Somehow this all seems familiar. Not only did power producer Calpine (NYSE:CPN) report a larger loss for the quarter, but management once again suggested that efforts to improve liquidity and the balance sheet could fall short of initial hopes and projections. And not too surprisingly, investors responded by marking these shares down a bit more.

Third-quarter performance doesn't seem to offer a lot of hope that we're really any closer to a major turnaround. Revenue was up 36%, and that spiffy-sounding performance was boosted by a high-single-digit increase in power sold, as well as a strong jump in the average realized price for that power. That right there is pretty much the good news.

Calpine's gross margin declined further in the quarter, as did operating margin, and that takes some of the steam out of the 23% rise in operating profits. What's more, while operating income rose about $33 million, interest expense (which comes after operating income) grew almost $100 million. When it was all said and done, the loss per share grew from $0.09 last year to $0.17 this quarter.

Not helping matters, the debt-to-capital ratio has actually been increasing as declines in debt are lagging the erosion of shareholder equity. Making matters worse, Calpine management said that its goal of reducing debt by $3 billion may get pushed into 2006 -- marking yet another year in which management failed to achieve its original goals for improving the balance sheet.

Lest I give the impression that it's all bad news, let's talk a bit about the industry. Electricity demand was strong this quarter as warmer weather lead to greater consumption. That was pretty much as expected, and it was a theme that investors also saw yesterday with Motley Fool Income Investor pick DukeEnergy (NYSE:DUK). Still, for all of management's talk about improving demand and spark spreads, the company's capacity utilization dipped 1.4 points and the average realized spark spread dropped 2 points.

As time passes, I get more skeptical about Calpine and whether management can really do what's needed to shore up the balance sheet and restore the company to profitability. I do like some of the fundamentals of the electricity business, but I'd much rather look at utilities like HuanengPower (NYSE:HNP) and E.ON (NYSE:EON), infrastructure plays like General Cable (NYSE:BGC) and ABB (NYSE:ABB), or maybe coal and gas suppliers, before I'd look to Calpine.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).