Calpine pushes into distribution with $1bn acquisition

Calpine Corporation, a Houston-based power generator, has agreed to purchase retail electricity company Noble Americas Energy Solutions (NAES) for around $900 million.

The purchase price for NAES is $800 million, with an estimated $100 million of additional net working capital added at closing. Calpine said it should recover around $200 million through the transaction and from acquired legacy hedges. The transaction is expected to close by the end of the year.

Calpine president Thad Hill said in a statement the deal is “a natural fit” that will build upon the company's entrance into the retail power market last year. The move is part of Calpine's shift from a power generator to also serving as a distributor, selling directly to residential, commercial and industrial customers.

NAES services industrial customers, and Calpine's acquisition of Champion Energy Marketing last July gave it an asset selling power to commercial markets.

“In addition to expanding our retail customer sales channels and product offerings, we will more than double the volume of retail load we are capable of serving across the country from our complementary wholesale power generation fleet,” Hill said.

Calpine, the largest natural gas-fired generator in the US, said it will fund the acquisition using cash-on-hand and a bridge loan of up to $550 million. It said it will repay the debt facility during 2017 with proceeds from asset sales and revenue generated from operations.

NAES operates in 18 states nationwide, including in the Northeast, where Calpine's power generation assets are concentrated; the mid-Atlantic; Texas and California, where NAES is headquartered.

Calpine has a fleet of 84 power plants in operation or under construction that represents more than 27GW of generation capacity. Last year, the company purchased the Granite Ridge Energy Center for $500 million. The 745MW combined cycle gas-fired plant is located in the ISO-New England power market.