Calpine to Restructure Power Sales Agreement With the California Department of Water Resources



    SAN JOSE, Calif., and HOUSTON, Dec. 12 /CNW/ -- Calpine Corporation (Pink
Sheets: CPNLQ) today announced a restructuring of its existing power sales
agreement with the California Department of Water Resources (CDWR). Under the
terms, Calpine will sell CDWR up to a five-year supply of peaking capacity
from the company's Los Esteros Critical Energy Facility (LECEF), a
180-megawatt natural gas fired energy facility, located in San Jose, Calif.
The restructured agreement amends Calpine's previous obligation to deliver
1,000 megawatts of fixed-price energy through 2009, and replaces it with a
unit-specific arrangement whereby CDWR has the right to dispatch LECEF through
2009 with an option to extend this agreement for an additional three years.
    "We are pleased with the outcome of this truly collaborative effort and
commend the California Department of Water Resources for approaching Calpine
with a creative solution that benefits all parties -- California energy
consumers, the state of California and Calpine," stated Calpine Chief
Executive Officer Robert P. May. "Calpine will continue to provide electricity
to California and Silicon Valley homes and businesses from a competitively
priced, peaking power resource. In addition, we are proud to have continued to
meet all of our power sales agreements and performance obligations with CDWR
since 2001."
    
    Calpine in California
    
    Calpine has made an unprecedented investment in California's energy
infrastructure through the construction and operation of the state's newest,
cleanest, and most fuel-efficient fleet of power plants. The state's single
largest producer of power from renewable resources, Calpine also was the first
company to license and construct a major California power plant in more than a
decade and is responsible for the first baseload generation built in the San
Francisco Bay Area in more than 30 years. Since July 2001, Calpine has added
more than 4,000 megawatts of new capacity in California -- an accomplishment
unmatched by any other company in the energy industry.
    
    About Calpine
    
    Calpine Corporation is helping meet the needs of an economy that demands
more and cleaner sources of electricity.  Founded in 1984, Calpine is a major
U.S. power company, capable of delivering nearly 24,000 megawatts of clean,
cost-effective, reliable and fuel-efficient electricity to customers and
communities in 18 states in the U.S.  The company owns, leases and operates
low-carbon, natural gas-fired and renewable geothermal power plants.  Using
advanced technologies, Calpine generates electricity in a reliable and
environmentally responsible manner for the customers and communities it
serves.  Please visit http://www.calpine.com for more information.
    In addition to historical information, this release contains
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act.  We use words such as "believe,"
"intend," "expect," "anticipate," "plan," "may," "will" and similar
expressions to identify forward-looking statements. Such statements include,
among others, those concerning our expected financial performance and
strategic and operational plans, as well as all assumptions, expectations,
predictions, intentions or beliefs about future events. You are cautioned that
any such forward-looking statements are not guarantees of future performance
and that a number of risks and uncertainties could cause actual results to
differ materially from those anticipated in the forward-looking statements.
Such risks and uncertainties include, but are not limited to: (i) the risks
and uncertainties associated with our Chapter 11 cases and Companies'
Creditors Arrangement Act (CCAA) proceedings of certain of Calpine's Canadian
affiliates, including our ability to successfully reorganize and emerge from
Chapter 11; (ii) our ability to implement our business plan; (iii) financial
results that may be volatile and may not reflect historical trends; (iv)
seasonal fluctuations of our results; (v) potential volatility in earnings
associated with fluctuations in prices for commodities such as natural gas and
power; (vi) our ability to manage liquidity needs and comply with covenants
related to our existing financing obligations and anticipated exit financing;
(vii) the direct or indirect effects on our business of our impaired credit
including increased cash collateral requirements in connection with the use of
commodity contracts; (viii) transportation of natural gas and transmission of
electricity; (ix) the expiration or termination of our power purchase
agreements and the related results on revenues; (*) risks associated with the
operation of power plants including unscheduled outages; (xi) factors that
impact the output of our geothermal resources and generation facilities,
including unusual or unexpected steam field well and pipeline maintenance and
variables associated with the waste water injection projects that supply added
water to the steam reservoir; (xii) risks associated with power project
development and construction activities; (xiii) our ability to attract, retain
and motivate key employees; (xiv) our ability to attract and retain customers
and contract counterparties; (xv) competition; (xvi) risks associated with
marketing and selling power from plants in the evolving energy markets; (xvii)
present and possible future claims, litigation and enforcement actions;
(xviii) effects of the application of laws or regulations, including changes
in laws or regulations or the interpretation thereof; and (xix) other risks
identified from time-to-time in Calpine's reports and registration statements
filed with the SEC, including, without limitation, the risk factors identified
in its Annual Report on Form 10-K for the year ended December 31, 2006, and
Quarterly Reports on Form 10-Q.  Actual results or developments may differ
materially from the expectations expressed or implied in the forward-looking
statements, and Calpine undertakes no obligation to update any such
statements. Unless specified otherwise, all information set forth in this
release is as of today's date, and Calpine undertakes no duty to update this
information. For additional information about Calpine's chapter 11
reorganization or general business operations, please refer to Calpine's
Annual Report on Form 10-K for the fiscal year ended December 31, 2006,
Calpine's Quarterly Reports on Form 10-Q, and any other recent Calpine report
to the Securities and Exchange Commission.  These filings are available by
visiting the Securities and Exchange Commission's website at
http://www.sec.gov or Calpine's website at http://www.calpine.com.




For further information:

For further information: media relations, Mel Scott, +1-713-570-4553, 
scottm@calpine.com, or investor relations, Norma Dunn, +1-713-830-8883, 
ndunn@calpine.com, both of Calpine Corporation Web Site:
http://www.calpine.com

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