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Calpine looks to add 450 MW to PJM gas plant, scouts additional projects

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Calpine looks to add 450 MW to PJM gas plant, scouts additional projects

Calpine Corp.is looking at adding 450 MW of dual-fuel, combined-cycle capacity at itsexisting 309-MW GarrisonEnergy Center, according to the company's first-quarter Form 10-Q.

Grid operator PJMInterconnection LLC has completed a system impact study on thesecond phase of the Garrison Energy Center and the facilities study isunderway, Calpine said. The existing Garrison Energy Center started commercialoperations in Kent County, Del., in June 2015.

Elsewhere in PJM, construction is underway at Calpine'sYork 2 Energy Center,with commercial operations slated to begin in the second quarter of 2017. The760-MW, combined-cycle project in York County, Pa., cleared PJM's 2017/2018 and2018/2019 base residual auctions, according to the 10-Q. The grid operator hascompleted and interconnection study process for an additional 68 MW of plannedcapacity at York 2, which has cleared the 2018/2019 base residual auction.

Aside from plant expansion, Calpine is currently evaluatingopportunities to develop additional projects in PJM and , markets that "featurecost advantages such as existing infrastructure and favorable transmissionqueue positions," Calpine said.

"These projects are continuing to advance entitlements(such as permits, zoning and transmission) for their potential futuredevelopment when economical," Calpine said in the filing.

Calpine in recent years has scaled back operations innon-core geographic regions — particularlyin the U.S. Southeast — while turning its focus to other marketsincluding PJM and ISO-NE.

On April 29, Calpine reached a deal to sell its natural gas-fired, 586-MWSouth Point Energy Centerin Mohave Valley, Ariz., to BerkshireHathaway Energy utility NVEnergy Inc.

"We are effectively moving a merchant power plant in anon-core geographic location to a utility that can put it to good use,"Calpine President and CEO Thad Hill said on the company's first-quarterearnings call.

Calpine's first-quarter 2016 adjusted EBITDA was helped by a$45 million year-over-year increase in commodity margin, which stood at $580million at the end of the period. Calpine's East business segment saw thehighest increase in first-quarter 2016 commodity margin: $62 million year overyear to $230 million, followed by the Texas business segment, which reported a$4 million year-over-year increase to $153 million. The West business segmentreported a $21 million year-over-year decrease in commodity margin to $197million.

In the same 10-Q filing, Calpine said it amended its $1.52billion corporate revolving facility and letter of credit in February to extendthe maturity by two years to June 27, 2020. The amendment also increasesfacility's capacity by an additional $178 million through June 27, 2018, andincreases the letter of credit sublimit by $250 million to $1 billion.