Calpine Announces Strategic Alliance With Panda Energy to Acquire Development Rights and Gas Turbines; Panda Alliance to Provide Calpine With 10,000-Megawatt Development Pipeline.

Business Editors/Energy Writers

SAN JOSE, Calif.--(BUSINESS WIRE)--June 26, 2000

Calpine Corporation (NYSE:CPN), the nation's fastest growing independent power company, announced today a strategic alliance with Dallas, Texas-based Panda Energy International, Inc. and plans to acquire from Panda the development rights to construct, own and operate the Oneta project -- a 1,000-megawatt natural gas-fired power facility. In addition, Calpine will acquire from Panda 24 General Electric 7 FA gas turbines and 12 steam turbines, scheduled for delivery in 2001 and 2002. The agreement also provides Calpine the exclusive development rights for seven additional projects, representing more than 9,600 megawatts of gas-fired generation in the U.S. Two of these facilities are in advanced stages of development. The transaction is expected to close in July 2000.

Calpine Chief Executive Officer and President Peter Cartwright stated, "Panda has a great portfolio of projects under development, including some of the largest power plants in the country. Calpine's alliance with Bob Carter, Panda's CEO, and his fine development team, offers tremendous upside potential for both companies."

The Oneta facility will be built in Coweta, Okla., southeast of Tulsa. It will be Calpine's fourth power project in the Southwest Power Pool. These facilities will operate as a system of highly efficient energy centers. Construction for the natural gas-fired project is scheduled to begin during the third quarter of 2000, with energy deliveries slated to begin in June 2002.

This alliance and strategic development pipeline considerably strengthens Calpine's position as a low-cost power provider in key energy markets throughout the U.S.

Under the agreement, Calpine will pay Panda approximately $126 million, which includes reimbursement of development costs, payments for the gas and steam turbines, and the Oneta facility. During commercial operation of the Oneta facility, Panda will receive contingent payments.

As each of the seven future development projects is successfully permitted and all conditions are in place to begin construction, Calpine will have the right to acquire a 100 percent interest in each facility, with Panda receiving a development fee and contingent payments. Calpine will build and operate the projects.

Panda Energy is a privately held, non-regulated electric generation company with headquarters in Dallas, Texas. Its primary focus is the development, ownership and operation of clean, low-cost power plants. Further details are available on Panda's website at www.pandaenergy.com.

Calpine Corporation, the nation's leading independent power company, 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. 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.

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 or prevented 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) cost estimates are preliminary and actual cost may be higher than estimated, (iv) the assurance that the Company will develop additional plants, (v) a competitor's development of a lower-cost generating gas-fired power plant, (vi) receipt of regulatory approvals or (vii) 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.