Market hammers California merchant generators' shares

Merchant generators' shares were hammered Friday after California utility Pacific Gas & Electric Co. filed for reorganization and protection from creditors under Chapter 11 of the bankruptcy code. The generators are owed billions of dollars in past due power bills. After independent generator Calpine Corp., Dynegy Inc.'s shares suffered the most. Dynegy closed down 5.83% at $47.95/share. Calpine's shares slumped 7.6% or $3.86/share to close at $46.80 on 11.5 million shares traded.


By the OGJ Online Staff

HOUSTON, Apr. 6�Merchant generators' shares were hammered Friday after California utility Pacific Gas & Electric Co. filed for reorganization and protection from creditors under Chapter 11 of the bankruptcy code.

The generators are owed billions of dollars in past due power bills. After independent generator Calpine Corp., Houston-based Dynegy Inc.'s shares suffered the most. Dynegy closed down 5.83% at $47.95/share.

Houston-based Reliant Energy Inc., which through its unregulated arm owns about 3,500 Mw of generation in California, and is owed at least $358 million was also hit. Its shares were down $2.10, or 4.65% to close $43.24. Duke Energy Corp.'s stock closed at $40.10/share, down 5.42%.

Other generators, including Williams and AES Corp., which have California operations, also suffered.

But worst hit was Calpine Corp. The company's shares slumped 7.6% or $3.86/share to close at $46.80 on 11.5 million shares traded.

Calpine is a power generator with significant megawatts in California and has already signed long-term contracts worth $10 billion with the state for 2,000 Mw power. Most of its power plants are in Pacific Gas & Electric Co.'s service territory.

Reliant Energy said Friday that Pacific Gas & Electric Co.'s bankruptcy filing does not increase the company's financial exposure. CEO Steve Letbetter said the utility holding company had planned for such a possibility .

He said Reliant established a $39 million reserve in the fourth quarter of 2000, and we will continue to reserve appropriate funds.

"Our exposure to financial risk as a result of Pacific Gas & Electric's action is not expected to increase,'" Letbetter said. "This development does not impact the level of first quarter results we have previously anticipated."

Likewise, Duke Energy Corp. said the company had taken a number of aggressive steps to limit its financial exposure to uncertainties in California's energy market, including the potential bankruptcy of the state's investor-owned utilities. The company said it sold a significant portion of energy output from its California plants through fixed-price, forward contracts to creditworthy entities.

"We regret that the collective actions to mitigate Pacific Gas & Electric's financial crisis were unsuccessful in keeping it from filing for Chapter 11 reorganization," the company said in a statement. "However, the Chapter 11 filing provides a defined process to collect our past receivables and keep PG&E in business going forward."

Duke said it continues to operate its California power plants and is working with federal and state officials and members of the state legislature to help California solve its electricity problems.

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