Calpine (NYSE: CPN), which is a major power company, has experienced lots of drama over the years. However, the company has been able to stabilize things – and has recently come out of bankruptcy.

But suddenly the drama has returned: NRG Energy (NYSE: NRG), a rival, has made a $11 billion hostile bid for Calpine (it's a stock-for-stock transaction).

And there's lots of momentum for the deal. Keep in mind that Harbinger Capital Partners, which is a major hedge fund, owns 24% of Calpine's shares and is pushing for a combination.

No doubt, NRG-Calpine would be a powerhouse, amounting to roughly 45,000 megawatts. It will also expand NRG's presence in the valuable California market.

True, the valuation for the transactions looks meager. But, I suspect we'll ultimately see a higher bid. According to Harbinger's letter to Calpine:

"We believe this offer represents a good starting point and that the Board should immediately engage with NRG concerning the terms."

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

NRG Energy (NYSE: NRG) confirmed an all-stock transaction with an exchange ratio of 0.534 for CPN shares, valuing the potential transaction at $22.70.

Calpine (NYSE: CPN) closed at $21.28 Wednesday.

CPN overall option implied volatility of 41 is near its 16-week average of 43 according to Track Data, suggesting non-directional risk.

A year or so ago, a 10% total annual return on equity would have been unsatisfactory for many investors.

My, how the U.S. financial landscape has changed from April 2007! A 10% return today doesn't look so bad, and a company that can achieve that and more is utility NRG Energy.

NRG Energy Inc. (NYSE: NRG) is a wholesale power generating company that owns and operates power plants with a net capacity of 22,880 megawatts.

The majority of NRG's revenue is from base load power. The significance? A stable cash flow. Further NRG's power source is largely natural gas-based, which is preferred, given likely additional regulations moving forward for coal-fired plants, as nations address climate change. NRG's power source mix is 45% natural gas, 34% coal, 16% oil, 5% nuclear. NRG's stable includes 175 power generation units at 49 power plants.

Just call NRG Energy the power generator with renovation and reclamation on its mind.

NRG Energy, Inc. (NYSE: NRG) is a wholesale power generating company that owns/operates power plants with a net capacity of 24,175 megawatts.

A majority of NRG's revenue is baseload power. The significance? A stable cash flow. Further NRG's power source is largely natural gas-based, which is preferred, given likely additional restrictions/regulations moving forward for coal-fired plants as nations like the U.S. address climate change. NRG's power source mix: 45% natural gas, 34% coal, 16% oil, 5% nuclear.

NRG's strategy is to repower existing facilities and develop new generating capacity in markets where NRG owns assets, with an emphasis on baseload capacity, long-term power sales agreements, efficiency, and environmental enhancements. So far, NRG's business is on-track. The Reuters Fiscal Year (FY) 2007/2008 EPS consensus estimates for NRG are $2.24 to $2.26.

There has not been a nuclear reactor built in the US for over 30 years. People were afraid of Chernobyl, the big Russian reactor disaster in 1986. Maybe the plants were just too dangerous.

But, oil was not at $80 a barrel then. The electricity grid was not suffering when temperatures hit 90 degrees and big cities were faced with "brown outs."

So, NRG Energy (NYSE: NRG) is making the first application for a plant since "before the Three Mile Island accident in Pennsylvania in 1979, according to The Associated Press. The plants would be based in Texas. The federal government expects applications from other large energy companies before the end of the year.

Energy Information Administration expects demand for electricity to move up 42% between now and 2030. The AP says none of these plants could be online before 2015. And the average cost of nuclear-produced electricity was 1.72 cents per kilowatt hour in 2006, compared with 2.37 cents for coal-fired plants and 6.75 cents for natural gas plants, according to the Nuclear Energy Institute, a trade group.

Nuclear energy may cause anxiety in some circles, but it is on the way back. The country can't afford to be without it.

Douglas A. McIntyre is a partner at 24/7 Wall St.