"[A]s much as 25% of the state's generation capacity may not be covering its cash costs and may face retirement decisions," Trey Griggs, Calpine's Chief Commercial Officer, claimed during an earnings conference call in discussing ERCOT fundamentals

Andrew Novotny, Calpine's Senior Vice President-Commercial Operations, added that, concerning the market impact of coal-to-gas switching, "It's actually more interesting over the next, let's say, six months to 12 months is that for the first time we may be seeing that effect in Texas now, as gas prices have gotten so low that PRB coal in Texas is no longer covering not only its cash cost, but even its marginal fuel cost as we go into November."

Pressed by an analyst to justify its view that ERCOT prices are at the bottom and that the market is primed to see either retirements or price increases -- given that Calpine executives have often repeated this view on prior earnings call with little change in the actual market materializing -- Calpine CEO Thad Hill said, "[U]ltimately Texas is going to have to play out one of two ways. Either, we're going to see a supply reaction because people are losing money, as I think Trey and Andrew both described. And we think that is more likely than not. The alternative outcome, I believe, is that we do see demand shock and some very high prices. As you know, the $9,000 a megawatt-hour price cap is there. And that sets forwards much higher. And I don't know which path it's going to have. Frankly, the former is probably better than the latter, but one way or the other, something has to move here, and could it be another year or two, sure. But ultimately economics is going to work, and I don't think people are going to continue to operate their facilities and lose money while they are doing it. So we'll just have to be patient and make sure that we're operating well and staying focused."

Griggs conceded that, in Texas, three years of mild summers combined with low natural gas prices and limited forward liquidity have led to a more "challenging" pricing environment.

Griggs said that Calpine's new retail platform in the form of Champion Energy, "helps to offset some of the impacts of these market moves. Champion provides a particularly valuable source of liquidity in Texas and prices above the current forward curve."