Calpine will sell six combined-cycle power plants (CCPP) totalling 3,498MW to LS Power for $1.57bn in cash, subject to working capital and other adjustments.
With the sale of the plants located in the south-east region of the US, Calpine will use existing federal and state net operating losses to offset the projected taxable gains.
The plants comprise the 1,134MW Oneta Energy Center located in Coweta, Oklahoma; the 501MW Carville Energy Center in St Gabriel, Louisiana; the 795MW Decatur Energy Center in Decatur, Alabama; the 237MW Hog Bayou Energy Center in Mobile, Alabama; the 255MW Santa Rosa Energy Center in Pace, Florida; and the 606MW Columbia Energy Center in Calhoun County, South Carolina.
Calpine said none of the assets included in the transaction that is expected to close in the second quarter of 2014 are directly encumbered with project debt.
The transaction would result in net cash proceeds of around $1.53bn that would be used by the company in a balanced manner that maintains leverage neutrality and is accretive to adjusted free cash flow per share.
Calpine CEO Jack Fusco said: "This transaction enables us to capture that value for our shareholders today, to accelerate the usage of our net operating losses and to deliver meaningful adjusted free cash-flow per share accretion.
"Consistent with our track record, we will continue to be opportunistic in our deployment of the capital generated from this sale, whether paying down debt, investing in acquisition or development opportunities or repurchasing our own shares of common stock."
After the transaction, Calpine will retain ownership of four natural gas-fired power plants totalling 1,738MW capacity located in Arkansas, Alabama and Florida.
The company will also sell its customary parts and services along with the sale of power plants and related assets.