S&P cuts Calpine

Standard & Poor's said it lowered its corporate credit rating on Calpine Corp. and its subsidiaries to CCC- from CCC.

The outlook remains negative.

The agency said its BBB- underlying rating on Gilroy Energy Center LLC's bonds and its BBB rating on Power Contract Financing LLC's bonds were not affected by the rating action on Calpine.

The ratings downgrade is based on an unfavorable court decision, which worsens Calpine's already vulnerable financial position, S&P said. Under the court's order, Calpine may be required to return $313 million to the trustee account by Jan. 20, 2006.

The agency noted the ratings are based on the company's vulnerable financial condition, compounded by uncertain prospects for improvements in power markets, making it unlikely that Calpine will be able to meet its obligations with internal cash flow generation.

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