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Calpine Corporation is a power company with 77 power plants and is one of the largest power generators of electricity from natural gas and geothermal resources in the U.S. The company sells power and services to wholesale customers who include commercial and industrial end-users, state and regional wholesale market operators, retail customers. The company employs 2,256 full-time employees. Geographic segments have a generation capacity of 7,590 MW in the West, 9,115 MW in Texas and 9,330 MW with an additional 361 MW under construction in the East. Calpine serves customers in 23 states in the U.S., Canada and Mexico.

During 2019 Calpine paid cash distributions to its parent, CPN Management, totalling $1.15 billion. Since the beginning of 2017 until January 2020, the company reduced its total debt by approximately $1.6 billion and funded approximately $350 million of expansion projects.

According to the Annual Financial Report, Calpine Corporation reported a net income of $770 million in 2019, compared to a net income of $10 million the previous year. The year-over-year increase in net income was primarily due to an increase in commodity margin in the Texas and West segments and an increase in non-cash, mark-to-market earnings on commodity hedge position for the year ended December 31^st 2019 compared to 2018.

Operating revenues of the company recorded an increase of $560 million, or by 5.9%, from $9,512 million in 2018 to $10,072 million in 2019. 

Income from operation increased by $830 million or by 208% in 2019, from $762 million in 2018 to $1,592 million in 2019 due to an increase in commodity margin in wholesale regional segments and a decrease in operating and maintenance expense.

Operating and maintenance expense decreased by $19 million in 2019 as well as general and other administrative expense decreased by $8 million in 2019 compared to 2018, primarily driven by a $32 million decrease associated with the acceleration of stock-based compensation expense during the first quarter of 2018 in connection with the consummation of the Merger.

The spread between Commodity revenue and Commodity expense represents Commodity Margin, which is a very important financial performance indicator of the company. The following Commodity Margins were achieved by the company´s Segments in 2018.

Commodity Margin in the West segment increased by $91 million, or 9%, from $1,060 million in 2018 to $1,151 million in 2019, primarily due to higher resource adequacy revenues and higher contribution from hedging activities.

Commodity Margin in the Texas segment increased by $211 million, or 33%, from $646 million in 2018 to $857 million in 2019, primarily due to higher market Spark Spreads during August and September 2019 compared to the same months in 2018.

Commodity Margin in the East segment decreased by $46 million, or 5%, from $970 million in 2018 to $924 million in 2019, primarily due to the sale of Garrison and RockGen Energy Centers on July 10^th 2019.

Commodity Margin in the Retail segment increased by $25 million, or by 7%, from $357 million in 2018 to $382 million in 2019, primarily due to increased contribution from gas supply hedging activity associated with retail gas business and lower costs.

Total Commodity Margin of all segments increased by $281 million, or by 9.3%, from $3,033 million in 2018 to $3,314 million in 2019.
At the end of 2019 liquidity was approximately $2.9 billion, compared to $1.4 billion in 2018.

Cash provided by operating activities for 2019 was $1,556 million for the year ended December 31^st 2019, compared to $1,101 million for the year ended December 31^st 2018. The increase in cash provided by operating activities of 41% was primarily due to an increase in Commodity Margin and in income from operations increased by $325 million in 2019 compared to 2018.

Cash used in investing activities was $258 million for the year ended December 31^st 2019, compared to $392 million for the year ended December 31^st 2018. The decrease was primarily due to divestitures during 2019. Calpine closed on the sale of the Garrison and RockGen Energy Centers for $303 million.

The company´s results in 2019 were significantly better than the results in 2018. Calpine believes that it is positioned well in 2020 to achieve unlevered free cash flow and other liquidity metrics, as well as financial performance within the range of its results in 2019. This belief is based on the company’s robust hedging program and stability of the company’s revenue streams.