Calpine Power Income Fund Announces Strong Financial Results for the Second Quarter of 2005 and Cash Distributions for August, September and October 2005.

CALGARY, Alberta -- In the Management's Discussion and Analysis, the first paragraph under Other Achievements should read: The Fund declared distributions of $0.2454 per Trust Unit to Unitholders during the second quarter of 2005 compared to $0.2390 per Trust Unit ... (sted The Fund declared distributions of $0.2454 per Trust Unit to Unitholders during the second quarter of 2005 compared to $0.2390 per weighted average Trust Unit...)

The corrected release reads:

CALPINE POWER INCOME FUND ANNOUNCES STRONG FINANCIAL RESULTS FOR THE SECOND QUARTER OF 2005 AND CASH DISTRIBUTIONS FOR AUGUST, SEPTEMBER AND OCTOBER 2005

Calpine Power Income Fund (TSX:CF.UN) today announced its results for the six months ending June 30, 2005. Based upon current forecast, cash distributions for the months of August, September and October 2005 will be $0.0818 per trust unit.

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                      Ex-Distribution       Distribution Distribution
Record Date                      Date               Date     per Unit
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August 31, 2005       August 29, 2005 September 20, 2005      $0.0818
September 30, 2005 September 28, 2005   October 20, 2005      $0.0818
October 31, 2005     October 27, 2005  November 18, 2005      $0.0818
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The above reflects distributions expected to be paid, however,
 distributions are subject to change based upon actual conditions.

"We are pleased to announce another quarter of strong results from all of our facilities," says Toby Austin, President and Chief Executive Officer of Calpine Canada Power Ltd., manager of the Calpine Power Income Fund. "All of our facilities performed at high levels of availability, contributing to net earnings at or above expected levels.

"Despite the weakness in power prices in Alberta, our tolling agreement with Calpine Corporation has provided us with a stable revenue stream, owing to the high levels of availability achieved by our Calgary facility. That, coupled with the solid performance at our other facilities, has resulted in again meeting our expected cash distributions for our unitholders.

"We continue to explore operational improvements and enhancements at our existing facilities, as well as acquisition opportunities, to improve our financial results and the overall risk profile of our Fund to ensure we meet our cash distribution targets."

MANAGEMENT'S DISCUSSION AND ANALYSIS

The Calpine Power Income Fund (the "Fund") is an unincorporated open-ended trust established under the laws of Alberta. The Fund indirectly owns interests in power generating facilities in British Columbia, Alberta and California and has an economic interest in a power plant in Ontario and holds a promissory note issued by Calpine Canada Power Ltd. ("the Manager"). The power generation facilities owned by the Fund and Calpine Power, L.P. (the "Partnership') are all modern and environmentally preferred, natural gas fired plants, with long-term energy sales agreements. The Fund and the Partnership are managed and administered by the Manager.

The Fund's objectives are to provide, on a per Trust Unit basis, a stable and sustainable flow of Distributable Cash of the Fund. To achieve these objectives, the Manager seeks to maximize the efficiency and profitability of the facilities and acquire or develop future facilities in accordance with established acquisition and investment guidelines. The Manager believes that its affiliation with Calpine Corporation ("Calpine") whose extensive experience in all aspects of the development, acquisition and operation of power generation facilities will enable the Manager to successfully implement the Fund's objectives.

The following discussion and analysis as provided by Management should be read in conjunction with the accompanying unaudited consolidated financial statements and the notes thereto of the Fund and the Partnership for the three and six months ended June 30, 2005 and 2004, which have been prepared in accordance with Canadian generally accepted accounting principles, and is based on information to August 9, 2005. The following discussion and analysis should also be read in conjunction with the audited consolidated financial statements and related management's discussion and analysis contained in the 2004 Annual Report, based on information to February 3, 2005. All dollar amounts are shown in Canadian dollars unless otherwise specified. Additional information concerning the Fund is available at www.calpinepif.com or on SEDAR at www.sedar.com.

SECOND QUARTER HIGHLIGHTS

- For the three months ended June 30, 2005, availability was approximately 96% reflecting strong plant performance and few unplanned outages. Plant specific results are set out below:

Availability       Generation (MWh)
                            ------------------- ---------------------
                             Q2 2005   Q2 2004   Q2 2005     Q2 2004
                            --------  --------- ---------  ----------
Calgary Energy Centre           100%        72%   40,810(2)  171,168
Island Cogeneration Facility     95%        46%  496,025     191,482
Whitby Cogeneration Facility     95%        96%   92,984      71,494
King City Facility(1)            97%        94%  252,331      97,480

(1) Acquired May 19, 2004 - availability and generation factors are
    from date of acquisition only.

(2) Revenue for the Calgary Energy Centre is based on availability
    of the plant not the MWh's of generation. See discussion of
    Calgary Energy Centre to follow.

Other Achievements

- The Fund declared distributions of $0.2454 per Trust Unit to Unitholders during the second quarter of 2005 compared to $0.2390 per Trust Unit in the comparable period in 2004 for a total year-to-date distribution of $0.4908 per Trust Unit in 2005 compared to $0.4760 for the same period in 2004.

- Distributable Cash for the second quarter of 2005 increased 8% over the second quarter of 2004 to $15.2 million as a result of increased distributions from the Partnership as well as cash generated from the King City Transaction which closed in May 2004.

- Revenue from the Partnership for the second quarter of 2005 increased 47% over 2004 second quarter results largely from the increased availability at the Island Facility and Calgary Energy Centre. The Island Facility was shut down for four days in the second quarter of 2005 compared to 63 days for the same period 2004. The Calgary Energy Centre was fully operational in the second quarter of 2005 compared to a shutdown of 14 days in the second quarter of 2004.

- Operating and maintenance expenses of the Partnership for the second quarter of 2005 decreased $1.7 million or 26% over 2004 second quarter results largely as a result of major maintenance expenses in 2004 on the Calgary Energy Centre which did not recur in the second quarter of 2005.

At June 30, 2005 and August 9, 2005, the Fund had 61,742,288 Trust Units outstanding, all of which are widely held by public investors and trade on the Toronto Stock Exchange.

RESULTS OF OPERATIONS
Calpine Power Income Fund
Selected Second Quarter Information

 (in 000's, except
 for Trust Units          Three months   Three months   Three months
 and per Trust                   ended          ended          ended
 Unit amounts)           June 30, 2005  June 30, 2004  June 30, 2003
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Total Revenue                $  19,532      $  13,562      $  13,196
Net Earnings                    14,777          6,431         12,858
Net Earnings Per Trust Unit     0.2393         0.1138         0.2472

Weighted Average Number of
 Trust Units Outstanding    61,742,288     56,497,168     52,001,351

Total Assets                   692,705        705,088        493,724
Total Long-term Liabilities     91,520        109,012              -
Distributions Declared Per
 Trust Unit                     0.2454         0.2390         0.2355


Selected Second Quarter Information
(in 000's, except
 for Trust Units            Six months     Six months     Six months
 and per Trust                   ended          ended          ended
 Unit amounts)           June 30, 2005  June 30, 2004  June 30, 2003
---------------------------------------------------------------------
Total Revenue                 $ 40,349       $ 26,824         17,495
Net Earnings                    30,674         18,823         16,719
Net Earnings Per Trust Unit     0.4968         0.3470         0.3214

Weighted Average Number of
 Trust Units Outstanding    61,742,288     54,249,260     52,001,351

Total Assets                   692,705        705,088        493,724
Total Long-term Liabilities     91,520        109,012              -
Distributions Declared Per
 Trust Unit                     0.4908         0.4760         0.4710

The Fund reported net earnings of $14.8 million and $30.7 million or $0.2393 and $0.4968 per Trust Unit for the three and six months ended June 30, 2005 compared to net earnings of $6.4 million and $18.8 million or $0.1138 and $0.3470 per Trust Unit for the three and six months ended June 30, 2004. Net earnings for the three and six months ended June 30, 2005 have increased 130% and 63% from the same periods last year in part from the income generated from the King City Facility, acquired midway through the second quarter of 2004, as well as the increased earnings of the Partnership. The Partnership's net earnings for the three and six months ended June 30, 2005 increased $9.7 million and $11.6 million over the same period in 2004 primarily due to shutdowns at both the Island and Calgary Facilities in 2004.

The Fund recorded finance income of $4.7 million and $9.4 million for the three and six months ended June 30, 2005 from the lease of the King City Facility and associated land to Calpine King City, compared to finance income, net of initial lease costs, of $2.4 million for the three and six months ended June 30, 2004. Initial lease costs of $4.2 million were a one time charge against finance income recorded at the inception of the lease. No amounts were recorded in the first quarter of 2004 as the acquisition occurred midway through the second quarter of 2004. The King City Facility is leased under a long-term lease arrangement. The Fund recognizes finance income over the lease term that provides a constant rate of return on the net investment in the lease. Lease and land rental payments are payable, annually, in arrears on December 31. Lease payments are due in both US and Canadian dollars - the US dollar portion being sufficient to service principal and interest payable to the third party lender. The King City Facility generated 252,331 MWh and 473,351 MWh for the three and six months ended June 30, 2005 and operated at 97% and 91% availability for the same periods. No shutdowns for scheduled maintenance occurred in the second quarter of 2005. The next scheduled maintenance is expected to occur in 2006.

Interest and other income of $2.1 million in the second quarter of 2005 increased $0.4 million from the prior year quarter as a result of increases in interest earned on the loan to the Manager made in conjunction with the acquisition of the King City Facility in 2004 as well as interest earned on the loan to the Partnership made in connection with the Island Facility upgrade.

Selected Second Quarter Information
(in 000's)
                  Three    Three    Three      Six      Six      Six
                 months   months   months   months   months   months
                  ended    ended    ended    ended    ended    ended
                June 30, June 30, June 30, June 30, June 30, June 30,
                   2005     2004     2003     2005     2004     2003
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Management and
 administrative
 expenses        $  637   $  357   $  338   $1,636   $  815   $  776
Initial lease
 costs                -    4,191        -        -    4,191        -
Interest on
 long-term debt   3,171    1,671        -    6,296    1,671        -
Interest            160      170        -      356      306        -
Amortization        311      311        -      622      587        -
Future Income
 Taxes              362      400        -      789      400        -

Management and administrative expenses were $0.6 million and $1.6 million for the three and six months ended June 30, 2005 compared to $0.4 million and $0.8 million for the same periods last year. Second quarter management and administrative expenses in 2005 were down $0.2 million from the same period in 2004 before a one-time non recurring recovery of $0.5 million recorded in 2004 in respect of the 2003 management incentive payment to the Manager. Second quarter expenses in 2005 compared to 2004 were down largely due to the timing of the recording of expenses associated with annual report and other public filings which, in 2005, were recorded primarily in the first quarter. Overall, management and administrative expenses incurred in the six months ended June 30, 2005 compared to adjusted 2004 expenses for the prior year period were up $297 thousand. Of the increase, $187 thousand was attributable to increased salary and trustee fees, $50 thousand related to increased costs associated with King City and $76 thousand related to increased legal and audit fees of the Fund. The Fund incurred $45 thousand and $88 thousand for fees payable to the Manager to manage and administer the Fund for the three and six months ended June 30, 2005, up from $41 thousand and $82 thousand for the same periods in 2004.

The Fund was entitled to receive $0.3 million in the second quarter of 2005 (Q2 2004 - $0.2 million) as a special distribution on the Class A Priority Units. The total special distribution declared for the six months ended June 30, 2005 was $1.3 million. The special distribution is paid to the Fund from the Partnership and is equal to 100% of the Fund's management and administrative expenses other than the King City management and administrative expense and the fees paid to the Manager to manage and administer the Fund. The special distribution is paid to the Fund before any amounts are paid on the Class B Subordinated Units. At the end of the second quarter 2005, $0.2 million was receivable by the Fund as a declared but unpaid distribution.

Interest on long term debt of $3.2 million and $6.3 million for the three and six months ended June 30, 2005 relates to interest accrued on the third-party loan made in conjunction with the acquisition of the King City Facility. Interest on long-term debt was $1.7 million for the same periods in 2004. This third-party loan, payable annually in US dollars, matures in 2019 and bears interest at a fixed interest rate of 12.8% per annum. The US dollar lease receipts together with a portion of the funds from the King City restricted cash account will be used to service this loan and, as such, foreign exchange risk associated with satisfying future obligations under this US dollar loan is mitigated.

Interest expense of $0.2 million and $0.4 million for the three and six months ended June 30, 2005 relates to standby charges and interest on the outstanding balance of the Calpine Commercial Trust ("CCT") Credit Facility (the "Credit Facility"). Interest expense of $0.2 million and $0.3 million for the three and six months ended June 30, 2004 relates solely to the Credit Facility standby charges. The Fund used the Credit Facility in addition to funds from the Levelized Reserve account to make a $16.0 million loan to the Partnership, $12.0 million of which was loaned in 2004, with the balance being loaned in January 2005, for financing of the capital upgrade to the Island Facility in 2004. The Fund has repaid $7.0 million of the outstanding Credit Facility balance this year, $4.0 million in the first quarter with the balance in the second quarter, with cash received on the Manager Loan in excess of distribution needs as well as monthly loan repayments from the Partnership. The average cost of borrowing for the Credit Facility in the second quarter was 4.61% and 4.53% for the six months ended June 30, 2005.

Amortization expenses attributable to the Credit Facility and the King City Loan were $311 thousand and $622 thousand for the three and six months ended June 30, 2005 largely unchanged from 2004 expenses for the same periods.

The Fund recorded tax expense of $0.4 million and $0.8 million on its income from the King City Facility for the three and six months ended June 30, 2005, which represents an effective tax rate of 40.75%, unchanged from 2004. Year-to-date tax expenses increased $0.3 million from the same period primarily as a result of the acquisition of the King City Facility part way through the second quarter of 2004. No tax expense was recorded in the first quarter of 2004 as no Fund entities were subject to income tax. No cash taxes are expected to be paid this year in the US due to US tax depreciation on the King City Facility in excess of income from operations.

Calpine Power, L.P.
Selected Second Quarter Information
(in 000's, except for per Unit amounts)

                  Three    Three    Three      Six      Six      Six
                 months months(1)  months   months months(1)  months
                  ended    ended    ended    ended    ended    ended
                June 30, June 30, June 30, June 30, June 30, June 30,
                   2005     2004     2003     2005     2004     2003
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Total Revenue   $28,615  $19,408  $28,332  $58,354  $47,079  $38,873
Net Earnings     18,053    8,319   18,844   37,710   26,087   25,009
 Net Earnings
  Per Class A
  Priority Unit  0.2455   0.1034   0.2537   0.5149   0.3653   0.3367
 Net Earnings
  Per Class B
  Subordinated
  Unit           0.2372   0.1320   0.2537   0.4907   0.3182   0.3367

Total Assets    666,864  663,786  699,826  666,864  663,786  699,826

Total Long-term
 Liabilities      2,469    2,276    2,097    2,469    2,276    2,097
Distributions
 Declared
 Per Class A
  Priority Unit  0.2566   0.2351   0.2362   0.5150   0.5340   0.4725
 Per Class B
  Subordinated
  Unit           0.2394   0.1025   0.4709   0.4788   0.3395   0.4709

(1) In 2004 the Island Facility was shut down in second quarter for
    capital upgrades.

Revenues for the three and six months ended June 30, 2005 were up $9.2 million and $11.3 million from the same periods in 2004. This increase was largely a result of the 159% and 63% increase in power generation at the Island Facility for the three and six months ended June 30, 2005. The Island Facility operated at 95% availability for the second quarter of 2005, significantly up from the 46% availability in the second quarter 2004. The increased power generation reflects the increased plant availability following the upgrade completed in the second quarter of 2004. Revenue from the Calgary Energy Centre was up slightly from the second quarter of 2004.

Net earnings for the three and six months ended June 30, 2005 were $18.1 million and $37.7 million, up $9.7 million and $11.6 million from the same periods in 2004. The increase in net earnings is due in part to benefits associated with the Island Facility upgrade, increased plant availability and lower operating and maintenance expenses at both the Calgary and Island facilities, offset by an increase in depreciation expense. Operating and maintenance expense primarily includes employee expenses, repairs and maintenance, insurance and property taxes.

Interest earned through the participating loan (the "Whitby Loan") to a Calpine subsidiary and other cash balances remain largely unchanged - up $99 thousand from the second quarter 2004. During the three and six months ended June 30, 2005, the Partnership received $0.9 million and $3.4 million from Calpine Canada Whitby Holdings Company ("CCWHC") that has been applied in full to the accrued interest receivable on the Whitby Loan. Pursuant to the Whitby Loan, CCWHC is required to pay to the Partnership all amounts received from the Whitby Cogeneration Facility to be applied first to accrued interest due at the time or due within 60 days of receipt of the payment and second to principal. As a result, on the anniversary date of the loan, April 30, the principal balance remained unchanged. The Partnership received $1.3 million and $2.0 million for the same periods in 2004. The amounts paid to CCWHC, a partner in the Whitby Cogeneration Facility, represented a $2.5 million distribution of the plant's 2004 earnings plus a further $0.9 million from current year operations.

Foreign exchange gains, which consist primarily of net gains on US dollar denominated cash and US dollar transactions, were $13 thousand and $35 thousand for the three and six months ended June 30, 2005 down from $209 thousand and $335 thousand for the three and six months ended June 30, 2004. The Partnership holds funds in US dollars to service US dollar trade activity as well as long term service agreement ("LTSA") obligations associated with the Calgary Energy Centre.

Island Cogeneration Facility

The Island Facility is a 240 MW natural gas-fired combined cycle cogeneration plant located at Duncan Bay, near Campbell River, on Vancouver Island, British Columbia. The Island Facility operated at 95% and 97% availability and generated 496,025 MWh and 1,018,881 MWh for the three and six months ended June 30, 2005 compared to 46% and 71% availability and 191,482 MWh and 627,982 MWh for the same periods in 2004. Power generation has increased 159% and 63% for the three and six months ended June 30, 2005 over the same periods in 2004 largely due to the increased capacity and availability of the plant, as the capital upgrade was completed in the second quarter of 2004. While the Island Facility was shut down for 4 days in June for scheduled maintenance this was significantly less than the two month outage which occurred in 2004 to carry out scheduled maintenance and implement the capital upgrade.

The Island Facility electricity generation revenue was $11.0 million and $22.2 million for the three and six months ended June 30, 2005, compared to $3.9 million and $13.2 million for the three and six months ended June 30, 2004. The increase is attributable to the increased power generation at the plant in 2005 as compared to 2004 which was shut down for two months in 2004 for scheduled major maintenance and capital upgrades.

Revenue from steam sold to Norske Skog Canada Limited ("Norske Skog"), a global supplier of newsprint and magazine printing papers, was $2.6 million and $6.4 million for the three and six months ended June 30, 2005 compared to $1.1 million and $4.9 million in the same periods in 2004. For the three and six months ended June 30, 2005, the Island Facility produced 309,775 GJ and 812,352 GJ of steam compared to 157,622 GJ and 716,556 GJ for the same periods in 2004. As a result of the strengthening Canadian dollar as well as natural gas prices, the steam price has increased 25% over the prior quarter. Steam volumes, although higher than the second quarter of 2004, were lower than expected due to repairs to equipment required for delivery of steam to Norske Skog. Lost revenue from lower steam sales was offset by the plant's higher deliveries of electrical power during this period. Current period operations to August 9, 2005 show that revenue and deliveries of steam have returned to normal.

Pursuant to a settlement agreement reached in 2002 (the "Settlement Agreement") with Alstom Canada Inc. ("Alstom") related to performance guarantees set out under the Island Facility Construction Contract, Alstom agreed to buy down amounts totaling $50.0 million to the Partnership over a ten year period because certain performance targets for the Island Facility were not met. The Island Facility recorded $1.3 million as settlement revenue from Alstom for the three months ended June 30, 2005, $2.4 million year to date, compared to $0.7 million and $2.7 million for the same periods in 2004. The increased earnings in 2005 over 2004 is a direct result of the plant shutdown in 2004 during which time no settlement revenue was earned as the plant was not operational. At June 30, 2005, the remaining amount due from Alstom under the terms of the Settlement Agreement was $31.4 million (June 30, 2004 - $35.6 million) which will be earned over approximately the next five to seven years, based on the expected operations of the plant during that period. Any amount remaining owing under the Settlement Agreement, if any, will be payable upon termination of the Maintenance Agreement, expected to be no later than April 2017. Performance of this obligation is secured by a letter of credit issued by a Canadian financial institution.

Operating and maintenance expense attributable to the Island Facility was $2.7 million and $5.0 million for the three and six months ended June 30, 2005, compared to $2.6 million and $5.2 million for the same periods in 2004. While the period over period amounts are relatively unchanged, the plant incurred $868 thousand in major maintenance expenses in the second quarter of 2005 compared to $436 thousand in the prior period. Certain maintenance costs in 2004 were incurred as part of the capital upgrade project and as a result were capitalized. The plant shutdown in June 2005 was for scheduled regular major maintenance and as such, all associated costs have been expensed. Further, overtime labour expense was down 82% in 2005 from 2004, a savings of $298 thousand. Certain operating and maintenance expenses are paid by the Manager and reimbursed by the Partnership, in accordance with applicable agreements. At June 30, 2005, there was $0.4 million (June 30, 2004 - $0.4 million) due to the Manager from the Partnership in respect of such agreements.

Depreciation expense attributable to the Island Facility was $3.1 million and $6.1 million for the three and six months ended June 30, 2005, compared to $2.5 million and $5.6 million for the same periods in 2004. Capital expenditures relating to the Island capital upgrade of $16.0 million, completed in the second quarter of 2004, are being depreciated over the remaining life of the plant, resulting in an increase in depreciation expense.

Interest expense for the three and six months ended June 30, 2005 totaled $158 thousand and $322 thousand payable on the loan from the Fund used to finance the capital upgrade at the Island Facility. The loan bears interest at the Fund's cost of funds plus 10 basis points and averaged 4.71% and 4.63% for the three and six months ended June 30, 2005. The loan increased to $16.0 million at the beginning of 2005 and was then reduced by $3.5 million through monthly principal repayments to June 30, 2005. Increased cash flow generated from the increased capacity as a result of the upgrade is committed to be used to service interest and principal on the loan.

Calgary Energy Centre

The Calgary Energy Centre is a natural gas-fired combined cycle plant located in Calgary, Alberta which commenced operations on March 31, 2003. The Calgary Energy Centre has a capacity of 300 MW, consisting of 250 MW of base capacity plus 50 MW of peaking capacity. Revenue is earned through both a fixed and variable charge payable by Calpine Energy Services Canada Partnership ("CESCP"), a wholly-owned partnership of Calpine, under the terms of the long-term Tolling Agreement, where the fixed charge component represents approximately 99% of total revenue and is a function of plant availability. The Calgary Energy Centre generated 40,810 MWh and 159,429 MWh for the three and six months ended June 30, 2005, and operated at 100% and 99% availability for the periods. For the three and six months ended June 30, 2004, the plant generated 171,168 MWh and 379,583 MWh and operated at 72% and 85% availability. The Calgary Energy Centre was shut down in the second quarter of 2004 for a scheduled combustion inspection after reaching 7,500 operating hours. The outage lasted 14 days.

Electricity revenues at the Calgary Energy Centre were $13.9 million and $27.7 million for the three and six months ended June 30, 2005, compared to $13.5 million and $27.1 million for the three and six months ended June 30, 2004. The increase in availability to 100% in the second quarter of 2005 compared to the 72% availability in the second quarter of 2004 resulted in the $465 thousand increase in revenues this quarter. The remaining increase is from monthly plant start-up charges which are a function of dispatching the plant as well as the annual CPI adjustment over the prior year. For the second quarter of 2005, the tolling revenue earned continued to be above net revenue the plant would have earned had it been selling power to the merchant market. CESCP is entitled, under the contract, to dispatch the plant on and off allowing CESCP to focus on generating power when it is profitable to do so. The capacity factor of the plant, being a measure of the actual MWh's produced versus the total possible MWh's of production from the plant in a given time period, was 6% in the second quarter of 2005, due to continued low prices in the Alberta power market. This lower capacity factor impacts power generation during the period, but has no financial impact on the Fund as revenue is earned from the Tolling Agreement which is based on availability of the plant. The capacity factor in the second quarter of 2004 of 27% was impacted by the shutdown of the plant in June 2004 as well as lower power demand in the second quarter of 2004.

Annual operating and maintenance expense attributable to the Calgary Energy Centre was $2.0 million and $4.1 million respectively for the three and six months ended June 30, 2005, compared to $3.9 million and $6.0 million respectively, for the same periods in 2004. The $1.9 million decrease in the current quarter over the same period in 2004 is attributable to a $1.4 million decrease in major maintenance expenses incurred in the June 2004 shutdown with the balance resulting from a decrease in contract labour and overtime not required in the second quarter of 2005. Certain operating and maintenance expenses are paid by the Manager and reimbursed by the Partnership, in accordance with applicable agreements. At June 30, 2005 there was $0.2 million (June 30, 2004 - $1.5 million) due to the Manager from the Partnership in respect of such agreements.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2005, the Fund had unrestricted cash and cash equivalents of $2.7 million. The Fund generated cash from operating activities of $14.0 million and $26.8 million in the three and six months ended June 30, 2005 compared to $14.0 million and $26.4 million for the same periods in 2004.

The Fund received $2.7 million and $5.3 million in principal and $1.4 million and $2.8 million in interest in the three and six months ended June 30, 2005 from the Manager on the Manager Loan issued as part of the King City Transaction compared to $2.0 million and $2.0 million for the same periods in the prior year. The Fund also received $1.4 million and $4.0 million as principal and interest in the three and six months ended June 30, 2005 from the loan to the Partnership for the Island capital upgrade. The Partnership is committed to use cash flow generated from the improved operations of the plant to service the Partnership Loan. Based on current operational results, the loan is expected to be fully repaid by the third quarter in 2007.

Cash used in financing activities of the Fund for the second quarter of 2005 totaled $18.2 million, comprised of distributions paid of $15.2 million and $3.0 million used to repay the Credit Facility. For the same period last year, the total cash provided by financing activities was $203.8 million including $99.8 million raised through a public equity offering and $111.1 million in long-term debt both of which were used to acquire the King City Facility and make a loan to the Manager of $154.7 million and $48.0 million respectively. Further, the Fund borrowed $8.0 million on its available Credit Facility to make a loan to the Partnership to finance the Island capital upgrade. During the second quarter of 2005, the Fund repaid $3.0 million on the Credit Facility using principal repayments received on the Partnership loan as well as cash received on the Manager Loan in excess of distribution requirements. At the end of the second quarter of 2005, the balance outstanding under the Credit Facility was $1.0 million with an additional undrawn credit amount of $29.0 million available to finance working capital. In addition, the Fund has the full $90.0 million acquisition facility available.

Distributions paid by the Fund in the second quarter of 2005 were up 16% from 2004 distributions in part due to the increase in the number of Trust Units outstanding in 2005 and also due to the 1% increase in per Trust Unit distributions announced in January of this year.

The Partnership had cash and cash equivalents of $31.6 million at June 30, 2005, up $17.9 million from the end of 2004, an increase of 131%.

The Partnership generated cash from operations of $28.2 million and $54.5 million for the three and six months ended June 30, 2005, compared to $5.1 million and $37.0 million for the same periods in 2004. The increased cash generated in 2005 was primarily attributable to increased cash from operations at the Island Facility in 2005 compared to 2004 when the Island Facility's upgrade was being completed.

The Partnership used $224 thousand and $278 thousand for capital expenditures during the three and six months ended June 30, 2005, substantially all associated with the Island Facility. In the same periods last year capital expenditures were $15.8 million and $22.7 million. These capital expenditures, largely related to the Island capital upgrade, are being depreciated over the remaining life of the plant and as such depreciation to date is up 9% over the prior year.

Cash from financing activities of the Partnership included $4.0 million received in January 2005 to finance the balance of capital expenditures associated with the Island Facility upgrade net of $1.3 million and $3.5 million repaid during the three and six months ended June 30, 2005. Financing activities in the second quarter of 2004 included $8.0 million received as the first payment on the loan to the Partnership for the Island capital upgrade.

Distributions paid in the three months ended June 30, 2005 were up $4.5 million from the prior year in part from the contractual 1% annual increase in Class A cash distributions and in part from a delay in the payment in 2004 of the Class B distributions in the second quarter. The April and May Class B Subordinated distribution totaling $3.5 million was not declared until later in 2004 after the Island capital upgrade was completed and the Island Facility went back into operation. The six months ended June 30, 2005 distributions were down slightly compared to the six months ended June 30, 2004 as a result of a $3.1 million Special A distribution in the first quarter of 2004 declared to the Fund to cover certain general and administrative expenses as well as in part the Credit Facility set up fee of $3.3 million.

At June 30, 2005, an unsegregated cash reserve of $14.1 million (June 30, 2004 - $4.0 million) has been accumulated in the Partnership to partially fund future maintenance costs of the Partnership. The next major maintenance for the Island Facility is expected to occur in the third quarter 2006. Major maintenance for the Calgary Energy Centre is dependent on actual operating hours as well as optimal timing to perform the maintenance. As such, the exact timing for the next major maintenance cannot be determined at this time although it is expected to occur no later than 2006.

Contractual Obligations

Both the Fund and Partnership will be required to remove generation facilities at the end of their useful lives and restore the plant sites to their original condition. The estimated future asset retirement obligation remains unchanged from 2004.

The Calgary Energy Centre and the Island Facility are each required to make payments for annual plant maintenance in accordance with applicable LTSA's. Amounts paid in accordance with these agreements for the three and six months ended June 30, 2005 were $nil and $269 thousand respectively ($625 thousand and $950 thousand for the same periods in 2004 respectively) for the Calgary Energy Centre and $194 thousand and $387 thousand ($163 thousand and $264 thousand for the same periods in 2004 respectively) for the Island Facility. Future commitments relating to the LTSA's have a significant variable portion that cannot be reasonably estimated. Currently the variable portion of the Island LTSA is offset by payments made under the Settlement Agreement with Alstom. As a result, the Island Facility will not be required to make significant cash payments relating to equivalent operating hour ("EOH") charges under the Island LTSA for approximately five to seven years. Calgary's LTSA payments are due in US dollars and are payable at certain EOH hurdles.

The Fund has not entered into any off-balance sheet arrangements.

DISTRIBUTABLE CASH AND DISTRIBUTIONS

Distributable Cash is not a measure under Canadian generally accepted accounting principles and there is no standardized measure of Distributable Cash. Distributable Cash, as presented, may not be comparable to similar measures presented by other companies. Distributable cash has been presented to assist readers in determining possible future cash distributions. Distributable cash cannot be assured and may vary.

The amount of Distributable Cash of the Fund to be distributed monthly to Unitholders is, as defined in the Fund Trust Indenture, based generally on the amount by which the Fund's cash on hand exceeds: (i) administration expenses of the Fund; (ii) amounts required for the business and operations including fees payable to the Manager under the Administration and Management Agreements; and (iii) any cash reserve which the Board of Directors of the Manager in its discretion determines is necessary to satisfy the Fund's current and anticipated obligations.

Calpine Power Income Fund

 (in 000's, except
 for Trust Units          Three months   Three months   Three months
 and per Trust                   ended          ended          ended
 Unit amounts)           June 30, 2005  June 30, 2004  June 30, 2003
---------------------------------------------------------------------
FUNDS FROM OPERATIONS
 BEFORE WORKING CAPITAL
 CHANGES
Accounts receivable           $ 11,352       $ 11,283       $ 11,933
Add (Deduct):
 Levelization reserve           (1,385)             -              -
 Principal repayment on
  loan to Calpine Canada
  Power Ltd.                     2,672          2,003              -
 Working capital                 2,512            701            313
                        --------------  -------------  --------------

DISTRIBUTABLE CASH            $ 15,151         13,987       $ 12,246
                        --------------  -------------  --------------
                        --------------  -------------  --------------
Weighted average number
 of Trust Units
 outstanding                61,742,288     56,497,168     52,001,351
                        --------------  -------------  --------------
                        --------------  -------------  --------------
Distributions declared
 per Trust Unit               $ 0.2454       $ 0.2390       $ 0.2355
                        --------------  -------------  --------------
                        --------------  -------------  --------------

 (in 000's, except
 for Trust Units            Six months     Six months     Six months
 and per Trust                   ended          ended          ended
 Unit amounts)           June 30, 2005  June 30, 2004  June 30, 2003
---------------------------------------------------------------------
FUNDS FROM OPERATIONS
 BEFORE WORKING CAPITAL
 CHANGES
Accounts receivable           $ 21,351       $ 26,876       $ 25,067
Add (Deduct):
 Levelization reserve           (2,919)             -              -
 Principal repayment on
  loan to Calpine Canada
  Power Ltd.                     5,343          2,003              -
 Working capital                 6,528         (2,568)           575
                        --------------  -------------  --------------

DISTRIBUTABLE CASH            $ 30,303       $ 26,311       $ 24,492
                        --------------  -------------  --------------
                        --------------  -------------  --------------
Weighted average number
 of Trust Units
 outstanding                61,742,288     54,249,240     52,001,351
                        --------------  -------------  --------------
                        --------------  -------------  --------------
Distributions declared
 per Trust Unit               $ 0.4908       $ 0.4760       $ 0.4710
                        --------------  -------------  --------------
                        --------------  -------------  --------------

Distributable Cash generated by the Fund totaled $15.2 million or $0.2454 per Trust Unit for the three months ended June 30, 2005 compared to $14.0 million or $0.2476 per unit in for the same period in 2004. The King City Transaction, which closed in the second quarter of 2004, has contributed an additional $0.9 million per month in distributable cash since June 2004 following its close in May 2004. The Fund pays monthly cash distributions to Unitholders on or about the 20th day of each month following the record date, which is the last business day of the preceding month.

The Fund, through its indirect 70% ownership of the Partnership, received $0.0798 of Distributable Cash per Class A Priority Unit per month (in addition to a special distribution equal to certain management and administrative expenses incurred directly by the Fund) for the three months ended June 30, 2005, up from $0.079 per month in 2004.

In 2004, the Fund established a Distribution Levelization Reserve ("the Levelization Reserve"), the purpose of which is to levelize, over the long-term, the distributions paid by the Fund to Unitholders in respect of the King City acquisition, so as to enable the Fund to provide a level cash stream to the Unitholders. Total undistributed cash at June 30, 2005 was $12.6 million. The CCT Trustees intend to annually increase or decrease this reserve with long-term consideration given to the expected cash from both the King City Facility and Manager Loan and future distribution requirements to Unitholders. Cash generated by the King City Transaction and other Fund investments is expected to exceed cash distributions anticipated to be paid on the Trust Units until 2014 and, as a result, the Levelization Reserve is expected to increase until that time.

Levelization Reserve
---------------------------------------------------------------------
Balance at March 31, 2005                                   $ 11,177
Contributions                                                  1,329
Income reinvested                                                 56
---------------------------------------------------------------------
Balance at June 30, 2005                                    $ 12,562
---------------------------------------------------------------------

As at June 30, 2005, the Levelization Reserve has been used as follow:

---------------------------------------------------------------------
Guaranteed investment certificates                          $  1,032
Loan to Calpine Power L.P.                                    11,530
---------------------------------------------------------------------
Balance at June 30, 2005                                    $ 12,562
---------------------------------------------------------------------

The working capital amount of $2.5 million and $6.5 million for the
three and six months ended June 30, 2005 includes accrued interest
payable on long-term debt associated with the King City Facility of
$3.2 million and $6.3 million respectively. Interest is payable
annually and will be fully serviced by annual lease payments received
on the King City lease. The lease payments will be recorded against
the net investment in lease when received.

The following is a summary of recent and expected monthly
distribution and future key dates:

                                                         Distribution
   Ex-distribution             Record       Distribution          per
              Date               Date       Payment Date   Trust Unit

    April 27, 2005     April 29, 2005       May 20, 2005      $0.0818
      May 27, 2005       May 31, 2005      June 20, 2005      $0.0818
     June 28, 2005      June 30, 2005      July 20, 2005      $0.0818
     July 27, 2005      July 29, 2005    August 19, 2005      $0.0818
   August 29, 2005    August 31, 2005 September 20, 2005      $0.0818
September 28, 2005 September 30, 2005   October 20, 2005      $0.0818


Calpine           Three    Three    Three      Six      Six      Six
 Power, L.P.     months   months   months   months   months   months
(in 000's,        ended    ended    Ended    ended    ended    Ended
 except for per June 30, June 30, June 30, June 30, June 30, June 30,
 Unit amounts)     2005     2004     2003     2005     2004     2003
---------------------------------------------------------------------

 FUNDS FROM
 OPERATIONS
 BEFORE WORKING
 CAPITAL
 CHANGES        $23,561  $12,934  $24,433  $48,648  $35,825  $32,524
Add (Deduct):
  Receipts with
   respect to
   Calgary Energy
   Tolling
   Agreement          -        -        -        -        -    9,548
 Capital
  expenditures     (224) (15,803)  (1,560)    (278) (22,681)  (2,657)
 Maintenance
  reserve
  decrease
  (increase)     (1,725)   1,773     (495)  (3,182)   5,572
 Loan payable    (1,278)   7,993        -      530    7,993        -
 Working capital (1,654)   7,611      400   (8,264)   8,627   (3,857)
---------------------------------------------------------------------

 DISTRIBUTABLE
 CASH           $18,680  $14,508  $22,778  $37,454  $35,336  $35,063
---------------------------------------------------------------------
---------------------------------------------------------------------

 Allocation of
 Distributable
 Cash
 Class A
  Priority
  Units         $13,344  $12,223  $12,284  $26,783  $27,769  $24,569
 Class B
  Subordinated
  Units           5,336    2,285   10,494   10,671    7,567   10,494
---------------------------------------------------------------------

                $18,680  $14,508  $22,778  $37,454  $35,336   35,063
---------------------------------------------------------------------
---------------------------------------------------------------------
Per Unit
 allocation of
 Distributable
 Cash
 Class A
  Priority
  Units         $0.2566  $0.2351  $0.2362  $0.5150  $0.5340  $0.4725
---------------------------------------------------------------------
---------------------------------------------------------------------

  Class B
  Subordinated
  Units         $0.2394  $0.1025  $0.4709  $0.4788  $0.3395  $0.4709
---------------------------------------------------------------------
---------------------------------------------------------------------

The amount of Distributable Cash, as defined in the Calpine Power, L.P. Partnership Agreement, is to be distributed monthly and is based generally on the amount by which the Partnership's cash on hand exceeds: (i) management and administration expenses of the Partnership; (ii) amounts required for the business and operations of the Partnership and its Facilities (including expenses payable to the Manager under the O&M Agreements); and (iii) any cash reserve which the Board of Directors of the Manager in its discretion has determined is necessary to satisfy the Partnership's current and anticipated obligations, including an annual reserve for the average estimated major maintenance expenditures. The Partnership distributes Distributable Cash of the Partnership in respect of each month to the partners of record on the last day of each month based on the priority rights of the partnership units. Payments are made on or about the 20th day after each record date.

The Partnership makes monthly cash distributions to both the Class A Priority Unitholders and Class B Subordinated Unitholders. The Fund, as the holder of Class A Priority Units in the Partnership, must be paid before the Manager receives distributions on its Class B Subordinated Units. In addition, the Partnership makes a special distribution to the Class A Priority Unitholders, before distributions are made on the Class B Subordinated Units, equivalent to the amount of certain general and administrative expense of the Fund. The Class B Subordinated Units represent a 30% economic interest in the Island Facility, the Calgary Energy Centre and the Whitby Loan and their entitlement to distributions is subordinated to that of Class A Priority Unitholders until 2022. The target distribution per Class A Priority Unit and Class B Subordinated Unit increases annually by 1%.

The Partnership has established a maintenance reserve, the purpose of which is to substantially fund future maintenance costs. The annual increase/decrease in the maintenance reserve is deducted from/added to cash available for distribution. During the three months ended June

30, 2005, $1.8 million (Q2 2004 - $nil) was contributed to the reserve and $0.2 million (Q2 2004 - $0.6 million) was withdrawn to fund maintenance costs. The funds in the reserve are invested in liquid securities with maturities coinciding with expected cash requirements. Interest income of $65 thousand (Q2 2004 - $10 thousand) was earned on the maintenance reserve during the second quarter of 2005.

Maintenance Reserve
---------------------------------------------------------------------
Balance at December 31, 2004                                $ 10,924
Contributions                                                  1,834
Withdrawals                                                     (463)
Income reinvested                                                 57
Foreign exchange gain on US dollars                               29
---------------------------------------------------------------------
Balance at March 31, 2005                                     12,381

Contributions                                                  1,834
Withdrawals                                                     (194)
Income reinvested                                                 65
Foreign exchange gain on US dollars                               20
---------------------------------------------------------------------
Balance at June 30, 2005                                    $ 14,106
---------------------------------------------------------------------
---------------------------------------------------------------------

The Partnership used cash from operations of $1.3 million and $3.5 million in the three and six months ended June 30, 2005 to service a loan made by the Fund to the Partnership in 2004 and the first quarter of 2005 to fund the capital upgrades at the Island Facility.

Distributions declared on the Class A Priority Units increased 9% or $1.1 million for the three months ended June 30, 2005 of which $0.9 million was an increase in the Special A expense distribution period over period with the remainder attributable to the 1% annual adjustment which took effect January 1 of this year. Class A distributions for the six months ended June 30, 2005 were down slightly in 2005 compared to the same prior period as a result of a $3.1 million Special A expense distribution in the first quarter of 2004 to cover, in part, the Credit Facility set up fees of $3.3 million. No similar setup fees were payable in 2005. Distributions declared on the Class B Subordinated Units were up $3.1 million in the second quarter of 2005 compared to the same period in 2004 due to the delay in Class B distributions during the Island plant shutdown in the second quarter. These distributions were later declared in 2004 and paid in full.

The Partnership paid, on July 20, 2005, a cash distribution of $5.9 million for the period from June 1 to June 30, 2005 to the Class A Priority and Class B Subordinated Unitholders of record on June 30, 2005. The Partnership also declared a cash distribution of $5.9 million for July 2005.

RESTRICTED CASH RESERVES

Calpine Power Income Fund

As part of the King City Transaction in 2004, the Fund deposited US$4.6 million of the funds received from the offering into a segregated account as required under the terms of the arrangement. The Funds were used to purchase government and high quality investments with maturities that coincide with the annual interest payments due on the King City Loan. It is expected that US$3.9 million of this reserve will be used in December 2005 with the balance to be used in 2006.

TAX TREATMENT OF DISTRIBUTIONS

For Canadian tax purposes, the taxable amount of distributions to the Fund's Unitholders was 20% for 2004, up from 1.89% in 2003. The remaining amount of the distributions reduce the adjusted cost base of the Trust Units, thereby providing a tax deferral for the Unitholders. As a result, in 2004, 80% of the distributions to Unitholders were a return of capital rather than an allocation of income. The tax deferral for Canadian tax purposes, arises primarily due to the ability of the Partnership to shelter its taxable income with capital cost allowance claims on the Facilities and is offset by the taxability of annual income generated on the King City Transaction which is taxed as earned with no available deferrals. The Manager anticipates that the taxable amount of distributions in 2005 will continue to be 20%. Thereafter it is anticipated that a higher proportion of cash distributions made by the Fund will be included in the income of the Unitholders for income tax purposes. Further, Fund acquisitions could serve to extend or reduce the tax-deferred horizon. The Fund recommends that Unitholders consult their tax advisors regarding the tax implications of their investment in Trust Units.

CRITICAL ACCOUNTING ESTIMATES

Preparation of both the Fund and Partnership's financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and revenues and expenses for the period then ended.

For the Fund, amounts recorded for finance income, depreciation and the provision for asset retirement obligations are based on estimates. With respect to the Partnership, amounts recorded for depreciation and the provision for asset retirement obligations are based on estimates. By their nature, these estimates are subject to measurement uncertainty and changes in these estimates may impact the consolidated financial statements of future periods.

NEW ACCOUNTING PRONOUNCEMENTS

In June 2003, the CICA issued new Accounting Guideline AcG-15, Consolidation of Variable Interest Entities, effective for fiscal years and periods starting on or after November 1, 2004. AcG-15 presents indications on the application of consolidation principles to certain entities that are subject to control on a basis other than the ownership of voting interests. The Fund and Partnership have adopted this guideline and there was no impact to the financial statements.

OUTLOOK

The Fund's main goal continues to be to provide stable and sustainable cash distributions to its Unitholders. Management expects this will be done by its ongoing commitment to operational excellence at its facilities, by enhancing operations to increase cash from operations and by reducing the overall risk profile of our assets by making accretive acquisitions of high quality assets.

The nature of the Fund's contracts insulate the Fund from commodity price risk while allowing the Fund to focus on reducing operating and maintenance expenses, the benefits of which we expect will increase net earnings and cash flow.

Remaining capital expenditures for 2005 are expected to be approximately $0.1 million, which will be financed from cash flow from operations. The major maintenance reserve is expected to increase by a further $3.1 million in 2005.

Management expects to make cash distributions to our Unitholders of $0.818 per month per Trust Unit for the remainder of 2005 and anticipates to end the year with a strong balance sheet and cash reserves.

BUSINESS RISKS

The Fund continues to monitor its business risks including its exposure to contract non-performance, most notably in the collection of both the monthly toll received on the Calgary Energy Centre availability and the repayment of the Manager Loan from Calpine Corporation. While Calpine's credit rating is below investment grade, the Fund received all payments due in the second quarter of 2005, and from inception of the Fund, from Calpine Corporation on time and in full.

Although the King City Steam Host has indicated that it intends to curtail its steam take from the King City Facility in the future, the Steam Host currently takes or has indicated that it intends to take a sufficient amount of thermal energy from the King City Facility to ensure the facility retains its QF status for 2005. The King City Steam Host is currently installing a water distillation facility which, when operational, will take a sufficient amount of thermal energy to ensure the King City Facility retains its QF status beyond 2005. The water distillation facility is expected to be completed in the third quarter of 2005. An order was granted in May, 2005 by FERC, pursuant to an application made earlier in the year, approving the recertification of the King City Facility for this alternate use of thermal energy.

Additional information on risks may be found in the Management Discussion and Analysis in the 2004 annual report.

SUMMARY OF QUARTERLY RESULTS
Calpine Power Income Fund
(unaudited)                             2005
                                 ------------------
(in 000's)                             Q2       Q1
                                 ------------------
 Equity earnings from
  Calpine Power, L.P.              12,766  $14,008
 Finance income (2)                 4,714    4,649
 Interest and other income          2,052    2,160
                                 ------------------
                                   19,532   20,817
                                 ------------------

 Expenses
 Initial lease cost                     -        -
 Management and administrative        637      999
 Interest on long-term debt         3,171    3,125
 Interest                             160      196
 Amortization                         311      311
 Accretion                             28       19
 Future income taxes                  362      427
 Foreign exchange                      86     (157)
                                 ------------------
                                    4,755    4,920
                                 ------------------

 Net earnings                      $14,777  $15,897
                                 ------------------
                                 ------------------

 Net earnings per Trust Unit       $0.2393  $0.2575
                                 ------------------
                                 ------------------

(unaudited)                                      2004
                                 ------------------------------------
(in 000's)                             Q4       Q3     Q2(1)      Q1
                                 ------------------------------------
 Equity earnings from
  Calpine Power, L.P.             $13,292  $13,802  $ 5,378  $13,262
 Finance income (2)                 4,843    5,076    6,577        -
 Interest and other income          2,198    2,290    1,607        -
                                 ------------------------------------
                                   20,333   21,168   13,562   13,262
                                 ------------------------------------

 Expenses
 Initial lease cost                     -        -    4,191        -
 Management and administrative      1,620      661      357      458
 Interest on long-term debt         3,132    3,433    1,671        -
 Interest                             237      218      170      136
 Amortization                         311      311      311      276
 Accretion                             27       28       20        -
 Future income taxes                1,666    1,743      400        -
 Foreign exchange                      20       53       11        -
                                 ------------------------------------
                                    7,013    6,447    7,131      870
                                 ------------------------------------

 Net earnings                      $13,320  $14,721  $ 6,431  $12,392
                                 ------------------------------------
                                 ------------------------------------

 Net earnings per Trust Unit       $0.2157  $0.2384  $0.1138  $0.2383
                                 ------------------------------------
                                 ------------------------------------

(unaudited)                             2003
                                 ------------------
(in 000's)                             Q4       Q3
                                 ------------------
 Equity earnings from
  Calpine Power, L.P.             $12,562  $11,312
 Finance income (2)                     -        -
 Interest and other income             15        6
                                 ------------------
                                   12,577   11,318
                                 ------------------

 Expenses
 Initial lease cost                     -        -
 Management and administrative        529    1,153
 Interest on long-term debt             -        -
 Interest                             134        -
 Amortization                         271        -
 Accretion                              -        -
 Future income taxes                    -        -
 Foreign exchange                       -        -
                                 ------------------
                                      934    1,153
                                 ------------------

 Net earnings                      $11,643  $10,165
                                 ------------------
                                 ------------------

 Net earnings per Trust Unit       $0.2239  $0.1995
                                 ------------------
                                 ------------------

(1) Operations for the three months ended June 30, 2004 include
    revenues and expenses as a result of the King City transaction,
    which closed in May 2004.

(2) Finance income is earned from the lease of the King City Facility
    to Calpine King City.

Calpine Power, L.P
(unaudited)                             2005
                                 ------------------
(in 000's)                             Q2       Q1
                                 ------------------

 Revenue
 Electricity and thermal          $27,598  $28,775
 Interest - Whitby                    846      837
 Interest - Other                     171      127
                                 ------------------
                                   28,615   29,739
                                 ------------------

 Expenses
 Operating and maintenance          4,733    4,336
 Depreciation                       5,471    5,402
 Accretion                             50       50
 General and administrative           163      152
 Interest                             158      164
 Foreign Exchange                     (13)     (22)
                                 ------------------
                                   10,562   10,082
                                 ------------------

Net earnings                      $18,053  $19,657
                                 ------------------
                                 ------------------

Net earnings per Unit
 Class A Priority Unit            $0.2455  $0.2694
 Class B Subordinated Unit        $0.2372  $0.2535

(unaudited)                                      2004
                                 ------------------------------------
(in 000's)                             Q4       Q3       Q2       Q1
                                 ------------------------------------

Revenue
 Electricity and thermal          $28,467  $27,827  $18,490  $26,757
 Interest - Whitby                    846      855      846      846
 Interest - Other                     143      129       72       68
                                 ------------------------------------
                                   29,456   28,811   19,408   27,671
                                 ------------------------------------

Expenses
 Operating and maintenance          4,836    3,573    6,417    4,777
 Depreciation                       5,104    5,504    4,777    5,203
 Accretion                             46       47       47       46
 General and administrative           604       82       10        3
 Interest                             107       88       47        -
 Foreign Exchange                     157      194     (209)    (126)
                                 ------------------------------------
                                   10,854    9,488   11,089    9,903
                                 ------------------------------------

Net earnings                      $18,602  $19,323  $ 8,319  $17,768
                                 ------------------------------------
                                 ------------------------------------

Net earnings per Unit
 Class A Priority Unit            $0.2556  $0.2654  $0.1034  $0.2550
 Class B Subordinated Unit        $0.2383  $0.2477  $0.1320  $0.2022

(unaudited)                             2003
                                 ------------------
(in 000's)                             Q4       Q3
                                 ------------------

Revenue
 Electricity and thermal          $26,564  $23,828
 Interest - Whitby                    855      859
 Interest - Other                      81      288
                                 ------------------
                                   27,500   24,975
                                 ------------------

Expenses
 Operating and maintenance          4,597    3,587
 Depreciation                       5,017    5,144
 Accretion                             44       43
 General and administrative            78       48
 Interest                               -        -
 Foreign Exchange                     184        -
                                 ------------------
                                    9,920    8,822
                                 ------------------

Net earnings                      $17,580  $16,153
                                 ------------------
                                 ------------------

Net earnings per Unit
 Class A Priority Unit            $0.2415  $0.2174
 Class B Subordinated Unit        $0.2254  $0.2174

FORWARD-LOOKING INFORMATION

Certain information in this Management's Discussion and Analysis is forward-looking and subject to risks and uncertainties. The results or events predicted in this information may differ from actual results or events. Factors which could cause actual results or events to differ materially from current expectations include, among other things, the ability of the Fund and the Partnership to successfully implement the Fund's strategic initiatives and whether such strategic initiatives will yield the expected benefits, the availability and price of energy commodities, regulatory decisions, competitive factors in the power industry, and the prevailing economic conditions in North America. The Fund and the Partnership each disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The Calpine Power Income Fund trust units are listed on the Toronto Stock Exchange under the symbol CF.UN. For further information on the Fund, please visit our website at www.calpinepif.com or see below contacts.

CALPINE POWER INCOME FUND
CONSOLIDATED BALANCE SHEETS
(thousands)

                                       As at               As at
                                   June 30, 2005   December 31, 2004
---------------------------------------------------------------------
                                      (unaudited)           (audited)
ASSETS
Current Assets
 Cash and cash equivalents             $   2,658           $   8,138
 Restricted cash, current portion
  (Note 5)                                 4,602               4,490
 Distributions receivable                  4,392               3,890
 Accounts receivable                         451                 566
 Loan to Calpine Canada Power Ltd.,
  current portion (Note 2)                 9,294               9,083
 Net investment in lease, current
  portion (Note 3)                        12,714               1,583
 Loan to Calpine Power, L.P. (Note 4)     12,523              11,993
 Prepaid expenses                             59                 257
                                      -------------------------------
                                          46,693              40,000

Investment in Calpine Power, L.P.
 (Note 7)                                476,640             476,649
Net investment in lease, less current
 portion (Note 3)                        135,567             135,521
Loan to Calpine Canada Power Ltd.,
 less current portion (Note 2)            27,488              32,188
Restricted Cash, less current
 portion (Note 5)                          1,148               1,114
Land                                       1,870               1,870
Deferred financing costs                   3,299               3,922
                                      -------------------------------
                                       $ 692,705           $ 691,264
                                      -------------------------------
                                      -------------------------------

LIABILITIES AND UNITHOLDERS' EQUITY

Current Liabilities
 Distributions payable                 $   5,051           $   5,001
 Accounts payable and accrued
  liabilities                              7,097               1,959
 Long-term debt, current portion
  (Note 5)                                12,274              12,035
 Borrowing under Credit Facility
  (Note 6)                                 1,000               8,000
                                      -------------------------------
                                          25,422              26,995
 Future income tax                         4,494               3,589
 Asset retirement liability                1,371               1,298
 Long-term debt, less current portion
  (Note 5)                                85,655              83,990
                                      -------------------------------
                                         116,942             115,872
 Unitholders' equity                     575,763             575,392
                                      -------------------------------
                                       $ 692,705           $ 691,264
                                      -------------------------------
                                      -------------------------------
See accompanying notes to the consolidated financial statements


CALPINE POWER INCOME FUND
CONSOLIDATED STATEMENTS OF EARNINGS AND UNITHOLDERS' EQUITY
(thousands, except for Trust Units and per Trust Unit amounts)
(unaudited)


                              Three      Three        Six        Six
                             months     months     months     months
                              ended      ended      ended      ended
                            June 30,   June 30,   June 30,   June 30,
                               2005       2004       2005       2004
---------------------------------------------------------------------
REVENUES
Equity earnings from
  Calpine Power, L.P.     $  12,766    $ 5,378   $ 26,774  $  18,640
 Finance income (Note 3
  and Note 9)                 4,714      6,577      9,363      6,577
 Interest and other
  income                      2,052      1,607      4,212      1,607
                         --------------------------------------------
                             19,532     13,562     40,349     26,824
                         --------------------------------------------

EXPENSES

 Initial lease costs              -      4,191          -      4,191
 Interest on long-term
  debt                        3,171      1,671      6,296      1,671
 Management and
  administrative                637        357      1,636        815
 Amortization                   311        311        622        587
 Interest                       160        170        356        306
 Foreign exchange loss
  (gain)                         86         11        (71)        11
 Accretion                       28         20         47         20
                         --------------------------------------------
                              4,393      6,731      8,886      7,601
                         --------------------------------------------

EARNINGS BEFORE FUTURE
 INCOME TAXES                15,139      6,831     31,463     19,223
                         --------------------------------------------

 Future income taxes            362        400        789        400
                         --------------------------------------------

NET EARNINGS                 14,777      6,431     30,674     18,823

UNITHOLDERS' EQUITY,
 BEGINNING OF PERIOD        576,137    485,069    575,392    485,001

Trust Units issued                -     99,845          -     99,845

Distributions               (15,151)   (13,987)   (30,303)   (26,311)
                         --------------------------------------------

UNITHOLDERS' EQUITY,
 END OF PERIOD              575,763  $ 557,358    575,763  $ 557,358
                         --------------------------------------------
                         --------------------------------------------

Weighted average number
 of Trust Units
 outstanding             61,742,288 56,497,168 61,742,288 54,249,260
                         --------------------------------------------
                         --------------------------------------------

Net earnings per Trust
 Unit                     $  0.2393  $  0.1138   $ 0.4968  $  0.3470
                         --------------------------------------------
                         --------------------------------------------
See accompanying notes to the consolidated financial statements

CALPINE POWER INCOME FUND
CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands)
(unaudited)


                              Three      Three        Six        Six
                             months     months     months     months
                              ended      ended      ended      ended
                            June 30,   June 30,   June 30,   June 30,
                               2005       2004       2005       2004
---------------------------------------------------------------------
OPERATING ACTIVITIES
 Net earnings              $ 14,777   $  6,431   $ 30,674   $ 18,823
 Adjustments for
  non-cash items:
 Equity earnings from
  Calpine Power, L.P.       (12,766)    (5,378)   (26,774)   (18,640)
 Finance income              (4,714)    (2,386)    (9,363)    (2,386)
 Amortization                   311        311        622        587
 Amortization of
  discount on loan to
  Calpine Canada Power
  Ltd.                         (414)      (349)      (854)      (349)
 Accretion                       28         20         47         20
 Foreign exchange loss
  (gain)                         86         11        (71)        11
 Future income taxes            362        400        789        400
 Distributions received
  from Calpine Power,
  L.P.                       13,682     12,223     26,281     28,410
                         --------------------------------------------
 Cash from operations
  before working capital
  changes                    11,352     11,283     21,351     26,876
 Change in non-cash
  working capital
  (Note 8)                    2,601      2,684      5,451       (503)
                         --------------------------------------------
 Net cash provided by
  operating activities       13,953     13,967     26,802     26,373
                         --------------------------------------------
INVESTING ACTIVITIES
 Acquisition of King
  City Facility Lease and
  Land                            -   (154,658)         -   (154,658)
 Loan to Calpine Canada
  Power Ltd.                      -    (47,968)         -    (47,968)
 Receipt of principal on
  loan to Calpine Canada
  Power Ltd.                  2,672      2,003      5,343      2,003
 Loan to Calpine
  Power, L.P.                     -     (7,993)    (4,007)    (7,993)
 Receipt of principal on
  loan to Calpine Power,
  L.P.                        1,278          -      3,477          -
                         --------------------------------------------
 Net cash provided by
  (used in) investing
  activities                  3,950   (208,616)     4,813   (208,616)
                         --------------------------------------------

 FINANCING ACTIVITIES
 Issue of long-term debt          -    111,111          -    111,111
 Financing costs                  -     (2,060)         -     (2,131)
 Borrowing under credit
  facility                        -      8,000          -      8,000
 Repayment on credit
  facility                   (3,000)         -     (7,000)         -
 Trust Units issued               -     99,845          -     99,845
 Distributions paid         (15,151)   (13,094)   (30,253)   (25,392)
                         --------------------------------------------
 Net cash provided by
  (used in) financing
  activities                (18,151)   203,802    (37,253)   191,433
                         --------------------------------------------
 Foreign exchange gain
  on cash held in a
  foreign currency               58        (44)       304        (44)
                         --------------------------------------------

(DECREASE) INCREASE IN
 CASH AND CASH
 EQUIVALENTS                   (190)     9,109     (5,334)     9,146
Cash and cash
 equivalents, beginning
 of period                    8,598         74     13,742         37
                         --------------------------------------------
CASH AND CASH
 EQUIVALENTS, END OF
 PERIOD                    $  8,408   $  9,183   $  8,408   $  9,183
                         --------------------------------------------
                         --------------------------------------------
Represented by:
 Cash and cash
  equivalents              $  2,658   $  2,956   $  2,658   $  2,956
 Restricted cash,
  current portion             4,602          -      4,602          -
 Restricted cash, less
  current portion             1,148      6,227      1,148      6,227
                         --------------------------------------------
                           $  8,408   $  9,183   $  8,408   $  9,183
                         --------------------------------------------
                         --------------------------------------------

SUPPLEMENTARY CASH FLOW
 INFORMATION
 Taxes paid                $      -   $      -   $      -   $      -
 Interest received         $  1,577   $  1,146   $  3,414   $  1,146
 Interest paid             $    160   $    175   $    356   $    309

See accompanying notes to the consolidated financial statements

CALPINE POWER INCOME FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004
(Tabular amounts are in thousands except for Trust Units and per
Trust Unit amounts)
(unaudited)


1. SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements of the Calpine Power Income
Fund ("Fund") have been prepared by Calpine Canada Power Ltd. ("the
Manager") in accordance with Canadian generally accepted accounting
principles. The accounting policies applied are consistent with those
outlined in the Fund's annual financial statements for the year ended
December 31, 2004. These consolidated financial statements for the
three and six months ended June 30, 2005 do not include all
disclosures required in the annual consolidated financial statements
and should be read in conjunction with the annual consolidated
financial statements included in the Fund's 2004 Annual Report.

The Fund is not subject to any seasonality in its earnings except as
may be derived from its investment in Calpine Power, L.P. (the
"Partnership"), which earns more revenue during winter months due to
increased requested output from contract counter parties.

2. LOAN TO CALPINE CANADA POWER LTD.

The Fund made a loan to the Manager in 2004 with $48.0 million of
funds received from a public offering that was done in conjunction
with the acquisition of the King City Facility. This loan has a face
value of $53.4 million, will mature in 2010 and bears interest at a
fixed rate of 13% per annum with interest and principal payable
monthly under the schedule provided in the loan agreement. The
discount on the face value is amortized to interest income over the
term of the note. The amount of the loan maturing within the next 12
months has been classified as current. The loan is a full recourse
obligation of the Manager and is secured by a pledge of the Manager's
limited partnership interest in the Partnership, including the
Manager's right to receive distributions under the Class B
Subordinated Units of Calpine Power L.P. In addition, Calpine King
City has provided the Fund with a limited recourse guarantee of the
Manager's obligations under the loan and granted the Fund a security
interest in the Lessee's annual cash from operations. As at June 30,
2005 the fair market value of the loan was determined to be
approximately $35.9 million (December 31, 2004 - $45.8 million).

Schedule of principal receipts and discount amortization

                                  Principal     Discount       Total
---------------------------------------------------------------------
2005 (remainder of the year)       $  5,343    $    (749)   $  4,594
2006                                 10,686       (1,180)      9,506
2007                                 10,686         (757)      9,929
2008                                  8,014         (383)      7,631
2009                                  2,672         (163)      2,509
2010                                  2,671          (58)      2,613
---------------------------------------------------------------------
As at June 30, 2005                $ 40,072     $ (3,290)   $ 36,782
                               --------------------------------------
                               --------------------------------------


3. NET INVESTMENT IN LEASE

The Fund acquired the King City Facility in 2004, pursuant to an
Acquisition Agreement with BAF Energy and leased it to Calpine King
City under a 20 year lease. The lease terms are such that the actual
plant acquisition is shown as a net investment in the lease given
that the Fund's economic recovery of the investment is substantially
achieved from the lease. The Fund will recognize finance income over
the lease term that will provide a constant rate of return on the net
investment in the lease. Lease payments are denominated in both US
and Canadian currency and will be receivable annually on December 31.
The US dollar lease receipts are expected to offset substantially all
foreign exchange risk associated with satisfying future obligations
under the US dollar third party loan. The amount of the net
investment in the lease maturing within the next 12 months has been
classified as current.


Net Investment in Lease includes the following as at June 30,
2005:

Total minimum lease payments receivable                    $ 323,285
Unguaranteed residual value                                  181,481
Unearned finance income                                     (356,485)
                                                          -----------
                                                             148,281
Net investment in lease, current portion                     (12,714)
                                                          -----------
Net investment in lease, less current portion             $  135,567
                                                          -----------
                                                          -----------

Future minimum lease payments receivable under the lease are as
follows:

2005 (remainder of the year)                              $   20,432
2006                                                          20,139
2007                                                          20,413
2008                                                          20,275
2009                                                          21,414
2010 and beyond                                              220,612
                                                          -----------
                                                          $  323,285
                                                          -----------
                                                          -----------

4. LOAN TO CALPINE POWER, L.P.

In January 2005, the Fund loaned an additional $4.0 million to the
Partnership to complete the financing of the capital upgrade at the
Island Cogeneration Facility. Interest, which averaged 4.71% and
4.63% for the three and six months ended June 30, 2005, is charged at
a rate of 10 basis points over the rate charged under the Credit
Facility. Although the loan is a demand loan, it is not expected to
be fully repaid until third quarter 2007. During the three and six
months ended June 30, 2005, the Partnership repaid $1.3 million and
$3.5 million to the Fund in satisfaction of the loan. As at June 30,
2005, the fair market value of the loan was determined to be
approximately $12.6 million (December 31, 2004 - $12.2 million).

5. LONG-TERM DEBT

In connection with the acquisition of the King City Facility in 2004,
the Fund entered into a loan for an amount equal to US$82 million
from a third party lender. This loan will mature in 2019 and bear
interest at a fixed interest rate of 12.8% per annum. The amount of
the loan maturing within the next 12 months has been classified as
current. The loan is a full recourse obligation of King City LP
("KCLP"), a wholly-owned subsidiary of the Fund, but non-recourse to
the Fund. Payments of principal and interest are payable annually on
December 31. The loan is secured by a first preferred security
interest in all assets owned by KCLP without limitation. As at June
30, 2005 the fair market value of the loan was determined to be
approximately US$85.8 million (December 31, 2004 - US$81.7 million).

The Fund was required under the terms of the arrangement to establish
a segregated cash account in 2004 of US$4.6 million (CDN $5.6
million) with proceeds received from a public offering that was part
of the acquisition of the King City Facility. This cash amount,
together with interest earned thereon, will be used to partially
satisfy its obligations to the third party lender for principal and
interest payments under the terms of the debt in 2005 and 2006.

6. CREDIT FACILITY

The Fund, through a wholly owned subsidiary, Calpine Commercial Trust
("CCT"), established a $120 million extendible term Credit Facility
in 2003. The term Credit Facility has a three year term, comprised of
a two year revolving period followed by a one year term period.

The facility can be drawn upon in Canadian or US dollars and has
varying interest rates based on prevailing market-based interest
rates, and the ratio of consolidated debt to adjusted consolidated
earnings. Standby fees range from 45 basis points to 75 basis points,
depending on the ratio of consolidated debt to adjusted consolidated
earnings and are charged on the undrawn balance of the facility.
During the three and six months ended June 30, 2005, $3.0 million and
$7.0 million of the credit facility was repaid with cash receipts
from the loan to the Partnership and principal and interest received
from the Manager in excess of distribution requirements. Interest on
the current balance of the facility averaged 4.61% and 4.53% for the
three and six months ended June 30, 2005 (4.30% and 4.30% for the
three and six months ended June 30, 2005). Due to the short-term
nature and floating interest rate on the credit facility borrowing,
carrying value approximates fair value.

Security for the facility consists of a floating charge and a
security interest over CCT's and the Partnership's current and after
acquired real and personal property, and is subject to certain
financial covenants measured quarterly. If not renewed, any
outstanding balance on the credit facility must be settled by October
2006.

7. INVESTMENT IN CALPINE POWER, L.P.

As at June 30, 2005, the equity investment in Calpine Power, L.P.
was comprised as follows:

---------------------------------------------------------------------
Investment in Calpine Power, L.P. at December 31, 2004     $ 476,649
Equity Earnings from Calpine Power, L.P.                      26,774
Distributions received and receivable from Calpine
 Power, L.P.                                                 (26,783)
---------------------------------------------------------------------
As at June 30, 2005                                        $ 476,640
---------------------------------------------------------------------
---------------------------------------------------------------------

8. WORKING CAPITAL

Change in non-cash working capital

                              Three      Three        Six        Six
                             months     months     months     months
                              ended      ended      ended      ended
                            June 30,   June 30,   June 30,   June 30,
                               2005       2004       2005       2004
---------------------------------------------------------------------
Operating Activities
Accounts receivable         $   (23)   $   428    $   115    $   426
Prepaid expenses                 91         80        198        158
Accounts payable              2,533      2,176      5,138     (1,087)
                         --------------------------------------------
                            $ 2,601    $ 2,684    $ 5,451    $  (503)
                         --------------------------------------------
                         --------------------------------------------


9. RELATED PARTY TRANSACTIONS

As at June 30, 2005 and December 31, 2004 the Fund had the following
balances receivable from (payable to) related parties in the normal
course of business:

                                        As at              As at
                                    June 30, 2005  December 31, 2004
---------------------------------------------------------------------
Distributions receivable
 from the Partnership                     $ 4,392            $ 3,890
Loan receivable from the
 Partnership                               12,523             11,993
Accounts receivable from
 the Partnership                              127                306
Accounts payable to the
 Partnership                                  (13)               (28)
Accounts payable to the Manager              (159)              (684)
Accounts payable to Calpine
 Corporation                                 (161)               (55)
---------------------------------------------------------------------
---------------------------------------------------------------------

In January 2005, the Fund advanced $4.0 million to the Partnership to
complete the financing of the capital upgrade at the Island
Cogeneration Facility. The Partnership repaid $1.3 million and $3.5
million to the Fund in the three and six months ended June 30, 2005
in satisfaction of this loan. For the three and six months ended June
30, 2005, $156 thousand and $321 thousand ($47 thousand and $47
thousand for the three and six months ended June 30, 2004) of
interest income on this amount was recognized by the Fund based on a
rate 10 basis points over the rate incurred on the Fund's Credit
Facility and averaged 4.71% and 4.63% for the three and six months
ended June 30, 2005.

As at June 30, 2005 and December 31, 2004, the Fund had the following
balances receivable from related parties resulting from the
acquisition of the King City Facility:

                                            As at              As at
                                    June 30, 2005  December 31, 2004
---------------------------------------------------------------------
Loan to Manager                            36,782             41,271
Ground Lease due from Calpine
 Corporation                                   61                 95
Net Investment in Lease due from
 Calpine Corporation                      148,281            137,104
---------------------------------------------------------------------
---------------------------------------------------------------------

For the three and six months ended June 30, 2005, the Fund recognized
finance and rental income of $4.7 million and $9.4 million ($6.6
million and $6.6 million three and six months June 30, 2004) from the
Facility and Ground Lease with Calpine King City.

Interest earned with respect to the loan to Calpine Canada Power Ltd.
amounted to $1.4 million and $2.8 million for the three and six
months ended June 30, 2005 ($1.1 million and $1.1 million for the
three and six months ended June 30, 2004).


CALPINE POWER, L.P.
CONSOLIDATED BALANCE SHEETS
(thousands)

                                            As at              As at
                                    June 30, 2005  December 31, 2004
---------------------------------------------------------------------
                                       (unaudited)
ASSETS
Current Assets
 Cash and cash equivalents
  (Note 2)                              $  31,614          $  13,715
 Accounts receivable                        9,729             10,819
 Interest receivable
  - Whitby Loan (Note 3)                      567              2,248
 Inventory                                  2,709              2,579
 Prepaid expenses                           3,986              2,014
                                     --------------------------------
                                           48,605             31,375
Loan to Calpine Canada
 Whitby Holdings Company (Note 3)          37,404             37,404
Capital assets (Note 4)                   580,855            591,450
                                     --------------------------------
                                        $ 666,864          $ 660,229
                                     --------------------------------
                                     --------------------------------
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities
 Distributions payable                  $   6,171          $   5,651
 Accounts payable and accrued
 liabilities - trade                       13,908              8,577
             - accrued capital                133                 44
 Interest payable                              51                242
 Loan payable (Note 5)                     12,523             11,993
                                     --------------------------------
                                           32,786             26,507
 Asset retirement liability                 2,469              2,369
                                     --------------------------------
                                           35,255             28,876
 Partners' equity (Note 6)                631,609            631,353
                                     --------------------------------

                                        $ 666,864          $ 660,229
                                     --------------------------------
                                     --------------------------------

See accompanying notes to the consolidated financial statements


CALPINE POWER, L.P.
CONSOLIDATED STATEMENTS OF EARNINGS AND PARTNERS' EQUITY
(thousands, except for per Unit amounts)
(unaudited)

                              Three      Three        Six        Six
                             months     months     months     months
                              ended      ended      ended      ended
                            June 30,   June 30,   June 30,   June 30,
                               2005       2004       2005       2004
---------------------------------------------------------------------
REVENUES

Electricity and thermal    $ 27,598   $ 18,490   $ 56,373   $ 45,247

 Interest - Whitby              846        846      1,683      1,692
          - Other income        171         72        298        140
                         --------------------------------------------
                             28,615     19,408     58,354     47,079
                         --------------------------------------------

EXPENSES

 Operating and
  maintenance                 4,733      6,417      9,069     11,194

 Depreciation                 5,471      4,777     10,873      9,980

 Accretion                       50         47        100         93

 Interest                       158         47        322         47

 General and administrative     163         10        315         13

 Foreign exchange gain          (13)      (209)       (35)      (335)
                         --------------------------------------------
                             10,562     11,089     20,644     20,992
                         --------------------------------------------

NET EARNINGS                 18,053      8,319     37,710     26,087

PARTNERS' EQUITY,
 BEGINNING OF PERIOD        632,236    639,751    631,353    644,508

Special distributions             -          -          -     (1,697)

Distributions               (18,680)   (14,508)   (37,454)   (35,336)
                         --------------------------------------------

PARTNERS' EQUITY,
 END OF PERIOD            $ 631,609  $ 633,562  $ 631,609  $ 633,562
                         --------------------------------------------
                         --------------------------------------------

Net earnings per
 Unit (Note 6):

 Class A Priority Unit    $  0.2455  $  0.1034  $  0.5149  $  0.3653
                         --------------------------------------------
                         --------------------------------------------

 Class B Subordinated
  Unit                    $  0.2372  $  0.1320  $  0.4907  $  0.3182
                         --------------------------------------------
                         --------------------------------------------

See accompanying notes to the consolidated financial statements


CALPINE POWER, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands) (unaudited)
                              Three      Three        Six        Six
                             months     months     months     months
                              ended      ended      ended      ended
                            June 30,   June 30,   June 30,   June 30,
                               2005       2004       2005       2004
---------------------------------------------------------------------
OPERATING ACTIVITIES
Net earnings               $ 18,053    $ 8,319   $ 37,710   $ 26,087
Adjustments for
 non-cash items:
 Depreciation                 5,471      4,777     10,873      9,980
 Accretion                       50         47        100         93
 Foreign exchange gain          (13)      (209)       (35)      (335)
                          -------------------------------------------

Cash from operations
 before working capital
 changes                     23,561     12,934     48,648     35,825
Change in non-cash
 working capital relating
 to operating activities
 (Note 7)                     4,615     (7,809)     5,809      1,128
                          -------------------------------------------

Net cash provided by
 operating activities        28,176      5,125     54,457     36,953
                          -------------------------------------------

INVESTING ACTIVITIES
Capital expenditures           (224)   (15,803)      (278)   (22,681)
Change in non-cash working
 capital relating to
 investing activities
 (Note 7)                       133      7,831         89      7,482
                          -------------------------------------------

Net cash used in investing
 activities                     (91)    (7,972)      (189)   (15,199)
                          -------------------------------------------

FINANCING ACTIVITIES
Loan payable                      -      7,993      4,007      7,993
Special distributions on
 the Class B Subordinated
 Units                            -          -          -     (1,697)
Payment of principal on
 loan payable                (1,278)         -     (3,477)         -
Distributions               (19,017)   (14,508)   (36,934)   (37,118)
                          -------------------------------------------

Net cash used in
 financing activities       (20,295)    (6,515)   (36,404)   (30,822)
                          -------------------------------------------

Foreign exchange gain on
 cash held in foreign
 currency                        13        209         35        335
                          -------------------------------------------

INCREASE (DECREASE) IN
 CASH AND CASH EQUIVALENTS    7,803     (9,153)    17,899     (8,733)
Cash and cash equivalents,
 beginning of period         23,811     15,588     13,715     15,168
                          -------------------------------------------

Cash and cash equivalents,
 end of period             $ 31,614    $ 6,435   $ 31,614    $ 6,435
                          -------------------------------------------
                          -------------------------------------------

SUPPLEMENTARY CASH
 FLOW INFORMATION
Interest received          $  1,071    $ 1,474   $  3,698    $ 2,292
Interest paid              $    162    $     -   $    511    $     -

See accompanying notes to the consolidated financial statements

CALPINE POWER, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004
(Tabular amounts are in thousands except for per Unit amounts)
(unaudited)


1. SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements of Calpine Power, L.P. (the
"Partnership") have been prepared by Calpine Canada Power Ltd. (the
"Manager") in accordance with Canadian generally accepted accounting
principles. The accounting policies applied are consistent with those
outlined in the Partnership's annual consolidated financial
statements for the year ended December 31, 2004. These consolidated
financial statements for the three and six months ended June 30, 2005
do not include all disclosures required in the annual consolidated
financial statements and should be read in conjunction with the
annual financial statements included in the 2004 Calpine Power Income
Fund (the "Fund") Annual Report.

The Partnership's earnings are subject to seasonality from its Island
Cogeneration Facility, which earns more revenue during winter months
due to increased requested output from contract counterparties.

Certain comparative figures have been reclassified to conform with
the 2005 presentation.

2. MAINTENANCE RESERVE

At June 30, 2005, a maintenance reserve of $14.1 million (December
31, 2004 - $10.9 million) has been accumulated within cash and cash
equivalents to partially fund future maintenance costs.

3. WHITBY LOAN

Cash received during the three and six months ended June 30, 2005 in
the amount of $0.9 million and $3.4 million ($1.3 million and $2.0
million for the three and six months ended June 30, 2004) associated
with the Whitby Loan has been applied to the accrued interest
receivable balance consistent with the terms of the loan agreement.
As at June 30, 2005, the fair market value of the Whitby Loan was
determined to be approximately $40.0 million (December 31, 2004 -
$40.3 million).

4. CAPITAL ASSETS

---------------------------------------------------------------------
                                              Accumulated   Net Book
                                     Cost    Depreciation      Value
---------------------------------------------------------------------
As at June 30, 2005
Land                            $     334        $      -      $ 334
Power generation plants
 and equipment                    632,355          51,834    580,521
---------------------------------------------------------------------
                                $ 632,689        $ 51,834  $ 580,855
                               --------------------------------------
                               --------------------------------------
As at December 31, 2004
Land                            $     334        $      -  $     334
Power generation plants
 and equipment                    632,077          40,961    591,116
---------------------------------------------------------------------
                                $ 632,411        $ 40,961  $ 591,450
                               --------------------------------------
                               --------------------------------------


5. LOAN PAYABLE

In January 2005, an additional $4.0 million was advanced to the
Partnership by the Fund to complete the financing of the capital
upgrade at the Island Cogeneration Facility. Interest is charged at a
rate of 10 basis points over the rate per the Fund's credit facility
which averaged 4.71% and 4.63% for the three and six months ended
June 30, 2005 (4.40% and 4.40% for the three and six months ended
June 30, 2004). Although the loan is a demand loan, it is not
expected to be fully repaid until sometime after 2007. During the
three and six months ended June 30, 2005, the Partnership repaid $1.3
million and $3.5 million to the Fund in satisfaction of the loan (nil
for the three and six months ended June 30, 2005). As at June 30,
2005, the fair market value of the loan was determined to be
approximately $12.6 million (December 31, 2004 - $12.2 million).

6. PARTNERS' EQUITY

The Partnership is authorized to issue an unlimited number of Class A
Priority Units and an unlimited number of Class B Subordinated Units.
For the three and six months ended June 30, 2005, the holder of Class
A Priority Units, Calpine Commercial Trust ("CCT"), received the
first $0.0798 of Distributable Cash per Class A Priority Unit per
month (in addition to an amount equal to certain management and
administrative expenses incurred directly by the Fund) on a
cumulative basis in priority to any payments on the Class B
Subordinated Units. For the three and six months ended June 30, 2005,
the holder of Class B Subordinated Units, the Manager, was entitled
to receive up to $0.0798 of Distributable Cash per Class B
Subordinated Unit per month which amounts are cumulative for a fiscal
year (and if unpaid at the end of a fiscal year, this entitlement
terminates for such fiscal year) following the priority payment of
Distributable Cash to the holder of Class A Priority Units. Each year
until 2022, the Distributable Cash entitlements increase at an annual
rate of 1%. Holders of Class A Priority Units and Class B
Subordinated Units are entitled to share equally, on a class basis,
any Distributable Cash in excess of their prior entitlements in any
calendar year.

                          Class A Units  Class B Units        Total
---------------------------------------------------------------------
As at December 31, 2004       $ 476,649      $ 154,704     $ 631,353
Net earnings                     26,774         10,936        37,710
Distributions declared          (26,783)       (10,671)      (37,454)
                             -----------    -----------   -----------
As at June 30, 2005           $ 476,640      $ 154,969     $ 631,609
                             -----------    -----------   -----------
                             -----------    -----------   -----------


Net earnings per Class A Priority Unit and Class B Subordinated Unit
for the three and six months ended June 30, 2005 have been calculated
based on a weighted average of 52,001,352 and 52, 001,352 Class A
Priority Units (December 31, 2004 - 52,001,352) and 22,286,294 and
22,286,294 Class B Subordinated Units (December 31, 2004 -
22,286,294).


7. WORKING CAPITAL

Change in non-cash working capital

                               Three       Three       Six       Six
                              months      months    months    months
                               ended       ended     ended     ended
                             June 30,    June 30,  June 30,  June 30,
                                2005        2004      2005      2004
---------------------------------------------------------------------
Operating activities:
Accounts receivable          $ 2,267    $   (435)  $ 1,090   $ 7,890
Interest receivable               17       1,111     1,681       (68)
Prepaid expenses                (884)     (8,929)   (1,972)   (7,004)
Accounts Payable and
 accrued Liabilities           3,327         404     5,331       308
Interest payable                  (6)         47      (191)       47
Inventory                       (106)         (7)     (130)      (45)
                          ----------- ----------- --------- ---------
                             $ 4,615    $ (7,809)  $ 5,809   $ 1,128
                          ----------- ----------- --------- ---------
                          ----------- ----------- --------- ---------

Investing activities:
Accounts payable
 - accrued capital           $   133    $  7,831   $    89   $ 7,482
                          ----------- ----------- --------- ---------
                             $   133    $  7,831   $    89   $ 7,482
                          ----------- ----------- --------- ---------
                          ----------- ----------- --------- ---------


8. RELATED PARTY TRANSACTIONS

Interest earned with respect to the Whitby Loan was $0.9 million and
$1.7 million for the three and six months ended June 30, 2005 ($0.9
million and $1.7 million for the three and six months ended June 30,
2004).

The Calgary Energy Centre and Calpine Energy Services Canada
Partnership ("CESCP") entered into a tolling agreement whereby the
Calgary Energy Centre earns revenue through monthly payments,
composed of both a fixed and variable portion, received from CESCP in
exchange for providing the full operating capacity of the plant. For
the three and six months ended June 30, 2005, the Partnership
recognized revenues of $13.9 million and $27.7 million ($13.5 million
and $27.1 million for the three and six months ended June 30, 2004)
from CESCP related to this agreement.

As at June 30, 2005 and December 31, 2004, the Partnership had the
following balances receivable from (payable to) related parties in
the normal course of business:

                                            As at              As at
                                    June 30, 2005  December 31, 2004
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Accounts receivable from
 Calpine Corporation                     $  4,633           $  3,664
Accounts receivable from the Fund              13                 28
Loan and interest receivable
 from Calpine Canada Whitby
 Holdings Company                          37,971             39,652
Distributions payable to Calpine
 Commercial Trust                          (4,392)            (3,890)
Distributions payable to the Manager       (1,778)            (1,761)
Accounts payable to
 Calpine Corporation                       (2,192)            (1,613)
Accounts payable to the Fund                 (127)              (306)
Loan payable to the Fund                  (12,523)           (11,993)
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Calpine Power Income Fund (TSX:CF.UN)