Ever try running through mud or wet sand? Not really rewarding or fun, is it? Calpine (NYSE:CPN) managers might be able to relate to that analogy right about now. Debt and market rumors of bankruptcy are overshadowing the progress being made at the power company.

Calpine's first-quarter revenue grew 9%, helped along by a significant year-over-year improvement in the company's spark spread. Operating results were also better, as gross profit and operating margin both improved on a year-over-year basis. In fact, the company posted a 1.1% jump in operating margin and a 64% improvement in operating income.

Now for the bad news. Interest expense rose dramatically in the quarter -- up 40% to nearly $350 million. With that sharp uptick in debt expense, the company posted a net loss of nearly $169 million for the quarter -- more than double the year-ago loss. While the company posted lower cash consumption from operating activities, earnings before interest, taxes, amortization, and depreciation were also down on a year-over-year basis.

What Calpine could really use right about now is a "debt fairy." If there were some way of magically wiping away a big chunk of the $18 billion in debt, Calpine would be a completely different company. Alas, the debt fairy is just as real as the tooth fairy, so there will be no easy way out.

Although Calpine managers made no promises for the future, it sounds as if they are at least willing to consider additional asset sales if the prices are right. That makes a lot of sense. Calpine is running at less than half of capacity on a companywide basis. If there are any redundant or non-strategic assets that can be converted to cash for debt repayment, that seems like a slam dunk to me.

In the meantime, owning Calpine shares these days will probably continue to be a lot like trying to drive on ice -- nail-biting, tough, and replete with the feeling that forces beyond your control are deciding your fate. While there are signs of improvement in the broader power market, Calpine has a long row to hoe to get its balance sheet in order and put the company in a position to report net profits to its owners.

At this point, Calpine looks like what I've always called a "binary stock" -- either it's going to recover and be all right, or it's heading to zero. Calpine clearly has assets with value, management is making progress on operating efficiency, and the company isn't in imminent danger of collapse. But that debt load is huge, and the market for independent power generation can be extremely volatile.

Investors with a nose for deep value and a very high tolerance for risk might want to take a sniff, but this is absolutely not a stock that belongs in everyone's portfolio today.

Get a charge from electricity generation? Try these other Foolish takes:

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