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Two combined-cycle natural gas-fired power generation plants of Calpine Corp. (CPN - Snapshot Report) have come online. These two plants, namely Russell City Energy Center and Los Esteros Critical Energy Facility, together have an electric generation capacity of more than 900 megawatts (MW).

Located in Hayward, Calif., the Russell City Energy Center has an electric generation capacity of 619 MW. Calpine owns 75% of the project while General Electric Company (GE - Analyst Report) is the owner of the balance of the plant. To date, the plant has contributed more than $25 million in initial sales and property tax revenue. During its operation, recurring property tax revenues are expected to be approximately $5 million per annum, which will help in funding local government services.

This natural gas-fired power plant employs the most advanced emissions control technology. With minimal green house gas emissions, this fuel-efficient plant readily responds to the dynamic grid conditions. This environment friendly zero-liquid discharge plant saves water by using reclaimed wastewater from the City of Hayward’s Water Pollution Control Facility. This prevents up to four million gallons of wastewater from being discharged into the San Francisco Bay per day.

Besides being eco-friendly, the company also fulfills its Corporate Social Responsibility. During the peak construction period, the plant employed 650 local union workers and currently employs 30 full-time operations staff.

Located in San Jose, the Los Esteros Critical Energy Facility has an electric generation capacity of up to 309 MW. When the plant first began its commercial operations in Mar 2003, it only generated 188 MW of power. However, the modernization and addition of heat-recovery steam generators have helped in increasing the plant’s power generation capacity while improving efficiency and environmental performance. Like Russell City Energy Center, this plant also responds to electric grid demand and prevents an additional two million gallons per day from being discharged into the San Francisco Bay.

As a result of construction upgrade, the plant has generated approximately $5 million in one-time tax revenue. Going forward, it is expected to contribute approximately $3 million on an annual basis in recurring tax revenues to local governments. Like the other plant, this plant has also employed local union workers and other employees.

Taken together, these two modern, efficient and environmentally responsible combined-cycle natural gas-fired power generation plants have the capability to power approximately 750,000 homes. The electricity generated from these two plants will be sold to Pacific Gas and Electric Company (PG&E), a subsidiary of PG&E Corp. (PCG - Analyst Report).

Calpine Corp. generates more electricity than any other independent power producer in America, with a fleet of 93 power plants in operation or under construction, representing more than 28,000 MW of generation capacity. The addition of the nat gas plants would bring the total number of plants owned by Calpine to 37 with total electric generation capacity of more than 6,300 MW. Besides meeting the power need of its customers, these plants will ensure the grid’s reliability by producing flexible, nat gas-fired capacity.

However, Calpine’s weak second quarter 2013 results, lower demand for electricity due to an unfavorable macro backdrop and lower commodity margins remain matters of concern. The company presently retains a short-term Zacks Rank #3 (Hold).

In the near term, we would advise investors to accumulate its short-term Zacks Rank #1 (Strong Buy) peer Huaneng Power International, Inc. (HNP - Snapshot Report).

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