Calpine Signs New Long-Term Power Contracts to Ensure California Continues to Receive Clean, Reliable Power

Calpine Corporation (NYSE:CPN) today announced it has entered into several new power supply contracts with Pacific Gas and Electric Company (PG&E). Calpine has executed new contracts to replace existing contracts it signed with the State of California during the energy crisis, as well as to increase the supply of renewable power delivered to PG&E from The Geysers.

In response to the State of California’s program to manage the energy crisis of 2000-2001, Calpine was the first power company to enter into long-term contracts with the State and was the first company to voluntarily renegotiate more favorable terms for the State. Now, in furtherance of the California Public Utilities Commission’s and the State’s policy objectives of removing the California Department of Water Resources (DWR) from its energy crisis role as the power purchaser of last resort, Calpine and PG&E have finalized contracts to replace two of these DWR contracts to ensure ratepayers continue to enjoy the benefits of Calpine’s clean, reliable, cost-effective and well-located power facilities. As part of this negotiation, Calpine and PG&E have agreed to upgrade the Los Esteros Critical Energy Facility, located in Silicon Valley, to operate in combined-cycle mode at an increased capacity and higher efficiency.

“Through these agreements Calpine is very pleased to assist PG&E in serving the changing generation needs in California,” said Calpine President and Chief Executive Officer Jack A. Fusco. “We welcome the opportunity to work with PG&E to supply both incremental renewable power and flexible and reliable natural gas-fired generation necessary to integrate intermittent renewable energy supplies coming on-line in furtherance of the State of California’s 33 percent renewable goal.”

These following agreements will be submitted to the California Public Utilities Commission by PG&E for approval:

Extension of Calpine Northern California Peaking Power Plant Contract

Calpine’s 11 peaking units, providing approximately 500 megawatts (MW), are highly dispatchable, reliable and are well located in Northern California. These power plants, which came on-line in 2002 and 2003, were under a power purchase agreement with the DWR which was due to expire in mid-2011. Calpine and PG&E have entered into a replacement contract whereby PG&E will enjoy greater dispatch flexibility for all 11 units through 2017 and for the seven Bay Area units through 2021.

Upgrade of the Los Esteros Critical Energy Facility

The Los Esteros Critical Energy Facility (LECEF), located in San Jose, California, was constructed and placed in operation by Calpine in 2003 pursuant to a power purchase agreement with DWR. In connection with the novation of the existing DWR contract, which will expire at the end of 2012, Calpine and PG&E have negotiated a new agreement to facilitate an upgrade of LECEF from a 180 MW simple-cycle generation facility to a 300 MW (289 MW July peak) combined-cycle generation facility. In addition to the increase in capacity, the upgrade project will increase the efficiency and environmental performance of the plant by significantly lowering the heat rate.

Extension and Expansion of PG&E’s Contract for Renewable Power from Calpine’s Geysers Geothermal Facility

Calpine and PG&E have agreed to a significant extension of the term and an increase in the volume under the existing contracts for delivery of electricity from The Geysers geothermal facility. Calpine currently provides PG&E a total of 375 MW of power under two contracts through 2012 and 2014. The parties have agreed to increase the volume to 425 MW through 2017. From 2018 through the end of 2021, Calpine will supply PG&E 250 MW of renewable energy from The Geysers.

The extension and increases in volume under these new contracts will not only assist PG&E in meeting its renewable goals, but will provide Calpine with the resources required to continue its efforts to maintain and increase the energy output from The Geysers, the largest geothermal facility in the United States.

Calpine’s Commitment to California

Calpine remains committed to California by providing clean, efficient, and renewable power generation. With 5,800 megawatts in operation, including the newly commissioned, state-of-the-art 600 MW Otay Mesa Energy Center in San Diego, additional development projects include the 600 MW Russell City Energy Center in Hayward, scheduled to be operational in 2012, the Los Esteros Critical Energy Center upgrade project discussed above and continuing expansion at The Geysers.

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, currently capable of delivering nearly 25,000 megawatts of clean, cost-effective, reliable and fuel-efficient electricity to customers and communities in 16 states in the United States and Canada. Calpine 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 www.calpine.com for more information.

Forward-Looking Information

In addition to historical information, this release contains 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. Words such as "believe," "intend," "expect," "anticipate," "plan," "may," "will" and similar expressions identify forward-looking statements. Such statements include, among others, those concerning expected financial performance and strategic and operational plans, as well as 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. Please see the risks identified in this release or in Calpine's reports and registration statements filed with the Securities and Exchange Commission, including, without limitation, the risk factors identified in its Annual Report on Form 10-K for the year ended December 31, 2008. These filings are available by visiting the Securities and Exchange Commission's web site at www.sec.gov or Calpine's web site at www.calpine.com. 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.

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