Calpine also reported a year-over-year increase in Adjusted EBITDA and Commodity Margin for the first quarter of 2009, despite a decline in revenues. Adjusted EBITDA increased to $331 million for the first quarter of 2009, compared to $301 million in the same period of last year. Commodity Margin for the first quarter 2009 was $529 million, slightly above Commodity Margin of $513 million for the first quarter of 2008.

Summary Of Financial Performance:

Compared to the first quarter 2008, Adjusted EBITDA improved $30 million to $331 million in the first quarter 2009. Largely driving the improvement in Adjusted EBITDA was an increase in Commodity Margin, which rose to $529 million in the first quarter of 2009 from $513 million in the prior year period. Improved Commodity Margin in the company’s West region was primarily associated with benefits from hedging as well as from the sale of surplus emission allowances, while The company’s Southeast region increased its Commodity Margin primarily as a result of higher hedge prices and higher market heat rates. These improvements were partially offset by decreases in Commodity Margin in the company’s Texas region, where weaker demand and spark spreads resulted in a 33% reduction in generation year-over-year.

The improvement in first quarter 2009 Adjusted EBITDA was further due to higher Adjusted EBITDA from the company’s unconsolidated investments in power plants, which increased by $11 million year-over-year, primarily as a result of the Greenfield Energy Centre, which achieved its first full quarter of operations in the 2009 period. Lastly, sales, general and other administrative expense (excluding depreciation and amortization and non-cash stock-based compensation) decreased by $7 million year-over-year, largely as a result of lower personnel costs.

Cash flows provided by operating activities were $80 million in the first quarter 2009 compared to an outflow of $340 million in the prior year period. The improvement was due in large part to a year-over-year decrease of $244 million in cash paid for interest, primarily as a result of the repayment of the Second Priority Debt in 2008. In addition, working capital employed decreased by $91 million, after adjusting for debt-related balances and assets held for sale, which did not impact cash provided by operating activities. The adjusted working capital decrease was mainly bacause of reductions in margin deposits, partially offset by current derivative activity. Further contributing to the improvement in cash flows provided by operating activities was a $64 million decline in cash payments for reorganization items, as well as a $7 million improvement in gross profit (excluding unrealized mark-to-market activity and depreciation and amortization expense).

The company believes that a comparison of net income (loss) as reported, from the first quarter 2009 to the first quarter 2008 is not meaningful, as the 2008 results include significant impacts associated with restructuring and the company’s emergence from bankruptcy during that quarter. As detailed in Table 1 below, net loss, excluding reorganization items, other one-time items and unrealized mark-to-market gains or losses, improved by $37 million year-over-year. This improvement was driven by gains from The company’s unconsolidated investments in power plants (as noted above), as well as by a decline in interest expense (net of one-time items) due to lower average debt balances and lower average interest rates in the first quarter of 2009.

West:

Commodity Margin in the company’s West segment increased by $19 million, or 7%, for the first quarter of 2009, compared to the first quarter of 2008. Although market spark spreads for the first quarter of 2009 settled substantially lower than the first quarter of 2008, the West segment financial performance improved in the first quarter of 2009 primarily as a result of higher hedge levels and higher average hedge prices as compared to the same period for 2008, as well as from the sale of surplus emission allowances.

Texas:

Commodity Margin in the company’s Texas segment decreased by $17 million, or 12%, for the first quarter of 2009, compared to the first quarter of 2008. The positive impact of the company’s hedging activities largely mitigated a weakening market environment, due to soft demand and much weaker spark spreads, resulting in a 33% reduction in generation for the first quarter of 2009. On-peak, market spark spreads were 55% lower in the Houston zone in the first quarter of 2009 compared to the first quarter of 2008, largely driven by reduced ERCOT demand and lower natural gas prices.

Southeast:

Commodity Margin in the company’s Southeast segment increased by $26 million, or 74%, driven primarily by both higher average hedge prices and higher market heat rates in the first quarter of 2009 compared to 2008. The increase in market heat rates as well as the 45% increase in generation for the first quarter of 2009, compared to 2008 were attributable in part to gas generation displacement of coal generation in certain markets and, to a lesser extent, a 3% increase in average availability. Additionally, some of the company’s plants benefited from the impact of advantageous transmission, customer and transportation agreements in the first quarter of 2009.

North:

Commodity Margin in the company’s North segment decreased by $12 million, or 20%, mainly because of lower average hedge prices during the first quarter of 2009, compared to 2008.