Calpine granted court OK to assume KIAC lease in light of $65.1 million-$79.4 million projected cash flow

By Jennifer Lanning Drey

Portland, Ore., May 30 - Calpine Corp. was granted court approval to assume the lease on its KIAC power generation facility in light of pre-tax cash flows of $65.1 million to $79.4 million, according to a Wednesday filing with the U.S. Bankruptcy Court for the Southern District of New York.

As previously reported, when Calpine filed Chapter 11 bankruptcy in 2005, the projected cash flows for the KIAC facility were negative for the next several years based on the assumption that energy prices would remain constant throughout the term of its energy purchase agreement, according to the company's motion requesting the approval.

However, while KIAC was trying to renegotiate the terms of some of its related agreements, the energy prices actually increased by 15% in January, coupled with a decrease in long-term natural gas prices.

Calpine said these factors have significantly improved the KIAC facility's projected cash flows, and it is now in the company's best interest to assume the lease.

The KIAC facility is located in Jamaica, N.Y.

Calpine, a San Jose, Calif., power company, filed for bankruptcy on Dec. 20, 2005. Its Chapter 11 case number is 05-60200.

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