Calpine_Analyst_Day_Presentation_022908

CALPINE CORPORATIONPROVIDING CLEAN POWER FOR FUTURE GENERATIONS

February 29, 2008

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 www.sec.gov and on Calpine’s website at www.calpine.com..

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.

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.

4

TABLE OF CONTENTS

Calpine OverviewRobert P. May, Chief Executive Officer

Restructuring OverviewGregory L. Doody, General Counsel and Secretary

Financial OverviewLisa J. Donahue, Chief Financial Officer

Operations OverviewPower Operations: Michael D. Rogers

Commercial Operations: Todd W. Filsinger

ConclusionRobert P. May, Chief Executive Officer

5

CALPINE OVERVIEW

6

West Region43 Plants7,246 MW

North Region10 Plants2,822 MW

Texas Region12 Plants7,487 MW

Southeast Region12 Plants6,254 MW

Total77 Plants

23,809 MW

• 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

Note: Represents Calpine’s net ownership including peaking capacity.

WHO ARE WE?

7

0

5

10

15

20

25

30

35

40

45

50

CPN DYN NRG RRI MIR

Wei

ghte

d av

erag

e ag

e of

pla

nts

CALPINE HAS CONSTRUCTED A MODERN FLEET

Source: SNL Financial.

• Most of Calpine’s peers were created by separating legacy electricity generation assets from regulated utilities and acquisitions

8

–

5,000

10,000

15,000

20,000

25,000

30,000

NRG CPN DYN RRI MIR

Other

Geothermal

Gas

Coal

Nuclear

• An investment in Calpine focuses on the growth potential in one of the nation’s most environmentally friendly asset portfolios

(MW

s)CALPINE IS ONE OF THE GREENEST LARGE IPPs AND HAS SIGNIFICANT SCALE

Source: Company filings and SNL Financial.

9

0.0

0.2

0.4

0.6

0.8

1.0

1.2

CPN DYN NRG RRI MIR

CO

2(to

ns)

/ M

Wh

Gen

erat

ed

CALPINE’S FLEET MINIMIZES MORE THAN JUST CARBON

Source: Credit Suisse research.

Air Pollutant Emission

Rates Compared to Average

Air Pollutants U.S. Fossil-Fired Facility

Nitrogen Oxide, NOx 95.2% Less

Acid rain, smog and fine particulate formationSulfur Dioxide, SO2 99.9% Less

Acid rain and fine particulate formation

Mercury, Hg 100% Less

NeurotoxinCarbon Dioxide, CO2 57.1% Less

Principal greenhouse gas-contributor to climate change

• 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

Carbon Profile Calpine Gas Fleet Emissions Comparison

Source: Calpine Form 10-K.

10

Streamlined management /operations

Capitalized to benefit all stakeholders

Diminishing reservemargins

Risk management strategy enhances value

Increasing replacement costs

Future developmentopportunities

MORE THAN JUST A COMMODITY PLAY

Calpine is well positioned to benefit from several significant value drivers

Carbon legislation creates value

11

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

CALPINE’S VISION STATEMENT

12

RESTRUCTURING OVERVIEW

13

• 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 million between full year 2005 and 2007 (excluding impairments)

• Reduction of ~$180 million/yr of overhead costs and 1,100 employees

• Rejected 25 leases and 273 executory contracts

CALPINE RESTRUCTURING CREATED GREATER FOCUS AND EFFICIENCY

• Divested or turned-over twelve plants or businesses

• Closed 19 non-core offices

• Refocused development and construction activities

Focus on Core Markets and

Assets

KeyRestructuring

Accomplishments

StreamlinedOrganization

• Improved monitoring and reporting capabilities

• Improved risk management organization

Restructuring significantly improved financial results, simplified the capital structure and streamlined the organization

14

CALPINE’S IMPROVED POSITION

• Unified approach to corporate structure and business activities with systemic method of decision making

• More accountability to set and meet budgets / forecasts

• More focused on cost side of profitability and maximizing value of existing power plant portfolio

• Streamlined business model with clearly defined core operations

More FocusedManagement Philosophy

More Conservative Capital Structure and Risk Profile

More DisciplinedGrowth and

Development Approach

• Manageable approach to risk and leverage

• Hedging strategy employed for both power and natural gas

• No significant non-project debt maturities until 2014

• ~$1.0 billion of liquidity at emergence

• Disciplined growth capabilities with focus on value creation

• Established market presence to identify new potential growth opportunities

• Experienced development team able to capitalize on market insight

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

16

FINANCIAL OVERVIEW

17

2007 FINANCIAL REVIEW

18

2007 PRIMARY DRIVERS AND FINANCIAL HIGHLIGHTS

Improved power markets

Fleet Performance

Overhead Reductions

Asset / ContractEnhanced

• Commodity Margin increased 10% from 2006 to 2007

• Average realized electricity price increased from $63.02 to $67.90 / MWh

• 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 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 primarily due to the reduction in workforce, lower facility costs and lower legal fees not related to our reorganization

• Savings resulting from the rejection and renegotiation of leases / executory contracts and divestiture of non-core assets

• 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

19

2007 FINANCIAL RESULTS

($ in millions)

(1) Included in operating revenues and fuel and purchased energy expenses.

• Interest expense includes $849 million of post-petition and default interest

December 31,

2007 2006 2005Operating 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 1,830Mark-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

20

ADJUSTED EBITDA RECONCILIATION($ in millions)

(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.

December 31,

2007 2006 2005Net 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

Depreciation and amortization expense(1)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

21

$0

$500

$1,000

$1,500

$2,000

$2,500

2005 2006 2007

$0

$200$400

$600

$800

$1,000$1,200

$1,400

$1,600

2005 2006 2007

2007 ADJUSTED EBITDA GREW TO $1.4 BILLION

Commodity Margin ($ millions)

Adjusted EBITDA ($ millions)

$1,830 $2,021$2,225

$927 $1,029

$1,41223.4% CAGR

10.3% CAGR

22

2007 REGIONAL HIGHLIGHTS($ in millions)

(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

Region

2007 Commodity

Margin

2006 Commodity

Margin2007 Gross

Profit2006 Gross

Profit

2007 Capacity Factor(1)

2006 Capacity Factor(1)

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 NATotal $2,225 $2,021 $895 $740 46.6% 39.2%

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

24

–

$500

$1,000

$1,500

$2,000

$2,500

$3,000

2008 2009 2010 2011 2012

Adju

sted

EBI

TDA

2008 – 2012 ADJUSTED EBITDA PROJECTIONS

• 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

($ in millions)

10.2% CAGR

Note: Projected Adjusted EBITDA is based on exit Lenders’ presentation on January 8, 2008.

25

• 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

(1) Includes major maintenance costs but does not include ordinary maintenance expense.

MAJOR MAINTENANCE AND CAPITAL EXPENDITURES

($ in millions)

2007Total Operating CapEx and Major Maintenance $267Construction CapEx 201Total CapEx and Major Maintenance 468 Less: Financing Related to Construction Projects (156)Net Funded CapEx and Major Maintenance $312

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

27

CAPITAL STRUCTURE OVERVIEW

28

CAPITAL STRUCTURE AND LIQUIDITY ($ in millions)

• Calpine has ~$1.0 billion of liquidity to support its operations

• The amount of restricted cash as of 12/31/2007 is $581 million

(1) Net debt excludes drawn revolver, bridge loan and restricted cash; PoR 2008E adjusted EBITDA used for At exit ratio.

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

Net debt(1) / adjusted EBITDA 6.9x 5.8x

Revolver and LC availability (total revolver capacity $1,000) 765 625

Total liquidity $2,680 $1,001

29

OVERVIEW OF EXIT FACILITIES

50% at Lender’s discretion(1)

50% at Lender’s discretion(1)

L + 287.5

L + 287.5

L + 287.5

L + 287.5

$7,280

None366 days from closing date$300

1% per annumMarch 29, 2014$2,093

1% per annumMarch 29, 2014$3,887

NoneMarch 29, 2014$1,000

Amount (in $ mm) Amortization

Existing First Lien Term Loan

Existing First Lien Revolver

MaturityFacilities

Additional First Lien Term Loan

First Lien Asset Sale Bridge

Total Facilities

Rate Cash Flow Sweep

• 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.

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DEBT MATURITY SCHEDULE

$385 $280

$1,687

$85$300

$5,606

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

2008 2009 2010 2011 2012 2013 2014 Thereafter

$ M

illio

ns

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

$152 mm outstanding Bridge balance to be

repaid from asset sales proceeds

$85 mm of PCFIII Notes to be repaid from cash

collateral account

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

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OPERATIONS OVERVIEW

33

OPERATIONS OVERVIEW- POWER OPERATIONS

34

• Calpine owns nearly 24,000 MW of operating capacity, concentrated in the West and Texas

- Within the West, the majority of the capacity is located in California

SERC4,255 MW

SPP1,134 MW

FRCC865 MW

ISONE537 MW

NYISO352 MW

RFC546 MW

MRO1,387 MW

California5,204 MW

Arizona520 MW

Oregon616 MW

Colorado906 MW

West Region 43 Plants7,246 MW

North Region10 Plants2,822 MW

Texas Region12 Plants7,487 MW

Southeast Region12 Plants6,254 MW

Total77 Plants

23,809 MW

ASSET PORTFOLIO

35

• 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

Calpine Overview

Total Capacity(1)

TECHNOLOGY MIX

Intermediate 12,119 MW

Intermediate (Cogeneration)

7,965 MW

Peaking 3,000 MW

Baseload (Geothermal)

725 MW

Intermediate51%


33%

Peaking 13%


3%

(1) As of 12/31/2007.

36

• 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

Calpine Overview

West North SoutheastTexas

TECHNOLOGY MIX BY REGION

Intermediate4,530 MW


1,008 MW

Peaking983 MW


725 MW



4,260 MW

Peaking963 MW



2,529 MW



168 MW

Peaking1,054 MW

Note: As of 12/31/2007.

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

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

Net Capacity Factor Equiv. Forced Outage Rate Net Heat Rate

50

27

48

05

101520253035404550

1

%

National Average +/- 1 St DevCalpine Average - 2005National Average - 2005Calpine Average - 2007

8

139

0

10

20

30

40

1

%


7,332

7,896

7,444

6,500

7,000

7,500

8,000

8,500

9,000

1

BTU

/kw

h


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SO2 EMISSIONS OF TOP 25 GENERATORS

(1) Dynegy adjusted for LS Power acquisitionsSource: 2006 CEMS data from Energy Velocity

-

200,000

400,000

600,000

800,000

1,000,000

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39

NOx EMISSIONS OF TOP 25 GENERATORS


0

50,000

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40

CARBON DIOXIDE EMISSIONS OF TOP 25 GENERATORS


-

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

120,000,000

140,000,000

160,000,000

180,000,000

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40,000,000

60,000,000

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41

MAJOR MAINTENANCE

(1) Based on Exit Facility Lenders’ presentation on January 8, 2008

• 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

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

43

OPERATIONS OVERVIEW- DEVELOPMENT OPPORTUNITIES

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 Risk

Mitigated Construction

Risk

Address Capital Investment

LimitsEvaluate Opportunities

• Focus efforts on markets where Calpine has a competitive advantage

• Expansion opportunities• Portfolio enhancement

• Continue to engage in evaluating projects• Market knowledge• Find unrealized value

Risk Mitigation

• Articulate Calpine’s risk tolerance and project specific financial objectives

• Refine and calibrate risk tolerance and financial analysis tools

• Execute mitigation strategies within risk tolerance and financial objectives

Meet Calpine Hurdle Rates

• Identify alternative ways to create value• Partner or Outsource• Contract• Promote projects that provide portfolio

diversification• Create new opportunities

Pro forma Cash Flows and ReturnsEntergy

SPP

FRCCERCOT

NE ISO

WECC

CO-WY

AZ-NM-SNVCalifornia

MRO

Northwest

NYISO

TVA VACAR

Southern

MISO

PJM

45

DEVELOPMENT AND GROWTH INITIATIVES

• 100% owned 596 MW combined-cycle plant under construction in southern San Diego County

• Output contracted under long-term PPA with SDG&E

• $377 million non-recourse financing arranged by ING Capital and BayernLB

• Expected on line date: 2009

Otay Mesa Energy Center

• 65% Calpine owned 597 MW combined-cycle plant to be located in Hayward, California (San Francisco area)

• Output contracted under long-term PPA with PG&E

• Buyback opportunity for 35% minority interest

• Expected on line date: 2010 / 2011

Russell City Energy Center

• 50% owned 1,005 MW gas-fired facility under construction in Ontario, Canada

• Output contracted under long-term PPA with Ontario Power Authority

• Completed $650 million project financing

• Expected on line date: 2008

Greenfield Energy Centre

• 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):

Any other growth projects would be incremental to Calpine’s PoR projections

46

OPERATIONS OVERVIEW- MARKET OUTLOOK

47

MARKET OUTLOOK - SUMMARY

• Many U.S. regional electricity markets continue to recover:- Reserve margins are tightening in many markets, and annual average market heat rates have

generally increased in recent years

• Several industry trends are expected to benefit Calpine:- Supply and Demand – Calpine’s plants in California and Texas benefit from lower levels of excess

capacity than found in many other regional electricity markets

- Regional Fuel Mix and Prices – Natural gas prices set power prices in most hours in Calpine’s core markets

- Environmental Regulations – Tightening environmental regulations, including regulation of carbon dioxide emissions, are expected to benefit Calpine

- Rising Construction Costs – Increasing costs to construct new generation facilities has positive implications for the value of Calpine’s existing assets

- Market Regulations – Market developments such as trends toward separate capacity markets as well as nodal pricing are expected to benefit Calpine

48

MANY MARKETS ARE NOT AS OVERBUILT AS THEY ONCE WERE …

2001New England

California1 PJM

New York

AZ- -SV

CO-WY

MISO

FRCC

NM

MRO

Northwest1

ERCOT

SPP

Entergy

TVA

Southern

VACAR

New England

California1 PJM

New York

AZ- -SV

CO-WY

MISO

FRCC

NM

MRO

Northwest1

ERCOT

SPP

Entergy

TVA

Southern

VACAR

Today

California1 PJM

New York

CO-WY

New England

MISO

FRCC

MRO

Northwest1

ERCOT

SPP

Entergy

TVA

Southern

VACARAZ- -SVNM

California1 PJM

New York

CO-WY

New England

MISO

FRCC

MRO

Northwest1

ERCOT

SPP

Entergy

TVA

Southern

VACARAZ- -SVNM

2005

PJM

New York

CO-WY

New England

MISO

FRCC

MRO

Northwest1

California1

ERCOT

SPP

Entergy

TVA

Southern

VACARAZ- -SVNM

(1) The supply and demand balance in the Northwest and California are dependent on hydro conditions.

Source: PA Consulting Group.

Degree of Market Overbuild

Market Significantly Overbuilt

Capacity Deficit

Significant Surplus

Capacity Deficit

49

2

… AS ILLUSTRATED BY DECLINING RESERVE MARGINS IN MUCH OF THE U.S.

Reserve Margins1

2005 and 2008

2005 2008

25%

17%

2005 2008

25%

17%

2005 2008

67%

49%

2005 2008

67%

49%

MISO

ENT

2005 2008

37%

25%

2005 2008

37%

25%

SOU

2005 2008

33%

27%

2005 2008

33%

27%

SPP

2005 2008

38%

27%

2005 2008

38%

27%

TVA

2005 2008

27%

21%

2005 2008

27%

21%

VACAR

2005 2008

30%

16%

2005 2008

30%

16%

ERCOT

2005 2008

25%

18%

2005 2008

25%

18%

AZNM2005 2008

16% 17%

2005 2008

16% 17%

CA

2005 2008

26%

32%

2005 2008

26%

32%

NW

2005 2008

23% 24%

2005 2008

23% 24%

PJM

2005 2008

25%23%

2005 2008

25%23%

New York

2005 2008

30%

20%

2005 2008

30%

20%

New England

(1) Represents PA’s forecast for the year which is a weather normalized forecast.Source: PA Consulting Group.

Reserve margin measures the amount of surplus capacity in a market and is defined as: (Capacity – Demand)/(Demand)

50

MARKET EQUILIBRIUM GENERALLY PROJECTED TO OCCUR IN THE 2008-2012 TIMEFRAME

(1) The years listed under target reserve margin correspond to the year the market is projected to reach equilibrium.

(2) Hydro capacity is de-rated in California and the rest of 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 itstarget again until 2011.

(4) Reserve margins represent all of NY and the 2010 date representswhen NY Incity first needs capacity.

Source: PA Consulting Group.

2008 Reserve

Target Reserve1

Reserve Margin (%)

17%15%

2008 2011

MISO

2008 2018

49%

15%

Entergy

2008 2016

20%

15%

MRO

2008 2012

25%

15%

Southern

2008 2013

27%

14%

SPP

2008 2018

27%

15%

TVA

2008 2012

21%

15%

VACAR

2008 2011

16%

13%

ERCOT

2008 2011

18%

14%

2008 2011

18%

14%

AZNM

2008 2011

17%15%

CA22008 2011

14% 14%

COWY3

2008 2011

24%22%

PJM

2008 2018

32%

8%

2008 2018

32%

8%

NW2

2008 2011

20%

16%

NewEngland

2008 2010

23%

17%

NewYork4

2008 2011

29%

19%

FRCC

51

REGIONAL FUEL MIX VARIES ACROSS THE U.S., TYPICALLY INCLUDING BOTH GAS AND COAL …

ERCOT

FRCC

MISOMRO

New York

PJM

SOU

SPP

ENT TVA VACAR

New England

AZNM

COWY

NW

CA

Fuel Type

Oil

Gas

Dual Fuel

Coal

Nuclear

Hydro/Other Renewable

Source: PA Consulting Group

52

… HOWEVER, THE FUEL ON THE MARGIN DRIVES MARKET ELECTRICITY PRICES

2 4 6 8 10 12 14 16 18 20 22 24Hour of Day

Capa

city

(G

W)

Sample Day of Market Dispatch(ERCOT example)

Oil

Gas

Coal

Nuclear

Sample Day of Market Dispatch(SERC example)

2 4 6 8 10 12 14 16 18 20 22 24Hour of Day

Hydro

Oil

Gas

Coal

NuclearCapa

city

(G

W)

SPP

FRCC

ERCOT

PJM

New YorkNew

England

CO-WY

AZ-NM-NVCalifornia

MRO

Northwest

MISO

Southern

VACARTVAEntergy

Fuel on the Margin

Gas on margin >90% of time

Gas on the margin >65% of time

Predominately coal with gas & oil

Predominately gas with coal & oil

Predominately coal with gas; oil >10%


53

IN CALPINE’S CORE MARKETS OF CALIFORNIA AND TEXAS, GAS PRICES PREDOMINANTLY DRIVE POWER PRICES

Impact on Peak Power Prices of $2 Higher Gas

0-10% increase 10-15% increase

15-20% increase 20-25% increase

The more gas is on the margin in a market, the more impact higher or lower gas prices will have on power prices.

SPP

FRCC

ERCOT

PJM

New YorkNew

England

CO-WY

AZ-NM-NVCalifornia

MRO

Northwest

MISO

Southern

VACARTVAEntergy

SPP

FRCC

ERCOT

PJM

New YorkNew

England

CO-WY

AZ-NM-NVCalifornia

MRO

Northwest

MISO

Southern

VACARTVAEntergy

Gas on margin >90% of time

Gas on the margin >65% of time

Predominately coal with gas & oil

Predominately gas with coal & oil

Predominately coal with gas; oil >10%

New England

PJM

New York

AZ- -SV

CO-WY

MISO

FRCC

AZ-NM

MRO

Northwest

ERCOT

SPP

Entergy

TVA

Southern

VACAR

New England

PJM

New York

AZ- -SV

CO-WY

MISO

FRCC

AZ-NM

MRO

Northwest

ERCOT

SPP

Entergy

TVA

Southern

VACAR

Fuel on the Margin


54

(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.

Calpine Capacity by Technology1

LOW CARBON DIOXIDE EMISSIONS

Sample CO2 Emissions Rates by Technology2

0.0

0.2

0.4

0.6

0.8

1.0

1.2

Hyd

ro

Nuc

lear

Geo

ther

mal

Gas

CC

Gas

CT

Oil

Coa

l

CO

2 Em

issi

ons

(tons

/MW

h)

Intermediate 12,119 MW


7,965 MW

Peaking 3,000 MW


725 MW

55

Example of Environmental Costs ($/MWh) by Technology1

(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.

$-

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

Combined Cycle Unit Existing Coal Unit(Retrofit)

Existing Coal Unit (No Retrofit)

Incr

emen

tal D

ispa

tch

Cos

ts ($

/MW

h)NOx Emission Costs ($/MWh) SO2 Emission Costs ($/MWh)Hg Emission Costs ($/MWh) CO2 Emission Costs ($/MWh)

• Calpine’s combined cycle plants emit significantly less NOx and carbon dioxide than coal plants and emit very little SO2 and no mercury

• Calpine’s emissions costs are consequently substantially lower than those of coal-fired units

LOW ENVIRONMENTAL COSTS

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, particularly in Asia

- Strong growth in the oil and gas industry which requires specialized labor with similar skill sets

- Higher commodity costs, including steel, copper, cement and oil

• Typical construction lead times have grown as well

• High costs of new construction are likely to contribute to tighter supply and demand balances as well as improved long-term contracting opportunities for existing assets

Construction Cost Index vs. GDP Deflator

90

100

110

120

130

140

150

2000 2001 2002 2003 2004 2005 2006 2007

Inde

x (2

000

= 10

0)

GDP Deflator Handy Whitman Index - Total Plant (All Steam Generation)

Sources: Handy Whitman Index, Global Insight GDP.

57

DISTINCT CAPACITY MARKETS HAVE BENEFITED CALPINE’S ASSETS

• Capacity markets can provide upside to generators, as well as, some long-term revenue stability

• By providing fixed payments to some of Calpine’s plants, the Resource Adequacy (RA) capacity market in California has benefited Calpine relative to the prior market structure. Calpine is an active participant in efforts to continue to improve California’s market structure

Source: PA Consulting Group and copyrighted material excerpted from Global Energy Decisions’ Energy Velocity Energy Map.

Current Capacity Markets

Markets with current or planned capacity markets

Energy only or bilateral markets

Entergy

SPP

FRCCERCOT

NE ISOFCM

WECC

CO-WY

AZ-NM-SNVCaliforniaRA

MRO

NorthwestNY ISOICAP

TVA VACAR

Southern

MISO

PJM ISORPM

58

CALIFORNIA AND TEXAS ARE MOVING TOWARD NODAL PRICING

• Locational Marginal Pricing (LMP), or nodal wholesale electricity prices, are determined according to values assigned to different input and output locations (the “nodes”).

• The nodal markets in California and ERCOT may also provide short-term upside to Calpine’s assets, particularly those located in congested areas, such as the San Francisco Bay Area.

Source: PA Consulting Group and copyrighted material excerpted from Global Energy Decisions’ Energy Velocity Energy Map.

Current and Evolving Nodal Markets

Markets with current or planned locational marginal pricing

Markets without locational marginal pricing

Entergy

SPP

FRCC

ERCOTLMP to begin in

late 2008(1)

New England ISOLMP since 2003

WECC

CO-WY

AZ-NM-SNVCaliforniaLMP to begin in

2008(1)

MRO

Northwest

NYISOLMP since 2000

TVA VACAR

Southern

MISOLMP since 2005

PJMLMP since

2000

(1) Reflects latest ISO targets.

59

OPERATIONS OVERVIEW- COMMERCIAL OPERATIONS

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

CCO’s goals are to:

Ensure the optimal dispatch of Calpine’s generating assets

Reduce the potential negative impact of commodity price risk on the value of Calpine’s assets and contracts

Create value by using the flexibility of Calpine’s physical assets, energy market competencies and infrastructure

Generate incremental value through active portfolio management and energy marketing by leveraging Calpine’s information, infrastructure and intellectual capital

All activities are conducted within the framework of Calpine’s Risk Policy

Risk oversight is organizationally independent from commercial operations

Integrated Approach to Portfolio Management

Calpine combines physical assets with trading and risk management capability to meet the energy needs of its core customersOrigination

Customized Energy

Solutions

Economic Dispatch & Portfolio

Optimization

Economic Dispatch & Portfolio

Optimization

Risk Management

Risk Management

Calpine Asset Portfolio

Anal

ysisTrading

Incremental Value & Risk Reduction

Calpine’s integrated approach to portfolio analysis & management creates incremental value from strategic planning to hourly portfolio optimization

Calpine’s commodity trading is focused on actively managing risk, as well as leveraging the Company’s physical infrastructure to capitalize on market inefficiencies

61

CONCLUSION

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

63

Q&A

64

APPENDIX

65

2007 REORGANIZATION EXPENSE DETAIL

($ in millions)

Reorganization Expense Detail

• 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

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

66

SELECTED OPERATING STATISTICS

(in thousands, except Heat Rate)

2007 2006 2007 2006Total 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 7,223West 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.

67

ASSET DISPOSITION ACTIVITY

• Company will continue to evaluate holdings in all assets

Assets StatusAries 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

68

CALPINE®CALPINE®

Economy & Finance

Calpine_Analyst_Day_Presentation_022908