Calpine loans $503m for two new energy centres

4 March 2005 – Five banks have agreed to loan Calpine Corporation the necessary $503m to complete the construction of two new energy centres in the USA.

The two projects were seen by Calpine as the next step on the route to becoming a vertically integrated energy company. Calpine vice president, Finance, Brian Harenza, said: “This marks the first time that Calpine’s strategy of managing every aspect of a power plant, from development and construction to operations and maintenance, has been financed in the broader commercial bank market.”

Calpine has initially received around $97m for the construction costs already spent on the 375 MW Mankato Energy Centre in Blue Earth County, Minn., and the 250 MW Freeport Energy Centre in Freeport, Texas. The remaining amount will be used to fund the completion.

Mankato’s entire 375 MW output will eventually be sold to Northern States Power under a 20 year power sales agreement. It is expected to begin producing energy in June 2006.

From its Freeport project, Calpine will sell steam and approximately 200 MW of power to The Dow Chemical Company under a 25 year agreement. The remaining 50 MW of power will be sold to Calpine Energy Services, L.P., an affiliate of Calpine, under an index based power purchase agreement. Freeport is expected to enter commercial operations in multiple stages. The first phase is expected to begin generation in the third quarter of 2005 and the last phase in November 2006.