Calpine on verge of collapse

It has been five years since California's power crisis, but it's still claiming its victims.

Californians who suffered through the power emergency at the beginning of the decade probably aren't inclined to use the word "tragedy'' now that one of the big electricity suppliers that made fortunes during the crisis faces ruin.

But that's a word that crops up when veterans of the state's energy wars speak of the near-collapse of independent power generator Calpine Corp., a company that soared during the energy crisis and filed for bankruptcy late Tuesday.

"It's a very sad story,'' said Mike Florio, senior staff attorney at The Utility Reform Network, a San Francisco consumer advocacy organization that fiercely denounced companies that took advantage of California's flawed energy deregulation plan in 2000 and 2001 to reap record profits.

As California agonized through blackouts and skyrocketing electricity bills, San Jose's Calpine carried out an ambitious program to build power plants. It based its sweeping construction program on efficient technology that squeezed the most power out of natural gas, the cleanest-burning fuel available.

The Sierra Club endorsed one of its plant proposals. Former Gov. Gray Davis hailed Calpine as the state's rescuer. Its founder, Peter Cartwright, is still called a visionary by a top state energy official.

To finance its aggressive building program, Calpine used a high-risk strategy, borrowing billions of dollars, largely from the bond market. Company officials expected that growing demand for electricity would provide plenty of cash to repay those obligations.

Today, Calpine is going broke, crushed by this heavy debt burden plus the high price of natural gas. The company lost $683.9 million in the first three quarters this year on revenue of $7.5 billion.