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  • 2. FORWARD-LOOKING STATEMENTS The information contained in this presentation includes certain estimates, projections and other forward-looking information that reflect Calpine’s current views with respect to future events and financial performance. These estimates, projections and other forward-looking information are based on assumptions that Calpine believes, as of the date hereof, are reasonable. Inevitably, there will be differences between such estimates and actual results, and those differences may be material. There can be no assurance that any estimates, projections or forward-looking information will be realized. All such estimates, projections and forward-looking information speak only as of the date hereof. Calpine undertakes no duty to update or revise the information contained herein. You are cautioned not to place undue reliance on the estimates, projections and other forward-looking information in this presentation as they are based on current expectations and general assumptions and are subject to various risks, uncertainties and other factors, including those set forth in our Form 10-K for the fiscal year ended December 31, 2007 and in other documents that we file with the SEC, many of which are beyond our control, that may cause actual results to differ materially from the views, beliefs and estimates expressed herein. Calpine’s reports and other information filed with the SEC, including the risk factors identified in its Annual Report on Form 10-K for the year ended December 31, 2007, can be found on the SEC’s website at and on Calpine’s website at The information contained in the presentation that relates to Calpine's operations for periods after the year ended December 31, 2007 is taken from information that has previously been made public by Calpine. We have not updated this information since it was last made public; therefore this information should not be construed to provide, nor is it intended to provide, guidance for such periods. Calpine has not determined what, if any, guidance it will provide in the future. 2
  • 3. REG G DISCLAIMER Calpine uses the non-GAAP financial measure “Commodity Margin” to assess its financial performance on a consolidated basis and by its reportable segments. Commodity Margin includes its electricity and steam revenues, hedging and optimization activities, renewable energy credit revenue, transmission revenue and expenses, and fuel and purchased energy expenses, but excludes mark-to-market activity and other service revenues. Calpine believes that Commodity Margin is a useful tool for assessing the performance of its core operations and is a key operational measure reviewed by its chief operating decision maker. Commodity Margin is not a measure calculated in accordance with GAAP, and should be viewed as a supplement to and not a substitute for Calpine’s results of operations presented in accordance with GAAP. Commodity Margin does not purport to represent net income (loss), the most comparable GAAP measure, as an indicator of operating performance and is not necessarily comparable to similarly-titled measures reported by other companies. In addition, Calpine management utilizes another non-GAAP financial measure, Adjusted EBITDA, as a measure of its liquidity and performance. Calpine defines Adjusted EBITDA as EBITDA as adjusted for certain items described in this presentation and in the accompanying reconciliation. Adjusted EBITDA is not a measure calculated in accordance with GAAP, and should be viewed as a supplement to and not a substitute for our results of operations presented in accordance with GAAP. Adjusted EBITDA does not purport to represent cash flow from operations or net income (loss) as defined by GAAP as an indicator of operating performance. Furthermore, Adjusted EBITDA is not necessarily comparable to similarly-titled measures reported by other companies. Calpine believes Adjusted EBITDA is used by and useful to investors and other users of our financial statements in analyzing our liquidity as it is the basis for material covenants under our DIP Facility, which was our primary source of financing during our Chapter 11 cases, and under our Exit Facility, which is our primary source of funding. Calpine also believes that EBITDA is widely used by investors to measure a company’s operating performance without regard to items such as interest expense, taxes, depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired. 3
  • 4. TABLE OF CONTENTS Calpine Overview Robert P. May, Chief Executive Officer Restructuring Overview Gregory L. Doody, General Counsel and Secretary Financial Overview Lisa J. Donahue, Chief Financial Officer Operations Overview Power Operations: Michael D. Rogers Commercial Operations: Todd W. Filsinger Conclusion Robert P. May, Chief Executive Officer 4
  • 6. WHO ARE WE? • Founded in 1984, Calpine is a major U.S. power company, currently operating nearly 24,000 megawatts (MW) of clean, cost-effective, reliable and fuel-efficient electric generating capacity for customers and communities across four distinct regions in the U.S. • Calpine is the nation’s largest natural gas, cogeneration, and renewable geothermal power provider North Region West Region 10 Plants 43 Plants 2,822 MW 7,246 MW Southeast Region 12 Plants 6,254 MW Texas Region 12 Plants Total 7,487 MW 77 Plants 23,809 MW Note: Represents Calpine’s net ownership including peaking capacity. 6
  • 7. CALPINE HAS CONSTRUCTED A MODERN FLEET 50 45 Weighted average age of plants 40 35 30 25 20 15 10 5 0 CPN DYN NRG RRI MIR Source: SNL Financial. • Most of Calpine’s peers were created by separating legacy electricity generation assets from regulated utilities and acquisitions 7
  • 8. CALPINE IS ONE OF THE GREENEST LARGE IPPs AND HAS SIGNIFICANT SCALE 30,000 25,000 20,000 Other Geothermal 15,000 Gas (MWs) Coal Nuclear 10,000 5,000 – NRG CPN DYN RRI MIR Source: Company filings and SNL Financial. • An investment in Calpine focuses on the growth potential in one of the nation’s most environmentally friendly asset portfolios 8
  • 9. CALPINE’S FLEET MINIMIZES MORE THAN JUST CARBON Carbon Profile Calpine Gas Fleet Emissions Comparison 1.2 Air Pollutant Emission CO2(tons) / MWh Generated 1.0 Rates Compared to Average Air Pollutants U.S. Fossil-Fired Facility 0.8 Nitrogen Oxide, NOx 95.2% Less Acid rain, smog and fine particulate formation 0.6 Sulfur Dioxide, SO2 99.9% Less Acid rain and fine particulate formation 0.4 Mercury, Hg 100% Less Neurotoxin 0.2 Carbon Dioxide, CO2 57.1% Less Principal greenhouse gas-contributor to climate change 0.0 Source: Calpine Form 10-K. CPN DYN NRG RRI MIR Source: Credit Suisse research. • Calpine is poised to benefit from pending legislation • Calpine’s highly efficient, modern gas fleet consumes significantly less fuel to generate electricity than older power generation facilities and emits much less air pollution compared to coal-fired or conventional gas-fired facilities • Calpine’s 725 MW geothermal fleet emits virtually no NOx, SO2, or CO2 9
  • 10. MORE THAN JUST A COMMODITY PLAY Capitalized to benefit all Risk management strategy stakeholders enhances value Streamlined management / Future development operations opportunities Diminishing reserve Increasing replacement margins costs Carbon legislation creates value Calpine is well positioned to benefit from several significant value drivers 10
  • 11. CALPINE’S VISION STATEMENT To be recognized as the leading power company by providing clean, efficient and reliable energy products and related services to our customers and appropriate financial returns to our stakeholders 11
  • 13. CALPINE RESTRUCTURING CREATED GREATER FOCUS AND EFFICIENCY • Divested or turned-over twelve plants or businesses Focus on Core Markets and • Closed 19 non-core offices Assets • Refocused development and construction activities • Overall debt reduced by $7 billion and interest expense reduced by ~$600 million/yr • Annual EBITDA increased by ~$485 million and gross profit by $471 Key million between full year 2005 and 2007 (excluding impairments) Restructuring • Reduction of ~$180 million/yr of overhead costs and 1,100 Accomplishments employees • Rejected 25 leases and 273 executory contracts • Improved monitoring and reporting capabilities Streamlined • Improved risk management organization Organization Restructuring significantly improved financial results, simplified the capital structure and streamlined the organization 13
  • 14. CALPINE’S IMPROVED POSITION • Unified approach to corporate structure and business activities with systemic method of decision making More Focused • More accountability to set and meet budgets / forecasts Management • More focused on cost side of profitability and maximizing value of Philosophy existing power plant portfolio • Streamlined business model with clearly defined core operations • Manageable approach to risk and leverage • Hedging strategy employed for both power and natural gas More Conservative Capital Structure • No significant non-project debt maturities until 2014 and Risk Profile • ~$1.0 billion of liquidity at emergence • Disciplined growth capabilities with focus on value creation More Disciplined • Established market presence to identify new potential growth Growth and opportunities Development • Experienced development team able to capitalize on market insight Approach 14
  • 15. SHARE DISTRIBUTION • As of February 26, 2008 there were approximately 420 million shares outstanding • The Plan of Reorganization allows for the potential issuance of up to 500 million common shares - Approximately 64 million shares are reserved for disputed unsecured claims and general contingencies - An additional 15 million are reserved for issuance under Calpine’s Equity Incentive Programs • The previous shareholders were issued 48.5 million warrants to purchase shares at an exercise price of $23.88 / share, which expire on August 25, 2008 15
  • 17. 2007 FINANCIAL REVIEW 17
  • 18. 2007 PRIMARY DRIVERS AND FINANCIAL HIGHLIGHTS • Commodity Margin increased 10% from 2006 to 2007 Improved power • Average realized electricity price increased from $63.02 to $67.90 / MWh markets • Improved credit support and market access contributed to additional long- term hedging and lower transaction costs • Capacity factor (excluding peakers) rose from 39.2% to 46.6% due to Fleet Performance increased demand in most of Calpine’s markets • Decreased forced outages and recordable industry rates • Improved starting reliability • SG&A expense decreased from $240 million in 2005 to $146 million in 2007 Overhead primarily due to the reduction in workforce, lower facility costs and lower Reductions legal fees not related to our reorganization • Savings resulting from the rejection and renegotiation of leases / executory Asset / Contract contracts and divestiture of non-core assets • Enhanced Improved origination of non-standard power sales to load serving entities • More REC and RA contribution • Adjusted EBITDA increased to $1,412 million from $1,029 million in 2006 18
  • 19. 2007 FINANCIAL RESULTS ($ in millions) December 31, 2007 2006 2005 Operating revenues $7,970 $6,937 $10,302 less: Fuel and purchased energy expenses (5,683) (4,752) (8,318) less: Mark-to-market activity, net(1) and other service revenues (62) (164) (154) Consolidated Commodity Margin 2,225 2,021 1,830 Mark-to-market activity, net(1) and other service revenues 62 164 154 Total other cost of revenue (1,392) (1,445) (3,929) Gross Profit $895 $740 ($1,945) Sales, general and other administrative expense 146 175 240 Other operating expenses 44 101 2,186 Interest expense, net of interest income 1,955 1,175 1,313 Other (income) expense, net (139) 18 (88) Net income before reorganization expense and taxes ($1,111) ($729) ($5,596) Reorganization items (3,258) 972 5,026 Net income before taxes $2,147 ($1,701) ($10,622) Income taxes (546) 64 (741) Net income, before discontinued operations $2,693 ($1,765) ($9,881) Discontinued operations, net of tax provision of $132 in 2005 – – ($58) Net income (after discontinued operations) $2,693 ($1,765) ($9,939) Adjusted EBITDA $1,412 $1,029 $927 (1) Included in operating revenues and fuel and purchased energy expenses. • Interest expense includes $849 million of post-petition and default interest 19
  • 20. ADJUSTED EBITDA RECONCILIATION ($ in millions) December 31, 2007 2006 2005 Net income, before discontinued operations $2,693 ($1,765) ($9,881) Adjustments to reconcile GAAP Income to Adjusted EBITDA: Interest expense, net of interest income 1,955 1,175 1,313 (1) Depreciation and amortization expense 507 522 558 Income tax provision (benefit) (546) 64 (741) Impairment charges 46 118 4,530 Reorganization items (3,258) 972 5,026 Major maintenance expense 98 77 70 Operating lease expense 54 66 105 Loss (income) on various repurchases of debt – 18 203 (Gains) losses on derivatives 2 (213) 52 (Gains) losses on sales of assets and contract restructuring excluding reorganization items (7) (6) 18 Claim settlement income (136) – – Other 3 1 80 Adjusted EBITDA $1,412 $1,029 $927 (1) Depreciation and amortization in the GAAP net income (loss) calculation on Calpine’s Consolidated Statements of Operations excludes amortization of other assets and amounts classified as SG&A. Note: Adjusted EBITDA is not a measure calculated in accordance with GAAP, and should be viewed as a supplement to and not a substitute for Calpine’s results of operations presented in accordance with GAAP. Adjusted EBITDA does not purport to represent cash flow from operations or net income (loss) as defined by GAAP as an indicator of operating performance. Furthermore, Adjusted EBITDA is not necessarily comparable to similarly-titled measures reported by other companies. 20
  • 21. 2007 ADJUSTED EBITDA GREW TO $1.4 BILLION Commodity Margin ($ millions) 10.3% CAGR $2,500 $2,225 $2,021 $1,830 $2,000 $1,500 $1,000 $500 $0 2005 2006 2007 Adjusted EBITDA ($ millions) $1,600 AGR $1,412 23.4% C $1,400 $1,200 $1,029 $927 $1,000 $800 $600 $400 $200 $0 2005 2006 2007 21
  • 22. 2007 REGIONAL HIGHLIGHTS ($ in millions) 2007 2006 2007 2006 Capacity Capacity Commodity Commodity 2007 Gross 2006 Gross Factor(1) Factor(1) Margin Margin Profit Profit Region West $1,196 $1,037 $664 $527 65.3% 58.7% Texas $500 $477 $298 $297 52.1% 41.7% Southeast $268 $215 $49 ($58) 25.5% 20.9% North $283 $313 $79 $79 33.6% 32.3% Other, Goodwill and Elimination ($22) ($21) ($195) ($105) NA NA Total $2,225 $2,021 $895 $740 46.6% 39.2% (1) Excludes peaking capacity. • Commodity Margin includes electricity and steam revenues, hedging and optimization activities, renewable energy credit revenue, transmission revenue and expenses, and fuel and purchased energy expenses, but excludes mark-to-market activity and other service revenues 22
  • 23. FINANCIAL PERFORMANCE DRIVERS • Calpine’s Plan of Reorganization assumes improved financial performance through 2012. Numerous factors are expected to contribute to improved performance, including: - Forecasted diminishing reserve margins across the U.S. - Significant impact on Calpine’s key markets, ERCOT and California - Owners of CCGT and peaking plants will likely be the beneficiaries - Development of regional capacity markets - Environmental pressures are anticipated to increase with carbon legislation looming, particularly in California - Calpine’s low-carbon dioxide emitting, cost-effective natural gas-fired generation portfolio is well positioned as this trend continues - The Geysers’ value is expected be further enhanced as the renewable energy credit market develops 23
  • 24. 2008 – 2012 ADJUSTED EBITDA PROJECTIONS ($ in millions) $3,000 CAGR $2,500 10.2% Adjusted EBITDA $2,000 $1,500 $1,000 $500 – 2008 2009 2010 2011 2012 Note: Projected Adjusted EBITDA is based on exit Lenders’ presentation on January 8, 2008. • The growth in EBITDA is primarily due to: - The improvement in commodity margin in ERCOT, CA, and Southeast - Contribution from growth projects (Greenfield, Otay Mesa and Russell City) - Implementation of CO2 legislation • Per the Lenders’ presentation on January 8, 2008 the Company had approximately 75% of gross margin hedged for 2008 24
  • 25. MAJOR MAINTENANCE AND CAPITAL EXPENDITURES • Capital expenditures include primarily operating and maintenance capital expenditures and certain construction and investment capital expenditures(1) • Operating and maintenance capital expenditures for the operating fleet - Includes capital spending for reinvestment in The Geysers • Construction capital expenditures - Capital required for the construction of Otay Mesa and Greenfield funded by proceeds from construction financings and equity contributions from Calpine and/or its project partners ($ in millions) 2007 Total Operating CapEx and Major Maintenance $267 Construction CapEx 201 Total CapEx and Major Maintenance 468 Less: Financing Related to Construction Projects (156) Net Funded CapEx and Major Maintenance $312 (1) Includes major maintenance costs but does not include ordinary maintenance expense. 25
  • 26. SIGNIFICANT NOL VALUE CREATED DURING BANKRUPTCY • Calpine (Including CCFC) has $5.1 billion of U.S. NOLs which will have annual IRC Section 382 limitations on usage as follows: - $4.33 billion over 13 years ($333 million/year) - $750 million over five years ($150 million/year) - Any amount not utilized in any year from these limitations can be carried forward to succeeding years. • In addition to these NOLs the company has significant deferred tax assets related to the bankruptcy that will generate tax deductions not limited under IRC Section 382 • In addition there are approximately $650 million of NOLs associated with Canada 26
  • 28. CAPITAL STRUCTURE AND LIQUIDITY ($ in millions) New capital structure December 31, 2007 At exit DIP Facility $3,970 – Second priority debt 3,672 – CCFC financing 1,080 1,079 Project debt 2,934 3,067 Drawn Revolver – 150 First lien debt – 5,980 Bridge loan – 300 Total debt $11,656 $10,576 Total cash assets $2,496 $839 Less restricted and reserved 581 463 Cash and cash equivalents $1,915 $376 (1) Net debt / adjusted EBITDA 6.9x 5.8x Revolver and LC availability (total revolver capacity $1,000) 765 625 Total liquidity $2,680 $1,001 (1) Net debt excludes drawn revolver, bridge loan and restricted cash; PoR 2008E adjusted EBITDA used for At exit ratio. • Calpine has ~$1.0 billion of liquidity to support its operations • The amount of restricted cash as of 12/31/2007 is $581 million 28
  • 29. OVERVIEW OF EXIT FACILITIES Amount Cash Flow Facilities Rate Maturity Amortization (in $ mm) Sweep $1,000 L + 287.5 March 29, 2014 None Existing First Lien Revolver 50% at Lender’s $3,887 L + 287.5 March 29, 2014 1% per annum Existing First discretion(1) Lien Term Loan 50% at Lender’s Additional First $2,093 L + 287.5 March 29, 2014 1% per annum discretion(1) Lien Term Loan 366 days from First Lien Asset $300 L + 287.5 None closing date Sale Bridge $7,280 Total Facilities • Calpine’s Exit Credit Facility provides significant, long-dated debt at attractive rates • $148 million of the Asset Sale Bridge Loan has been repaid from the Hillabee proceeds, the balance will be paid off with a portion of the proceeds from the sale of Fremont (1) Cash flow sweep can potentially be reduced to 25% if consolidated leverage ratio less than 5.0. 29
  • 30. DEBT MATURITY SCHEDULE $6,000 $5,606 $5,000 $4,000 $ Millions $152 mm outstanding $85 mm of PCFIII Notes $3,000 Bridge balance to be to be repaid from cash repaid from asset collateral account sales proceeds $2,000 $1,687 $1,000 $385 $280 $300 $85 $0 2008 2009 2010 2011 2012 2013 2014 Thereafter CCFC Project debt First Lien Assumptions: • Maturity Balances assumes no cash sweeps • All other debt maturities are paid off from operating cashflows at the Project Level • Metcalf assumed to be refinanced in 2008 30
  • 31. FIRST LIEN COLLATERAL PROGRAM • Exit Facility provides first lien collateral for power, gas and interest rate hedging transactions - Power, gas, and other commodity hedging is limited to Right Way Risk (RWR) transactions - Reduces reliance on cash collateral decreasing liquidity risk - Reduced cost of collateral - Exit Facility allows more flexibility as to the types of natural gas transactions to be included in the program • Currently 5 counterparties under the program with 3 additional counterparties expected to sign on by April 2008 • As of 12/31/2007, over $170 million reduction in cash collateral on commodity hedging transactions 31
  • 34. ASSET PORTFOLIO • Calpine owns nearly 24,000 MW of operating capacity, concentrated in the West and Texas Colorado 906 MW - California Within the West, the majority of the capacity is located in California 5,204 MW Oregon 616 MW Arizona 520 MW ISONE 537 MW North Region 10 Plants West Region 2,822 MW MRO 43 Plants NYISO 1,387 MW 352 MW 7,246 MW RFC 546 MW FRCC Southeast Region 865 MW 12 Plants 6,254 MW Texas Region SPP 12 Plants 1,134 MW Total 7,487 MW 77 Plants SERC 23,809 MW 4,255 MW 34
  • 35. Calpine Overview TECHNOLOGY MIX • The majority of Calpine’s capacity is gas-fired • Combined cycle plants represent 51% of Calpine’s capacity, cogeneration technology represents 33%, and 725 MW of capacity is geothermal Total Capacity(1) Baseload Baseload (Geothermal) (Geothermal) 3% 725 MW Peaking Peaking 13% 3,000 MW Intermediate Intermediate 12,119 MW 51% Intermediate Intermediate (Cogeneration) (Cogeneration) 7,965 MW 33% (1) As of 12/31/2007. 35
  • 36. Calpine Overview TECHNOLOGY MIX BY REGION • Most of Calpine’s West region capacity consists of intermediate gas-fired combined cycles • In Texas, the majority of Calpine’s assets operate as cogeneration facilities, which sell steam to industrial and commercial customers for use in heating and other applications West Texas North Southeast Baseload Peaking Peaking Intermediate Intermediate Intermediate (Geothermal) 983 MW 963 MW 1,600 MW 2,762 MW (Cogeneration) 725 MW 4,260 MW Intermediate Peaking (Cogeneration) 1,054 MW 1,008 MW Intermediate Intermediate Intermediate (Cogeneration) 3,227 MW Intermediate (Cogeneration) 2,529 MW 4,530 MW 168 MW Note: As of 12/31/2007. 36
  • 37. FLEET CHARACTERISTICS • Calpine’s assets are reliable and fuel-efficient - Higher availability and lower outages than national average - Operate at lower heat rates • Calpine’s fleet efficiency permits the Company to economically dispatch its assets when it is uneconomic for other similar assets to operate Net Capacity Factor Equiv. Forced Outage Rate Net Heat Rate % 50 50 % 40 9,000 48 45 40 8,500 30 35 BTU/kwh 30 8,000 7,896 27 25 20 20 7,444 7,500 13 15 7,332 10 9 10 7,000 8 5 0 0 6,500 National Average +/- 1 St Dev National Average +/- 1 St Dev National Average +/- 1 St Dev 1 1 1 Calpine Average - 2005 Calpine Average - 2005 Calpine Average - 2005 National Average - 2005 National Average - 2005 National Average - 2005 Calpine Average - 2007 Calpine Average - 2007 Calpine Average - 2007 Sources: Calpine combined cycle data (excludes cogens): NERC Generating Availability Data System (GADS). National combined cycle data: NCF and EFOR plant data from NERC; NHR plant data from Energy Velocity and PA Consulting Group 37
  • 38. (1) SO2 (tons) / yr - 200,000 400,000 600,000 800,000 1,000,000 1,200,000 Southern AEP Source: 2006 CEMS data from Energy Velocity Duke Dynegy adjusted for LS Power acquisitions TVA Progress TXU PPL Ameren Allegheny Reliant FirstEnergy 38 DTE Energy Edison International Dominion NRG Berkshire Hathaway E.ON AG SO2 EMISSIONS OF TOP 25 GENERATORS Xcel Constellation PSEG FPL (1) Dynegy Entergy Exelon Calpine
  • 39. (1) NOx (tons ) / yr 100,000 150,000 200,000 250,000 300,000 350,000 50,000 0 AEP Southern Source: 2006 CEMS data from Energy Velocity TVA Dynegy adjusted for LS Power acquisitions Duke Berkshire Hathaway Xcel Dominion Progress Edison International FirstEnergy Allegheny Ameren 39 DTE NRG E.ON AG TXU PPL Reliant FPL NOx EMISSIONS OF TOP 25 GENERATORS Entergy Constellation PSEG Exelon Dynegy (1) Calpine
  • 40. CARBON DIOXIDE EMISSIONS OF TOP 25 GENERATORS 200,000,000 180,000,000 160,000,000 140,000,000 120,000,000 CO2 (tons) / yr 100,000,000 80,000,000 60,000,000 40,000,000 20,000,000 - Edison International Calpine Constellation Dominion Reliant DTE Duke Entergy Xcel Exelon FPL TXU PPL FirstEnergy Allegheny Ameren NRG Southern AEP E.ON AG TVA PSEG Progress Berkshire Hathaway Dynegy (1) (1) Dynegy adjusted for LS Power acquisitions Source: 2006 CEMS data from Energy Velocity 40
  • 41. MAJOR MAINTENANCE • One of Calpine’s biggest non-labor cost is major maintenance expense - Expected 2008 major maintenance expense is $174 million(1) - Most operators rely on OEMs to perform this service • Calpine self-performs major maintenance with an in-house Turbine Maintenance Group (TMG) - Material financial benefit to self performing major maintenance - TMG is viewed as one of the industry’s experts on gas turbines (1) Based on Exit Facility Lenders’ presentation on January 8, 2008 41
  • 42. CONTINUING FLEET INITIATIVES • Calpine focuses on continuous operational improvement for its assets, including: - Performance Optimization Program (“POP”) focused on enhancing the total efficiency of Calpine’s plants through implementation of best practices gathered from across the fleet - Calpine Engine Optimization (“CEO”) designed to reduce heat rates and increase power output of gas turbines through implementation of optimized parts and components - Other engineering initiatives designed to optimize operations and processes related to management of the power assets • Calpine is able to leverage lessons learned across the fleet for maximum optimization 42
  • 44. DEVELOPMENT AND GROWTH OPPORTUNITIES • Development is refocused on creating value from acquiring, developing and disposing of assets based on a rigorous risk framework Mitigate Price Northwest NE ISO Risk MISO NYISO MRO WECC Pro forma Cash PJM CO-WY Flows and TVA VACAR SPP California AZ-NM-SNV Returns Entergy Southern ERCOT FRCC Mitigated Address Capital Construction Investment Risk Limits Evaluate Opportunities Risk Mitigation Meet Calpine Hurdle Rates • Focus efforts on markets where Calpine has • Identify alternative ways to create value • Articulate Calpine’s risk tolerance and a competitive advantage • Partner or Outsource project specific financial objectives • Expansion opportunities • Contract • Refine and calibrate risk tolerance and • Portfolio enhancement • Promote projects that provide portfolio financial analysis tools • Continue to engage in evaluating projects diversification • Execute mitigation strategies within risk • Market knowledge • Create new opportunities tolerance and financial objectives • Find unrealized value 44
  • 45. DEVELOPMENT AND GROWTH INITIATIVES • Calpine’s development program includes executing long-term power purchase agreements • Calpine has three projects where contractual agreements with counterparties have been completed, totaling 2,198 MW (1,487 MW net): Greenfield Energy Centre Otay Mesa Energy Center Russell City Energy Center • • • 50% owned 1,005 MW gas- 100% owned 596 MW 65% Calpine owned 597 MW fired facility under combined-cycle plant under combined-cycle plant to be construction in Ontario, construction in southern located in Hayward, Canada San Diego County California (San Francisco • • area) Output contracted under Output contracted under • long-term PPA with Ontario long-term PPA with SDG&E Output contracted under • Power Authority long-term PPA with PG&E $377 million non-recourse • • Completed $650 million financing arranged by ING Buyback opportunity for project financing Capital and BayernLB 35% minority interest • • • Expected on line date: 2008 Expected on line date: 2009 Expected on line date: 2010 / 2011 Any other growth projects would be incremental to Calpine’s PoR projections 45
  • 47. MARKET OUTLOOK - SUMMARY • Many U.S. regional electricity markets continue to recover: - Reserve margins arein recent yearsmany markets, and annual average market heat rates have tightening in generally increased • Several industry trends are expected to benefit Calpine: - Supply and Demand –inCalpine’s plants in California andmarkets Texas benefit from lower levels of excess capacity than found many other regional electricity - markets Fuel Mix and Prices – Natural gas prices set power prices in most hours in Calpine’s core Regional - dioxide emissions, are expected to benefit Calpine regulations, including regulation of carbon Environmental Regulations – Tightening environmental - Rising Construction Costs –of Calpine’scosts to construct new generation facilities has positive Increasing implications for the value existing assets - Market Regulations – Market developments such as trends toward separate capacity markets as well as nodal pricing are expected to benefit Calpine 47
  • 48. MANY MARKETS ARE NOT AS OVERBUILT AS THEY ONCE WERE … 2001 2005 New England New England Northwest1 Northwest1 MISO MISO New York New York MRO MRO PJM California1 PJM California1 CO- WY CO-WY SPP SPP TVA TVA VACAR VACAR AZ-NM-SV AZ-NM-SV Entergy Entergy Southern Southern ERCOT ERCOT FRCC FRCC Today New England Northwest1 Degree of Market Overbuild MISO New York Market Significantly Significant Surplus MRO Overbuilt PJM California1 CO-WY SPP TVA VACAR AZ-NM-SV Entergy Southern Capacity Deficit ERCOT FRCC (1) The supply and demand balance in the Northwest and California are dependent on hydro conditions. Source: PA Consulting Group. 48
  • 49. … AS ILLUSTRATED BY DECLINING RESERVE MARGINS IN MUCH OF THE U.S. Reserve Margins1 30% 2005 and 2008 20% 32% 26% New England 25% 24% NW 23% 17% 2005 2008 25% MISO 23% PJM 2005 2008 New 2005 2008 17% York 16% 2005 2008 38% 33% 27% 27% 27% 21% 2005 2008 CA 25% TVA VACAR SPP 18% 2005 2008 2005 AZNM 2008 2005 2008 2005 2008 37% 30% 2 67% 25% 2005 2008 16% 49% SOU ERCOT Reserve margin measures the amount of ENT surplus capacity in a market and is defined as: (Capacity – Demand)/(Demand) 2005 2008 2005 2008 2005 2008 (1) Represents PA’s forecast for the year which is a weather normalized forecast. Source: PA Consulting Group. 49
  • 50. MARKET EQUILIBRIUM GENERALLY PROJECTED TO OCCUR IN THE 2008-2012 TIMEFRAME 32% 20% NW2 16% 23% 20% 8% 17% New 15% England 14% 14% New 17% 15% York4 2008 2018 MRO 2008 2011 COWY3 17% MISO 15% 24% 2008 2016 2008 2010 22% 27% CA2 27% 2008 2011 2008 2011 PJM 18% 14% 15% 21% 14% 2008 2011 SPP TVA Reserve 2008 2011 15% 49% Margin (%) AZNM Entergy VACAR 2008 2013 2008 2018 2008 Reserve 15% 25% 16% Target Reserve1 2008 2011 2008 2012 13% 15% 2008 2018 (1) The years listed under target reserve margin correspond to the year 29% ERCOT the market is projected to reach equilibrium. Southern (2) Hydro capacity is de-rated in California and the rest of 19% the WECC by 25% and 20%, respectively. (3) The Colorado/Wyoming region is currently at its target but the reserve margin is expected to increase in 2009 and not reach its FRCC 2008 2012 2008 2011 target again until 2011. (4) Reserve margins represent all of NY and the 2010 date represents when NY Incity first needs capacity. Source: PA Consulting Group. 2008 2011 50
  • 51. REGIONAL FUEL MIX VARIES ACROSS THE U.S., TYPICALLY INCLUDING BOTH GAS AND COAL … New England NW New York MRO MISO PJM COWY CA SPP Fuel Type AZNM TVA ENT VACAR SOU Coal Oil Nuclear Gas ERCOT Hydro/Other Renewable Dual Fuel FRCC Source: PA Consulting Group 51
  • 52. … HOWEVER, THE FUEL ON THE MARGIN DRIVES MARKET ELECTRICITY PRICES Fuel on the Margin Sample Day of Market Dispatch (SERC example) MISO New York Oil Northwest New Capacity (GW) MRO England Gas PJM CO-WY Coal SPP TVA VACAR AZ-NM-NV Nuclear Entergy California Southern Hydro ERCOT 2 4 6 8 10 12 14 16 18 20 22 24 Hour of Day FRCC Sample Day of Market Dispatch (ERCOT example) Gas on margin >90% of time Oil Gas on the margin >65% of time Capacity (GW) Gas Predominately coal with gas & oil Predominately gas with coal & oil Predominately coal with gas; oil >10% Coal Nuclear 2 4 6 8 10 12 14 16 18 20 22 24 Hour of Day Source: PA Consulting Group 52
  • 53. IN CALPINE’S CORE MARKETS OF CALIFORNIA AND TEXAS, GAS PRICES PREDOMINANTLY DRIVE POWER PRICES Fuel on the Margin MISO The more gas is on the margin in a market, the more impact New York Northwest New higher or lower gas prices will have on power prices. MRO England PJM CO-WY SPP Impact on Peak Power Prices of $2 Higher Gas New England TVA VACAR AZ-NM-NV Entergy California Southern ERCOT Northwest FRCC MISO New York MRO Gas on margin >90% of time PJM Gas on the margin >65% of time CO- Y W Predominately coal with gas & oil SPP Predominately gas with coal & oil TVA VACAR Predominately coal with gas; oil >10% AZ- -SV -NM Entergy Southern ERCOT 20-25% increase FRCC 15-20% increase 10-15% increase 0-10% increase Source: PA Consulting Group 53
  • 54. LOW CARBON DIOXIDE EMISSIONS Calpine Capacity by Technology1 Sample CO2 Emissions Rates by Technology2 Baseload 1.2 (Geothermal) CO2 Emissions (tons/MWh) 725 MW 1.0 Peaking 3,000 MW 0.8 0.6 Intermediate 0.4 12,119 MW Intermediate 0.2 (Cogeneration) 7,965 MW 0.0 Hydro Geothermal Gas CT Nuclear Gas CC Oil Coal (1) As of 12/31/2007. (2) Assumes 7,000 heat rate CC emitting 117 lbs/MMBTu CO2; 10,700 heat rate CT emitting 117 lbs/MMBtu CO2; 9,500 heat rate Oil unit emitting 161 lbs/MMBtu CO2; and a 10,000 heat rate Coal unit emitting 209 lbs/MMBtu CO2. 54
  • 55. LOW ENVIRONMENTAL COSTS • Calpine’s combined cycle plants Example of Environmental Costs ($/MWh) by Technology1 emit significantly less NOx and carbon dioxide than coal plants and $30.00 Incremental Dispatch Costs ($/MWh) emit very little SO2 and no mercury $25.00 • Calpine’s emissions costs are $20.00 consequently substantially lower $15.00 than those of coal-fired units $10.00 $5.00 $- Combined Cycle Unit Existing Coal Unit Existing Coal Unit (Retrofit) (No Retrofit) NOx Emission Costs ($/MWh) SO2 Emission Costs ($/MWh) Hg Emission Costs ($/MWh) CO2 Emission Costs ($/MWh) (1) Assumes: $3,400/ton NOx cost, $550/ton SO2 cost, $35MM/ton Hg cost, and $15/ton CO2 cost. Assumes an SCR and Scrubber are retrofitted on coal plants. 55
  • 56. RISING CONSTRUCTION COSTS HAVE POSITIVE IMPLICATIONS FOR CALPINE • New plant construction costs have risen substantially in recent months: - Strong growth in demand for materials and labor in developing economies, Construction Cost Index vs. GDP Deflator particularly in Asia 150 - Strong growth in the oil and gas industry which requires specialized 140 labor with similar skill sets Index (2000 = 100) 130 - Higher commodity costs, including steel, copper, cement and oil 120 • Typical construction lead times have 110 grown as well • High costs of new construction are 100 90 likely to contribute to tighter supply 2000 2001 2002 2003 2004 2005 2006 2007 and demand balances as well as GDP Deflator Handy Whitman Index - Total Plant (All Steam Generation) improved long-term contracting Sources: Handy Whitman Index, Global Insight GDP. opportunities for existing assets 56
  • 57. DISTINCT CAPACITY MARKETS HAVE BENEFITED CALPINE’S ASSETS • Capacity markets can provide upside to generators, as well as, some long- Current Capacity Markets term revenue stability NE ISO • FCM By providing fixed payments to some NY ISO Northwest ICAP of Calpine’s plants, the Resource MISO MRO Adequacy (RA) capacity market in WECC California has benefited Calpine PJM ISO CO-WY RPM relative to the prior market structure. SPP Calpine is an active participant in VACAR TVA California AZ-NM-SNV efforts to continue to improve RA Entergy Southern California’s market structure ERCOT FRCC Markets with current or planned capacity markets Energy only or bilateral markets Source: PA Consulting Group and copyrighted material excerpted from Global Energy Decisions’ Energy Velocity Energy Map. 57
  • 58. CALIFORNIA AND TEXAS ARE MOVING TOWARD NODAL PRICING • Locational Marginal Pricing (LMP), or nodal wholesale electricity Current and Evolving Nodal Markets prices, are determined New England ISO LMP since 2003 according to values NYISO LMP since 2000 assigned to different input Northwest MISO and output locations (the LMP since 2005 MRO “nodes”). PJM WECC LMP since • The nodal markets in CO-WY 2000 California and ERCOT may TVA VACAR SPP California AZ-NM-SNV LMP to begin in also provide short-term 2008(1) Entergy Southern ERCOT upside to Calpine’s assets, LMP to begin in late 2008(1) FRCC particularly those located in congested areas, such Markets with current or planned locational marginal pricing as the San Francisco Bay Markets without locational marginal pricing Area. Source: PA Consulting Group and copyrighted material excerpted from Global Energy Decisions’ Energy Velocity Energy Map. (1) Reflects latest ISO targets. 58
  • 60. COMMERCIAL OPERATIONS OBJECTIVES • Calpine’s Commercial Operations’ (CCO) objective is to preserve and enhance the expected Commodity Margin of its portfolio of assets while delivering value to its customers • Commercial activities reflect the goal of integrated portfolio management Integrated Approach to Portfolio Management CCO’s goals are to: Ensure the optimal dispatch of Calpine’s generating Incremental Value & Risk Reduction assets Calpine’s commodity Calpine combines physical Reduce the potential negative impact of commodity trading is focused on assets with trading and risk price risk on the value of Calpine’s assets and actively managing risk, as management capability to contracts well as leveraging the meet the energy needs of its Company’s physical core customers Origination Create value by using the flexibility of Calpine’s infrastructure to capitalize on market inefficiencies Customized physical assets, energy market competencies and Risk Energy infrastructure Management Solutions Generate incremental value through active portfolio Calpine Asset management and energy marketing by leveraging Portfolio sis Calpine’s information, infrastructure and intellectual aly Tr capital ad An in g Economic Dispatch & Calpine’s integrated approach All activities are conducted within the framework Portfolio to portfolio analysis & of Calpine’s Risk Policy management creates Optimization incremental value from Risk oversight is organizationally independent from strategic planning to hourly portfolio optimization commercial operations 60
  • 61. CONCLUSION 61
  • 62. PROVIDING CLEAN POWER FOR FUTURE GENERATIONS Focused Management and Operations Teams / Streamlined Structure Poised to Benefit from Tight Power Markets Value Created from Carbon Legislation 24,000 MW Environmentally Friendly Portfolio Significant Capabilities to Grow Organically Average Age of Fleet Less Than Ten Years Calpine Is Positioned to Succeed 62
  • 63. Q&A 63
  • 64. APPENDIX 64
  • 65. 2007 REORGANIZATION EXPENSE DETAIL Reorganization Expense Detail ($ in millions) December 31, 2007 2006 Provision for expected allowed claims ($3,687) $845 (Gain) on asset sales (285) (106) Asset impairments 120 – DIP facility financing and CalGen secured debt repayment costs 202 39 Professional fees 217 153 Interest (income) on accumulated cash (59) (25) Other 234 66 Total reorganization items ($3,258) $972 • Provision for expected allowable claims consisted primarily of a $4.1 billion settlement of claims related to Calpine corporation’s guarantee of the ULC 1 notes and release of guarantee of the ULC 2 notes following the repayment those notes in September 2007 • Gain on asset sales primarily from the sale of Aries, Goldendale, PSM and Parlin in 2007 and Dighton and Fox in 2006 • Asset impairment charges consisted primarily of a pre-tax, predominantly non-cash impairment charge of ~$89 million to record interest in Acadia at fair value less cost to sell 65
  • 66. SELECTED OPERATING STATISTICS (in thousands, except Heat Rate) 2007 2006 2007 2006 Total MWh generated 90,811 83,146 Average MW of peaker facilities 3,014 2,965 West 36,837 34,567 West 983 983 Texas 33,154 27,169 Texas - - Southeast 14,795 13,954 Southeast 963 963 North 6,025 7,456 North 1,068 1,019 Average Availability 90.8% 91.3% Average capacity factor, excluding peakers 46.6% 39.2% West 90.8% 91.6% West 65.3% 58.7% Texas 90.8% 88.6% Texas 52.1% 41.7% Southeast 92.1% 92.6% Southeast 25.5% 20.9% North 87.4% 93.7% North 33.6% 32.3% Average total MW in operation 24,755 26,785 Average steam adjusted Heat Rate 7,184 7,223 West 7,281 7,608 West 7,336 7,321 Texas 7,266 7,430 Texas 6,830 6,878 Southeast 7,222 8,184 Southeast 7,511 7,579 North 2,986 3,563 North 7,646 7,486 Note: Capacities reflect average capacity during 2007 and doe not reflect capacity going forward. 66
  • 67. ASSET DISPOSITION ACTIVITY Assets Status Aries Divested Dighton Divested Fox Divested Valladolid III Divested Goldendale Divested Power Systems Manufacturing Divested Thomassen Turbine Systems Divested Parlin Divested Acadia Divested Rumford / Tiverton Turned Over Hillabee Divested Fremont Pending Sale Texas City Restructured / Actively Marketing for Sale Clear Lake Restructured / Actively Marketing for Sale Pine Bluff Restructured RockGen Restructured / Purchased Santa Rosa Restructured Hog Bayou Restructured • Company will continue to evaluate holdings in all assets 67
  • 68. CALPINE ® 68