Calpine management held its investor day April 10. The company raised its 2013 adjusted EBITDA guidance range to $1.8 billion-$1.96 billion, from its previous range of $1.76 billion-$1.96 billion, as it increased its overall hedge profile. The revised guidance is in line with our adjusted EBITDA estimate of $1.91 billion. We are reaffirming our fair value estimate of $26 per share, full-year 2013 earnings per share estimates, no-moat rating, and positive moat trend.

Management announced 995 megawatts of new capacity additions in 2015-17 in the North and Texas regions. Management identified 300 megawatts of low-cost upgrade opportunities in Texas, which we view positively given energy supply constraints and above-average demand growth. These capacity additions are incremental to the 1,413 megawatts of approved generation in 2013-15 in the company’s core Texas and California regions.

The company is now 68% hedged for 2013, up from 49% in late 2012, and continues to remain open in Texas given its bullish view on power market fundamentals. Year-to-date, the company has repurchased $58 million of its previously announced $400 million share repurchase authorization. This is in addition to its $600 million of share repurchases in 2011 and 2012. Based on our forecast free cash flow, we think Calpine has the capacity to increase its share repurchase plan in 2014-15.


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