Calpine Announces Plans to Acquire Dow Chemical's 70 MW Pittsburg, Calif. Power Plant and Gas Pipeline Assets.

SAN JOSE, Calif.--(BUSINESS WIRE)--Feb. 18, 1998--As part of its continuing expansion program in California's deregulating energy market, San Jose-based Calpine Corporation (NYSE:CPN), a leading independent power company, today announced it has entered into exclusive negotiations with The Dow Chemical Company (Dow) to acquire its 70 megawatt natural gas-fired power plant and a natural gas pipeline system located adjacent to Dow's chemical plant in Pittsburg, Calif.

The pipeline delivers low-cost fuel to the plant from the Sacramento basin gas fields. Calpine expects to complete the acquisition during the second quarter of 1998.

As part of the transaction, Calpine will enter into long-term agreements with Dow to provide electricity and steam to its chemical facility and steam to the nearby USS-POSCO Industries steel mill. In addition, Calpine will acquire a site at the Dow chemical facility suitable for future expansion. The company is exploring the development of a modern 250 to 500 megawatt power plant at this site.

"Meeting the challenges of today's changing energy market demands innovation," stated Calpine Vice President John King. "The Dow transaction exemplifies the new opportunities for California customers to benefit in a deregulated energy market. We look forward to providing Dow and other industrial and retail customers with a long-term, economic energy program tailored to meet their unique electricity and steam requirements."

Beginning April 1998, California's $23 billion retail energy market is expected to open to competition. With the Dow acquisition, Calpine will have the ability to sell excess power from the existing Pittsburg power plant and new power facilities directly to California's power exchange and to contracted retail customers.

Calpine Corporation is a leading power company dedicated to providing customers with low-cost electricity and thermal energy. The company was founded in 1984 and is publicly traded on the New York Stock Exchange under the symbol CPN. For more information on Calpine, visit its website at www.calpine.com.

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) the Company may not successfully complete final negotiations with The Dow Chemical Company, (ii) the possible unavailability of financing (iii) commercial operations of the new merchant plant may be delayed because of various development and construction risks, such as a failure to obtain the necessary permits to operate or the failure of third-party contractors to perform their contractual obligations (iv) there is no assurance that the Company will develop additional merchant plants, (v) a competitor could develop a lower-cost generating gas-fired power plant or (vi) the Company could fail to market power from the plants. 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 Corp.

Katherine Potter, 408/995-5115 ext. 1168 (Media Rel.)

Rick Barraza, 408/995-5115 ext. 1125 (Investor Rel.)