Calpine Announces $20-to-$25 Million Program to Further Mitigate Environmental Impacts of Sutter Power Plant.

SAN JOSE, Calif.--(BUSINESS WIRE)--Sept. 15, 1998--

Cleanest Natural Gas-fired Power Plant to be Permitted in the U.S.;

New Design Reduces Groundwater Use by Over 95%, Eliminates Plant

Effluent Discharges and Establishes New Emissions Standard

In a milestone for the U.S. power industry, Calpine Corporation (NYSE:CPN) today announced that it will invest an additional $20-$25 million in its proposed Sutter County, Calif. energy facility, further mitigating potential environmental impacts. The new design will make Calpine's Sutter Power Plant the cleanest gas-fired energy facility of its size ever permitted in the U.S. A 100-percent dry cooled design uses air instead of water as the cooling medium for the plant. This design will reduce groundwater consumption at the 500-mw plant by at least 95-percent--from 4,800 acre-feet per year to less than 225 acre-feet per year.

An additional benefit of this program is an innovative "zero discharge system." By recycling and treating the water used at the plant, water consumption is dramatically reduced; and effluent discharge from the facility to local drainage ditches is eliminated.

A third component to Calpine's mitigation program will set a new industry standard for lowest air emissions, reducing nitrogen oxide (NOx) levels to 2.5 parts per million (ppm). Current gas-fired power plants in the Bay Area emit about 97 ppm.

"Calpine believes in making a social commitment to the communities we serve, and in this case it is a major economic commitment as well. Calpine is dedicated to developing an environmentally responsible energy resource compatible with Sutter County's unique community and agricultural needs," stated Calpine Senior Vice President Lynn Kerby.

This innovative proposal offers effective solutions to agricultural, community and environmental concerns surrounding the original design. The program also makes a significant contribution to protect and conserve California's valuable air and water resources, while providing a new source of low-cost electricity for nearly half a million residents and businesses in Sutter County and Sacramento Valley.

New Plant Design Reduces Ground Water Use by 95%

As originally designed, the plant would pump 3,000 gallons per minute on average. By reconfiguring the plant to an air-cooled design, Calpine will reduce groundwater consumption by more than 95-percent. Furthermore, air-cooling eliminates the visual impact of a cooling tower vapor plume.

Plant Modification Eliminates Water Discharge

Periodic regional flooding during the winter and spring months has raised local concerns about water discharge into nearby drainage ditches. Calpine's new proposal eliminates this discharge to ensure full mitigation of any biological concerns associated with effluent discharge.

New Configuration Leads the Nation in Air Quality Standards

Calpine's Sutter facility will lower smog-producing nitrogen oxide emissions by over 95-percent when compared to existing northern California gas-fired utility plants--the equivalent of taking 380,000 cars off the road. The new design will limit NOx emissions to 2.5 parts per million (ppm). Originally configured at 3.0 ppm, this latest reduction will eliminate another 40 tons per year of NOx.

Sutter County and CEC Propose Transmission Line Route and Switchyard Site

Sutter County officials and the California Energy Commission (the lead state permitting agency) have advised Calpine to consider relocating the plant's transmission line route and switchyard from South Township to O'Banion Road. This new shorter route has been identified as a favorable solution to public concerns about potential visual and agricultural impacts associated with the current route and switchyard site. Calpine is prepared to reroute these facilities as recommended.

Sutter Plant Creates New Jobs and Stimulates Local Economy

Calpine's total project investment in the county is now estimated at $270-to-$310 million, resulting in $2.7-to-$3.1 million of annual property tax revenue to Sutter County. Ongoing plant operations will infuse an additional $3-to-$6 million annually into local businesses and community organizations.

During the construction phase, the project will create approximately 250 jobs with an estimated annual payroll of $20 million. Calpine expects to create at least 20 full-time jobs with a $1 million annual payroll budget when the facility goes online in 2000. Calpine is committed to hiring locally for construction and operation of the plant.

About Calpine

Calpine Corporation is a leading independent power company dedicated to providing customers with low-cost electricity and thermal energy. Calpine brings in-depth expertise to the development, acquisition, ownership and operation of power generation facilities. Calpine's operating projects include clean-burning natural gas-fired, combined-cycle power plants and geothermal facilities. Calpine currently has 5,100 megawatts of capacity in operation, under construction or in development in 10 states - enough energy to power five million households. The company was founded in 1984 and is publicly traded on the New York Stock Exchange under the symbol CPN. Please visit Calpine's website at www.calpine.com 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 ("the Company") and its management. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties that could materially affect actual results such as, but not limited to, (i) changes in government regulations and anticipated deregulation of the electric energy industry; (ii) commercial operations of new plants that may be delayed because of various development and construction risks, such as a failure to obtain financing and the necessary permits to operate or the failure of third-party contractors to perform their contractual obligations (iii) the assurance that the Company will develop additional plants, (iv) a competitor's development of a lower-cost generating gas-fired power plant or (v) the risks associated with marketing and selling power from power plants in the newly competitive energy market. Prospective investors are also referred to the other risks identified from time to time in the Company's reports and registration statements filed with the Securities and Exchange Commission.

CONTACT: Calpine Corporation, San Jose

Meridith Manning, 408/995-5115 ext. 1273