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

    SAN JOSE, Calif., and HOUSTON, Aug. 24 /CNW/ -- Calpine Corporation (Pink
Sheets: CPNLQ) today filed a motion with the U.S. Bankruptcy Court for the
Southern District of New York seeking authority to assume Calpine's power
sales agreement with the California Department of Water Resources.  Today's
filing will resolve power contract-related issues between Calpine, the
California Department of Water Resources, the California Attorney General
Edmund G. Brown, Jr. and the California Electricity Oversight Board. The
filing also helps expedite Calpine's plans to emerge from Chapter 11 as a
profitable, more competitive power company.
    Calpine Chief Executive Officer Robert P. May stated, "Since entering
into our power sales agreement with the Department of Water Resources in 2001,
Calpine has continued to meet all of our performance obligations under this
contract.  We are especially proud to have upheld our commitment to the state
throughout Calpine's Chapter 11 restructuring and are pleased to be in a
position to formally assume this important power contract for Calpine and the
state of California.
    "Today's filing also will allow Calpine to remove a potential impediment
to our timely emergence from Chapter 11," continued Mr. May.  "We look forward
to building on our long-standing relationship with the Department of Water
Resources and our other power customers to help assure that California can
continue to rely upon Calpine for delivering clean, reliable and
cost-effective electricity."
    Under the terms of the power sales agreement with the California
Department of Water Resources, Calpine provides 1,000 megawatts of fixed-price
electricity through Dec. 31, 2009.  The company anticipates the U.S.
Bankruptcy Court will review its filing at the company's Sept. 11, 2007,
    Calpine in California
    Calpine has a long-standing record of achievement in California.  Since
2001, the company has invested more than $5 billion in California's power
generation capacity, and is the state's largest renewable power provider.
During the energy crisis, Calpine was the first power company to enter into
long-term contracts with the state and was the first to voluntarily
renegotiate more favorable terms for the state.
    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 developed more than 4,000 megawatts of clean,
reliable electricity in California -- an accomplishment unmatched by any other
company in the energy industry.  In addition, Calpine continues to make
substantial infrastructure investments in California, including the
600-megawatt Russell City Energy Center to be built in the San Francisco Bay
Area and the 593-megawatt Otay Mesa Energy Center under construction in San
    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 more than 24,500 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 for more information.
    This news release discusses certain matters that may be considered
"forward-looking" statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, including statements regarding the intent, belief or
current expectations of Calpine Corporation and its subsidiaries ("the
Company") and its management and uses 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 the Company's expected financial performance and strategic
and operational plans, as well as all assumptions, expectations, predictions,
intentions or beliefs about future events.  Readers 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 the Company's Chapter 11 cases and Companies'
Creditors Arrangement Act proceedings, including impact on operations; (ii)
the Company's ability to attract, retain and motivate key employees and
successfully implement new strategies; (iii) the Company's ability to
successfully reorganize and emerge from Chapter 11; (iv) the Company's ability
to attract and retain customers and counterparties; (v) the Company's ability
to implement its business plan; (vi) financial results that may be volatile
and may not reflect historical trends; (vii) the Company's ability to manage
liquidity needs and comply with financing obligations; (viii) the direct or
indirect effects on the Company's business of its impaired credit including
increased cash collateral requirements; (ix) the expiration or termination of
the Company's power purchase agreements and the related results on revenues; (*)
potential volatility in earnings and requirements for cash collateral
associated with the use of commodity contracts; (xi) price and supply of
natural gas; (xii) risks associated with power project development,
acquisition and construction activities; (xiii) risks associated with the
operation of power plants, including unscheduled outages of operating plants;
(xiv) factors that impact the output of the Company's 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; (xv) quarterly and
seasonal fluctuations of the Company's results; (xvi) competition; (xvii)
risks associated with marketing and selling power from plants in the evolving
energy markets; (xviii) present and possible future claims, litigation and
enforcement actions; (xix) effects of the application of laws or regulations,
including changes in laws or regulations or the interpretation thereof; and
(xx) other risks identified the risk factors identified in its Annual Report
on Form 10-K for the year ended December 31, 2006, and its Quarterly Report on
Form 10-Q for the quarter ended June 30, 2007, which can also be found on the
Company's website at All information set forth in this
news release is as of today's date, and the Company undertakes no duty to
update this information.

For further information:

For further information: Media, Mel Scott, +1-713-570-4553,, or Investors, Karen Bunton, +1-408-792-1121,, both of Calpine Corporation Web Site:

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