term derivative assets
(2)
|
|
$
|
436
|
|
|
$
|
(229
|
)
|
|
$
|
207
|
|
Total derivative assets
|
|
$
|
1,316
|
|
|
$
|
(950
|
)
|
|
$
|
366
|
|
|
|
|
|
|
|
|
||||||
Derivative (liabilities):
|
|
|
|
|
|
|
||||||
Commodity exchange traded derivatives contracts
|
|
$
|
(435
|
)
|
|
$
|
435
|
|
|
$
|
—
|
|
Commodity forward contracts
|
|
(486
|
)
|
|
272
|
|
|
(214
|
)
|
|||
Interest rate hedging instruments
|
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
|||
Total current derivative (liabilities)
(2)
|
|
$
|
(929
|
)
|
|
$
|
707
|
|
|
$
|
(222
|
)
|
Commodity exchange traded derivatives contracts
|
|
(149
|
)
|
|
149
|
|
|
—
|
|
|||
Commodity forward contracts
|
|
(237
|
)
|
|
115
|
|
|
(122
|
)
|
|||
Interest rate hedging instruments
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
|||
Total long-term derivative (liabilities)
(2)
|
|
$
|
(390
|
)
|
|
$
|
264
|
|
|
$
|
(126
|
)
|
Total derivative liabilities
|
|
$
|
(1,319
|
)
|
|
$
|
971
|
|
|
$
|
(348
|
)
|
Net derivative assets (liabilities)
|
|
$
|
(3
|
)
|
|
$
|
21
|
|
|
$
|
18
|
|
|
|
December 31, 2017
|
||||||||||
|
|
Gross Amounts of Assets and (Liabilities)
|
|
Gross Amounts Offset on the Consolidated Condensed Balance Sheets
|
|
Net Amount Presented on the Consolidated Condensed Balance Sheets
(1)
|
||||||
Derivative assets:
|
|
|
|
|
|
|
||||||
Commodity exchange traded derivatives contracts
|
|
$
|
672
|
|
|
$
|
(672
|
)
|
|
$
|
—
|
|
Commodity forward contracts
|
|
361
|
|
|
(194
|
)
|
|
167
|
|
|||
Interest rate hedging instruments
|
|
7
|
|
|
—
|
|
|
7
|
|
|||
Total current derivative assets
(3)
|
|
$
|
1,040
|
|
|
$
|
(866
|
)
|
|
$
|
174
|
|
Commodity exchange traded derivatives contracts
|
|
74
|
|
|
(74
|
)
|
|
—
|
|
|||
Commodity forward contracts
|
|
231
|
|
|
(32
|
)
|
|
199
|
|
|||
Interest rate hedging instruments
|
|
22
|
|
|
(3
|
)
|
|
19
|
|
|||
Total long-term derivative assets
(3)
|
|
$
|
327
|
|
|
$
|
(109
|
)
|
|
$
|
218
|
|
Total derivative assets
|
|
$
|
1,367
|
|
|
$
|
(975
|
)
|
|
$
|
392
|
|
|
|
|
|
|
|
|
||||||
Derivative (liabilities):
|
|
|
|
|
|
|
||||||
Commodity exchange traded derivatives contracts
|
|
$
|
(702
|
)
|
|
$
|
702
|
|
|
$
|
—
|
|
Commodity forward contracts
|
|
(389
|
)
|
|
209
|
|
|
(180
|
)
|
|||
Interest rate hedging instruments
|
|
(17
|
)
|
|
—
|
|
|
(17
|
)
|
|||
Total current derivative (liabilities)
(3)
|
|
$
|
(1,108
|
)
|
|
$
|
911
|
|
|
$
|
(197
|
)
|
Commodity exchange traded derivatives contracts
|
|
(88
|
)
|
|
88
|
|
|
—
|
|
|||
Commodity forward contracts
|
|
(140
|
)
|
|
35
|
|
|
(105
|
)
|
|||
Interest rate hedging instruments
|
|
(17
|
)
|
|
3
|
|
|
(14
|
)
|
|||
Total long-term derivative (liabilities)
(3)
|
|
$
|
(245
|
)
|
|
$
|
126
|
|
|
$
|
(119
|
)
|
Total derivative liabilities
|
|
$
|
(1,353
|
)
|
|
$
|
1,037
|
|
|
$
|
(316
|
)
|
Net derivative assets (liabilities)
|
|
$
|
14
|
|
|
$
|
62
|
|
|
$
|
76
|
|
(1)
|
At
September 30, 2018
and
December 31, 2017
, we had
$178 million
and
$155 million
, respectively, of collateral under master netting arrangements that were not offset against our derivative instruments on the Consolidated Condensed Balance Sheets primarily related to initial margin requirements.
|
(2)
|
At
September 30, 2018
, current and long-term derivative assets are shown net of collateral of
$(43) million
and
$(2) million
, respectively, and current and long-term derivative liabilities are shown net of collateral of
$30 million
and
$36 million
, respectively.
|
(3)
|
At
December 31, 2017
, current and long-term derivative assets are shown net of collateral of
$(8) million
and
$(2) million
, respectively, and current and long-term derivative liabilities are shown net of collateral of
$52 million
and
$20 million
, respectively.
|
|
September 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
Fair Value
of Derivative
Assets
|
|
Fair Value
of Derivative
Liabilities
|
|
Fair Value
of Derivative
Assets
|
|
Fair Value
of Derivative
Liabilities
|
||||||||
Derivatives designated as cash flow hedging instruments:
|
|
|
|
|
|
|
|
||||||||
Interest rate hedging instruments
|
$
|
80
|
|
|
$
|
12
|
|
|
$
|
26
|
|
|
$
|
31
|
|
Total derivatives designated as cash flow hedging instruments
|
$
|
80
|
|
|
$
|
12
|
|
|
$
|
26
|
|
|
$
|
31
|
|
|
|
|
|
|
|
|
|
||||||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
||||||||
Commodity instruments
|
$
|
284
|
|
|
$
|
336
|
|
|
$
|
366
|
|
|
$
|
285
|
|
Interest rate hedging instruments
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total derivatives not designated as hedging instruments
|
$
|
286
|
|
|
$
|
336
|
|
|
$
|
366
|
|
|
$
|
285
|
|
Total derivatives
|
$
|
366
|
|
|
$
|
348
|
|
|
$
|
392
|
|
|
$
|
316
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Realized gain (loss)
(1)(2)
|
|
|
|
|
|
|
|
||||||||
Commodity derivative instruments
|
$
|
45
|
|
|
$
|
(53
|
)
|
|
$
|
111
|
|
|
$
|
20
|
|
Total realized gain (loss)
|
$
|
45
|
|
|
$
|
(53
|
)
|
|
$
|
111
|
|
|
$
|
20
|
|
|
|
|
|
|
|
|
|
||||||||
Mark-to-market gain (loss)
(3)
|
|
|
|
|
|
|
|
||||||||
Commodity derivative instruments
|
$
|
106
|
|
|
$
|
66
|
|
|
$
|
(77
|
)
|
|
$
|
39
|
|
Interest rate hedging instruments
|
1
|
|
|
—
|
|
|
4
|
|
|
1
|
|
||||
Total mark-to-market gain (loss)
|
$
|
107
|
|
|
$
|
66
|
|
|
$
|
(73
|
)
|
|
$
|
40
|
|
Total activity, net
|
$
|
152
|
|
|
$
|
13
|
|
|
$
|
38
|
|
|
$
|
60
|
|
(1)
|
Does not include the realized value associated with derivative instruments that settle through physical delivery.
|
(2)
|
Includes amortization of acquisition date fair value of financial derivative activity related to the acquisition of Champion Energy, Calpine Solutions and North American Power.
|
(3)
|
In addition to changes in market value on derivatives not designated as hedges, changes in mark-to-market gain (loss) also includes hedge ineffectiveness and adjustments to reflect changes in credit default risk exposure.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Realized and mark-to-market gain (loss)
(1)
|
|
|
|
|
|
|
|
||||||||
Derivatives contracts included in operating revenues
(2)(3)
|
$
|
34
|
|
|
$
|
60
|
|
|
$
|
(142
|
)
|
|
$
|
252
|
|
Derivatives contracts included in fuel and purchased energy expense
(2)(3)
|
117
|
|
|
(47
|
)
|
|
176
|
|
|
(193
|
)
|
||||
Interest rate hedging instruments included in interest expense
|
1
|
|
|
—
|
|
|
4
|
|
|
1
|
|
||||
Total activity, net
|
$
|
152
|
|
|
$
|
13
|
|
|
$
|
38
|
|
|
$
|
60
|
|
(1)
|
In addition to changes in market value on derivatives not designated as hedges, changes in mark-to-market gain (loss) also includes hedge ineffectiveness and adjustments to reflect changes in credit default risk exposure.
|
(2)
|
Does not include the realized value associated with derivative instruments that settle through physical delivery.
|
(3)
|
Includes amortization of acquisition date fair value of financial derivative activity related to the acquisition of Champion Energy, Calpine Solutions and North American Power.
|
|
Three Months Ended September 30,
|
|
Three Months Ended September 30,
|
||||||||||||||
|
Gain (Loss) Recognized in
OCI (Effective Portion)
|
|
Gain (Loss) Reclassified from
AOCI into Income (Effective Portion)
(3)
|
||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Affected Line Item on the Consolidated Condensed Statements of Operations
|
||||||||
Interest rate hedging instruments
(1)(2)
|
$
|
13
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
(10
|
)
|
|
Interest expense
|
Interest rate hedging instruments
(1)(2)
|
—
|
|
|
1
|
|
|
—
|
|
|
(1
|
)
|
|
Depreciation expense
|
||||
Total
|
$
|
13
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
(11
|
)
|
|
|
|
Nine Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||
|
Gain (Loss) Recognized in
OCI (Effective Portion)
|
|
Gain (Loss) Reclassified from
AOCI into Income (Effective Portion)
(3)
|
||||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Affected Line Item on the Consolidated Condensed Statements of Operations
|
||||||||
Interest rate hedging instruments
(1)(2)
|
$
|
82
|
|
|
$
|
(12
|
)
|
|
$
|
(6
|
)
|
|
$
|
(32
|
)
|
|
Interest expense
|
Interest rate hedging instruments
(1)(2)
|
1
|
|
|
5
|
|
|
(1
|
)
|
|
(5
|
)
|
|
Depreciation expense
|
||||
Total
|
$
|
83
|
|
|
$
|
(7
|
)
|
|
$
|
(7
|
)
|
|
$
|
(37
|
)
|
|
|
(1)
|
We recorded nil and
$1 million
in gains on hedge ineffectiveness related to our interest rate hedging instruments designated as cash flow hedges during the three and nine months ended
September 30, 2018
. We did not record any material gain (loss) on hedge ineffectiveness related to our interest rate hedging instruments designated as cash flow hedges during the three and nine months ended
September 30, 2017
.
|
(2)
|
We recorded an income tax benefit of
$1 million
and income tax expense of
$1 million
for the three months ended
September 30, 2018
and
2017
, respectively, and income tax expense of
$3 million
and
$3 million
for the nine months ended
September 30, 2018
and
2017
, respectively, in AOCI related to our cash flow hedging activities.
|
(3)
|
Cumulative cash flow hedge gains (losses) attributable to Calpine, net of tax, remaining in AOCI were
$5 million
and
$(72) million
at
September 30, 2018
and
December 31, 2017
, respectively. Cumulative cash flow hedge (losses) attributable to the noncontrolling interest, net of tax, remaining in AOCI were
$(3) million
and
$(6) million
at
September 30, 2018
and
December 31, 2017
, respectively.
|
8.
|
Use of Collateral
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Margin deposits
(1)
|
$
|
223
|
|
|
$
|
221
|
|
Natural gas and power prepayments
|
30
|
|
|
23
|
|
||
Total margin deposits and natural gas and power prepayments with our counterparties
(2)
|
$
|
253
|
|
|
$
|
244
|
|
|
|
|
|
||||
Letters of credit issued
|
$
|
946
|
|
|
$
|
885
|
|
First priority liens under power and natural gas agreements
|
77
|
|
|
102
|
|
||
First priority liens under interest rate hedging instruments
|
12
|
|
|
31
|
|
||
Total letters of credit and first priority liens with our counterparties
|
$
|
1,035
|
|
|
$
|
1,018
|
|
|
|
|
|
||||
Margin deposits posted with us by our counterparties
(1)(3)
|
$
|
24
|
|
|
$
|
4
|
|
Letters of credit posted with us by our counterparties
|
18
|
|
|
30
|
|
||
Total margin deposits and letters of credit posted with us by our counterparties
|
$
|
42
|
|
|
$
|
34
|
|
(1)
|
We offset fair value amounts recognized for derivative instruments executed with the same counterparty under a master netting arrangement for financial statement presentation; therefore, amounts recognized for the right to reclaim, or the obligation to return, cash collateral are presented net with the corresponding derivative instrument fair values. See Note 7 for further discussion of our derivative instruments subject to master netting arrangements.
|
(2)
|
At
September 30, 2018
and
December 31, 2017
,
$34 million
and
$64 million
, respectively, were included in current and long-term derivative assets and liabilities,
$211 million
and
$171 million
, respectively, were included in margin deposits and other prepaid expense and
$8 million
and
$9 million
, respectively, were included in other assets on our Consolidated Condensed Balance Sheets.
|
(3)
|
At
September 30, 2018
and
December 31, 2017
,
$13 million
and
$2 million
, respectively, were included in current and long-term derivative assets and liabilities and
$11 million
and
$2 million
, respectively, were included in other current liabilities on our Consolidated Condensed Balance Sheets.
|
9.
|
Income Taxes
|
•
|
a reduction in the U.S. federal corporate tax rate from
35%
to
21%
;
|
•
|
limitation on the deduction of certain interest expense;
|
•
|
full expense deduction for certain business capital expenditures;
|
•
|
limitation on the utilization of NOLs arising after December 31, 2017; and
|
•
|
a system of taxing foreign-sourced income from multinational corporations.
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Income tax expense (benefit)
|
|
$
|
128
|
|
|
$
|
(2
|
)
|
|
$
|
78
|
|
|
$
|
—
|
|
Effective tax rate
|
|
32
|
%
|
|
(1
|
)%
|
|
75
|
%
|
|
—
|
%
|
10.
|
Stock-Based Compensation
|
•
|
all restricted stock and restricted stock units were vested and canceled and the holders received a cash payment equal to a share price of
$15.25
per share less any applicable withholding taxes;
|
•
|
all vested and unvested stock options were vested (in the case of unvested stock options) and canceled and the holders of the stock options received a cash payment equal to the intrinsic value based on a share price of
$15.25
per share less any applicable withholding taxes; and
|
•
|
all Performance Share Units (“PSUs”), including the PSUs awarded in 2015 for the measurement period of January 1, 2015 through December 31, 2017, were vested and canceled in exchange for a cash payment with the payout value based on the greater of target value or actual performance over the truncated period using a share price of
$15.25
per share less any applicable withholding taxes.
|
11.
|
Commitments and Contingencies
|
12.
|
Related Party Transactions
|
13.
|
Segment Information
|
|
Three Months Ended September 30, 2018
|
||||||||||||||||||||||
|
Wholesale
|
|
|
|
Consolidation
|
|
|
||||||||||||||||
|
West
|
|
Texas
|
|
East
|
|
Retail
|
|
Elimination
|
|
Total
|
||||||||||||
Total operating revenues
(1)
|
$
|
701
|
|
|
$
|
1,022
|
|
|
$
|
460
|
|
|
$
|
1,125
|
|
|
$
|
(418
|
)
|
|
$
|
2,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commodity Margin
|
$
|
356
|
|
|
$
|
187
|
|
|
$
|
320
|
|
|
$
|
111
|
|
|
$
|
—
|
|
|
$
|
974
|
|
Add: Mark-to-market commodity activity, net and other
(2)
|
(13
|
)
|
|
137
|
|
|
(26
|
)
|
|
(20
|
)
|
|
(8
|
)
|
|
70
|
|
||||||
Less:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating and maintenance expense
|
85
|
|
|
63
|
|
|
72
|
|
|
36
|
|
|
(8
|
)
|
|
248
|
|
||||||
Depreciation and amortization expense
|
70
|
|
|
57
|
|
|
39
|
|
|
13
|
|
|
—
|
|
|
179
|
|
||||||
General and other administrative expense
|
7
|
|
|
12
|
|
|
7
|
|
|
5
|
|
|
—
|
|
|
31
|
|
||||||
Other operating expenses
|
11
|
|
|
3
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
23
|
|
||||||
(Income) from unconsolidated subsidiaries
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
||||||
Income from operations
|
170
|
|
|
189
|
|
|
172
|
|
|
37
|
|
|
—
|
|
|
568
|
|
||||||
Interest expense
|
|
|
|
|
|
|
|
|
|
|
158
|
|
|||||||||||
Debt extinguishment costs and other (income) expense, net
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|||||||||||
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
$
|
406
|
|
|
Three Months Ended September 30, 2017
|
||||||||||||||||||||||
|
Wholesale
|
|
|
|
Consolidation
|
|
|
||||||||||||||||
|
West
|
|
Texas
|
|
East
|
|
Retail
|
|
Elimination
|
|
Total
|
||||||||||||
Total operating revenues
(1)
|
$
|
508
|
|
|
$
|
901
|
|
|
$
|
445
|
|
|
$
|
1,091
|
|
|
$
|
(359
|
)
|
|
$
|
2,586
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commodity Margin
|
$
|
304
|
|
|
$
|
172
|
|
|
$
|
287
|
|
|
$
|
101
|
|
|
$
|
—
|
|
|
$
|
864
|
|
Add: Mark-to-market commodity activity, net and other
(2)
|
(44
|
)
|
|
153
|
|
|
(35
|
)
|
|
(65
|
)
|
|
(8
|
)
|
|
1
|
|
||||||
Less:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating and maintenance expense
|
78
|
|
|
63
|
|
|
60
|
|
|
35
|
|
|
(8
|
)
|
|
228
|
|
||||||
Depreciation and amortization expense
|
59
|
|
|
52
|
|
|
49
|
|
|
19
|
|
|
—
|
|
|
179
|
|
||||||
General and other administrative expense
|
10
|
|
|
15
|
|
|
8
|
|
|
4
|
|
|
—
|
|
|
37
|
|
||||||
Other operating expenses
|
11
|
|
|
5
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
23
|
|
||||||
Impairment losses
|
—
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
||||||
(Income) from unconsolidated subsidiaries
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
||||||
Income (loss) from operations
|
102
|
|
|
178
|
|
|
135
|
|
|
(22
|
)
|
|
—
|
|
|
393
|
|
||||||
Interest expense
|
|
|
|
|
|
|
|
|
|
|
156
|
|
|||||||||||
Debt extinguishment costs and other (income) expense, net
|
|
|
|
|
|
|
|
|
|
|
8
|
|
|||||||||||
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
$
|
229
|
|
|
Nine Months Ended September 30, 2018
|
||||||||||||||||||||||
|
Wholesale
|
|
|
|
Consolidation
|
|
|
||||||||||||||||
|
West
|
|
Texas
|
|
East
|
|
Retail
|
|
Elimination
|
|
Total
|
||||||||||||
Total operating revenues
(3)
|
$
|
1,536
|
|
|
$
|
2,155
|
|
|
$
|
1,415
|
|
|
$
|
2,998
|
|
|
$
|
(946
|
)
|
|
$
|
7,158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commodity Margin
|
$
|
782
|
|
|
$
|
504
|
|
|
$
|
729
|
|
|
$
|
265
|
|
|
$
|
—
|
|
|
$
|
2,280
|
|
Add: Mark-to-market commodity activity, net and other
(4)
|
(23
|
)
|
|
(109
|
)
|
|
7
|
|
|
41
|
|
|
(23
|
)
|
|
(107
|
)
|
||||||
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Operating and maintenance expense
|
255
|
|
|
208
|
|
|
208
|
|
|
117
|
|
|
(23
|
)
|
|
765
|
|
||||||
Depreciation and amortization expense
|
204
|
|
|
190
|
|
|
133
|
|
|
39
|
|
|
—
|
|
|
566
|
|
||||||
General and other administrative expense
|
28
|
|
|
50
|
|
|
30
|
|
|
14
|
|
|
—
|
|
|
122
|
|
||||||
Other operating expenses
|
33
|
|
|
22
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
79
|
|
||||||
(Income) from unconsolidated subsidiaries
|
—
|
|
|
—
|
|
|
(17
|
)
|
|
1
|
|
|
—
|
|
|
(16
|
)
|
||||||
Income (loss) from operations
|
239
|
|
|
(75
|
)
|
|
358
|
|
|
135
|
|
|
—
|
|
|
657
|
|
||||||
Interest expense
|
|
|
|
|
|
|
|
|
|
|
466
|
|
|||||||||||
Debt extinguishment costs and other (income) expense, net
|
|
|
|
|
|
|
|
|
|
|
73
|
|
|||||||||||
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
$
|
118
|
|
|
Nine Months Ended September 30, 2017
|
||||||||||||||||||||||
|
Wholesale
|
|
|
|
Consolidation
|
|
|
||||||||||||||||
|
West
|
|
Texas
|
|
East
|
|
Retail
|
|
Elimination
|
|
Total
|
||||||||||||
Total operating revenues
(3)
|
$
|
1,379
|
|
|
$
|
2,057
|
|
|
$
|
1,318
|
|
|
$
|
2,961
|
|
|
$
|
(764
|
)
|
|
$
|
6,951
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Commodity Margin
|
$
|
721
|
|
|
$
|
433
|
|
|
$
|
619
|
|
|
$
|
296
|
|
|
$
|
—
|
|
|
$
|
2,069
|
|
Add: Mark-to-market commodity activity, net and other
(4)
|
10
|
|
|
123
|
|
|
(14
|
)
|
|
(157
|
)
|
|
(22
|
)
|
|
(60
|
)
|
||||||
Less:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Operating and maintenance expense
|
275
|
|
|
238
|
|
|
214
|
|
|
107
|
|
|
(22
|
)
|
|
812
|
|
||||||
Depreciation and amortization expense
|
178
|
|
|
160
|
|
|
146
|
|
|
58
|
|
|
—
|
|
|
542
|
|
||||||
General and other administrative expense
|
30
|
|
|
51
|
|
|
23
|
|
|
13
|
|
|
—
|
|
|
117
|
|
||||||
Other operating expenses
|
28
|
|
|
11
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
63
|
|
||||||
Impairment losses
|
28
|
|
|
13
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41
|
|
||||||
(Gain) on sale of assets, net
|
—
|
|
|
—
|
|
|
(27
|
)
|
|
—
|
|
|
—
|
|
|
(27
|
)
|
||||||
(Income) from unconsolidated subsidiaries
|
—
|
|
|
—
|
|
|
(17
|
)
|
|
—
|
|
|
—
|
|
|
(17
|
)
|
||||||
Income (loss) from operations
|
192
|
|
|
83
|
|
|
242
|
|
|
(39
|
)
|
|
—
|
|
|
478
|
|
||||||
Interest expense
|
|
|
|
|
|
|
|
|
|
|
469
|
|
|||||||||||
Debt extinguishment costs and other (income) expense, net
|
|
|
|
|
|
|
|
|
|
|
42
|
|
|||||||||||
Loss before income taxes
|
|
|
|
|
|
|
|
|
|
|
$
|
(33
|
)
|
(1)
|
Includes intersegment revenues of
$160 million
and
$96 million
in the West,
$238 million
and
$191 million
in Texas,
$19 million
and
$71 million
in the East and
$1 million
and
$1 million
in Retail for the three months ended
September 30, 2018
and
2017
, respectively. Intersegment revenues for sales between wholesale and retail operations are executed to manage supply needs for our retail operations from our wholesale fleet or to facilitate margin collateral netting at Calpine Corporation.
|
(2)
|
Includes
$30 million
and
$33 million
of lease levelization and
$26 million
and
$39 million
of amortization expense for the three months ended
September 30, 2018
and
2017
, respectively.
|
(3)
|
Includes intersegment revenues of
$344 million
and
$204 million
in the West,
$447 million
and
$317 million
in Texas,
$152 million
and
$240 million
in the East and
$3 million
and
$3 million
in Retail for the nine months ended
September 30, 2018
and
2017
, respectively. Intersegment revenues for sales between wholesale and retail operations are executed to manage supply needs for our retail operations from our wholesale fleet or to facilitate margin collateral netting at Calpine Corporation.
|
(4)
|
Includes
$(5) million
and
$(13) million
of lease levelization and
$79 million
and
$143 million
of amortization expense for the nine months ended
September 30, 2018
and
2017
, respectively.
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operation
s
|
|
2018
|
|
2017
|
|
Change
|
|
% Change
|
|||||||
Operating revenues:
|
|
|
|
|
|
|
|
|||||||
Commodity revenue
|
$
|
2,845
|
|
|
$
|
2,506
|
|
|
$
|
339
|
|
|
14
|
|
Mark-to-market gain
|
40
|
|
|
76
|
|
|
(36
|
)
|
|
(47
|
)
|
|||
Other revenue
|
5
|
|
|
4
|
|
|
1
|
|
|
25
|
|
|||
Operating revenues
|
2,890
|
|
|
2,586
|
|
|
304
|
|
|
12
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|||||||
Fuel and purchased energy expense:
|
|
|
|
|
|
|
|
|||||||
Commodity expense
|
1,912
|
|
|
1,711
|
|
|
(201
|
)
|
|
(12
|
)
|
|||
Mark-to-market (gain) loss
|
(66
|
)
|
|
10
|
|
|
76
|
|
|
#
|
|
|||
Fuel and purchased energy expense
|
1,846
|
|
|
1,721
|
|
|
(125
|
)
|
|
(7
|
)
|
|||
Operating and maintenance expense
|
248
|
|
|
228
|
|
|
(20
|
)
|
|
(9
|
)
|
|||
Depreciation and amortization expense
|
179
|
|
|
179
|
|
|
—
|
|
|
—
|
|
|||
General and other administrative expense
|
31
|
|
|
37
|
|
|
6
|
|
|
16
|
|
|||
Other operating expenses
|
23
|
|
|
23
|
|
|
—
|
|
|
—
|
|
|||
Total operating expenses
|
2,327
|
|
|
2,188
|
|
|
(139
|
)
|
|
(6
|
)
|
|||
Impairment losses
|
—
|
|
|
12
|
|
|
12
|
|
|
#
|
|
|||
(Income) from unconsolidated subsidiaries
|
(5
|
)
|
|
(7
|
)
|
|
(2
|
)
|
|
(29
|
)
|
|||
Income from operations
|
568
|
|
|
393
|
|
|
175
|
|
|
45
|
|
|||
Interest expense
|
158
|
|
|
156
|
|
|
(2
|
)
|
|
(1
|
)
|
|||
Debt extinguishment costs
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|||
Other (income) expense, net
|
3
|
|
|
7
|
|
|
4
|
|
|
57
|
|
|||
Income before income taxes
|
406
|
|
|
229
|
|
|
177
|
|
|
77
|
|
|||
Income tax expense (benefit)
|
128
|
|
|
(2
|
)
|
|
(130
|
)
|
|
#
|
|
|||
Net income
|
278
|
|
|
231
|
|
|
47
|
|
|
20
|
|
|||
Net income attributable to the noncontrolling interest
|
(6
|
)
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|||
Net income attributable to Calpine
|
$
|
272
|
|
|
$
|
225
|
|
|
$
|
47
|
|
|
21
|
|
|
2018
|
|
2017
|
|
Change
|
|
% Change
|
||||
Operating Performance Metrics:
|
|
|
|
|
|
|
|
||||
MWh generated (in thousands)
(1)(2)
|
31,022
|
|
|
28,834
|
|
|
2,188
|
|
|
8
|
|
Average availability
(2)
|
95.5
|
%
|
|
95.1
|
%
|
|
0.4
|
%
|
|
—
|
|
Average total MW in operation
(1)
|
25,070
|
|
|
25,185
|
|
|
(115
|
)
|
|
—
|
|
Average capacity factor, excluding peakers
|
59.3
|
%
|
|
57.4
|
%
|
|
1.9
|
%
|
|
3
|
|
Steam Adjusted Heat Rate
(2)
|
7,379
|
|
|
7,407
|
|
|
28
|
|
|
—
|
|
#
|
Variance of 100% or greater
|
(1)
|
Represents generation and capacity from power plants that we both consolidate and operate and excludes Greenfield LP, Whitby, Freeport Energy Center, 21.5% of Hidalgo Energy Center and 25% each of Freestone Energy Center and Russell City Energy Center.
|
(2)
|
Generation, average availability and Steam Adjusted Heat Rate exclude power plants and units that are inactive.
|
(1)
|
Commodity Margin excludes amortization expense related to contracts recorded at fair value, non-cash GAAP-related adjustments to levelize revenues from tolling agreements, Commodity revenue and Commodity expense attributable to the noncontrolling interest and other unusual items or non-recurring items.
|
|
2018
|
|
2017
|
|
Change
|
|
% Change
|
|||||||
Operating revenues:
|
|
|
|
|
|
|
|
|||||||
Commodity revenue
|
$
|
7,362
|
|
|
$
|
6,714
|
|
|
$
|
648
|
|
|
10
|
|
Mark-to-market gain (loss)
|
(220
|
)
|
|
224
|
|
|
(444
|
)
|
|
#
|
|
|||
Other revenue
|
16
|
|
|
13
|
|
|
3
|
|
|
23
|
|
|||
Operating revenues
|
7,158
|
|
|
6,951
|
|
|
207
|
|
|
3
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
|
|||||||
Fuel and purchased energy expense:
|
|
|
|
|
|
|
|
|||||||
Commodity expense
|
5,128
|
|
|
4,757
|
|
|
(371
|
)
|
|
(8
|
)
|
|||
Mark-to-market (gain) loss
|
(143
|
)
|
|
185
|
|
|
328
|
|
|
#
|
|
|||
Fuel and purchased energy expense
|
4,985
|
|
|
4,942
|
|
|
(43
|
)
|
|
(1
|
)
|
|||
Operating and maintenance expense
|
765
|
|
|
812
|
|
|
47
|
|
|
6
|
|
|||
Depreciation and amortization expense
|
566
|
|
|
542
|
|
|
(24
|
)
|
|
(4
|
)
|
|||
General and other administrative expense
|
122
|
|
|
117
|
|
|
(5
|
)
|
|
(4
|
)
|
|||
Other operating expenses
|
79
|
|
|
63
|
|
|
(16
|
)
|
|
(25
|
)
|
|||
Total operating expenses
|
6,517
|
|
|
6,476
|
|
|
(41
|
)
|
|
(1
|
)
|
|||
Impairment losses
|
—
|
|
|
41
|
|
|
41
|
|
|
#
|
|
|||
(Gain) on sale of assets, net
|
—
|
|
|
(27
|
)
|
|
(27
|
)
|
|
#
|
|
|||
(Income) from unconsolidated subsidiaries
|
(16
|
)
|
|
(17
|
)
|
|
(1
|
)
|
|
(6
|
)
|
|||
Income from operations
|
657
|
|
|
478
|
|
|
179
|
|
|
37
|
|
|||
Interest expense
|
466
|
|
|
469
|
|
|
3
|
|
|
1
|
|
|||
Debt extinguishment costs
|
1
|
|
|
26
|
|
|
25
|
|
|
96
|
|
|||
Other (income) expense, net
|
72
|
|
|
16
|
|
|
(56
|
)
|
|
#
|
|
|||
Income (loss) before income taxes
|
118
|
|
|
(33
|
)
|
|
151
|
|
|
#
|
|
|||
Income tax expense
|
78
|
|
|
—
|
|
|
(78
|
)
|
|
#
|
|
|||
Net income (loss)
|
40
|
|
|
(33
|
)
|
|
73
|
|
|
#
|
|
|||
Net income attributable to the noncontrolling interest
|
(14
|
)
|
|
(14
|
)
|
|
—
|
|
|
—
|
|
|||
Net income (loss) attributable to Calpine
|
$
|
26
|
|
|
$
|
(47
|
)
|
|
$
|
73
|
|
|
#
|
|
|
2018
|
|
2017
|
|
Change
|
|
% Change
|
||||
Operating Performance Metrics:
|
|
|
|
|
|
|
|
||||
MWh generated (in thousands)
(1)(2)
|
73,273
|
|
|
71,507
|
|
|
1,766
|
|
|
2
|
|
Average availability
(2)
|
88.0
|
%
|
|
88.2
|
%
|
|
(0.2
|
)%
|
|
—
|
|
Average total MW in operation
(1)
|
25,137
|
|
|
25,196
|
|
|
(59
|
)
|
|
—
|
|
Average capacity factor, excluding peakers
|
47.6
|
%
|
|
48.3
|
%
|
|
(0.7
|
)%
|
|
(1
|
)
|
Steam Adjusted Heat Rate
(2)
|
7,366
|
|
|
7,362
|
|
|
(4
|
)
|
|
—
|
|
#
|
Variance of 100% or greater
|
(1)
|
Represents generation and capacity from power plants that we both consolidate and operate and excludes Greenfield LP, Whitby, Freeport Energy Center, 21.5% of Hidalgo Energy Center and 25% each of Freestone Energy Center and Russell City Energy Center.
|
(2)
|
Generation, average availability and Steam Adjusted Heat Rate exclude power plants and units that are inactive.
|
(1)
|
Commodity Margin excludes amortization expense related to contracts recorded at fair value, non-cash GAAP-related adjustments to levelize revenues from tolling agreements, Commodity revenue and Commodity expense attributable to the noncontrolling interest and other unusual items or non-recurring items.
|
West:
|
2018
|
|
2017
|
|
Change
|
|
% Change
|
|||||||
Commodity Margin (in millions)
|
$
|
356
|
|
|
$
|
304
|
|
|
$
|
52
|
|
|
17
|
|
Commodity Margin per MWh generated
|
$
|
41.44
|
|
|
$
|
43.50
|
|
|
$
|
(2.06
|
)
|
|
(5
|
)
|
|
|
|
|
|
|
|
|
|||||||
MWh generated (in thousands)
|
8,590
|
|
|
6,989
|
|
|
1,601
|
|
|
23
|
|
|||
Average availability
|
97.5
|
%
|
|
93.5
|
%
|
|
4.0
|
%
|
|
4
|
|
|||
Average total MW in operation
|
7,425
|
|
|
7,425
|
|
|
—
|
|
|
—
|
|
|||
Average capacity factor, excluding peakers
|
55.1
|
%
|
|
45.4
|
%
|
|
9.7
|
%
|
|
21
|
|
|||
Steam Adjusted Heat Rate
|
7,384
|
|
|
7,351
|
|
|
(33
|
)
|
|
—
|
|
Texas:
|
2018
|
|
2017
|
|
Change
|
|
% Change
|
|||||||
Commodity Margin (in millions)
|
$
|
187
|
|
|
$
|
172
|
|
|
$
|
15
|
|
|
9
|
|
Commodity Margin per MWh generated
|
$
|
13.28
|
|
|
$
|
13.27
|
|
|
$
|
0.01
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|||||||
MWh generated (in thousands)
|
14,081
|
|
|
12,959
|
|
|
1,122
|
|
|
9
|
|
|||
Average availability
|
95.7
|
%
|
|
95.7
|
%
|
|
—
|
%
|
|
—
|
|
|||
Average total MW in operation
|
8,850
|
|
|
8,848
|
|
|
2
|
|
|
—
|
|
|||
Average capacity factor, excluding peakers
|
67.0
|
%
|
|
66.3
|
%
|
|
0.7
|
%
|
|
1
|
|
|||
Steam Adjusted Heat Rate
|
7,186
|
|
|
7,235
|
|
|
49
|
|
|
1
|
|
East:
|
2018
|
|
2017
|
|
Change
|
|
% Change
|
|||||||
Commodity Margin (in millions)
|
$
|
320
|
|
|
$
|
287
|
|
|
$
|
33
|
|
|
11
|
|
Commodity Margin per MWh generated
|
$
|
38.32
|
|
|
$
|
32.30
|
|
|
$
|
6.02
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|||||||
MWh generated (in thousands)
|
8,351
|
|
|
8,886
|
|
|
(535
|
)
|
|
(6
|
)
|
|||
Average availability
|
93.7
|
%
|
|
95.8
|
%
|
|
(2.1
|
)%
|
|
(2
|
)
|
|||
Average total MW in operation
|
8,795
|
|
|
8,912
|
|
|
(117
|
)
|
|
(1
|
)
|
|||
Average capacity factor, excluding peakers
|
53.1
|
%
|
|
58.1
|
%
|
|
(5.0
|
)%
|
|
(9
|
)
|
|||
Steam Adjusted Heat Rate
|
7,710
|
|
|
7,714
|
|
|
4
|
|
|
—
|
|
Retail:
|
2018
|
|
2017
|
|
Change
|
|
% Change
|
|||||||
Commodity Margin (in millions)
|
$
|
111
|
|
|
$
|
101
|
|
|
$
|
10
|
|
|
10
|
|
West:
|
2018
|
|
2017
|
|
Change
|
|
% Change
|
|||||||
Commodity Margin (in millions)
|
$
|
782
|
|
|
$
|
721
|
|
|
$
|
61
|
|
|
8
|
|
Commodity Margin per MWh generated
|
$
|
44.35
|
|
|
$
|
44.89
|
|
|
$
|
(0.54
|
)
|
|
(1
|
)
|
|
|
|
|
|
|
|
|
|||||||
MWh generated (in thousands)
|
17,631
|
|
|
16,061
|
|
|
1,570
|
|
|
10
|
|
|||
Average availability
|
87.8
|
%
|
|
84.1
|
%
|
|
3.7
|
%
|
|
4
|
|
|||
Average total MW in operation
|
7,425
|
|
|
7,425
|
|
|
—
|
|
|
—
|
|
|||
Average capacity factor, excluding peakers
|
38.1
|
%
|
|
35.2
|
%
|
|
2.9
|
%
|
|
8
|
|
|||
Steam Adjusted Heat Rate
|
7,366
|
|
|
7,383
|
|
|
17
|
|
|
—
|
|
Texas:
|
2018
|
|
2017
|
|
Change
|
|
% Change
|
|||||||
Commodity Margin (in millions)
|
$
|
504
|
|
|
$
|
433
|
|
|
$
|
71
|
|
|
16
|
|
Commodity Margin per MWh generated
|
$
|
14.30
|
|
|
$
|
13.06
|
|
|
$
|
1.24
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|||||||
MWh generated (in thousands)
|
35,247
|
|
|
33,166
|
|
|
2,081
|
|
|
6
|
|
|||
Average availability
|
89.0
|
%
|
|
88.9
|
%
|
|
0.1
|
%
|
|
—
|
|
|||
Average total MW in operation
|
8,850
|
|
|
8,855
|
|
|
(5
|
)
|
|
—
|
|
|||
Average capacity factor, excluding peakers
|
57.4
|
%
|
|
57.2
|
%
|
|
0.2
|
%
|
|
—
|
|
|||
Steam Adjusted Heat Rate
|
7,147
|
|
|
7,144
|
|
|
(3
|
)
|
|
—
|
|
East:
|
2018
|
|
2017
|
|
Change
|
|
% Change
|
|||||||
Commodity Margin (in millions)
|
$
|
729
|
|
|
$
|
619
|
|
|
$
|
110
|
|
|
18
|
|
Commodity Margin per MWh generated
|
$
|
35.74
|
|
|
$
|
27.78
|
|
|
$
|
7.96
|
|
|
29
|
|
|
|
|
|
|
|
|
|
|||||||
MWh generated (in thousands)
|
20,395
|
|
|
22,280
|
|
|
(1,885
|
)
|
|
(8
|
)
|
|||
Average availability
|
87.1
|
%
|
|
90.5
|
%
|
|
(3.4
|
)%
|
|
(4
|
)
|
|||
Average total MW in operation
|
8,862
|
|
|
8,916
|
|
|
(54
|
)
|
|
(1
|
)
|
|||
Average capacity factor, excluding peakers
|
44.4
|
%
|
|
50.0
|
%
|
|
(5.6
|
)%
|
|
(11
|
)
|
|||
Steam Adjusted Heat Rate
|
7,752
|
|
|
7,692
|
|
|
(60
|
)
|
|
(1
|
)
|
Retail:
|
2018
|
|
2017
|
|
Change
|
|
% Change
|
|||||||
Commodity Margin (in millions)
|
$
|
265
|
|
|
$
|
296
|
|
|
$
|
(31
|
)
|
|
(10
|
)
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Cash and cash equivalents, corporate
(1)
|
$
|
446
|
|
|
$
|
228
|
|
Cash and cash equivalents, non-corporate
|
88
|
|
|
56
|
|
||
Total cash and cash equivalents
|
534
|
|
|
284
|
|
||
Restricted cash
|
229
|
|
|
159
|
|
||
Corporate Revolving Facility availability
(2)
|
1,165
|
|
|
1,161
|
|
||
CDHI letter of credit facility availability
|
55
|
|
|
56
|
|
||
Other facilities availability
(3)
|
7
|
|
|
—
|
|
||
Total current liquidity availability
(4)
|
$
|
1,990
|
|
|
$
|
1,660
|
|
(1)
|
Includes $24 million and $4 million of margin deposits posted with us by our counterparties at
September 30, 2018
and
December 31, 2017
, respectively. See Note 8 of the Notes to Consolidated Condensed Financial Statements for further information related to our collateral.
|
(2)
|
Our ability to use availability under our Corporate Revolving Facility is unrestricted. On May 18, 2018, we amended our Corporate Revolving Facility to increase the capacity by approximately $220 million from $1.47 billion to approximately $1.69 billion.
|
(3)
|
During the second quarter of 2018, we executed two unsecured $50 million letter of credit facilities with third party financial institutions, each maturing on June 20, 2020. On July 26, 2018, we upsized one of the letter of credit facilities to $100 million.
|
(4)
|
Our ability to use corporate cash and cash equivalents is unrestricted. See Note 1 of the Notes to Consolidated Condensed Financial Statements for a description of the restrictions on our use of non-corporate cash and cash equivalents and restricted cash. Our $300 million CDHI letter of credit facility is restricted to support certain obligations under PPAs and power transmission and natural gas transportation agreements.
|
•
|
the level of Market Heat Rates;
|
•
|
our continued ability to successfully hedge our Commodity Margin;
|
•
|
changes in U.S. macroeconomic conditions;
|
•
|
maintaining acceptable availability levels for our fleet;
|
•
|
the effect of current and pending environmental regulations in the markets in which we participate;
|
•
|
improving the efficiency and profitability of our operations;
|
•
|
increasing future contractual cash flows; and
|
•
|
our significant counterparties performing under their contracts with us.
|
|
September 30, 2018
|
|
December 31, 2017
|
||||
Corporate Revolving Facility
(1)
|
$
|
524
|
|
|
$
|
629
|
|
CDHI
|
245
|
|
|
244
|
|
||
Various project financing facilities
|
232
|
|
|
196
|
|
||
Other corporate facilities
(2)
|
143
|
|
|
—
|
|
||
Total
|
$
|
1,144
|
|
|
$
|
1,069
|
|
(1)
|
The Corporate Revolving Facility represents our primary revolving facility.
|
(2)
|
During the second quarter of 2018, we executed two unsecured $50 million letter of credit facilities with third party financial institutions, each maturing on June 20, 2020. On July 26, 2018, we upsized one of the letter of credit facilities to $100 million.
|
|
2018
|
|
2017
|
||||
Beginning cash and cash equivalents
|
$
|
443
|
|
|
$
|
606
|
|
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
873
|
|
|
825
|
|
||
Investing activities
|
(313
|
)
|
|
(162
|
)
|
||
Financing activities
|
(240
|
)
|
|
(621
|
)
|
||
Net increase in cash, cash equivalents and restricted cash
|
320
|
|
|
42
|
|
||
Ending cash, cash equivalents and restricted cash
|
$
|
763
|
|
|
$
|
648
|
|
•
|
Income from operations
— Income from operations, adjusted for non-cash items, increased by $257 million for the nine months ended September 30, 2018, compared to the same period in 2017. Non-cash items consist primarily of depreciation and amortization, income from unconsolidated investments in subsidiaries, gain on sale of assets and mark-to-market activity. The increase in income from operations was primarily driven by a $219 million increase in Commodity revenue, net of Commodity expense, excluding non-cash amortization and a $47 million decrease in operating and maintenance expense. See “Results of Operations for the Nine months ended September 30, 2018 and 2017” above for further discussion of these changes.
|
•
|
Working capital employed
— Working capital employed increased by $208 million for the nine months ended September 30, 2018 compared to the same period in 2017 after adjusting for changes in debt extinguishment costs and mark-to-market related balances which did not impact cash provided by operating activities. This change was primarily due to an increase in net collateral margining requirements on our commodity hedging activities during the period ended September 30, 2018 as well as an increase in the purchase of environmental products inventory necessary to manage business requirements.
|
•
|
Capital expenditures
— Capital expenditures for the nine months ended September 30, 2018, were $314 million, an increase of $66 million over the nine month period ended September 30, 2017. The increase was primarily due to additional capitalization of seasonal maintenance outage costs during 2018 when compared to 2017.
|
•
|
Acquisitions and Divestitures
—
During the nine months ended September 30, 2017, we closed on the acquisition of the retail electric provider North American Power for a net purchase price paid of $111 million and also closed on the sale of Osprey Energy Center receiving net proceeds of $162 million. During the nine months ended September 30, 2018, we sold the Auburndale Peaking Energy Center for $10 million.
|
•
|
First Lien Term Loans and First Lien Notes
— During the nine months ended September 30, 2017, we received proceeds of $396 million from the issuance of the 2019 First Lien Term Loan which was used, together with cash on hand, to redeem $453 million of the 2023 First Lien Notes. In addition, we used cash on hand to repay $400 million of our outstanding 2017 First Lien Term Loan. There were no similar activities during the nine months ended September 30, 2018.
|
•
|
Stock Repurchases
— During the nine months ended September 30, 2018, we repurchased $79 million of our equity classified share-based awards on the effective date of the Merger. There was no similar activity during the same period in 2017.
|
|
Commodity Instruments
|
|
Interest Rate Hedging Instruments
|
|
Total
|
||||||
Fair value of contracts outstanding at January 1, 2018
|
$
|
81
|
|
|
$
|
(5
|
)
|
|
$
|
76
|
|
Items recognized or otherwise settled during the period
(1)(2)
|
88
|
|
|
10
|
|
|
98
|
|
|||
Fair value attributable to new contracts
(3)
|
14
|
|
|
—
|
|
|
14
|
|
|||
Changes in fair value attributable to price movements
|
(235
|
)
|
|
65
|
|
|
(170
|
)
|
|||
Fair value of contracts outstanding at September 30, 2018
(4)
|
$
|
(52
|
)
|
|
$
|
70
|
|
|
$
|
18
|
|
(1)
|
Commodity contract settlements consist of the realization of previously recognized losses on contracts not designated as hedging instruments of $120 million (represents a portion of Commodity revenue and Commodity expense as reported on our Consolidated Condensed Statements of Operations) and $32 million related to current period losses from other changes in derivative assets and liabilities not reflected in OCI or earnings.
|
(2)
|
Interest rate settlements consist of $8 million related to realized losses from settlements of designated cash flow hedges and $2 million related to realized losses from settlements of undesignated interest rate hedging instruments (represents a portion of interest expense as reported on our Consolidated Condensed Statements of Operations).
|
(3)
|
Fair value attributable to new contracts includes $17 million and nil of fair value related to commodity contracts and interest rate hedging instruments, respectively, which are not reflected in OCI or earnings.
|
(4)
|
We netted all amounts allowed under the derivative accounting guidance on the Consolidated Condensed Balance Sheet, which includes derivative transactions under enforceable master netting arrangements and related cash collateral. Net commodity and interest rate derivative assets and liabilities reported in Notes 6 and 7 of the Notes to Consolidated Condensed Financial Statements are shown net of collateral paid to and received from counterparties under legally enforceable master netting arrangements.
|
Fair Value Source
|
|
2018
|
|
2019-2020
|
|
2021-2022
|
|
After 2022
|
|
Total
|
||||||||||
Prices actively quoted
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Prices provided by other external sources
|
|
7
|
|
|
(156
|
)
|
|
8
|
|
|
1
|
|
|
(140
|
)
|
|||||
Prices based on models and other valuation methods
|
|
20
|
|
|
55
|
|
|
(3
|
)
|
|
16
|
|
|
88
|
|
|||||
Total fair value
|
|
$
|
27
|
|
|
$
|
(101
|
)
|
|
$
|
5
|
|
|
$
|
17
|
|
|
$
|
(52
|
)
|
|
2018
|
|
2017
|
||||
Three months ended September 30:
|
|
|
|
||||
High
|
$
|
54
|
|
|
$
|
29
|
|
Low
|
$
|
32
|
|
|
$
|
17
|
|
Average
|
$
|
41
|
|
|
$
|
22
|
|
|
|
|
|
||||
Nine months ended September 30:
|
|
|
|
||||
High
|
$
|
54
|
|
|
$
|
29
|
|
Low
|
$
|
19
|
|
|
$
|
16
|
|
Average
|
$
|
34
|
|
|
$
|
20
|
|
As of September 30
|
$
|
47
|
|
|
$
|
22
|
|
•
|
credit approvals;
|
•
|
routine monitoring of counterparties’ and customer’s credit limits and their overall credit ratings;
|
•
|
limiting our marketing, hedging and optimization activities with high risk counterparties;
|
•
|
margin, collateral, or prepayment arrangements; and
|
•
|
payment netting arrangements, or master netting arrangements that allow for the netting of positive and negative exposures of various contracts associated with a single counterparty.
|
Credit Quality
(Based on Credit Ratings
as of September 30, 2018)
|
|
2018
|
|
2019-2020
|
|
2021-2022
|
|
After 2022
|
|
Total
|
||||||||||
Investment grade
|
|
$
|
13
|
|
|
$
|
(141
|
)
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
$
|
(130
|
)
|
Non-investment grade
|
|
—
|
|
|
(4
|
)
|
|
(5
|
)
|
|
1
|
|
|
(8
|
)
|
|||||
No external ratings
(1)
|
|
14
|
|
|
44
|
|
|
12
|
|
|
16
|
|
|
86
|
|
|||||
Total fair value
|
|
$
|
27
|
|
|
$
|
(101
|
)
|
|
$
|
5
|
|
|
$
|
17
|
|
|
$
|
(52
|
)
|
(1)
|
Primarily comprised of the fair value of derivative instruments held with customers that are not rated by third party credit agencies due to the nature and size of the customers.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
Exhibit
Number
|
|
Description
|
|
|
|
|
Second Amended and Restated Limited Partnership Agreement of CPN Management, LP a Delaware Limited Partnership, dated August 29, 2018.†
|
|
|
|
|
|
Amended and Restated Executive Employment Agreement between the Company and John B. (Thad) Hill, dated August 29, 2018 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on From 8-K filed with the SEC on September 4, 2018).†
|
|
|
|
|
|
Amended and Restated Executive Employment Agreement between the Company and W. Thaddeus Miller, dated August 29, 2018 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on From 8-K filed with the SEC on September 4, 2018).†
|
|
|
|
|
|
Executive Employment Agreement between the Company and Zamir Rauf, dated August 29, 2018 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on From 8-K filed with the SEC on September 4, 2018).†
|
|
|
|
|
|
Restrictive Covenant Agreement between the Company and Zamir Rauf, dated August 29, 2018 (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on From 8-K filed with the SEC on September 4, 2018).†
|
|
|
|
|
|
Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
Certification of the Chief Executive Officer and the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
|
|
|
|
|
101.INS
|
|
XBRL Instance Document.
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema.
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase.
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase.
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase.
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase.
|
*
|
Furnished herewith.
|
†
|
Management contract or compensatory plan, contract or arrangement.
|
CALPINE CORPORATION
|
||
(Registrant)
|
||
|
|
|
By:
|
|
/s/ ZAMIR RAUF
|
|
|
Zamir Rauf
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
TABLE OF CONTENTS
|
||||
|
|
|
|
|
ARTICLE I. DEFINITIONS
|
1
|
|
||
|
|
|
|
|
|
1.01
|
Certain Definitions
|
1
|
|
|
1.02
|
Construction
|
12
|
|
|
|
|
|
|
ARTICLE II. FORMATION
|
12
|
|
||
|
|
|
|
|
|
2.01
|
Continuation of the Partnership
|
12
|
|
|
2.02
|
Name
|
13
|
|
|
2.03
|
Registered Office; Registered Agent
|
13
|
|
|
2.04
|
Principal Place of Business
|
13
|
|
|
2.05
|
Purpose; Powers
|
13
|
|
|
2.06
|
Fiscal Year
|
13
|
|
|
2.07
|
Foreign Qualification Governmental Filings
|
13
|
|
|
2.08
|
Duration
|
13
|
|
|
|
|
|
|
ARTICLE III. PARTNERS; REPRESENTATIONS AND WARRANTIES OF PARTNERS
|
14
|
|
||
|
|
|
|
|
|
3.01
|
Partners
|
14
|
|
|
3.02
|
Additional Partners
|
14
|
|
|
3.03
|
Representations and Warranties
|
14
|
|
|
3.04
|
Liability to Third Parties
|
15
|
|
|
|
|
|
|
ARTICLE IV. INTERESTS AND CAPITAL CONTRIBUTIONS
|
16
|
|
||
|
|
|
|
|
|
4.01
|
Interests
|
16
|
|
|
4.02
|
Capital Contributions
|
16
|
|
|
4.03
|
Return of Contribution
|
16
|
|
|
4.04
|
Withdrawal of Capital
|
16
|
|
|
4.05
|
Further Contributions
|
16
|
|
|
4.06
|
Capital Accounts
|
16
|
|
|
4.07
|
Award of Interests to Class B Partners
|
16
|
|
|
|
|
|
|
ARTICLE V. DISTRIBUTIONS, REDEMPTIONS AND ALLOCATIONS
|
18
|
|
||
|
|
|
|
|
|
5.01
|
Distributions
|
18
|
|
|
5.02
|
Benchmark Amounts; Other Adjustments
|
19
|
|
|
5.03
|
Tax Distributions
|
19
|
|
|
5.04
|
Distributions in Error
|
19
|
|
|
5.05
|
Allocations
|
20
|
|
|
5.06
|
Withholding
|
24
|
|
|
|
|
|
|
ARTICLE VI. TRANSFERS OF INTERESTS
|
24
|
|
||
|
|
|
|
|
|
6.01
|
Transfers
|
24
|
|
|
6.02
|
Drag-Along Rights
|
26
|
|
|
6.03
|
Tag-Along Rights
|
27
|
|
|
6.04
|
Pledge of Interests
|
31
|
|
|
6.05
|
Repurchase Rights
|
31
|
|
|
6.06
|
Elective Transfer
|
34
|
|
|
6.07
|
IPO
|
35
|
|
|
6.08
|
Power of Attorney
|
36
|
|
|
6.09
|
Incapacity
|
36
|
|
|
6.10
|
Non-Competition; Non-Solicitation; Non-Disparagement
|
36
|
|
|
6.11
|
Parent Distribution
|
39
|
|
|
|
|
|
|
ARTICLE VII. MANAGEMENT
|
40
|
|
||
|
|
|
|
|
|
7.01
|
Management
|
40
|
|
|
7.02
|
Limitation of Duties
|
40
|
|
|
7.03
|
Transactions with Affiliates
|
40
|
|
|
7.04
|
Officers; Partners
|
40
|
|
|
7.05
|
Indemnification; Limitation of Liability
|
41
|
|
|
7.06
|
Officers’ Insurance
|
43
|
|
|
|
|
|
|
ARTICLE VIII. OTHER RIGHTS AND OBLIGATIONS OF PARTNERS
|
43
|
|
||
|
|
|
|
|
|
8.01
|
Books and Records
|
43
|
|
|
8.02
|
Schedule K-1 Information
|
43
|
|
|
8.03
|
Confidentiality
|
43
|
|
|
|
|
|
|
ARTICLE IX. TAXES
|
43
|
|
||
|
|
|
|
|
|
9.01
|
Tax Returns
|
43
|
|
|
9.02
|
Tax Classification
|
44
|
|
|
9.03
|
Partnership Representative
|
44
|
|
|
9.04
|
Section 409A
|
44
|
|
|
|
|
|
|
ARTICLE X. CERTIFICATION OF INTERESTS; REPORTS; BANK ACCOUNTS
|
44
|
|
||
|
|
|
|
|
|
10.01
|
Certification of Interests
|
44
|
|
|
10.02
|
Reports
|
45
|
|
|
10.03
|
Bank Accounts
|
45
|
|
|
|
|
|
|
ARTICLE XI. DISSOLUTION, LIQUIDATION TERMINATION AND CONVERSION
|
45
|
|
||
|
|
|
|
|
|
11.01
|
Dissolution
|
45
|
|
|
11.02
|
Liquidation and Termination
|
45
|
|
|
11.03
|
Cancellation of Filing
|
46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARTICLE XII. GENERAL PROVISIONS
|
46
|
|
||
|
|
|
|
|
|
12.01
|
Changes in Interests; Disposition of Assets
|
46
|
|
|
12.02
|
Offset
|
47
|
|
|
12.03
|
Notices
|
47
|
|
|
12.04
|
Entire Agreement; Supersedure
|
47
|
|
|
12.05
|
Effect of Waiver or Consent
|
47
|
|
|
12.06
|
Amendment or Modification
|
47
|
|
|
12.07
|
Binding Effect
|
48
|
|
|
12.08
|
Governing Law; Severability
|
48
|
|
|
12.09
|
Further Assurances
|
48
|
|
|
12.10
|
Consent to Jurisdiction; Service of Process; Waiver of Jury Trial
|
48
|
|
|
12.11
|
Waiver of Certain Rights
|
49
|
|
|
12.12
|
Counterparts
|
49
|
|
|
|
|
|
|
EXHIBIT A
|
A-1
|
|
||
|
|
|
||
EXHIBIT B
|
B-1
|
|
||
|
|
|
||
EXHIBIT C
|
C-1
|
|
||
|
|
|
||
EXHIBIT D
|
D-1
|
|
||
|
|
|
||
EXHIBIT E
|
E-1
|
|
(A)
|
in the case of an Initial Tag-Along Sale under clause (1) of the first sentence of
Section 6.03(a)
, the product of (1) the Initial Parent Sale
|
(B)
|
in the case of a Subsequent Tag-Along Sale under clause (x) of the second sentence of
Section 6.03(a)
, the product of (1) the Subsequent Parent Sale Percentage
multiplied
by (2) such Tag-Along Participant’s Interests at such time;
|
(C)
|
in the case of an Initial Tag-Along Sale under clause (2) or (3) of the first sentence of
Section 6.03(a)
, the product of (1) the Initial ECP Sale Percentage
multiplied
by (2) such Tag-Along Participant’s Interests at such time; and
|
(D)
|
in the case of a Subsequent Tag-Along Sale under clause (y) of the second sentence of
Section 6.03(a)
, the product of (1) the Subsequent ECP Sale Percentage
multiplied
by (2) such Tag-Along Participant’s Interests at such time (such participation rights in the prior clauses (A), (B), (C) and (D) being hereinafter referred to as “
Tag-Along Rights
”).
|
(A)
|
“
Initial Parent Sale Percentage
” shall be equal to a percentage, (1) the numerator of which shall be equal to the Class A Interests proposed to be Transferred by Parent in the Initial Tag-Along Sale under clause (1) of the first sentence of
Section 6.03(a)
(including any such Class A Interests Transferred by Parent prior to such Initial Tag-Along Sale) and (2) the denominator of which shall be an amount equal to (i) the aggregate Class A Interests held by Parent on the Effective Date
plus
(ii) any additional Class A Interests acquired by Parent after the Effective Date and prior to the applicable Initial Tag-Along Sale;
|
(B)
|
“
Subsequent Parent Sale Percentage
” shall be equal to a percentage, (1) the numerator of which shall be equal to the Class A Interests proposed to be Transferred by Parent in the applicable Subsequent Tag-Along Sale under clause (x) of the second sentence of
Section 6.03(a)
and (2) the denominator of which shall be the aggregate Class A Interests held by Parent as of immediately prior to the applicable Subsequent Tag-Along Sale;
provided
,
however
, that, in the event that the applicable Tag-Along Participant has not exercised in full its Tag-Along Rights in all previous Tag-Along Sales, such Tag-Along Participant shall have the right to include all or any such unexercised Tag-Along Rights in the then applicable Tag-Along Sale;
|
(C)
|
“
Initial ECP Sale Percentage
” shall be equal to a percentage, (1) the numerator of which shall be equal to the Parent Interests proposed to be Transferred by ECP in the Initial Tag-Along Sale under clause (2) or (3) of the first sentence of
Section 6.03(a)
(including any such Parent Interests Transferred by ECP prior to such Initial Tag-Along
|
(D)
|
“
Subsequent ECP Sale Percentage
” shall be equal to a percentage, (1) the numerator of which shall be equal to the Parent Interests proposed to be Transferred by ECP in the Subsequent Tag-Along Sale under clause (y) of the second sentence of
Section 6.03(a)
and (2) the denominator of which shall be the aggregate Parent Interests held by ECP as of immediately prior to the applicable Subsequent Tag-Along Sale;
provided
,
however
, that, in the event that the applicable Tag-Along Participant has not exercised in full its Tag-Along Rights in all previous Tag-Along Sales, such Tag-Along Participant shall have the right to include all or any such unexercised Tag-Along Rights in the then applicable Tag-Along Sale.
|
Partner Name and Address
|
Type of Interest
|
Capital Contribution
|
Unreturned Capital
|
Percentage Interest
(2)
|
Benchmark Component
|
General Partner
(1)
Volt Parent GP, LLC
51 JFK Parkway
Suite 200
Short Hills, NJ 07078
Attn: President and CEO
Fax: (973) 671-6101
|
General Partner
|
|
|
|
|
Parent
(1)
Volt Parent, LP
51 JFK Parkway
Suite 200
Short Hills, NJ 07078
Attn: President and CEO
Fax: (973) 671-6101
|
Class A
|
$5,439,205,757.50
|
$5,439,205,757.50
|
100.0000%
|
None
|
Partner Name and Address
|
Date of Issuance
|
Type of Interest
|
Percentage Interest
(3)
|
Benchmark Components
|
John Hill
|
March 8, 2018
|
Class B Interest
|
1.3900%
|
$5,452,861,009.00
|
William Miller
|
March 8, 2018
|
Class B Interest
|
0.5300%
|
$5,452,861,009.00
|
Zamir Rauf
|
March 8, 2018
|
Class B Interest
|
0.3900%
|
$5,452,861,009.00
|
August 29, 2018
|
Class B Interest
|
0.0100%
|
$5,452,861,009.00
|
(1)
|
All notices shall be sent with a copy concurrently to Latham & Watkins LLP, 885 Third Avenue, New York, NY 10022-4834, Facsimile No.: (212) 751-4864, Attn: David Kurzweil.
|
(2)
|
Not adjusted for Benchmark Amount.
|
(3)
|
Reflects the Awards granted to such Class B Partner, whether vested or unvested. Awards are subject to vesting as set forth in the applicable Award Agreement.
|
Name
|
Title
|
Tyler Reeder
|
President and Chief Executive Officer
|
Andrew Singer
|
General Counsel and Secretary
|
Andrew Gilbert
|
Vice President and Treasurer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Calpine Corporation (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ JOHN B. (THAD) HILL III
|
John B. (Thad) Hill III
|
President, Chief Executive Officer and Director
|
Calpine Corporation
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Calpine Corporation (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ ZAMIR RAUF
|
Zamir Rauf
|
Executive Vice President and
Chief Financial Officer
|
Calpine Corporation
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
|
|
|
|
|
/s/ JOHN B. (THAD) HILL III
|
|
|
|
/s/ ZAMIR RAUF
|
|
|
John B. (Thad) Hill III
|
|
|
|
Zamir Rauf
|
|
|
President,
|
|
|
|
Executive Vice President and
|
|
|
Chief Executive Officer and Director
|
|
|
|
Chief Financial Officer
|
|
|
Calpine Corporation
|
|
|
|
Calpine Corporation
|
|