Chairman, chief executive officer, and president, Calpine
Born: January 1930, in New York.
Education: Princeton University, BS, 1952; Columbia University, MS, 1953.
Family: Married June (maiden name unknown); children: four.
Career: General Electric, 1960–1979, worked in nuclear plant construction, project management, and new business development; Gibbs and Hill, 1979–1984, engineering consultant; Calpine, 1984–, chairman, chief executive officer, and president.
Address: Calpine, 50 West San Fernando Street, San Jose, California 95113; http://www.calpine.com.
■ Peter Cartwright cofounded Calpine Corporation in 1984 after a long career in engineering that included building nuclear power plants around the world for General Electric. Cartwright established Calpine as a firm that provided management services to independent power generation companies but went on to build Calpine into one of the largest independent power companies in the United States and the largest provider of environmentally cleaner "green power." Considered by many industry analysts as a visionary in the modern power industry, colleagues and employees note that Cartwright fostered the company's growth by rewarding creativity and embracing risk.
Cartwright served in the U.S. Navy Civil Engineer Corps after receiving his master's degree in engineering from Columbia University. He joined General Electric in 1960 and worked for the company for the next 19 years, spending six of those years overseas. His responsibilities included plant construction, project management, and new business development. He oversaw the company's technology development and licensing programs in Europe and Japan and worked in its nuclear energy division. In 1979 he left to join the New York–based engineering company Gibbs and Hill. He established the company's western regional office, which provided engineering services primarily for power plants.
In 1984 Cartwright and some of his coworkers, believing that natural gas was going to be the wave of the future for power in the United States, decided to start their own company after a series of legislative moves in the course of the preceding decade had created a fertile environment for new start-ups in the energy business. They founded Calpine, deriving the name from the company's location in California and from the word "Alpine" for the Swiss company, Electrowatt, that helped finance their start. Calpine was established with $1 million of seed financing and a team of five, including Cartwright.
In the beginning, Cartwright focused on management services to independent power generators. In 1988 he decided it was time take the next step and establish a power-generation business within the company, which soon owned one megawatt of power. In an article for Princeton University's E-Quad News , Cartwright told Sara Peters, "We celebrated everything in those days. So we said, 'Why don't we shoot to have 1000 megawatts by the year 2000?' And we had enough champagne to make it seem feasible to do that" (Winter 2001–2002).
As Cartwright and Calpine started owning and operating power plants, the company began to grow rapidly. Originally, Cartwright focused the company's activities primarily on generating geothermal power, that is, electricity generated by utilizing naturally occurring geological heat sources, such as geysers or hot springs. But the company also became involved in gas-fired projects. From its inception until 1992, Calpine operated as a co-generator. Cartwright had built the company with very limited capital, getting financing from such areas as public equity offerings, public debt offerings, and bank debt. But Cartwright had long been looking to the future and to deregulation to open the door to bigger things. In an interview with Susan Mueller for the Business Journal , Cartwright recalled, "It was clear to me, in 1984, that regulation was going to go away and there would be opportunities for an independent company" (September 8, 2000).
By 1992 deregulation had begun in earnest and wholesale generators were able to sell power at prices closer to open market prices to regulated public utilities, like Pacific Gas and Electric in California. Calpine had assets of $21 billion in 1992 and a power plant portfolio of 141 megawatts by 1994. Two years later, Electrowatt wanted to divest of its energy assets, and Cartwright decided to let the public buy out Electrowatt's interest in Calpine. Cartwright then guided Calpine through the largest initial public offering in the history of the power industry to that time. With access to public markets for both debt and equity, Cartwright had placed the company in position to embark on his plan to develop and acquire more geothermal facilities and high-efficiency natural gas.
Industry analysts considered Cartwright a true visionary in the energy business. He was especially lauded for his ability to both recognize and articulate the tremendous opportunities available in meeting the ever-increasing demands for electricity by building modern power systems that were fuel-efficient and environmentally friendly. Industry experts also noted that Cartwright recognized the need for new generating facilities during the embryonic stages of deregulation and restructuring in the industry.
By 1998 the company, under Cartwright's guidance, had power plants in operation or under development in ten states and was in the process of developing a $250 million, natural gas–fired, 500-megawatt power plant seven miles southwest of Yuba City, California. Cartwright viewed the old power companies and older power-producing plants as very inefficient and a major source of pollution. In contrast, he noted that Calpine's geothermal plants were extremely pollution-free and that the emissions from natural gas–fired plants were insignificant, especially in comparison to coal-powered plants. In an interview with April C. Murelio for Electric Light & Power , Cartwright commented on his pet subject of America's outdated and inefficient power generation capabilities: "We don't drive 30-year-old cars, or operate 30-year-old computers, or use 30-year-old telephones, so why do we continue to generate electricity and pollute our air with aging power plants?" (May 1999).
In 1999 Cartwright had guided Calpine into place as one of the nation's fastest-growing independent power producers. The company had 5,900 megawatts of capacity in operation, under construction, or in development across 11 states, far exceeding Cartwright's 1998 goal of owning 1,000 megawatts of power by 2000. Much of the growth was based on Cartwright's twofold strategy of expanding and diversifying Calpine's domestic portfolio of power projects and enhancing the performance and efficiency of its existing power plants. Cartwright also oversaw the company's efforts to decentralize its strategic energy program, which allowed the company to integrate the power plants as generating systems with corporate level financing and pooled gas procurement. The strategy allowed Calpine to meet customer needs from the most cost-effective facilities. Instead of operating individual power plants, Calpine operated integrated power systems.
On the heels of the power shortages in California, the company's new goal was to have more than 100 power plants throughout the West, the South, and New England and a total of 40,000 megawatts. Before the end of 2001, Cartwright had established a four-year building-and-buying campaign and had raised about half of the $17 billion needed to pursue his goals. Industry analysts noted that Cartwright and Calpine faced numerous risks in the expansion plan, including a possible initiative by government to re-regulate independent power suppliers like Calpine. Construction delays were another concern. However, industry insiders noted that Cartwright addressed the delays by assigning a roving staff to troubleshoot at every construction site and order parts in bulk, which enabled the company to trim construction costs by 15 percent.
Despite certain risks, investors continued to show confidence in Cartwright's direction for the company as the stock doubled in 2000 to a split-adjusted $47. By 2001 Calpine was the world's ninth-largest electricity producer. The industry analyst Kit Konolige noted in BusinessWeek , "These guys were the first to put their money behind a perception that there was going to be a power shortage in the U.S., and it has paid off handsomely for investors" (March 26, 2001).
Cartwright faced the nationwide economic downslide that began in late 2001 by scaling back the company's aggressive capital expenditure and plant construction program. He also put 34 advanced-stage development projects on hold in 2002 but continued to move ahead with his ambitions to bring 70,000 megawatts of generation on line by 2005. Although some industry analysts predicted a power supply glut, Cartwright remained bullish on the business and continued to position it to capitalize on improving markets.
Cartwright's strategy to stabilize the company's finances was to assign the net value of Calpine's power contracts over market ($6.5 billion then) and combine it with the value of its gas and power assets ($16.5 billion at the time) and then to back out of Calpine's debt and lease obligations ($15 billion). These moves resulted in the company having a net value of $8 billion, or $21.40 a share. Cartwright also noted in an interview in Oil Daily , "We are proud that Calpine achieved a growth rate of 63% even as our nation and industry faced difficult economic conditions" (January 17, 2002).
Cartwright's strategy appeared to pay off as it reported a 57 percent increase in third-quarter profits in 2003. Part of the good result was due to higher realized oil and gas prices that increased Calpine's oil and gas production margins. Industry analysts also noted that gains from debt restructuring helped Calpine report profits of $237.8 million on revenue of $2.7 billion. In the same quarter the previous year, the company had reported profits of $151.1 million on revenue of $2.5 billion.
Cartwright was always noted by industry analysts for his strong vision for the company and his entrepreneurial spirit. He was able find the right deals, make quick decisions, and take prudent risks to achieve success. Cartwright's energy did not wane as he continued to work well into his 70s, and he maintained a clear vision that Calpine would become the largest and most profitable power company in North America.
Cartwright was also known for instilling his entrepreneurial attitude throughout the company. He achieved this by quickly rewarding creativity and accomplishing goals. Cartwright also emphasized promoting from within and letting his employees grow with the company. In an interview with Susan Mueller for the Business Journal , Cartwright's friend, the investment banker George Stathakis noted, "Peter is a very decent guy with a lot of integrity. He tells it like it is" (September 8, 2000).
Throughout his years overseeing the company, Cartwright maintained a loose organizational structure and proudly proclaimed that the company had no organizational charts. Instead, Cartwright organized the company so that new projects were done on a team basis that included people from all of the company's various disciplines, such as legal, finance, and insurance. As for his own management philosophy, Cartwright told Bob Schmidt during an interview for the Sacramento Business Journal , "We try to give everybody as much authority and responsibility as they can handle, and I try to stay out of their hair" (July 20, 1998).
Under Cartwright's guidance, Calpine had increased its generating capacity by more than 70 percent in 2002. By 2004, the company had 89 energy centers in 21 states in the United States, as well as in Canada and the United Kingdom. Calpine also had a capacity of more than 22,000 megawatts. Ten new projects were also under construction in 2004, and Cartwright expected the company to have a capacity of more than 29,000 megawatts by the end of 2005. He remained a strong proponent of natural gas as an important fuel in the power industry for at least four decades. In addition to his duties at Calpine, Cartwright served on the board of directors for Catlytica Energy Systems, Cheng Power Systems, the San Jose Symphony, and the California Chamber of Commerce.
See also entries on Calpine Corporation and General Electric Company in International Directory of Company Histories .
"Calpine Puts Aggressive Power Plans on Hold," Oil Daily , January 17, 2002, ITEM02017002.
"The Green Utility That's in the Black," BusinessWeek , March 26, 2001, p. 108.
Mueller, Susan, "No Shortage of Energy," Business Journal , September 8, 2000, p. 41.
Murelio, April C., "Regional Strategy Catapults Calpine," Electric Light & Power , May 1999, p. 1.
Peters, Sara, "Calpine CEO Shares Wisdom, Insight," E-Quad News , Winter 2001–2002, http://www.princeton.edu/~seasweb/eqnews/winter_01-02/feature2.html .
Schmidt, Bob (interviewer), "In Depth: Energy," Sacramento Business Journal , July 17, 1998.
Wherry, Rob, "Power Surge," Forbes , January 22, 2001, p. 99.