Company Quick10K Filing
Calpine
Price15.12 EPS8,809,524
Shares0 P/E0
MCap0 P/FCF0
Net Debt9,510 EBIT1,424
TEV9,510 TEV/EBIT7
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-13
10-K 2019-12-31 Filed 2020-02-25
10-Q 2019-09-30 Filed 2019-11-08
10-Q 2019-06-30 Filed 2019-08-08
10-Q 2019-03-31 Filed 2019-05-10
10-K 2018-12-31 Filed 2019-03-28
10-Q 2018-09-30 Filed 2018-11-08
10-Q 2018-06-30 Filed 2018-08-09
10-Q 2018-03-31 Filed 2018-05-10
10-K 2017-12-31 Filed 2018-02-16
10-Q 2017-09-30 Filed 2017-11-01
10-Q 2017-06-30 Filed 2017-07-28
10-Q 2017-03-31 Filed 2017-04-28
10-K 2016-12-31 Filed 2017-02-10
10-Q 2016-09-30 Filed 2016-10-28
10-Q 2016-06-30 Filed 2016-07-29
10-Q 2016-03-31 Filed 2016-04-29
10-K 2015-12-31 Filed 2016-02-12
10-Q 2015-09-30 Filed 2015-10-30
10-Q 2015-06-30 Filed 2015-07-30
10-Q 2015-03-31 Filed 2015-05-01
10-K 2014-12-31 Filed 2015-02-13
10-Q 2014-09-30 Filed 2014-11-06
10-Q 2014-06-30 Filed 2014-08-01
10-Q 2014-03-31 Filed 2014-05-01
10-K 2013-12-31 Filed 2014-02-13
10-Q 2013-09-30 Filed 2013-11-07
10-Q 2013-06-30 Filed 2013-07-25
10-K 2012-12-31 Filed 2013-02-13
10-Q 2012-09-30 Filed 2012-11-06
10-Q 2012-06-30 Filed 2012-07-27
10-Q 2012-03-31 Filed 2012-04-27
10-K 2011-12-31 Filed 2012-02-10
10-Q 2011-09-30 Filed 2011-10-28
10-Q 2011-06-30 Filed 2011-07-29
10-Q 2011-03-31 Filed 2011-04-29
10-K 2010-12-31 Filed 2011-02-18
10-Q 2010-09-30 Filed 2010-10-29
10-Q 2010-06-30 Filed 2010-07-30
10-Q 2010-03-31 Filed 2010-05-05
10-K 2009-12-31 Filed 2010-02-25
8-K 2020-07-27 Regulation FD, Regulation FD
8-K 2020-06-09
8-K 2020-05-13
8-K 2020-04-06
8-K 2020-02-25
8-K 2020-02-24
8-K 2020-02-12
8-K 2019-12-27
8-K 2019-12-20
8-K 2019-12-19
8-K 2019-12-10
8-K 2019-12-10
8-K 2019-11-20
8-K 2019-11-08
8-K 2019-08-12
8-K 2019-07-29
8-K 2019-07-10
8-K 2019-05-10
8-K 2019-04-05
8-K 2019-03-08
8-K 2018-08-29
8-K 2018-07-02
8-K 2018-05-18
8-K 2018-04-09
8-K 2018-03-16
8-K 2018-03-08
8-K 2018-02-23

CPN 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
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
EX-31.1 cpn_exhibit311x03312020.htm
EX-31.2 cpn_exhibit312x03312020.htm
EX-32.1 cpn_exhibit321x03312020.htm

Calpine Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
2016128402012201420172020
Assets, Equity
2.92.21.50.80.1-0.62012201420172020
Rev, G Profit, Net Income
1.51.00.5-0.1-0.6-1.12012201420172020
Ops, Inv, Fin

10-Q 1 cpn_10qx03312020.htm CALPINE 10-Q FOR QUARTERLY PERIOD ENDED MARCH 31, 2020 Document


    
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 
____________________
Form 10-Q
(Mark One)
[X]
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
 
 
OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
 
For the quarterly period ended March 31, 2020
 
 
 
 
Or
 
 
 
[    ]
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
 
 
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 001-12079
______________________
image0a10.jpg
Calpine Corporation
(A Delaware Corporation)
I.R.S. Employer Identification No. 77-0212977
717 Texas Avenue, Suite 1000, Houston, Texas 77002
Telephone: (713) 830-2000


Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes [ ]    No [X]
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X]    No [    ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
[   ]
 
Accelerated filer            
[    ]
Non-accelerated filer
[X]
 
Smaller reporting company 
[    ]
Emerging growth company
[   ]
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes [    ]    No [X]

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date: 105.2 shares of common stock, par value $0.001, were outstanding as of May 12, 2020, none of which were publicly traded.


 





CALPINE CORPORATION AND SUBSIDIARIES
REPORT ON FORM 10-Q
For the Quarter Ended March 31, 2020
INDEX
 
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

i



DEFINITIONS
As used in this report for the quarter ended March 31, 2020 (this “Report”), the following abbreviations and terms have the meanings as listed below. Additionally, the terms “Calpine,” “we,” “us” and “our” refer to Calpine Corporation and its consolidated subsidiaries, unless the context clearly indicates otherwise. The term “Calpine Corporation” refers only to Calpine Corporation and not to any of its subsidiaries. Unless and as otherwise stated, any references in this Report to any agreement means such agreement and all schedules, exhibits and attachments in each case as amended, restated, supplemented or otherwise modified to the date of filing this Report.
ABBREVIATION
 
DEFINITION
 
 
 
2019 Form 10-K
 
Calpine Corporation’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on February 25, 2020
 
 
 
2022 First Lien Notes
 
The $750 million aggregate principal amount of 6.0% senior secured notes due 2022, issued October 31, 2013, repaid on December 20, 2019 and January 21, 2020
 
 
 
2023 Senior Unsecured Notes
 
The $1.25 billion aggregate principal amount of 5.375% senior unsecured notes due 2023, issued July 22, 2014, repaid on December 27, 2019 and January 21, 2020
 
 
 
2024 First Lien Notes
 
The $490 million aggregate principal amount of 5.875% senior secured notes due 2024, issued October 31, 2013, repaid on December 20, 2019 and January 21, 2020
 
 
 
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
 
 
 
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
 
 
 
2026 First Lien Term Loans
 
Collectively, the $950 million first lien senior secured term loan, dated April 5, 2019, 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 and the $750 million first lien senior secured term loan, dated August 12, 2019, among Calpine Corporation, as borrower, the lending party thereto, Credit Suisse AG, Cayman Islands Branch, as administrative agent and MUFG Union Bank, N.A., as collateral agent
 
 
 
2028 First Lien Notes
 
The $1.25 billion aggregate principal amount of 4.5% senior secured notes due 2028, issued December 20, 2019
 
 
 
2028 Senior Unsecured Notes
 
The $1.4 billion aggregate principal amount of 5.125% senior unsecured notes due 2028, issued December 27, 2019
 
 
 
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
 
 
 

ii



ABBREVIATION
 
DEFINITION
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
 
 
 
CAISO
 
California Independent System Operator which is an entity that manages the power grid and operates the competitive power market in California
 
 
 
Calpine Receivables
 
Calpine Receivables, LLC, an indirect, wholly owned subsidiary of Calpine, which was established as a 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 a 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
 
 
 
CCA
 
Community Choice Aggregators which are local governments that procure power on behalf of their residents, businesses and municipal accounts from an alternative supplier while still receiving transmission and distribution service from their existing utility
 
 
 
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
 
 
 
CDHI
 
Calpine Development Holdings, Inc., an indirect, wholly owned subsidiary of Calpine
 
 
 
Champion Energy
 
Champion Energy Marketing, LLC, an indirect, wholly owned subsidiary of Calpine, which owns a retail electric provider that serves residential, governmental, commercial and industrial customers in deregulated electricity markets in 13 states and the District of Columbia, including presence in Texas, the mid-Atlantic and Northeast
 
 
 
Chapter 11
 
Chapter 11 of the U.S. Bankruptcy Code
 
 
 
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
 
 
 
Commodity Margin
 
Measure of profit 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
 
 
 

iii



ABBREVIATION
 
DEFINITION
Corporate Revolving Facility
 
The approximately $2.0 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, May 18, 2018, April 5, 2019 and August 12, 2019 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
 
 
 
CPUC
 
California Public Utilities Commission
 
 
 
ERCOT
 
Electric Reliability Council of Texas which is an entity that manages the flow of electric power to Texas customers representing approximately 90 percent of the state's electric load
 
 
 
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, the 2026 First Lien Notes and the 2028 First Lien Notes
 
 
 
First Lien Term Loans
 
Collectively, the 2024 First Lien Term Loan and the 2026 First Lien Term Loans
 
 
 
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(s), 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.
 
 
 
Market Heat Rate(s)
 
The regional power price divided by the corresponding regional natural gas price
 
 
 
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)
 
 
 
NYMEX
 
New York Mercantile Exchange
 
 
 
OCI
 
Other Comprehensive Income
 
 
 

iv



ABBREVIATION
 
DEFINITION
OTC
 
Over-the-Counter
 
 
 
PG&E
 
Pacific Gas and Electric Company
 
 
 
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
 
 
 
RMR Contract(s)
 
Reliability Must Run contract(s)
 
 
 
RTO(s)
 
Regional Transmission Organization(s), 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
 
 
 
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, the 2025 Senior Unsecured Notes and the 2028 Senior Unsecured Notes
 
 
 
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, which we sold on November 20, 2019, 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

v



Forward-Looking Statements

This Report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act, and Section 21E of the Exchange Act. Forward-looking statements may appear throughout this Report, including without limitation, the “Management’s Discussion and Analysis” section. We use words such as “believe,” “intend,” “expect,” “anticipate,” “plan,” “may,” “will,” “should,” “estimate,” “potential,” “project” and similar expressions to identify forward-looking statements. Such statements include, among others, those concerning our expected financial performance and strategic and operational plans, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. We believe that the forward-looking statements are based upon reasonable assumptions and expectations. However, you are cautioned that any such forward-looking statements are not guarantees of future performance and that a number of risks and uncertainties could cause actual results to differ materially from those anticipated in the forward-looking statements. Such risks and uncertainties include, but are not limited to:
Public health threats or outbreaks of communicable diseases, such as the ongoing COVID-19 pandemic and its impact on our business, suppliers, customers, employees and supply chains;
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 the 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 Term Loans, First Lien Notes, 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 and floods, acts of terrorism, cyber attacks or wildfires 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 or if a significant customer were to seek bankruptcy protection under Chapter 11;
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, Commodity Futures Trading Commission, FERC and other regulatory bodies; and
Other risks identified in this Report, in our 2019 Form 10-K and in other reports filed by us with the SEC.


vi



Given the risks and uncertainties surrounding forward-looking statements, you should not place undue reliance on these statements. Many of these factors are beyond our ability to control or predict. Our forward-looking statements speak only as of the date of this Report. Other than as required by law, we undertake no obligation to update or revise forward-looking statements, whether as a result of new information, future events, or otherwise.
Where You Can Find Other Information
Our website is www.calpine.com. Information contained on our website is not part of this Report. Information that we furnish or file with the SEC, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to, or exhibits included in, these reports are available for download, free of charge, through our website. Our SEC filings, including exhibits filed therewith, are also available directly on the SEC’s website at www.sec.gov.

vii



PART I — FINANCIAL INFORMATION
Item 1.
Financial Statements

CALPINE CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
 
 
Three Months Ended March 31,
 
 
2020
 
2019
 
(in millions)
Operating revenues:
 
 
 
 
Commodity revenue
 
$
1,943

 
$
2,538

Mark-to-market gain
 
345

 
56

Other revenue
 
4

 
5

Operating revenues

2,292

 
2,599

Operating expenses:
 
 
 
 
Fuel and purchased energy expense:
 
 
 
 
Commodity expense
 
1,347

 
1,758

Mark-to-market loss
 
144

 
10

Fuel and purchased energy expense

1,491

 
1,768

Operating and maintenance expense
 
240

 
239

Depreciation and amortization expense
 
164

 
174

General and other administrative expense
 
31

 
32

Other operating expenses
 
17

 
34

Total operating expenses

1,943

 
2,247

(Income) from unconsolidated subsidiaries
 

 
(6
)
Income from operations

349

 
358

Interest expense
 
169

 
149

Gain on extinguishment of debt
 

 
(4
)
Other (income) expense, net
 
4

 
23

Income before income taxes

176

 
190

Income tax expense
 
46

 
10

Net income

130

 
180

Net income attributable to the noncontrolling interest
 
(2
)
 
(5
)
Net income attributable to Calpine

$
128

 
$
175


The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.

1



CALPINE CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

 
Three Months Ended March 31,
 
2020
 
2019
 
(in millions)
Net income
$
130

 
$
180

Cash flow hedging activities:
 
 
 
Loss on cash flow hedges before reclassification adjustment for cash flow hedges realized in net income
(110
)
 
(23
)
Reclassification adjustment for (gain) loss on cash flow hedges realized in net income
6

 
(2
)
Foreign currency translation gain (loss)
(7
)
 
2

Income tax benefit
3

 

Other comprehensive loss
(108
)
 
(23
)
Comprehensive income
22

 
157

Comprehensive (income) attributable to the noncontrolling interest
(2
)
 
(5
)
Comprehensive income attributable to Calpine
$
20


$
152


The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.


2



CALPINE CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
 
 
March 31,
 
December 31,
 
 
2020
 
2019
 
 
(in millions, except share and per share amounts)
ASSETS
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
531

 
$
1,131

Accounts receivable, net of allowance of $9 and $9
 
598

 
757

Inventories
 
543

 
543

Margin deposits and other prepaid expense
 
337

 
367

Restricted cash, current
 
260

 
299

Derivative assets, current
 
226

 
156

Other current assets
 
44

 
49

Total current assets
 
2,539

 
3,302

Property, plant and equipment, net
 
11,959

 
11,963

Restricted cash, net of current portion
 
46

 
46

Investments in unconsolidated subsidiaries
 
63

 
70

Long-term derivative assets
 
263

 
246

Goodwill
 
242

 
242

Intangible assets, net
 
323

 
340

Other assets
 
438

 
440

Total assets
 
$
15,873

 
$
16,649

LIABILITIES & STOCKHOLDER’S EQUITY
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
584

 
$
714

Accrued interest payable
 
102

 
61

Debt, current portion
 
217

 
1,268

Derivative liabilities, current
 
194

 
225

Other current liabilities
 
503

 
657

Total current liabilities
 
1,600

 
2,925

Debt, net of current portion
 
10,836

 
10,438

Long-term derivative liabilities
 
184

 
63

Other long-term liabilities
 
622

 
565

Total liabilities
 
13,242

 
13,991

 
 
 
 
 
Commitments and contingencies (see Note 9)
 

 

Stockholder’s equity:
 
 
 
 
Common stock, $0.001 par value per share; authorized 5,000 shares, 105.2 shares issued and outstanding
 

 

Additional paid-in capital
 
9,651

 
9,584

Accumulated deficit
 
(6,795
)
 
(6,923
)
Accumulated other comprehensive loss
 
(225
)
 
(114
)
Total Calpine stockholder’s equity
 
2,631

 
2,547

Noncontrolling interest
 

 
111

Total stockholder’s equity
 
2,631

 
2,658

Total liabilities and stockholder’s equity
 
$
15,873

 
$
16,649


The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.

3



CALPINE CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS EQUITY
For the Three Months Ended March 31, 2020 and 2019
(Unaudited)
(in millions)
 
Common
Stock
 
Additional
Paid-In
Capital
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive
Loss
 
Noncontrolling
Interest
 
Total
Stockholder’s
Equity
Balance, December 31, 2019
$

 
$
9,584

 
$
(6,923
)
 
$
(114
)
 
$
111

 
$
2,658

Net income

 

 
128

 

 
2

 
130

Other comprehensive loss

 

 

 
(108
)
 

 
(108
)
Acquisition of noncontrolling interest (Note 3)

 
67

 

 
(3
)
 
(113
)
 
(49
)
Balance, March 31, 2020
$


$
9,651


$
(6,795
)

$
(225
)

$


$
2,631


 
Common
Stock
 
Additional
Paid-In
Capital
 
Accumulated
Deficit
 
Accumulated
Other
Comprehensive
Loss
 
Noncontrolling
Interest
 
Total
Stockholder’s
Equity
Balance, December 31, 2018
$

 
$
9,582

 
$
(6,542
)
 
$
(77
)
 
$
93

 
$
3,056

Net income

 

 
175

 

 
5

 
180

Other comprehensive income

 

 

 
(23
)
 

 
(23
)
Other

 
2

 

 

 
(2
)
 

Balance, March 31, 2019
$


$
9,584


$
(6,367
)

$
(100
)

$
96


$
3,213


The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.


4



CALPINE CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)

 
 
Three Months Ended March 31,
 
 
2020
 
2019
 
 
(in millions)
Cash flows from operating activities:
 
 
 
 
Net income
 
$
130

 
$
180

Adjustments to reconcile net income to net cash provided by operating activities:
 

 

Depreciation and amortization(1)
 
184

 
199

Gain on extinguishment of debt
 

 
(4
)
Deferred income taxes
 
44

 
7

Mark-to-market activity, net
 
(177
)
 
(45
)
(Income) from unconsolidated subsidiaries
 

 
(6
)
Return on investments from unconsolidated subsidiaries
 

 
11

Other
 
4

 
19

Change in operating assets and liabilities:
 

 

Accounts receivable
 
158

 
228

Accounts payable
 
(139
)
 
(229
)
Margin deposits and other prepaid expense
 
30

 
(65
)
Other assets and liabilities, net
 
(97
)
 
27

Derivative instruments, net
 
76

 
(81
)
Net cash provided by operating activities
 
213

 
241

Cash flows from investing activities:
 
 
 
 
Purchases of property, plant and equipment
 
(135
)
 
(143
)
Other
 
9

 
(9
)
Net cash used in investing activities
 
(126
)
 
(152
)
Cash flows from financing activities:
 
 
 
 
Repayment of CCFC Term Loan and First Lien Term Loans
 
(11
)
 
(10
)
Repayments of First Lien Notes
 
(429
)
 

Repayments of Senior Unsecured Notes
 
(623
)
 
(44
)
Borrowings under revolving facilities
 
450

 
170

Repayments of revolving facilities
 

 
(50
)
Repayments of project financing, notes payable and other
 
(45
)
 
(43
)
Financing costs
 
(17
)
 

Acquisition of noncontrolling interest(2) (Note 3)
 
(49
)
 

Other
 
(2
)
 

Net cash provided by (used in) financing activities
 
(726
)
 
23

Net increase (decrease) in cash, cash equivalents and restricted cash
 
(639
)
 
112

Cash, cash equivalents and restricted cash, beginning of period
 
1,476

 
406

Cash, cash equivalents and restricted cash, end of period(3)
 
$
837

 
$
518


The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.

5



CALPINE CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS — (CONTINUED)
(Unaudited)

 
 
Three Months Ended March 31,
 
 
2020
 
2019
 
 
(in millions)
Cash paid during the period for:
 
 
 
 
Interest, net of amounts capitalized
 
$
89

 
$
115

Income taxes
 
$
1

 
$

 
 
 
 
 
Supplemental disclosure of non-cash investing and financing activities:
 
 
 
 
Change in capital expenditures included in accounts payable and other current liabilities
 
$
16

 
$
13

Plant tax settlement offset in prepaid assets
 
$

 
$
(4
)
Asset retirement obligation adjustment offset in operating activities
 
$

 
$
(13
)
Garrison Energy Center and RockGen Energy Center property, plant and equipment, net, classified as current assets held for sale
 
$

 
$
(363
)
Garrison Energy Center capital lease liability classified as current liabilities held for sale
 
$

 
$
22

____________
(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)
On January 28, 2020, we completed the acquisition of the 25% noncontrolling interest of Russell City Energy Company, LLC for approximately $49 million.
(3)
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.

The accompanying notes are an integral part of these Consolidated Condensed Financial Statements.


6



CALPINE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31, 2020
(Unaudited)
1.
Basis of Presentation and Summary of Significant Accounting Policies
We are one of the largest power generators in the U.S. We own and operate primarily natural gas-fired and geothermal power plants in North America and have a significant presence in major competitive wholesale and retail power markets in California, Texas, and the Northeast and mid-Atlantic regions of the U.S. We sell power, steam, capacity, renewable energy credits and ancillary services to our wholesale customers, which include utilities, independent electric system operators and industrial companies, retail power providers, municipalities, CCAs and other governmental entities and power marketers. Additionally, through our retail brands, we market retail energy and related products to commercial, industrial, governmental and residential customers. We continue to focus on providing products and services that are beneficial to our wholesale and retail customers. We purchase primarily natural gas and some fuel oil as fuel for our power plants and engage in related natural gas transportation and storage transactions. We also purchase power and related products for sale to our customers and purchase electric transmission rights to deliver power to our customers. Additionally, consistent with our Risk Management Policy, we enter into natural gas, power, environmental product, fuel oil and other physical and financial commodity contracts to hedge certain business risks and optimize our portfolio of power plants.
Basis of Interim Presentation — The accompanying unaudited, interim Consolidated Condensed Financial Statements of Calpine Corporation, a Delaware corporation, and consolidated subsidiaries have been prepared pursuant to the rules and regulations of the SEC. In the opinion of management, the Consolidated Condensed Financial Statements include the normal, recurring adjustments necessary for a fair statement of the information required to be set forth therein. Certain information and note disclosures, normally included in financial statements prepared in accordance with U.S. GAAP, have been condensed or omitted from these statements pursuant to such rules and regulations and, accordingly, these financial statements should be read in conjunction with our audited Consolidated Financial Statements for the year ended December 31, 2019, included in our 2019 Form 10-K. The results for interim periods are not indicative of the results for the entire year primarily due to acquisitions and disposals of assets, seasonal fluctuations in our revenues and expenses, timing of major maintenance expense, variations resulting from the application of the method to calculate the provision for income tax for interim periods, volatility of commodity prices and mark-to-market gains and losses from commodity and interest rate derivative contracts.
Use of Estimates in Preparation of Financial Statements — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures included in our Consolidated Condensed Financial Statements. Actual results could differ from those estimates.
Cash and Cash Equivalents — We consider all highly liquid investments with an original maturity of three months or less to be cash equivalents. We have cash and cash equivalents held in non-corporate accounts relating to certain project finance facilities and lease agreements that require us to establish and maintain segregated cash accounts. These accounts have been pledged as security in favor of the lenders under such project finance facilities, and the use of certain cash balances on deposit in such accounts is limited, at least temporarily, to the operations of the respective projects.
Restricted Cash — Certain of our debt agreements, lease agreements or other operating agreements require us to establish and maintain segregated cash accounts, the use of which is restricted, making these cash funds unavailable for general use. These amounts are held by depository banks in order to comply with the contractual provisions requiring reserves for payments such as for debt service, rent and major maintenance or with applicable regulatory requirements. Funds that can be used to satisfy obligations due during the next 12 months are classified as current restricted cash, with the remainder classified as non-current restricted cash. Restricted cash is generally invested in accounts earning market rates; therefore, the carrying value approximates fair value. Such cash is excluded from cash and cash equivalents on our Consolidated Condensed Balance Sheets.

7



The table below represents the components of our restricted cash as of March 31, 2020 and December 31, 2019 (in millions):
 
March 31, 2020
 
December 31, 2019
 
Current
 
Non-Current
 
Total
 
Current
 
Non-Current
 
Total
Debt service
$
53

 
$
7

 
$
60

 
$
58

 
$
8

 
$
66

Construction/major maintenance
37

 
6

 
43

 
28

 
6

 
34

Security/project/insurance
166

 
31

 
197

 
209

 
31

 
240

Other
4

 
2

 
6

 
4

 
1

 
5

Total
$
260

 
$
46

 
$
306

 
$
299

 
$
46

 
$
345

Accounts Receivable Accounts receivable represents amounts due from customers. Accounts receivable are recorded at invoiced amounts, net of reserves and allowances, and do not bear interest as the balances are short term in nature. On January 1, 2020, we adopted the provisions of Accounting Standards Update 2016-13, “Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). We use a variety of information to determine our allowance for expected credit losses based on multiple factors including the length of time receivables are past due, current and future economic trends and conditions affecting our customer base, significant one-time events, historical write-off experience and forward-looking information such as internally developed forecasts. See below for further information related to our adoption of ASU 2016-13.
Property, Plant and Equipment, Net — At March 31, 2020 and December 31, 2019, the components of property, plant and equipment are stated at cost less accumulated depreciation as follows (in millions):
 
March 31, 2020
 
December 31, 2019
 
Depreciable Lives
Buildings, machinery and equipment
$
16,560

 
$
16,510

 
1.5
50
 Years
Geothermal properties
1,561

 
1,553

 
13
58
 Years
Other
287

 
291

 
3
50
 Years
 
18,408

 
18,354

 
 
 
 
 
Less: Accumulated depreciation
6,955

 
6,851

 
 
 
 
 
 
11,453

 
11,503

 
 
 
 
 
Land
128

 
128

 
 
 
 
 
Construction in progress
378

 
332

 
 
 
 
 
Property, plant and equipment, net
$
11,959

 
$
11,963

 
 
 
 
 
Capitalized Interest — The total amount of interest capitalized was $2 million and $7 million during the three months ended March 31, 2020 and 2019, respectively.
Goodwill — We have not recorded any impairment losses or changes in the carrying amount of our goodwill during the three months ended March 31, 2020 and 2019.

8



Leases
Lessee — Supplemental balance sheet information related to our operating and finance leases is as follows as of March 31, 2020 and December 31, 2019 (in millions):
 
 
Location on Consolidated Condensed Balance Sheet
 
March 31, 2020
 
December 31, 2019
Right-of-use assets – operating leases
 
Other assets
 
$
173

 
$
171

 
 
 
 
 
 
 
Right-of-use assets – finance leases
 
Property, plant and equipment, net
 
$
104

 
$
107

 
 
 
 
 
 
 
Operating lease obligation, current
 
Other current liabilities
 
$
19

 
$
12

Operating lease obligation, long-term
 
Other long-term liabilities
 
$
167

 
$
170

 
 
 
 
 
 
 
Finance lease obligation, current
 
Debt, current portion
 
$
10

 
$
10

Finance lease obligation, long-term
 
Debt, net of current portion
 
$
58

 
$
63

Lessor — We apply lease accounting to PPAs that meet the definition of a lease and determine lease classification treatment at commencement of the agreement. Revenue recognized related to fixed lease payments on our operating leases was $48 million and $69 million during the three months ended March 31, 2020 and 2019, respectively.
New Accounting Standards and Disclosure Requirements
Financial Instruments–Credit Losses — In June 2016, the FASB issued ASU 2016-13. The standard provides a new model for recognizing credit losses on financial assets carried at amortized cost using an estimate of expected credit losses, instead of the "incurred loss" methodology previously required for recognizing credit losses that delayed recognition until it was probable that a loss was incurred. The estimate of expected credit losses is to be based on consideration of past events, current conditions and reasonable and supportable forecasts of future conditions. The scope of the standard is limited to our trade account receivable balances and the standard is effective for fiscal years beginning after December 15, 2019. We adopted ASU 2016-13 on January 1, 2020 with no cumulative effect adjustment recognized upon adoption. The adoption of ASU 2016-13 did not have a material effect on our financial condition, results of operations or cash flows.
Fair Value Measurements — In August 2018, the FASB issued Accounting Standards Update 2018-13, “Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” The standard removes, modifies and adds disclosures about fair value measurements and is effective for fiscal years beginning after December 15, 2019. We adopted Accounting Standards Update 2018-13 on January 1, 2020, which did not have a material effect on our financial condition, results of operations or cash flows.
Income Taxes — In December 2019, the FASB issued Accounting Standards Update 2019-12, “Simplifying the Accounting for Income Taxes.” The standard is intended to simplify the accounting for income taxes by removing certain exceptions and improve consistent application by clarifying guidance related to the accounting for income taxes. The standard is effective for fiscal years beginning after December 15, 2020 with early adoption permitted including in interim periods. We adopted Accounting Standards Update 2019-12 on January 1, 2020, which did not have a material effect on our financial condition, results of operations or cash flows.
2.
Revenue from Contracts with Customers
Disaggregation of Revenues with Customers

The following tables represent a disaggregation of our operating revenues for the three months ended March 31, 2020 and 2019 by reportable segment (in millions). See Note 11 for a description of our segments.

9



 
Three Months Ended March 31, 2020
 
Wholesale
 
 
 
 
 
 
 
West
 
Texas
 
East
 
Retail
 
Elimination
 
Total
Third Party:
 
 
 
 
 
 
 
 
 
 
 
Energy & other products
$
201

 
$
219

 
$
106

 
$
324

 
$

 
$
850

Capacity
62

 
28

 
105

 

 

 
195

Revenues relating to physical or executory contracts – third party
$
263

 
$
247

 
$
211

 
$
324

 
$

 
$
1,045

 
 
 
 
 
 
 
 
 
 
 
 
Affiliate(1):
$
17

 
$
10

 
$
19

 
$
1

 
$
(47
)
 
$

 
 
 
 
 
 
 
 
 
 
 
 
Revenues relating to leases and derivative instruments(2)
 
 
 
 
 
 
 
 
 
 
$
1,246

Other
 
 
 
 
 
 
 
 
 
 
1

Total operating revenues
 
 
 
 
 
 
 
 
 
 
$
2,292


 
Three Months Ended March 31, 2019
 
Wholesale
 
 
 
 
 
 
 
West
 
Texas
 
East
 
Retail
 
Elimination
 
Total
Third Party:
 
 
 
 
 
 
 
 
 
 
 
Energy & other products
$
292

 
$
302

 
$
203

 
$
412

 
$

 
$
1,209

Capacity
35

 
32

 
177

 

 

 
244

Revenues relating to physical or executory contracts – third party
$
327

 
$
334

 
$
380

 
$
412

 
$

 
$
1,453

 
 
 
 
 
 
 
 
 
 
 
 
Affiliate(1):
$
11

 
$
14

 
$
27

 
$
3

 
$
(55
)
 
$

 
 
 
 
 
 
 
 
 
 
 
 
Revenues relating to leases and derivative instruments(2)
 
 
 
 
 
 
 
 
 
 
$
1,146

Total operating revenues
 
 
 
 
 
 
 
 
 
 
$
2,599

___________
(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.
Performance Obligations and Contract Balances
At March 31, 2020 and December 31, 2019, deferred revenue balances relating to contracts with our customers were included in other current liabilities on our Consolidated Condensed Balance Sheets and primarily relate to sales of environmental products and capacity. We classify deferred revenue as current or long-term based on the timing of when we expect to recognize revenue. The balance outstanding at March 31, 2020 and December 31, 2019 was $21 million and $14 million, respectively. The revenue recognized during the three months ended March 31, 2020 and 2019, relating to the deferred revenue balance at the beginning of each period was $1 million and $2 million, respectively and resulted from our performance under the customer contracts. The change in the deferred revenue balance during the three months ended March 31, 2020 and 2019 was primarily due to the timing difference of when consideration was received and when the related good or service was transferred.

10



Performance Obligations not yet Satisfied
As of March 31, 2020, we have entered into certain contracts for fixed and determinable amounts with customers under which we have not yet completed our performance obligations which primarily includes agreements for which we are providing capacity from our generating facilities. We have revenues related to the sale of capacity through participation in various ISO capacity auctions estimated based upon cleared volumes and the sale of capacity to our customers of $496 million, $657 million, $441 million, $307 million and $192 million that will be recognized during the years ending December 31, 2020, 2021, 2022, 2023 and 2024, respectively, and $63 million thereafter. Revenues under these contracts will be recognized as we transfer control of the commodities to our customers.
3.
Variable Interest Entities and Unconsolidated Investments
We consolidate all of our VIEs where we have determined that we are the primary beneficiary. There were no changes to our determination of whether we are the primary beneficiary of our VIEs for the three months ended March 31, 2020. See Note 7 in our 2019 Form 10-K for further information regarding our VIEs.
Consolidated VIEs
Our consolidated VIEs include natural gas-fired power plants with an aggregate capacity of 6,824 MW and 6,669 MW at March 31, 2020 and December 31, 2019, respectively. For these VIEs, we may provide other operational and administrative support through various affiliate contractual arrangements among the VIEs, Calpine Corporation and its other wholly owned subsidiaries whereby we support the VIE through the reimbursement of costs and/or the purchase and sale of energy. Other than amounts contractually required, we provided no additional material support to our VIEs in the form of cash and other contributions during each of the three months ended March 31, 2020 and 2019.
The table below details summarized financial information (excluding intercompany balances which are eliminated in consolidation) for our consolidated VIEs as of March 31, 2020 and December 31    , 2019 (in millions):
 
March 31, 2020
 
December 31, 2019
Assets:
 
 
 
Current assets
$
309

 
$
371

Property, plant and equipment, net
3,431

 
3,454

Restricted cash, net of current portion
14

 
15

Other assets
47

 
53

Total assets
$
3,801

 
$
3,893

Liabilities:
 
 
 
Current liabilities
$
244

 
$
303

Debt, net of current portion
1,588

 
1,635

Long-term derivative liabilities
19

 
8

Other long-term liabilities
36

 
53

Total liabilities
$
1,887

 
$
1,999

Noncontrolling Interest — At December 31, 2019, we owned a 75% interest in Russell City Energy Company, LLC, one of our VIEs, which was also 25% owned by a third party. On January 28, 2020, we completed the acquisition of the 25% noncontrolling interest of Russell City Energy Company, LLC for approximately $49 million, resulting in a $67 million increase to additional paid-in capital. Prior to the acquisition, we accounted for the third party ownership interest as a noncontrolling interest.
Unconsolidated VIEs and Investments in Unconsolidated Subsidiaries
We have a 50% partnership interest in Greenfield LP which is also a VIE; however, we do not have the power to direct the most significant activities of this entity and therefore do not consolidate it. Greenfield LP is a limited partnership between certain subsidiaries of ours and of Mitsui & Co., Ltd., which operates the Greenfield Energy Centre, a 1,038 MW natural gas-fired, combined-cycle power plant located in Ontario, Canada.
Calpine Receivables is a VIE and a bankruptcy remote entity created for the special purpose of purchasing trade accounts receivable from Calpine Solutions under the Accounts Receivable Sales Program. We have determined that we do not have the power to direct the activities of the VIE that most significantly affect the VIE’s economic performance nor the obligation to absorb losses or receive benefits from the VIE. Accordingly, we have determined that we are not the primary beneficiary of Calpine

11



Receivables because we do not have the power to affect its financial performance as the unaffiliated financial institutions that purchase the receivables from Calpine Receivables control the selection criteria of the receivables sold and appoint the servicer of the receivables which controls management of default. Thus, we do not consolidate Calpine Receivables in our Consolidated Condensed Financial Statements and use the equity method of accounting to record our net interest in Calpine Receivables.
We account for these entities under the equity method of accounting and include our net equity interest in investments in unconsolidated subsidiaries on our Consolidated Condensed Balance Sheets. At March 31, 2020 and December 31, 2019, our equity method investments included on our Consolidated Condensed Balance Sheets were comprised of the following (in millions):
 
Ownership Interest as of
March 31, 2020
 
March 31, 2020
 
December 31, 2019
Greenfield LP(1)
50%
 
$
60

 
$
66

Calpine Receivables
100%
 
3

 
4

Total investments in unconsolidated subsidiaries
 
 
$
63

 
$
70

____________
(1)
Includes our share of AOCI related to interest rate hedging instruments associated with our unconsolidated subsidiary Greenfield LP’s debt.
Our risk of loss related to our investment in Greenfield LP is limited to our investment balance. Our risk of loss related to our investment in Calpine Receivables is $52 million which consists of our notes receivable from Calpine Receivables at March 31, 2020 and our initial investment associated with Calpine Receivables. See Note 10 for further information associated with our related party activity with Calpine Receivables.
Holders of the debt of our unconsolidated investments do not have recourse to Calpine Corporation and its other subsidiaries; therefore, the debt of our unconsolidated investments is not reflected on our Consolidated Condensed Balance Sheets. At March 31, 2020 and December 31, 2019, Greenfield LP’s debt was approximately $272 million and $299 million, respectively, and based on our pro rata share of our investment in Greenfield LP, our share of such debt would be approximately $136 million and $150 million at March 31, 2020 and December 31, 2019, respectively.
Our equity interest in the net income from our investments in unconsolidated subsidiaries for the three months ended March 31, 2020 and 2019, is recorded in (income) from unconsolidated subsidiaries. The following table sets forth details of our (income) from unconsolidated subsidiaries for the periods indicated (in millions):
 
 
Three Months Ended March 31,
 
 
2020
 
2019
Greenfield LP
 
$
(1
)
 
$
(2
)
Whitby(1)
 

 
(4
)
Calpine Receivables
 
1

 

Total
 
$

 
$
(6
)
____________
(1)
On November 20, 2019, we sold our 50% interest in Whitby to a third party.
Distributions from Greenfield LP were nil during each of the three months ended March 31, 2020 and 2019. Distributions from Whitby were $11 million during the three months ended March 31, 2019. We did not have material distributions from our investment in Calpine Receivables for the three months ended March 31, 2020 and 2019.

12



4.
Debt
Our debt at March 31, 2020 and December 31, 2019, was as follows (in millions):
 
March 31, 2020

December 31, 2019
First Lien Term Loans
$
3,161

 
$
3,167

Senior Unsecured Notes
3,041

 
3,663

First Lien Notes
2,407

 
2,835

Project financing, notes payable and other
840

 
879

CCFC Term Loan
964

 
967

Finance lease obligations
68

 
73

Revolving facilities
572

 
122

Subtotal
11,053

 
11,706

Less: Current maturities
217

 
1,268

Total long-term debt
$
10,836

 
$
10,438

Our effective interest rate on our consolidated debt, excluding the effects of capitalized interest and mark-to-market gains (losses) on interest rate hedging instruments, decreased to 5.3% for the three months ended March 31, 2020, from 5.9% for the same period in 2019.
First Lien Term Loans
The amounts outstanding under our First Lien Term Loans are summarized in the table below (in millions):
 
March 31, 2020
 
December 31, 2019
2024 First Lien Term Loan
$
1,511

 
$
1,514

2026 First Lien Term Loans
1,650

 
1,653

Total First Lien Term Loans
$
3,161

 
$
3,167

Senior Unsecured Notes
The amounts outstanding under our Senior Unsecured Notes are summarized in the table below (in millions):
 
March 31, 2020
 
December 31, 2019
2023 Senior Unsecured Notes(1)
$

 
$
623

2024 Senior Unsecured Notes
479

 
479

2025 Senior Unsecured Notes
1,174

 
1,174

2028 Senior Unsecured Notes(1)
1,388

 
1,387

Total Senior Unsecured Notes
$
3,041

 
$
3,663

____________
(1)
On January 21, 2020, we redeemed the outstanding $623 million in aggregate principal amount of our 2023 Senior Unsecured Notes, which was included in debt, current portion on our Consolidated Condensed Balance Sheet at December 31, 2019, with the proceeds from the 2028 Senior Unsecured Notes, which was included in cash and cash equivalents on our Consolidated Condensed Balance Sheet at December 31, 2019.

13



First Lien Notes
The amounts outstanding under our First Lien Notes are summarized in the table below (in millions):
 
March 31, 2020
 
December 31, 2019
2022 First Lien Notes(1)
$

 
$
245

2024 First Lien Notes(2)

 
184

2026 First Lien Notes
1,173

 
1,172

2028 First Lien Notes
1,234

 
1,234

Total First Lien Notes
$
2,407

 
$
2,835

____________
(1)
On January 21, 2020, we redeemed the outstanding $245 million in aggregate principal amount of our 2022 First Lien Notes, which was included in debt, current portion on our Consolidated Condensed Balance Sheet at December 31, 2019, with the proceeds from the 2028 First Lien Notes, which was included in cash and cash equivalents on our Consolidated Condensed Balance Sheet at December 31, 2019.
(2)
On January 21, 2020, we redeemed the outstanding $184 million in aggregate principal amount of our 2024 First Lien Notes, which was included in debt, current portion on our Consolidated Condensed Balance Sheet at December 31, 2019, with the proceeds from the 2028 First Lien Notes which was included in cash and cash equivalents on our Consolidated Condensed Balance Sheet at December 31, 2019.
Project Financing, Notes Payable and Other
On January 29, 2019, PG&E and PG&E Corporation each filed voluntary petitions for relief under Chapter 11. Our power plants that sell energy and energy-related products to PG&E through PPAs, include Russell City Energy Center and Los Esteros Critical Energy Facility. Since the bankruptcy filing, we have received all material payments under the PPAs, either directly or through the application of collateral. As a result of PG&E’s bankruptcy, we are currently unable to make distributions from our Russell City and Los Esteros projects in accordance with the terms of the project debt agreements associated with each related project. In July 2019, we executed forbearance agreements associated with the Russell City and Los Esteros project debt agreements, under which the lenders have agreed to forbear enforcement of their rights and remedies, including the ability to accelerate the repayment of borrowings outstanding, otherwise arising because PG&E did not assume our PPAs during the first 180 days of PG&E’s bankruptcy proceeding. The forbearance agreements are effective for rolling 90-day periods, so long as we continue to meet certain conditions, including that the PPAs have not been rejected and there are no other defaults under the project debt agreements or the forbearance agreements. We may be required to reclassify $276 million of Russell City and Los Esteros long-term project debt outstanding at March 31, 2020 to a current liability in a future period. We continue to monitor the bankruptcy proceedings and are assessing our options.
Corporate Revolving Facility and Other Letter of Credit Facilities
The table below represents amounts issued under our letter of credit facilities at March 31, 2020 and December 31, 2019 (in millions):
 
March 31, 2020
 
December 31, 2019
Corporate Revolving Facility(1)
$
636

 
$
604

CDHI
3

 
3

Various project financing facilities
185

 
184

Other corporate facilities(2)
295

 
294

Total
$
1,119

 
$
1,085

____________
(1)
The Corporate Revolving Facility represents our primary revolving facility and matures on March 8, 2023.
(2)
On April 9, 2020, we amended one of our unsecured letter of credit facilities to partially extend the maturity of $100 million in commitments from June 20, 2020 to June 20, 2022.

14



Fair Value of Debt
We record our debt instruments based on contractual terms, net of any applicable premium or discount and debt issuance costs. The following table details the fair values and carrying values of our debt instruments at March 31, 2020 and December 31, 2019 (in millions):
 
March 31, 2020
 
December 31, 2019
 
Fair Value
 
Carrying Value
 
Fair Value
 
Carrying Value
First Lien Term Loans
$
2,920

 
$
3,161

 
$
3,238

 
$
3,167

Senior Unsecured Notes
2,827

 
3,041

 
3,764

 
3,663

First Lien Notes
2,313

 
2,407

 
2,929

 
2,835

Project financing, notes payable and other(1)
777

 
778

 
822

 
817

CCFC Term Loan
850

 
964

 
982

 
967

Revolving facilities
572

 
572

 
122

 
122

Total
$
10,259

 
$
10,923

 
$
11,857

 
$
11,571

____________
(1)
Excludes an agreement that is accounted for as a failed sale-leaseback transaction under U.S. GAAP.
Our First Lien Term Loans, Senior Unsecured Notes, First Lien Notes and CCFC Term Loan are categorized as level 2 within the fair value hierarchy. Our revolving facilities and project financing, notes payable and other debt instruments are categorized as level 3 within the fair value hierarchy. We do not have any debt instruments with fair value measurements categorized as level 1 within the fair value hierarchy.
5.
Assets and Liabilities with Recurring Fair Value Measurements
Cash Equivalents — Highly liquid investments which meet the definition of cash equivalents, primarily investments in money market accounts and other interest-bearing accounts, are included in both our cash and cash equivalents and our restricted cash on our Consolidated Condensed Balance Sheets. Certain of our money market accounts invest in U.S. Treasury securities or other obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities. We do not have any cash equivalents invested in institutional prime money market funds which require use of a floating net asset value and are subject to liquidity fees and redemption restrictions. Certain of our cash equivalents are classified within level 1 of the fair value hierarchy.
Derivatives — The primary factors affecting the fair value of our derivative instruments at any point in time are the volume of open derivative positions (MMBtu, MWh and $ notional amounts); changing commodity market prices, primarily for power and natural gas; our credit standing and that of our counterparties and customers for energy commodity derivatives; and prevailing interest rates for our interest rate hedging instruments. Prices for power and natural gas and interest rates are volatile, which can result in material changes in the fair value measurements reported in our financial statements in the future.
We utilize market data, such as pricing services and broker quotes, and assumptions that we believe market participants would use in pricing our assets or liabilities including assumptions about the risks inherent to the inputs in the valuation technique. These inputs can be either readily observable, market corroborated or generally unobservable. The market data obtained from broker pricing services is evaluated to determine the nature of the quotes obtained and, where accepted as a reliable quote, used to validate our assessment of fair value. We use other qualitative assessments to determine the level of activity in any given market. We primarily apply the market approach and income approach for recurring fair value measurements and utilize what we believe to be the best available information. We utilize valuation techniques that seek to maximize the use of observable inputs and minimize the use of unobservable inputs. We classify fair value balances based on the observability of those inputs.
The fair value of our derivatives includes consideration of our credit standing, the credit standing of our counterparties and customers and the effect of credit enhancements, if any. We have also recorded credit reserves in the determination of fair value based on our expectation of how market participants would determine fair value. Such valuation adjustments are generally based on market evidence, if available, or our best estimate.
Our level 1 fair value derivative instruments primarily consist of power and natural gas swaps, futures and options traded on the NYMEX or Intercontinental Exchange.
Our level 2 fair value derivative instruments primarily consist of interest rate hedging instruments and OTC power and natural gas forwards for which market-based pricing inputs in the principal or most advantageous market are representative of

15



executable prices for market participants. These inputs are observable at commonly quoted intervals for substantially the full term of the instruments. In certain instances, our level 2 derivative instruments may utilize models to measure fair value. These models are industry-standard models, including the Black-Scholes option-pricing model, that incorporate various assumptions, including quoted interest rates, correlation, volatility, as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace.
Our level 3 fair value derivative instruments may consist of OTC power and natural gas forwards and options where pricing inputs are unobservable, as well as other complex and structured transactions primarily for the sale and purchase of power and natural gas to both wholesale counterparties and retail customers. Complex or structured transactions are tailored to our customers’ needs and can introduce the need for internally-developed model inputs which might not be observable in or corroborated by the market. When such inputs have a significant effect on the measurement of fair value, the instrument is categorized in level 3. Our valuation models may incorporate historical correlation information and extrapolate available broker and other information to future periods.
Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement at period end. Our assessment of the significance of a particular input to the fair value measurement requires judgment and may affect our estimate of the fair value of our assets and liabilities and their placement within the fair value hierarchy levels. The following tables present our assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2020 and December 31, 2019, by level within the fair value hierarchy:
 
Assets and Liabilities with Recurring Fair Value Measures as of March 31, 2020
 
Level 1    
 
Level 2    
 
Level 3    
 
Total    
 
(in millions)
Assets:
 
 
 
 
 
 
 
Cash equivalents(1)
$
444

 
$

 
$

 
$
444

Commodity instruments:
 
 
 
 
 
 
 
Commodity exchange traded derivatives contracts
1,198

 

 

 
1,198

Commodity forward contracts(2)

 
383

 
366

 
749

Interest rate hedging instruments

 

 

 

Effect of netting and allocation of collateral(3)(4)
(1,198
)
 
(235
)
 
(25
)
 
(1,458
)
Total assets
$
444

 
$
148

 
$
341

 
$
933

Liabilities:
 
 
 
 
 
 
 
Commodity instruments:
 
 
 
 
 
 
 
Commodity exchange traded derivatives contracts
$
1,233

 
$

 
$

 
$
1,233

Commodity forward contracts(2)

 
379

 
117

 
496

Interest rate hedging instruments

 
150

 

 
150

Effect of netting and allocation of collateral(3)(4)
(1,233
)
 
(243
)
 
(25
)
 
(1,501
)
Total liabilities
$

 
$
286

 
$
92

 
$
378


16



 
Assets and Liabilities with Recurring Fair Value Measures as of December 31, 2019
 
Level 1    
 
Level 2    
 
Level 3    
 
Total    
 
(in millions)
Assets:
 
 
 
 
 
 
 
Cash equivalents(1)
$
784

 
$

 
$

 
$
784

Commodity instruments:
 
 
 
 
 
 
 
Commodity exchange traded derivatives contracts
872

 

 

 
872

Commodity forward contracts(2)

 
245

 
294

 
539

Interest rate hedging instruments

 
12

 

 
12

Effect of netting and allocation of collateral(3)(4)
(872
)
 
(131
)
 
(18
)
 
(1,021
)
Total assets
$
784

 
$
126

 
$
276

 
$
1,186

Liabilities:
 
 
 
 
 
 
 
Commodity instruments:
 
 
 
 
 
 
 
Commodity exchange traded derivatives contracts
$
984

 
$

 
$

 
$
984

Commodity forward contracts(2)

 
285

 
123

 
408

Interest rate hedging instruments

 
31