Calpine Corp. (CPN), struggling under a heavy debt load since the Enron crisis (search) of 2001, on Wednesday accelerated its $3 billion debt-reduction plan and signaled it may sell up to eight more power plants in a bid to improve its balance sheet.

Calpine, which was recently forced to deny rumors it was on the brink of bankruptcy, also said it will mothball underperforming plants, sever some costly maintenance agreements and attempt to reduce losses at its plants during off-peak hours.

In addition to the debt reduction, the company aims to reduce operating costs by $200 million annually and achieve $275 million in annual interest savings.

Calpine's shares surged 25 percent on the New York Stock Exchange (search).

Under the accelerated debt-reduction plan, Calpine said it hopes to slash its debt by more than $3 billion by the end of the year -- moving up its timetable from the end of 2006. As of the end of the first quarter, the company had more than $18 billion in total debt.

Calpine said previously announced potential asset sales, as well as the possible power plant sales, will help finance the reduction.

Last week, the company said it was evaluating strategic alternatives for its U.S. oil and gas assets, including the possible sale of all or some of these operations.

It is also completing a review of bids for its 1,200-megawatt Saltend Energy Center (search) plant in the United Kingdom, the company's only plant in Europe. Calpine expects to use the proceeds to redeem $620 million in preferred equity and use the balance in accordance with its bond indentures.

"To operate effectively in a business environment that has changed dramatically over the last few years, we are reviewing all options to provide near-term results, while continuing to focus on long-term value," Chief Executive Peter Cartwright said in a statement.

Cartwright said the asset sales and the temporary plant shutdowns should refocus the company's business to take advantage of opportunities in several of its key power regions.

Calpine owns more than 90 power plants in more than 20 U.S. states and in Canada. The company did not give details about which plants it expects to sell or shut down.

San Jose, Calif.-based Calpine is one of several merchant power companies attempting to dig out from an industrywide credit crunch following the collapse of Enron Corp. and a glut in generating capacity.

Shares have plummeted from more than $55 a share in 2001 to $1.33 a share last month.

The company has been selling off noncore assets and working to slash debt to keep going until power markets strengthen and "spark spreads" -- profit margins on electricity sales -- improve.

Maxcor Financial analyst Daniele Seitz said that while many of the initiatives in the accelerated debt-reduction program had been hinted at by the company for a long time, the plan is a "tremendous step in the right direction" for the struggling company.

"It is good that the plan is already laid out, and we think that the company, over time, will be able to execute it," she said.

On May 11, Calpine warned its cash needs over the next year would exceed cash from operations and cash on hand, and that maintaining sufficient liquidity depended on the success of the program to raise money from selling assets.

Calpine reported a first-quarter net loss of $168.7 million, or 38 cents a share, versus a loss of $71.2 million, or 17 cents a share, a year ago.

Calpine shares rose 50 cents to $2.48 Wednesday.