Calpine sets up $250m credit facility

California power company Calpine has entered into a $250 million letter of credit facility with Deutsche Bank, which expires in October 2005. The San José-based company expects this new credit enhancement structure to widen its spark spreads and increase working capital at its Calpine Energy Services subsidiary. (Spark spread refers to the difference between the price of electricity sold by a generator and the price of the fuel used to generate it.)

As part this innovative new structure, Calpine has created a new entity, Calpine Energy Management (CEM), to facilitate short-term gas and power purchases and sales ranging from the hourly market up to one month ahead. It is CEM that has entered into the letter of credit facility, which is rated Aa3/AA– by Moody’s and Standard & Poor’s respectively.

Deutsche Bank will guarantee CEM’s power and gas obligations by issuing letters of credit, said Calpine, and receivables from power sales will