Calpine Announces First Major Bilateral Power Supply Agreement From New Arizona Plant; New Generation to Help Relieve Southern California and Western Energy Shortages.

Business Editors

SAN JOSE, Calif.--(BUSINESS WIRE)--Sept. 21, 2000

Calpine Corporation today announced it has entered into a five-year power sales agreement with Imperial Irrigation District (IID). Calpine will deliver 150 megawatts of electricity from its new South Point Energy Center to IID's southern California electric customers, beginning May 2002. This is the first major power sale from a new technology merchant energy center in Arizona.

Calpine's 526-megawatt South Point Energy Center, scheduled to be available for the summer of 2001, is nearing 80 percent completion. Designed with advanced, combined-cycle turbine technology, the natural gas fueled facility is located at the Fort Mohave Indian Reservation near Bullhead City, Ariz. at the California/Arizona border. New generation from South Point will increase reliability and help meet increased demand in 2001, when generation capacity in the west could again be in short supply.

"Calpine's energy centers, like South Point, are bringing much needed electricity to the western power markets," stated Calpine Vice President Jim Macias. "Electricity is a vital societal and economic product--and in the west and other fast growing energy markets, it's in short supply. We appreciate IID's confidence in Calpine's ability to provide their customers with a clean, reliable and cost-effective energy solution."

Imperial Irrigation District serves more than 97,000 power customers in the Imperial and Coachella valleys. IID can produce 493 megawatts of power through its own energy generating plants. The rest of their energy comes from purchasing power and power trades with other agencies. "The dynamic energy market we experienced this summer encouraged us to work for a secure resource," said Frank Barbera, assistant power department manager, in a press release. Ron Hull, IID's public affairs manager, said "the problems experienced by San Diego recently are an indication of what can happen when trying to purchase power on the open market." Several times throughout the summer, state power regulating officials declared Stage 2 alerts, in which they asked consumers to control power consumption or the state would be forced to take steps to do so. The problems throughout the state did fuel the desire among IID officials to assure they had a new long-term contract.

"The IID needed to secure additional electricity supplies to replace a large contract that will end in early 2002. It was very astute of IID to begin working with Calpine early on in the construction phase of our new Arizona facility. IID's southern California customers will appreciate their foresight in locking in a long-term, affordable energy supply," stated Bill Ross, Calpine manager-market development, who led the Calpine negotiating team.

In addition to South Point, Calpine expects to bring two new energy centers on line in the west in 2001, representing 1,000 megawatts of new electrical capacity to the northern California power market. The company expects to complete construction of an 880-megawatt unit in northern California in 2002, and has announced plans for bring an additional 1,200 megawatts of generation to the northern and southern California markets in the year 2003 and 2004.

Based in San Jose, Calif., Calpine Corporation is dedicated to providing customers with reliable and competitively priced electricity. Calpine is focused on clean, efficient combined-cycle, natural gas-fired generation and is the nation's largest producer of renewable geothermal energy. Calpine has launched the largest power development program in the U.S. To date, the company has approximately 26,000 megawatts of base load capacity and 4,700 megawatts of peaking capacity in operation, under construction and in announced development in 27 states and Alberta, Canada. The company was founded in 1984 and is publicly traded on the New York Stock Exchange under the symbol CPN. For more information about Calpine, visit its website at www.calpine.com.