Just initiated a new position in CPN via share @ $17.14 and April $18 Calls
Macroeconomic trend: Although declining natural gas prices are generally negative for merchant energy companies, Calpine is a beneficiary of lower natural gas prices because coal generating capacity is being displaced. Thermal coal is now more expensive than natural gas on a heat equivalent basis (BTU’s) based upon current spot prices. Calpine has one of the largest fleets of natural gas burning, combined cycle power plants and are some of the most efficient cleanest burning power plants in the United States.
Calpine is well positioned to benefit from future environmental regulation of greenhouse gas emissions or a carbon tax. While the debate about global warming continues, environmental concerns appear to have a higher priority than they did previously. As the collapse of Solyndra and the Fukushima nuclear accident illustrates, there are no easy solutions to our energy needs. If the U.S. were to move away from nuclear power, the difference would need to be filled.
