As Independent Merchants Reorganize, Power Market Sees Sparks Fly
The last of the big independent energy producers, offspring of the federal government's attempt to push the power market into a competitive arena, was forced into bankruptcy last month. Market deregulation is not what some thought it would be, with new surprises in the mix. But industry observers foresee a new era in power production, as once-mighty merchant power firms emerge as smaller, restructured companies. "Competition will continue, just on a smaller scale," says David Dismukes, associate director of the Louisiana State University Center for Energy Studies, Baton Rouge. Construction industry firms, ever-adaptable, say they're already ready for the next step.
The Dec. 20, 2005, Chaper 11 filing of Calpine Corp., San Jose, Calif., America's largest merchant power producer with 27,000 MW of capacity, is the most recent in a cascade of independent power firm bankruptcies (ENR 1/2-9 p. 17). Many in the industry say the company was forced to its knees under the weight of the government's half-hearted attempt to restructure power markets, and then beaten to the ground by extremely high natural gas prices. Heavily in debt with its share price tumbling fast, Calpine had to move quickly to restructure and seek a cash infusion to maintain energy supply.