Calpine Power Income Fund Announces Strong Financial Results for the Third Quarter of 2005 and Cash Distributions for November and December 2005.

CALGARY, Alberta -- Calpine Power Income Fund (TSX:CF.UN) today announced its results for the nine months ending September 30, 2005. Based upon current forecast, cash distributions for the months of November and December 2005 will be $0.0818 per trust unit.

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                     Ex-Distribution                     Distribution
Record Date                     Date   Distribution Date     per Unit
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November 30, 2005  November 28, 2005   December 20, 2005      $0.0818
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December 30, 2005  December 28, 2005   January 20 , 2006      $0.0818
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The above reflects distributions expected to be paid, however,
 distributions are subject to change based upon actual conditions.
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"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 solid financial performance at expected levels.

"We have again experienced volatility in our unit price, largely due to comments made by the federal Department of Finance relating to income trusts. In addition, there has been ongoing speculation on the financial position of our sponsor and major off-taker, Calpine Corporation, which has contributed to some volatility in our unit price.

"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. Through its 70% ownership interest in Calpine Power, L.P. (the "Partnership"), the Fund indirectly owns interests in power generating facilities in British Columbia, Alberta and an economic interest in a power plant in Ontario. In addition, the Fund owns an interest in a power generating facility in California and holds a promissory note issued by Calpine Canada Power Ltd. ("the Manager"). The power generation facilities owned by the Fund and 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 from 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"), which has 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 nine months ended September 30, 2005 and 2004, which have been prepared in accordance with Canadian generally accepted accounting principles, and is based on information to November 8, 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.

THIRD QUARTER HIGHLIGHTS

- The Fund declared distributions of $0.2454 per Trust Unit to Unitholders during the third quarter of 2005 compared to $0.2430 per Trust Unit in the comparable period in 2004 for a total year-to-date distribution of $0.7362 per Trust Unit in 2005 compared to $0.7190 for the same period in 2004.

- For the three months ended September 30, 2005, availability was approximately 99% reflecting strong plant performance and few unplanned outages. All plants are operating at or exceeding target levels of financial results. Plant specific results are set out below:

Availability       Generation (MWh)
                            ------------------- ---------------------
                              Q3 2005  Q3 2004   Q3 2005     Q3 2004
                            --------- --------- ----------- ---------

Calgary Energy Centre             100%      93%   97,398(1)  214,795
Island Cogeneration Facility      100%     100%  518,044     495,585
Whitby Cogeneration Facility       97%      99%   74,248      84,716
King City Facility                 99%      97%  201,922     248,120

(1) 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.

At September 30, 2005 and November 8, 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 Third Quarter Information

                          Three months   Three months   Three months
(in 000's, except for            ended          ended          ended
 Trust Units and per           Sept 30,       Sept 30,       Sept 30,
 Trust Unit amounts)              2005           2004           2003
---------------------------------------------------------------------
Total Revenue                 $ 20,183       $ 21,168       $ 11,318
Net Earnings                    14,723         14,721         10,165
Net Earnings Per Trust Unit     0.2385         0.2384         0.1955

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

Total Assets                   690,818        704,136        491,895
Total Long-term Liabilities     88,808        104,616              -
Distributions Declared Per
 Trust Unit                     0.2454         0.2430         0.2555



                           Nine months    Nine months    Nine months
(in 000's, except for            ended          ended          ended
 Trust Units and per           Sept 30,       Sept 30,       Sept 30,
 Trust Unit amounts)              2005           2004           2003
---------------------------------------------------------------------
Total Revenue                 $ 60,532       $ 47,992       $ 28,813
Net Earnings                    45,397         33,544         26,884
Net Earnings Per Trust Unit     0.7353         0.5906         0.5169

Weighted Average Number of
 Trust Units Outstanding    61,742,288     56,800,718     52,001,351

Total Assets                   690,818        704,136        491,895
Total Long-term Liabilities     88,808        104,616              -
Distributions Declared Per
 Trust Unit                     0.7362         0.7190         0.7265

Earnings

The Fund reported net earnings of $14.7 million ($0.2385 per Trust Unit) for the three months ended September 30, 2005, consistent with net earnings of $14.7 million ($0.2384 per Trust Unit) for the same period of 2004. For the first three quarters of 2005, net earnings were $45.4 million ($0.7353 per Trust Unit), a 36% increase over net earnings of $33.5 million ($0.5906 per Trust Unit) for the same period of 2004, reflecting a full nine months of finance income in 2005 from the King City Facility acquired in May 2004 and improved equity earnings from the Partnership reflecting the benefits of the upgrade at the Island Facility in 2004.

Revenues

Total revenue for the three and nine months ended September 30, 2005 were $20.2 million and $60.5 million, respectively, compared to $21.2 million and $48.0 million for the same periods of 2004. Equity earnings from the Partnership for the third quarter of 2005 totaled $13.6 million, compared to the $13.8 million reported in the third quarter 2004. Equity earnings for the first nine months of 2005 increased to $40.4 million from $32.4 million in 2004, primarily resulting from increased power generation at the Island Facility following an upgrade completed in the second quarter of 2004. A detailed discussion of the Partnership's operating results can be found in the Calpine Power L.P. section of this MD&A.

Finance income totaled $4.6 million and $14.0 million for the three and nine months ended September 30, 2005, compared to finance income of $5.1 million and $11.7 million for the same periods of 2004. Finance income is generated by the long-term lease of the King City facility and associated land to Calpine King City and commenced upon the acquisition of the facility and land by the Fund in May 2004. The Fund recognizes finance income over the lease term on a basis that provides a constant rate of return on the net investment in the lease with lease and land rental payments due, annually, in arrears on December 31. Lease payments are payable in both US and Canadian dollars - the US dollar portion being sufficient to service principal and interest payments of the Fund's non-recourse US dollar denominated debt that was used to acquire the facility. Of the $0.5 million decline in finance income in the third quarter 2005 compared to third quarter 2004, $0.3 million is a result of foreign exchange and the remaining $0.2 million is due to principal payments on the Lease made in December 2004. Year-to-date finance income is higher in 2005 compared to 2004, primarily due to the additional four months of finance income included in the 2005 period as the King City assets were acquired May 2004. The King City Facility generated 201,922 MWh and 675,273 MWh for the three and nine months ended September 30, 2005 and operated at 99% and 89% availability for the same periods. Comparatively for the three and nine months ended September 30, 2004 the King City Facility generated 248,120 MWh and 345,600 MWh and operated at 97% and 98% availability. Power generation was lower at the King City Facility for the third quarter 2005 due to a 10 day force majeure outage during the quarter. During the outage, the sale of gas that would normally be used to operate the plant offset the electricity revenues not received during this period. While the Fund is reliant on annual lease payments from Calpine to lease the King City Facility, operational results from the Facility may influence Calpine's ability to fulfill this lease obligation.

Interest and other income of $1.9 million in the third quarter of 2005 decreased $0.4 million from the prior year quarter, reflecting the impact on interest earned of a lower outstanding loan balance to the Manager as a result of scheduled principal repayments. The loan to the Manager originated in the second quarter of 2004 in conjunction with the acquisition of the King City Facility. Accordingly, interest and other income for the nine months ended September 30, 2005 of $6.1 million has increased $2.2 million over the prior year reflecting a full nine months of interest earned.

Selected Third Quarter Information

                  Three    Three    Three     Nine     Nine     Nine
                 months   months   months   months   months   months
                  ended    ended    ended    ended    ended    ended
                Sept 30, Sept 30, Sept 30, Sept 30, Sept 30, Sept 30,
(in 000's)         2005     2004     2003     2005     2004     2003
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Management and
 administrative
 expenses         $ 523    $ 661  $ 1,153  $ 2,159  $ 1,476  $ 1,929
Amortization        311      311        -      933      898        -
Interest on
 long-term debt   3,069    3,433        -    9,365    5,104        -
Interest            140      218        -      496      524        -
Initial lease
 costs                -        -        -        _    4,191        -
Future Income
 Taxes            1,595    1,743        -    2,384    2,143        -

Expenses - Management and Administrative

Management and administrative expenses were $0.5 million and $2.2 million for the three and nine months ended September 30, 2005 compared to $0.7 million and $1.5 million for the same periods in 2004. Third quarter management and administrative expenses in 2005 were down $138 thousand from the same period in 2004 mainly due to non-recurring reporting costs incurred in 2004 relating to the King City acquisition. If the effect of a one-time recovery of $0.5 million in 2004 in respect of the 2003 management incentive payment to the Manager is removed, year-to-date management and administrative expenses increased by $160 thousand reflecting an increase in salary expense as the Fund employed eleven individuals since August 2004, offset by the lower reporting costs that have been incurred in 2005. The Fund incurred $43 thousand and $129 thousand for fees payable to the Manager to manage and administer the Fund for the three and nine months ended September 30, 2005, up from $41 thousand and $123 thousand for the same periods in 2004.

The Fund was entitled to receive $0.2 million in the third quarter of 2005 (Q3 2004 - $0.5 million) as a special distribution on the Class A Priority Units. The total special distribution declared for the nine months ended September 30, 2005 was $1.5 million. The special distribution is paid to the Fund from the Partnership. It 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 third quarter 2005, $0.2 million was receivable by the Fund as a declared but unpaid distribution.

Expenses - Interest Expense

Interest on long term debt of $3.1 million and $9.4 million for the three and nine months ended September 30, 2005 related to interest accrued on the US dollar denominated loan incurred in conjunction with the acquisition of the King City Facility ("King City Loan"). Interest on long-term debt was $3.4 million and $5.1 million for the same periods in 2004. The King City 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 largely mitigated. Interest expense incurred in the third quarter 2005 has decreased a total of $0.3 million of which $0.2 million of the decrease is due to the impact of foreign exchange fluctuations with the remaining $0.1 million decrease is a result of principal payments made in December 2004.

Interest expense of $0.1 million and $0.5 million for the three and nine months ended September 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 $0.5 million for the three and nine months ended September 30, 2004 relates solely to interest and standby charges on the Credit Facility. Utilizing $8.0 million of borrowings from the Credit Facility and $8.0 million of funds from the Levelization Reserve, the Fund loaned $16.0 million to the Partnership in 2004 for financing of the 2004 upgrade to the Island Facility. The Fund has repaid $8.0 million of the outstanding Credit Facility balance this year, $7.0 million in the first and second quarter with the balance in the third quarter. This was achieved through cash received in excess of distribution requirements. The average cost of borrowing incurred for the Credit Facility in the third quarter was 4.65% and 4.55% for the nine months ended September 30, 2005.

Amortization expenses attributable to the deferred financing costs of the Credit Facility and the King City Loan were $0.3 million and $0.9 million for the three and nine months ended September 30, 2005, unchanged from 2004.

Initial lease costs of $4.2 million relate to the King City Facility and were expensed at the inception of the lease to Calpine King City in May 2004.

The Fund recorded tax expense of $1.6 million and $2.4 million on its income from the King City Facility for the three and nine months ended September 30, 2005, representing an effective tax rate of 40.75%, unchanged from 2004. Year-to-date tax expenses increased $0.2 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 Third Quarter Information
(in 000's, except for per Unit amounts)

                  Three    Three    Three     Nine     Nine     Nine
                 months   months   months   months months(1)  months
                  ended    ended    ended    ended    ended    ended
                Sept 30, Sept 30, Sept 30, Sept 30, Sept 30, Sept 30,
                   2005     2004     2003     2005     2004     2003
---------------------------------------------------------------------

Total
 Revenue       $ 29,569 $ 28,811 $ 24,975 $ 87,923 $ 75,890 $ 63,848
Net Earnings     19,224   19,323   16,153   56,934   45,410   41,162
 Net Earnings
  Per Class A
  Priority
  Unit           0.2625   0.2654   0.2174   0.7773   0.6239   0.5541
 Net Earnings
  Per Class B
  Subordinated
  Unit           0.2502   0.2477   0.2174   0.7409   0.5819   0.5541

Total
 Assets         660,566  664,237  644,475  660,566  664,237  644,475

Total Long-term
 Liabilities      2,520    2,322    2,140    2,520    2,322    2,140
Distributions
 Declared
 Per Class A
  Priority Unit  0.2549   0.2483   0.2889   0.7699   0.7823   0.7614
 Per Class B
  Subordinated
  Unit           0.2394   0.3950   0.2821   0.7182   0.7346   0.7530
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(1) In 2004 the Island Facility was shut down in second quarter for
    capital upgrades.

Earnings

Net earnings for the three months ended September 30, 2005 of $19.2 million were consistent with the $19.3 million of net earnings reported in the third quarter of 2004. Nine month net earnings $56.9 million in 2005 were $11.5 million higher than net earnings of the comparable period in 2004, due in part to benefits realized from 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. Current quarter operating and maintenance expenses were up in 2005 mainly due to one time credits on utilities, property tax and insurance costs that are included in the third quarter of 2004. Year-to-date operating expenses are less than the nine months ended September 30, 2004 due to major maintenance expenses of contract labour and overhead that were not incurred in 2005. Operating and maintenance expense primarily includes employee expenses, repairs and maintenance, insurance and property taxes.

Revenues

Revenues for the three and nine months ended September 30, 2005 were up $0.8 million and $12.0 million from the same periods in 2004. This increase was mainly due to higher power generation at the Island Facility for the nine months ended September 30, 2005. The Island Facility operated at 98% availability for the nine months ended September 30, 2005, significantly up from the 80% availability in the nine months ended September 30, 2004. The increased power generation reflects both the increase in capacity of the plant since the upgrade as well as no planned outages occurring in 2005.

Interest earned through the participating loan (the "Whitby Loan") to a Calpine subsidiary and other cash balances remained largely unchanged from the third quarter 2004. During the three and nine months ended September 30, 2005, respectively, the Partnership received $1.1 million and $4.5 million from Calpine Canada Whitby Holdings Company ("CCWHC") that has been applied to the accrued interest receivable and principal on the Whitby Loan. The Partnership received nil and $2.0 million for the same periods in 2004. The amounts received in 2005 represented a $2.5 million distribution of the plant's 2004 earnings plus a further $2.0 million from current year operations.

Island Cogeneration Facility

Selected Third Quarter Information

                            Three months  Three months  Three months
                                   ended         ended         ended
                                 Sept 30,      Sept 30,      Sept 30,
                                    2005          2004          2003
---------------------------------------------------------------------

Availability                         100%          100%           95%
Electricity generated (MWh)      518,044       495,585       442,697
Steam generation (GJ)            420,342       503,084       358,671


                             Nine months   Nine months   Nine months
                                   ended         ended         ended
                                 Sept 30,      Sept 30,      Sept 30,
                                    2005          2004          2003
---------------------------------------------------------------------

Availability                          98%           80%           76%
Electricity generated (MWh)    1,536,924     1,123,567     1,031,745
Steam generation (GJ)          1,232,694     1,219,590     1,089,848

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. Power generation has increased 5% and 37% for the three and nine months ended September 30, 2005, respectively, over the same periods in 2004, due to the increased capacity and availability of the plant relating to the capital upgrade completed in the second quarter of 2004. A planned shutdown  for two months occurred in the second quarter of 2004 for these capital upgrades and scheduled major maintenance.

Revenues

Electricity generation revenue was $11.0 million and $33.3 million for the three and nine months ended September 30, 2005, compared to $10.9 million and $24.2 million for the three and nine months ended September 30, 2004. The increase in year-to-date performance is due to both the increased capacity of the plant from the capital upgrades and no planned outages occurring in 2005.

Electricity revenue is net of any heat rate penalty payable to BC Hydro pursuant to the terms of the Electricity Purchase Agreement ("EPA"). A heat rate penalty is payable when the annual heat rate of the Island Facility exceeds the heat rate guaranteed in the EPA and as a result BC Hydro incurs additional costs for gas. The amount of the penalty payable is a function of natural gas prices and the amount that the actual heat rate exceeds the guaranteed heat rate stated in the EPA. Pursuant to an agreement between the Partnership and Calpine, the Island Facility is indemnified by Calpine for annual heat rate penalties incurred over specified amounts. Heat rate penalties for the three and nine months ended September 30, 2005 totaled $1.8 million and $4.8 million compared to $1.7 million and $5.0 million in the same periods of 2004.

Included in electricity generation revenue was $1.4 million and $3.8 million of settlement revenue from Alstom for the three and nine months ended September 30, 2005, compared to $1.4 million and $4.2 million for the same periods in 2004. 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 pay certain 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 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 September 30, 2005, the remaining amount due from Alstom under the terms of the Settlement Agreement was $30.0 million (September 30, 2004 - $34.3 million) which will be earned over approximately the next five to seven years, based on the expected operations of the plant during that period. Remaining amounts 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.

Revenue from steam sold to Catalyst Paper Corporation ("Catalyst"), formerly known as Norske Skog Canada Limited, was $3.5 million and $9.9 million for the three and nine months ended September 30, 2005 compared to $3.4 million and $8.3 million in the same periods in 2004. As a result of the strengthening Canadian dollar as well as higher natural gas prices, the steam price has increased 21% in the nine months ended September 30, 2005 over the nine months ended September 30, 2004. Price increases in the third quarter of 2005 were offset by lower steam volumes due to less steam offtake by Catalyst during the current period. Year-to-date steam volumes remain consistent with 2004.

Expenses

Operating and maintenance expense attributable to the Island Facility was $2.5 million and $7.5 million for the three and nine months ended September 30, 2005, compared to $2.0 million and $7.2 million for the same periods in 2004. The $0.5 million increase in operating and maintenance expense for the quarter is due to increased production from the facility. Certain operating and maintenance expenses are paid by the Manager and reimbursed by the Partnership, in accordance with applicable agreements. At September 30, 2005, there was $0.7 million (September 30, 2004 - $0.2 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 $9.2 million for the three and nine months ended September 30, 2005, compared to $3.3 million and $8.9 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 the increase in year-to-date depreciation expense.

Interest expense for the three and nine months ended September 30, 2005 totaled $0.1 million and $0.5 million related to the loan from the Fund used to finance the capital upgrade at the Island Facility (the "Partnership Loan"). The loan bears interest at the Fund's cost of funds plus 10 basis points and averaged 4.76% and 4.68% for the three and nine months ended September 30, 2005. The loan increased to $16.0 million at the beginning of 2005 and has since then been reduced by $4.5 million through monthly principal repayments to September 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

Selected Third Quarter Information

                  Three    Three    Three     Nine     Nine     Nine
                 months   months   months   months   months   months
                  ended    ended    ended    ended    ended    ended
                Sept 30, Sept 30, Sept 30, Sept 30, Sept 30, Sept 30,
                   2005     2004     2003     2005     2004     2003
---------------------------------------------------------------------

Availability        100%      93%      98%      99%      87%      98%
Electricity
 generated
 (MWh)           97,398  214,795  310,978  256,827  594,378  447,378

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 a long-term Tolling Agreement, where the fixed charge component represents approximately 99% of total revenue and is a function of plant availability.

Revenues

Electricity revenues at the Calgary Energy Centre were $14.1 million and $41.8 million for the three and nine months ended September 30, 2005, compared to $13.5 million and $40.6 million for the three and nine months ended September 30, 2004. The increase in availability to 100% in the third quarter of 2005 compared to the 93% availability in the third quarter of 2004 resulted in $0.3 million of the 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. A certain number of startups annually are included in the monthly tolling revenue paid by CESCP; any startups over this amount are an additional charge to CESCP.

For the third 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 16% in the third quarter of 2005, due to prices in the Alberta power market being typically lower during off-peak periods then economically profitable for the Calgary Energy Centre. 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 third quarter of 2004 was 33%, also due to lower dispatching of the plant typically during the off-peak periods.

Expenses

Annual operating and maintenance expense attributable to the Calgary Energy Centre was $2.1 million and $6.2 million respectively for the three and nine months ended September 30, 2005, compared to $1.6 million and $7.5 million respectively, for the same periods in 2004. The $0.5 million increase in the current quarter over the same period in 2004 is attributable to one time credits received in the third quarter 2004 on utilities, insurance costs and property taxes. Major maintenance expenses related to the planned outage in the second quarter of 2004 accounts for the year-to-date decrease in operating and maintenance expenses in 2005. There were no major maintenance outages in 2005. Certain operating and maintenance expenses are paid by the Manager and reimbursed by the Partnership, in accordance with applicable agreements. At September 30, 2005 there was $0.2 million (September 30, 2004 - $0.2 million) due to the Manager from the Partnership in respect of such agreements.

Depreciation expense attributable to the Calgary Energy Centre was $2.4 million and $7.1 million for the three and nine months ended September 30, 2005 compared to $2.2 million and $6.6 million for the same periods in 2004. The increase over the prior year is due to a reassessment of the useful life of certain spare parts in 2005 resulting in a shorter depreciable life.

LIQUIDITY AND CAPITAL RESOURCES

Calpine Power Income Fund

Selected Third Quarter Information
(in 000)
                  Three    Three    Three     Nine     Nine     Nine
                 months   months   months   months   months   months
                  ended    ended    ended    ended    ended    ended
                Sept 30, Sept 30, Sept 30, Sept 30, Sept 30, Sept 30,
                   2005     2004     2003     2005     2004     2003
---------------------------------------------------------------------

Cash provided
 by operating
 activities    $ 13,991 $ 13,769 $ 13,490 $ 40,793 $ 40,142 $ 38,954
Cash provided
 by (used in)
 investing
 activities       3,646    3,005        -    8,459 (205,611)       -
Cash provided
 by (used in)
 financing
 activities     (16,152) (15,003) (13,591) (53,405) 176,430  (38,941)
Cash and cash
 equivalents      4,097    4,722       23    4,097    4,722       23
Restricted
 cash             5,482    5,889        -    5,482    5,889        -

At September 30, 2005, the Fund had unrestricted cash and cash equivalents of $4.1 million. The Fund generated cash from operating activities of $14.0 million and $40.8 million in the three and nine months ended September 30, 2005 compared to $13.8 million and $40.1 million for the same periods in 2004.

In accordance with the terms of the Manager Loan issued as part of the King City transaction, the Fund received payments of $2.7 million and $8.0 million of principal and $1.3 million and $4.1 million of interest in the three and nine months ended September 30, 2005 compared to $3.0 million and $5.0 million of principal and $1.6 million and $2.8 million of interest for the same periods in the prior year. The Manager Loan will be fully repaid on December 31, 2010. The Fund also received payments of $1.1 million and $5.1 million of principal and interest in the three and nine months ended September 30, 2005 from the Partnership Loan used to fund the Island capital upgrade. The Partnership is committed to use cash flow generated from the improved operations of the Island Facility to service the Partnership Loan. Based on current operational results, the Partnership Loan is expected to be fully repaid by the third quarter in 2007.

Cash used in financing activities of the Fund for the third quarter of 2005 totaled $16.2 million, comprised of distributions paid of $15.2 million and $1.0 million used to repay the Credit Facility. For the same period last year, cash used by financing activities related to $15.0 million of distributions paid. Distributions paid by the Fund in the third quarter of 2005 were up 1% from 2004 distributions due to the 1% increase in per Trust Unit distributions announced in January of this year.

At the end of the third quarter of 2005, no amounts were drawn under the Credit Facility. Under the terms of the Credit Facility, the Fund may draw up to $30 million to fund working capital requirements and $90 million to finance new acquisitions.

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 King City Loan. 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 these restricted cash reserves will be used in December 2005 with the balance to be used in 2006.

Calpine Power L.P.

Selected Third Quarter Information
(in 000)
                  Three    Three    Three     Nine     Nine     Nine
                 months   months   months   months   months   months
                  ended    ended    ended    ended    ended    ended
                Sept 30, Sept 30, Sept 30, Sept 30, Sept 30, Sept 30,
                   2005     2004     2003     2005     2004     2003
---------------------------------------------------------------------

Cash provided
 by operating
 activities    $ 14,749 $ 23,835 $ 18,614 $ 69,206 $ 60,788 $ 49,471
Cash provided
 by (used in)
 investing
 activities       1,056   (1,677) (10,155)     867  (16,876) (37,849)
Cash provided
 by (used in)
 financing
 activities     (19,551) (18,444) (38,819) (55,955) (49,266) (91,417)
Cash and cash
 equivalents     27,918    9,955   16,475   27,918    9,955   16,475
Retricted
 cash                 -        -    2,190        -        -    2,190

The Partnership had cash and cash equivalents $27.9 million at September 30, 2005, up $14.2 million or 104% from the end of 2004. Included in cash and cash equivalents is an unsegregated cash reserve of $15.5 million at September 30, 2005 (September 30, 2004 - $6.6 million) that will be used to fund future maintenance costs of the Partnership. The next major maintenance for the Island Facility is expected to occur in the third quarter of 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 event cannot be determined at this time although it is expected to occur in the first half of 2006.

The Partnership generated cash from operations of $14.8 million and $69.2 million for the three and nine months ended September 30, 2005, compared to $23.8 million and $60.8 million for the same periods in 2004. The decrease in cash from operations for the third quarter 2005 is mainly due to the annual payment of the heat rate penalty at the Island Facility during the third quarter of 2005 compared to payment in the second quarter of 2004. The increased cash generated for the nine months ended September 30, 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 implemented.

The Partnership used nil and $0.2 million for capital expenditures during the three and nine months ended September 30, 2005, substantially all associated with the Island Facility. In the same periods last year capital expenditures were nil and $22.7 million. These capital expenditures, largely related to the Island capital upgrade and capital portions of the major maintenance which occurred in the second quarter of 2004.

Cash from financing activities of the Partnership for the nine months ended September 30, 2005 include $4.0 million received in January 2005 on the Partnership Loan to finance the balance of capital expenditures associated with the Island Facility upgrade net of $4.5 million in principal repaid during the period on the loan.

Future 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 nine months ended September 30, 2005 were $0.3 million and $0.5 million respectively (nil and $0.3 million for the same periods in 2004 respectively) for the Calgary Energy Centre and $0.2 million and $0.6 million ($0.2 million and $0.6 million 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.

Calpine Power Income Fund


(in 000's, except
 for Trust Units        Three months    Three months    Three months
 and per Trust         ended Sept 30,  ended Sept 30,  ended Sept 30,
 Unit Amounts)                  2005            2004            2003
---------------------------------------------------------------------
FUNDS FROM OPERATIONS
 BEFORE WORKING
 CAPITAL CHANGES            $ 11,042        $ 10,391        $ 12,487
Add (Deduct):
 Levelization reserve         (1,297)         (1,965)              -
 Principal repayment
  on loan to Calpine
  Canada Power Ltd.            2,672           3,005               -
 Working capital               2,735           3,572             799
                       ----------------------------------------------

DISTRIBUTABLE CASH          $ 15,152          15,003        $ 13,286
                       ----------------------------------------------
                       ----------------------------------------------
Weighted average
 number of Trust Units
 outstanding              61,742,288      61,742,288      52,001,351
                       ----------------------------------------------
                       ----------------------------------------------
Distributions declared
 per Trust Unit             $ 0.2454        $ 0.2430        $ 0.2555
                       ----------------------------------------------
                       ----------------------------------------------


(in 000's, except
 for Trust Units         Nine months     Nine months     Nine months
 and per Trust         ended Sept 30,  ended Sept 30,  ended Sept 30,
 Unit Amounts)                  2005            2004            2003
---------------------------------------------------------------------
FUNDS FROM OPERATIONS
 BEFORE WORKING
 CAPITAL CHANGES            $ 32,393        $ 37,267        $ 37,554
Add (Deduct):
 Levelization reserve         (4,216)         (3,883)              -
 Principal repayment
  on loan to Calpine
  Canada Power Ltd.            8,015           5,008               -
 Working capital               9,263           2,922             224
                      -----------------------------------------------

DISTRIBUTABLE CASH          $ 45,455        $ 41,314        $ 37,778
                      -----------------------------------------------
                      -----------------------------------------------
Weighted average
 number of Trust Units
 outstanding              61,742,288      56,800,718      52,001,351
                      -----------------------------------------------
                      -----------------------------------------------

Distributions declared
 per Trust Unit             $ 0.7362        $ 0.7190        $ 0.7265
                      -----------------------------------------------
                      -----------------------------------------------

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 Trustees or the Manager in its discretion determines is necessary to satisfy the Fund's current and anticipated future obligations. 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 following is a summary of recent and expected monthly distribution and future key dates:

Distribution
  Ex-distribution                          Distribution           per
             Date        Record Date       Payment Date    Trust Unit
 October 27, 2005   October 31, 2005  November 18, 2005       $0.0818
November 28, 2005  November 30, 2005  December 20, 2005       $0.0818
December 28, 2005  December 30, 2005   January 20, 2006       $0.0818

Distributable Cash generated by the Fund totaled $15.2 million or $0.2454 per Trust Unit for the three months ended September 30, 2005 compared to $15.0 million or $0.2430 per unit for the same period in 2004. The King City Transaction, which closed in May 2004, has contributed an additional $0.9 million per month in distributable cash since June 2004.

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 September 30, 2005, up from $0.079 per month in the same period of 2004.

Levelization Reserve

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 September 30, 2005 was $13.9 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 June 30, 2005                                    $ 12,562
Contributions                                                  1,242
Income reinvested                                                 55
---------------------------------------------------------------------
Balance at September 30, 2005                               $ 13,859
---------------------------------------------------------------------


As at September 30, 2005, the Levelization Reserve has been used as
follows:

---------------------------------------------------------------------
Guaranteed investment certificates                          $  2,303
Loan to Calpine Power L.P. due on demand                      11,556
---------------------------------------------------------------------
Balance at September 30, 2005                               $ 13,859
---------------------------------------------------------------------

Working Capital

The working capital amount of $2.7 million and $9.3 million for the three and nine months ended September 30, 2005 includes accrued interest payable on the King City Loan of $3.1 million and $9.3 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.

Calpine Power, L.P.

                  Three    Three    Three     Nine     Nine     Nine
(in 000's,       months   months   months   months   months   months
except for        ended    ended    ended    ended    ended    ended
per Unit        Sept 30, Sept 30, Sept 30, Sept 30, Sept 30, Sept 30,
amounts)           2005     2004     2003     2005     2004     2003
---------------------------------------------------------------------
FUNDS FROM
 OPERATIONS
 BEFORE WORKING
 CAPITAL
 CHANGES        $24,646  $25,068  $21,340  $73,294  $60,893  $53,864
Add (Deduct):
 Receipts with
  respect to
  Calgary
  Energy
  Tolling
  Agreement           -        -        -        -        -    9,548
 Capital
  expenditures       99        -     (349)    (179) (22,681)  (3,006)
 Maintenance
  reserve
  decrease
  (increase)     (1,429)  (2,826)    (495)  (4,611)   2,746     (990)
 Loan payable      (974)                -     (444)   7,993        -
 Working
  capital        (3,753)    (527)     813  (12,017)   8,100   (3,044)
               ------------------------------------------------------
DISTRIBUTABLE
 CASH           $18,589  $21,715  $21,309  $56,043  $57,051  $56,372
               ------------------------------------------------------
               ------------------------------------------------------

Allocation of
 Distributable
 Cash
 Class A
  Priority
  Units         $13,253  $12,911  $15,022  $40,036  $40,680  $39,591
 Class B
  Subordinated
  Units           5,336    8,804    6,287   16,007   16,371   16,781
               ------------------------------------------------------
                $18,589  $21,715  $21,309  $56,043  $57,051   56,372
               ------------------------------------------------------
               ------------------------------------------------------
Per Unit
 allocation of
 Distributable
 Cash
 Class A
  Priority
  Units         $0.2549  $0.2483  $0.2889  $0.7699  $0.7823  $0.7614
               ------------------------------------------------------
               ------------------------------------------------------
 Class B
  Subordinated
  Units         $0.2394  $0.3950  $0.2821  $0.7182  $0.7346  $0.7530
               ------------------------------------------------------
               ------------------------------------------------------

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 Trustees or 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 target distribution per Class A Priority Unit and Class B Subordinated Unit increases annually by 1%.

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 expenses 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.

Maintenance Reserve

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 September 30, 2005, $1.8 million (Q3 2004 - $2.8 million) was contributed to the reserve and $0.4 million (Q3 2004 - nil) 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 $73 thousand (Q3 2004 - $9 thousand) was earned on the maintenance reserve during the third quarter of 2005.

Maintenance Reserve
---------------------------------------------------------------------
Balance at June 30, 2005                                    $ 14,106
Contributions                                                  1,834
Withdrawals                                                     (446)
Income reinvested                                                 73
Foreign exchange gain on US dollars                              (32)
---------------------------------------------------------------------
Balance at September 30, 2005                                 15,535
---------------------------------------------------------------------

Loan Payable

The Partnership used cash from operations of $1.0 million and $4.5 million in the three and nine months ended September 30, 2005 to make principal payments on the Partnership Loan in 2005. The loan originated in the second quarter of 2004 and no principal payments were made in the three and nine months ended September 30, 2004.

Working Capital

Cash used to fund working capital in the third quarter of 2005 is significantly higher than the prior year due to timing of the payment of the Island Heat Rate Penalty in the third quarter of 2005 which was paid in the second quarter of 2004.

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

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.

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 $1.7 million in 2005.

Management expects to make cash distributions to our Unitholders of $0.0818 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 third 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 has now successfully installed a water distillation facility which, when operated, has the ability to take a sufficient amount of thermal energy to ensure the King City Facility retains its QF status. The water distillation facility was 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.

On September 8, 2005, the Canadian Government announced its intention to study tax issues related to Flow Through Entities ("FTE") including income trusts. Changes to income tax legislation arising from this study, if any, could have an impact on unitholder distributions.

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)                                      Q3       Q2       Q1
                                          --------------------------
 Equity earnings from
  Calpine Power, L.P.                     $ 13,649 $ 12,766 $ 14,008
 Finance income.(2)                          4,613    4,714    4,649
 Interest and other income                   1,921    2,052    2,160
                                          --------------------------
                                            20,183   19,532   20,817
                                          --------------------------
Expenses
 Management and administrative                 523      637      999
 Amortization                                  311      311      311
 Accretion                                      27       28       19
 Interest on long-term debt                  3,069    3,171    3,125
 Interest                                      140      160      196
 Foreign exchange                             (205)      86     (157)
 Initial lease cost                              -        -        -
 Future income taxes                         1,595      362      427
                                          --------------------------
                                             5,460    4,755    4,920
                                          --------------------------
Net earnings                              $ 14,723 $ 14,777 $ 15,897
                                          --------------------------
                                          --------------------------
Net earnings per Trust Unit               $ 0.2385 $ 0.2393 $ 0.2575
                                          --------------------------
                                          --------------------------


(unaudited)                               2004                  2003
                        ----------------------------------- --------
(in 000's)                    Q4       Q3     Q2(1)      Q1       Q4
                        ----------------------------------- --------
 Equity earnings from
  Calpine Power, L.P.   $ 13,292 $ 13,802 $  5,378 $ 13,262 $ 12,562
 Finance income.(2)        4,843    5,076    6,577        -        -
 Interest and other
  income                   2,198    2,290    1,607        -       15
                        ----------------------------------- --------
                          20,333   21,168   13,562   13,262   12,577
                        ----------------------------------- --------
Expenses
 Management and
  administrative           1,620      661      357      458      529
 Amortization                311      311      311      276      271
 Accretion                    27       28       20        -        -
 Interest on
  long-term debt           3,132    3,433    1,671        -        -
 Interest                    237      218      170      136      134
 Foreign exchange             20       53       11        -        -
 Initial lease cost            -        -    4,191        -        -
 Future income taxes       1,666    1,743      400        -        -
                        ----------------------------------- --------
                           7,013    6,447    7,131      870      934
                        ----------------------------------- --------
Net earnings            $ 13,320 $ 14,721 $  6,431 $ 12,392 $ 11,643
                        ----------------------------------- --------
                        ----------------------------------- --------
Net earnings per
 Trust Unit             $ 0.2157 $ 0.2384 $ 0.1138 $ 0.2383 $ 0.2239
                        ----------------------------------- --------
                        ----------------------------------- --------

(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)                                      Q3       Q2       Q1
                                          --------------------------
Revenue
 Electricity and thermal                  $ 28,554 $ 27,598 $ 28,775
 Interest - Whitby                             837      846      837
 Interest - Other                              178      171      127
                                          --------------------------
                                            29,569   28,615   29,739
                                          --------------------------
Expenses
 Operating and maintenance                   4,638    4,733    4,336
 Depreciation                                5,422    5,471    5,402
 Accretion                                      50       50       50
 General and administrative                    137      163      152
 Interest                                      148      158      164
 Foreign Exchange                              (50)     (13)     (22)
                                          --------------------------
                                            10,345   10,562   10,082
                                          --------------------------
Net earnings                              $ 19,224 $ 18,053 $ 19,657
                                          --------------------------
                                          --------------------------
Net earnings per Unit
 Class A Priority Unit                    $ 0.2625 $ 0.2455 $ 0.2694
 Class B Subordinated Unit                $ 0.2502 $ 0.2372 $ 0.2535



(unaudited)                               2004                  2003
                        ----------------------------------- --------
(in 000's)                    Q4       Q3       Q2       Q1       Q4
                        ----------------------------------- --------
Revenue
 Electricity and
  thermal               $ 28,467 $ 27,827 $ 18,490 $ 26,757 $ 26,564
 Interest - Whitby           846      855      846      846      855
 Interest - Other            143      129       72       68       81
                        ----------------------------------- --------
                          29,456   28,811   19,408   27,671   27,500
                        ----------------------------------- --------
Expenses
 Operating and
  maintenance              4,836    3,573    6,417    4,777    4,597
 Depreciation              5,104    5,504    4,777    5,203    5,017
 Accretion                    46       47       47       46       44
 General and
  administrative             604       82       10        3       78
 Interest                    107       88       47        -        -
 Foreign Exchange            157      194     (209)    (126)     184
                        ----------------------------------- --------
                          10,854    9,488   11,089    9,903    9,920
                        ----------------------------------- --------
Net earnings            $ 18,602 $ 19,323 $  8,319 $ 17,768 $ 17,580
                        ----------------------------------- --------
                        ----------------------------------- --------
Net earnings per Unit
 Class A Priority Unit  $ 0.2556 $ 0.2654 $ 0.1034 $ 0.2550 $ 0.2415
 Class B Subordinated
  Unit                  $ 0.2383 $ 0.2477 $ 0.1320 $ 0.2022 $ 0.2254

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 contacts below.

CALPINE POWER INCOME FUND
CONSOLIDATED BALANCE SHEETS
(thousands)
                                        As at                  As at
                                 September 30,           December 31,
                                         2005                   2004
---------------------------------------------------------------------
                                     (unaudited)
ASSETS
Current Assets
  Cash and cash equivalents          $    4,097            $   8,138
  Restricted cash, current
   portion (Note 5)                       4,387                4,490
  Distributions receivable                4,404                3,890
  Accounts receivable                       456                  566
  Loan to Calpine Canada
   Power Ltd., current portion
   (Note 2)                               9,400                9,083
  Net investment in lease,
   current portion (Note 3)               1,487                1,583
  Loan to Calpine Power, L.P.
   (Note 4)                              11,549               11,993
  Prepaid expenses                          305                  257
                                     --------------------------------
                                         36,087               40,000

Investment in Calpine Power,
 L.P. (Note 7)                          477,036              476,649
Net investment in lease,
 less current portion (Note 3)          146,644              135,521
Loan to Calpine Canada Power Ltd.,
 less current portion (Note 2)           25,098               32,188
Restricted cash, less current
 portion (Note 5)                         1,095                1,114
Land                                      1,870                1,870
Deferred financing costs                  2,988                3,922
                                     --------------------------------
                                     $  690,818            $ 691,264
                                     --------------------------------
                                     --------------------------------

LIABILITIES AND UNITHOLDERS'
 EQUITY
Current Liabilities
 Distributions payable               $   5,051             $   5,001
 Accounts payable and accrued
  liabilities                            9,925                 1,959
 Long-term debt, current
  portion (Note 5)                      11,700                12,035
 Borrowing under Credit
  Facility (Note 6)                          -                 8,000
                                     --------------------------------
                                        26,676                26,995
Future income tax                        5,821                 3,589
Asset retirement liability               1,333                 1,298
Long-term debt, less current
 portion (Note 5)                       81,654                83,990
                                     --------------------------------
                                       115,484               115,872
Unitholders' equity                    575,334               575,392
                                     --------------------------------
                                     $ 690,818             $ 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 months  Three months   Nine months   Nine Months
                     ended         ended         ended         ended
              September 30, September 30, September 30, September 30,
                      2005          2004          2005          2004
---------------------------------------------------------------------

REVENUES

 Equity
  earnings
  from Calpine
  Power, L.P.     $ 13,649   $    13,802    $   40,423   $    32,442
 Finance income
  (Note 3 and
  Note 9)            4,613         5,076        13,976        11,653
 Interest and
  other income       1,921         2,290         6,133         3,897
               ------------------------------------------------------
                    20,183        21,168        60,532        47,992
               ------------------------------------------------------

EXPENSES

 Management and
  administrative       523           661         2,159         1,476
 Amortization          311           311           933           898
 Accretion              27            28            74            48
 Interest on
  long-term debt     3,069         3,433         9,365         5,104
 Interest              140           218           496           524
 Foreign exchange
  loss (gain)         (205)           53          (276)           64
 Initial lease
  costs                  -             -             -         4,191
               ------------------------------------------------------
                     3,865         4,704        12,751        12,305
               ------------------------------------------------------

EARNINGS BEFORE
 FUTURE INCOME
 TAXES              16,318        16,464        47,781        35,687
               ------------------------------------------------------
Future income
 taxes               1,595         1,743         2,384         2,143
               ------------------------------------------------------
NET EARNINGS        14,723        14,721        45,397        33,544

UNITHOLDERS'
 EQUITY, BEGINNING
 OF PERIOD         575,763       577,358       575,392       485,001

Trust Units
 issued                  -             -             -        99,845

Distributions      (15,152)      (15,003)      (45,455)      (41,314)
               ------------------------------------------------------
UNITHOLDERS'
 EQUITY, END
 OF PERIOD         575,334     $ 577,076       575,334     $ 577,076
               ------------------------------------------------------
               ------------------------------------------------------
Weighted
 average
 number of
 Trust Units
 outstanding    61,742,288    61,742,288    61,742,288    56,800,718
               ------------------------------------------------------
               ------------------------------------------------------
Net earnings
 per Trust
 Unit            $  0.2385   $    0.2384    $   0.7353    $   0.5906
               ------------------------------------------------------
               ------------------------------------------------------

See accompanying notes to the consolidated financial statements


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

              Three months  Three months   Nine months   Nine Months
                     ended         ended         ended         ended
              September 30, September 30, September 30, September 30,
                      2005          2004          2005          2004
---------------------------------------------------------------------
OPERATING ACTIVITIES
 Net earnings     $ 14,723      $ 14,721      $ 45,397      $ 33,544
 Adjustments for
  non-cash items:
  Equity earnings
   from Calpine
   Power, L.P.     (13,649)      (13,802)      (40,423)      (32,442)
  Finance income    (4,613)       (5,076)      (13,976)       (7,462)
  Amortization         311           311           933           898
  Amortization of
   discount on
   loan to Calpine
   Canada Power Ltd.  (388)         (498)       (1,242)         (847)
  Accretion             27            28            74            48
  Foreign exchange
   loss (gain)        (205)           53          (276)           64
  Future income
   taxes             1,595         1,743         2,384         2,143
 Distributions
  received from
  Calpine Power,
  L.P.              13,241        12,911        39,522        41,321
                   --------------------------------------------------
 Cash from
  operations
  before working
  capital changes   11,042        10,391        32,393        37,267
 Change in
  non-cash working
  capital (Note 8)   2,949         3,378         8,400         2,875
                   --------------------------------------------------
 Net cash
  provided by
  operating
  activities        13,991        13,769        40,793        40,142
                   --------------------------------------------------

INVESTING ACTIVITIES
 Receipt of
  principal on loan
  to Calpine Canada
  Power Ltd.         2,672         3,005         8,015         5,008
 Loan to Calpine
  Power, L.P.
  (Note 4)               -             -        (4,007)       (7,993)
 Receipt of
  principal on loan
  to Calpine Power,
  L.P.                 974             -         4,451             -
 Acquisition of
  King City Facility
  Lease and Land         -             -             -      (154,658)
 Loan to Calpine
  Canada Power Ltd.      -             -             -       (47,968)
                   --------------------------------------------------
 Net cash provided
  by (used in)
  investing
  activities         3,646         3,005         8,459      (205,611)
                   --------------------------------------------------

 FINANCING ACTIVITIES
 Distributions
  paid             (15,152)      (15,003)      (45,405)      (40,395)
 Repayment on
  credit facility   (1,000)            -        (8,000)            -
 Borrowing under
  credit facility        -             -             -         8,000
 Issue of
  long-term debt         -             -             -       111,111
 Financing costs         -             -             -        (2,131)
 Trust Units issued      -             -             -        99,845
                   --------------------------------------------------
 Net cash provided
  by (used in)
  financing
  activities       (16,152)      (15,003)      (53,405)      176,430
                   --------------------------------------------------
Foreign exchange
 gain on cash held
 in a foreign
 currency             (314)         (343)          (10)         (387)
                   --------------------------------------------------

INCREASE (DECREASE)
 IN CASH AND CASH
 EQUIVALENTS         1,171         1,428        (4,163)       10,574
Cash and cash
 equivalents,
 beginning of
 period              8,408         9,183        13,742            37
                   --------------------------------------------------
CASH AND CASH
 EQUIVALENTS,
 END OF PERIOD    $  9,579      $ 10,611      $  9,579      $ 10,611
                   --------------------------------------------------
                   --------------------------------------------------

Represented by:
 Cash and cash
  equivalents     $  4,097      $  4,722      $  4,097      $  4,722
 Restricted cash,
  current portion    4,387      $      -         4,387             -
 Restricted cash,
  less current
  portion            1,095         5,889         1,095         5,889
                   --------------------------------------------------
                  $  9,579      $ 10,611      $  9,579      $ 10,611
                   --------------------------------------------------
                   --------------------------------------------------

SUPPLEMENTARY
 CASH FLOW
 INFORMATION
 Taxes paid       $      -      $      -      $      -      $      -
 Interest
  received        $  1,476         1,639      $  4,890      $  2,785
 Interest paid    $    140      $    218      $    356      $    524


See accompanying notes to the consolidated financial statements

CALPINE POWER INCOME FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 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 nine months ended September 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.

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

2. LOAN TO CALPINE CANADA POWER LTD.

In 2004, the Fund loaned $48.0 million to the Manager from funds received from a public offering made 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 portion 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 September 30, 2005 the fair market value of the loan was determined to be approximately $27.6 million (December 31, 2004 - $45.8 million).

Schedule of principal receipts
 and discount amortization          Principal    Discount      Total
---------------------------------------------------------------------
2005 (remainder of the year)         $  2,671    $   (361)  $  2,310
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 September 30, 2005             $ 37,400    $ (2,902)  $ 34,498
                                   ----------------------------------
                                   ----------------------------------

3. NET INVESTMENT IN LEASE

The Fund acquired the King City Facility in 2004, pursuant to an Acquisition Agreement with BAF Energy and leased the facility to Calpine King City for a 20 year term. The plant acquisition has been accounted for 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 recognizes finance income over the lease term on a basis that provides a constant rate of return on the net investment in the lease. Lease payments are denominated in both US and Canadian currency and are 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 Fund's related US dollar denominated borrowings (Note 5). 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 September 30, 2005:

Total minimum lease payments receivable                    $ 314,925
Unguaranteed residual value                                  173,004
Unearned finance income                                     (339,798)
                                                          -----------
                                                             148,131
Net investment in lease, current portion                      (1,487)
                                                          -----------
Net investment in lease, less current portion              $ 146,644
                                                          -----------
                                                          -----------

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

2005 (remainder of the year)                               $  19,495
2006                                                          19,216
2007                                                          19,552
2008                                                          19,557
2009                                                          20,948
2010 and beyond                                              216,157
                                                          -----------
                                                           $ 314,925
                                                          -----------
                                                          -----------

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 4.76% and 4.68% for the three and nine months ended September 30, 2005, is charged at a rate of 10 basis points over the rate that would be charged under the Credit Facility. Although the loan is a demand loan, it is not expected to be fully repaid until after 2007. During the three and nine months ended September 30, 2005, the Partnership repaid $1.0 million and $4.5 million to the Fund in satisfaction of the loan. At September 30, 2005, the principal outstanding under the loan was $11.5 million (December 31, 2004 $12.0 million). As at September 30, 2005, the fair market value of the loan was determined to be approximately $11.5 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 US$82 million from a third party lender. This loan will mature in 2019 and bears interest at a fixed rate of 12.8% per annum with principal and interest payments due annually on December 31. The portion 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 and is secured by a first preferred security interest in all assets owned by KCLP without limitation. As at September 30, 2005 the fair market value of the loan was US$88.6 million (December 31, 2004 - US$81.7 million).

Under the terms of the arrangement, the Fund was required 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 principal and interest payments under the terms of the loan 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. Interest charged on the facility averaged 4.65% and 4.55% for the three and nine months ended September 30, 2005 (4.15% and 4.16% for the three and nine months ended September 30, 2004). 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. At September 30, 2005, no amounts were drawn under the facility.

7. INVESTMENT IN CALPINE POWER, L.P.

As at September 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.                      40,423
Distributions received and receivable from Calpine
 Power, L.P.                                                 (40,036)
---------------------------------------------------------------------
As at September 30, 2005                                   $ 477,036
---------------------------------------------------------------------
---------------------------------------------------------------------

8. CHANGE IN NON-CASH WORKING CAPITAL

Change        Three months  Three months   Nine months   Nine months
 in non-cash         ended         ended         ended         ended
 working      September 30, September 30, September 30, September 30,
 capital              2005          2004          2005          2004
---------------------------------------------------------------------
Operating
 Activities
Accounts
 receivable        $    (7)      $  (401)      $   108       $    25

Prepaid expenses      (246)         (313)          (48)         (155)
Accounts payable     3,202         4,092         8,340         3,005
                -----------------------------------------------------
                   $ 2,949       $ 3,378       $ 8,400       $ 2,875
                -----------------------------------------------------
                -----------------------------------------------------

9. RELATED PARTY TRANSACTIONS

As at September 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
                                         September 30,   December 31,
                                                 2005           2004
---------------------------------------------------------------------
Distributions receivable from the
 Partnership                                  $ 4,404        $ 3,890
Accounts receivable from the Partnership           65            306
Ground Lease due from Calpine Corporation          88             95
Loan to Manager                                34,498         41,271
Net Investment in Lease due from
 Calpine Corporation                          148,131        137,104
Loan receivable from the Partnership           11,549         11,993
Accounts payable to Calpine Corporation          (217)           (55)
Accounts payable to the Partnership              (184)           (28)
Accounts payable to the Manager                   (15)          (684)
---------------------------------------------------------------------
---------------------------------------------------------------------

For the three and nine months ended September 30, 2005, $146 thousand and $467 thousand ($88 thousand and $135 thousand for the three and nine months ended September 30, 2004) of interest income on this amount was recognized by the Fund on the Partnership Loan.

For the three and nine months ended September 30, 2005, the Fund recognized finance and rental income of $4.6 million and $14.1 million ($5.1 million and $7.5 million for the three and nine months ended September 30, 2004 net of initial lease costs) from the Facility and Ground Lease with Calpine King City.

Interest earned with respect to the loan to Calpine Canada Power Ltd. amounted to $1.7 million and $5.3 million for the three and nine months ended September 30, 2005 ($2.1 million and $3.6 million for the three and nine months ended September 30, 2004).

10. SEGMENTED INFORMATION

              Three months  Three months   Nine months   Nine months
                     ended         ended         ended         ended
              September 30, September 30, September 30, September 30,
                      2005          2004          2005          2004
---------------------------------------------------------------------
Revenue
 Canada          $  15,498     $  16,039     $  46,341     $  36,261
 United States       4,685         5,129        14,191        11,731
              -------------------------------------------------------
                 $  20,183     $  21,168     $  60,532     $  47,992
              -------------------------------------------------------
Total Assets
 Canada          $ 533,461     $ 540,213       533,461       540,213
 United States     157,357       163,923       157,357       163,923
              -------------------------------------------------------
                 $ 690,818     $ 704,136     $ 690,818     $ 704,136
              -------------------------------------------------------
              -------------------------------------------------------

Revenues are attributable to the two countries based on the location of the underlying generating and infrastructure facilities.

CALPINE POWER, L.P.
CONSOLIDATED BALANCE SHEETS
(thousands)
                                            As at              As at
                               September 30, 2005  December 31, 2004
---------------------------------------------------------------------
                                       (unaudited)
ASSETS
Current Assets
 Cash and cash equivalents              $  27,918          $  13,715
 Accounts receivable                       10,293             10,819
 Interest receivable (Note 2)               1,404              2,248
 Inventory                                  2,706              2,579
 Prepaid expenses                           6,597              2,014
                                        ----------         ----------
                                           48,918             31,375
Loan to Calpine Canada
 Whitby Holdings Company (Note 2)          36,314             37,404
Capital assets (Note 3)                   575,334            591,450
                                        ----------         ----------
                                        $ 660,566          $ 660,229
                                        ----------         ----------
                                        ----------         ----------
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities
 Distributions payable                  $   6,182          $   5,651
 Accounts payable and
  accrued liabilities                       8,024              8,621
 Interest payable                              47                242
 Loan payable (Note 4)                     11,549             11,993
                                        ----------         ----------
                                           25,802             26,507
Asset retirement liability                  2,520              2,369
                                        ----------         ----------
                                           28,322             28,876
Partners' equity (Note 5)                 632,244            631,353
                                        ----------         ----------

                                        $ 660,566          $ 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 months  Three months  Nine months  Nine months
                       ended         ended        ended        ended
                   September     September    September    September
                    30, 2005      30, 2004     30, 2005     30, 2004
---------------------------------------------------------------------

Electricity and
 thermal           $  28,554     $  27,827    $  84,927    $  73,074
Interest
 - Whitby                837           855        2,520        2,547
 - Other income          178           129          476          269
                -----------------------------------------------------
                      29,569        28,811       87,923       75,890
                -----------------------------------------------------

EXPENSES

 Operating and
  maintenance          4,638         3,573       13,707       14,767

 Depreciation          5,422         5,504       16,295       15,484

 Accretion                50            47          150          140

 Interest                148            88          470          135

 General and
  administrative         137            82          452           95

 Foreign exchange
  (gain) loss            (50)          194          (85)        (141)
                -----------------------------------------------------
                      10,345         9,488       30,989       30,480
                -----------------------------------------------------

NET EARNINGS          19,224        19,323       56,934       45,410

PARTNERS' EQUITY,
 BEGINNING OF
 PERIOD              631,609       633,562      631,353      644,508

Special
 distributions             -             -            -       (1,697)

Distributions        (18,589)      (21,715)     (56,043)     (57,051)
                -----------------------------------------------------

PARTNERS' EQUITY,
 END OF PERIOD     $ 632,244     $ 631,170    $ 632,244    $ 631,170
                -----------------------------------------------------
                -----------------------------------------------------
WEIGHTED AVERAGE
 NUMBER OF UNITS
 OUTSTANDING
                -----------------------------------------------------
 Class A
  Priority
  Units           52,001,352    52,001,352   52,001,352   52,001,352
                -----------------------------------------------------
                -----------------------------------------------------
 Class B
  Priority
  Units           22,286,294    22,286,294   22,286,294   22,286,294
                -----------------------------------------------------
                -----------------------------------------------------

Net earnings per
 Unit (Note 5):
                -----------------------------------------------------
 Class A
  Priority Unit    $  0.2625    $   0.2654    $  0.7773    $  0.6239
                -----------------------------------------------------
                -----------------------------------------------------
 Class B
  Subordinated
  Unit             $  0.2502    $   0.2477    $  0.7409    $  0.5819
                -----------------------------------------------------
                -----------------------------------------------------

See accompanying notes to the consolidated financial statements


CALPINE POWER, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands)
(unaudited)
                Three months  Three months  Nine months  Nine months
                       ended         ended        ended        ended
                   September     September    September    September
                    30, 2005      30, 2004     30, 2005     30, 2004
---------------------------------------------------------------------

OPERATING
 ACTIVITIES
Net earnings      $   19,224    $   19,323    $  56,934    $  45,410
Adjustments for
 non-cash items:
 Depreciation          5,422         5,504       16,295       15,484
 Accretion                50            47          150          140
 Foreign exchange
  (gain) loss            (50)          194          (85)        (141)
                -----------------------------------------------------

Cash from
 operations
 before working
 capital changes      24,646        25,068       73,294       60,893
Change in non-cash
 working capital
 relating to
 operating
 activities
 (Note 6)             (9,897)       (1,233)      (4,088)        (105)
                -----------------------------------------------------

Net cash
 provided by
 operating
 activities           14,749        23,835       69,206       60,788
                -----------------------------------------------------

INVESTING ACTIVITIES
Loan to Calpine
 Canada Whitby
 Holdings Company      1,090             -        1,090            -
Capital
 expenditures             99             -         (179)     (22,681)
Change in non-cash
 working capital
 relating to
 investing
 activities
 (Note 6)               (133)       (1,677)         (44)       5,805
                -----------------------------------------------------

Net cash used
 in investing
 activities            1,056        (1,677)         867      (16,876)
                -----------------------------------------------------

FINANCING ACTIVITIES
Distributions        (18,577)      (18,444)     (55,511)     (55,562)
Loan payable               -             -        4,007        7,993
Payment of
 principal on
 loan payable           (974)            -       (4,451)           -
Special
 distributions
 on the Class B
 Subordinated
 Units                     -             -            -       (1,697)
                -----------------------------------------------------

Net cash used
 in financing
 activities          (19,551)      (18,444)     (55,955)     (49,266)
                -----------------------------------------------------

Foreign exchange
 gain on cash
 held in foreign
 currency                 50          (194)          85          141
                -----------------------------------------------------

INCREASE (DECREASE)
 IN CASH AND CASH
 EQUIVALENTS          (3,696)        3,520       14,203       (5,213)
Cash and cash
 equivalents,
 beginning of
 period               31,614         6,435       13,715       15,168
                -----------------------------------------------------

Cash and cash
 equivalents,
 end of period    $   27,918    $    9,955    $  27,918    $   9,955
                -----------------------------------------------------
                -----------------------------------------------------

SUPPLEMENTARY CASH
 FLOW INFORMATION
Interest
 received         $    1,268    $      129    $   4,966    $   2,269
Interest paid     $      150    $        -    $     511    $       -

See accompanying notes to the consolidated financial statements

CALPINE POWER, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 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 nine months ended September 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. WHITBY LOAN

In 2002, the Partnership obtained a note receivable (the "Whitby Loan") from Calpine Canada Whitby Holdings Company, with a 15 year term to maturity and bearing interest at a rate of 9.07% per annum. Cash received during the three and nine months ended September 30, 2005 in the amount of $1.1 million and $4.5 million (nil and $2.0 million for the three and nine months ended September 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 September 30, 2005, the fair market value of the Whitby Loan was determined to be approximately $39.1 million (December 31, 2004 - $40.3 million).

3. CAPITAL ASSETS

---------------------------------------------------------------------
                                             Accumulated    Net Book
                                    Cost    Depreciation       Value
---------------------------------------------------------------------
As at September 30, 2005
Land                           $     334        $      -   $     334
Power generation plants and
 equipment                       632,256          57,256     575,000
---------------------------------------------------------------------
                               $ 632,590        $ 57,256   $ 575,334
                              ---------------------------------------
                              ---------------------------------------
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
                              ---------------------------------------
                              ---------------------------------------

4. 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 that would be incurred on the Fund's credit facility which averaged 4.76% and 4.68% for the three and nine months ended September 30, 2005 (4.25% and 4.26% for the three and nine months ended September 30, 2004). Although the loan is a demand loan, it is not expected to be fully repaid until after 2007. During the three and nine months ended September 30, 2005, the Partnership repaid $1.0 million and $4.5 million to the Fund in satisfaction of the loan (nil for the three and nine months ended September 30, 2004). At September 30, 2005, the principal outstanding under the loan was $11.5 million (December 31, 2004 $12.0 million). As at September 30, 2005, the fair market value of the loan was approximately $11.5 million (December 31, 2004 - $12.2 million).

5. 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 nine months ended September 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 nine months ended September 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 holders 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                       40,423         16,511      56,934
Distributions declared            (40,036)       (16,007)    (56,043)
                           ------------------------------------------
As at September 30, 2005        $ 477,036      $ 155,208   $ 632,244
                           ------------------------------------------
                           ------------------------------------------


6. CHANGE IN NON-CASH WORKING CAPITAL

                              Three      Three       Nine       Nine
                             months     months     months     months
                              ended      ended      ended      ended
Change in non-cash        September  September  September  September
working capital            30, 2005   30, 2004   30, 2005   30, 2004
---------------------------------------------------------------------
Operating activities:
Accounts receivable        $   (564)  $ (1,929)  $    526    $ 5,961
Interest receivable            (837)      (855)       844       (547)
Inventory                         3          4       (127)       (41)
Prepaid expenses             (2,611)       345     (4,583)       277
Accounts payable and
 accrued liabilities         (5,884)     1,122       (553)    (5,882)
Interest payable                 (4)        80       (195)       127
                          -------------------------------------------
                           $ (9,897)  $ (1,233)  $ (4,088)   $  (105)
                          -------------------------------------------
                          -------------------------------------------
Investing activities:
Accounts payable -
 accrued capital           $   (133)  $ (1,677)  $    (44)   $ 5,805
                          -------------------------------------------
                           $   (133)  $ (1,677)  $    (44)   $ 5,805
                          -------------------------------------------
                          -------------------------------------------

7. RELATED PARTY TRANSACTIONS

As at September 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
                                               September   December
                                                30, 2005   31, 2004
--------------------------------------------------------------------
Accounts receivable from Calpine Corporation     $ 4,224    $ 3,664
Accounts receivable from the Fund                    184         28
Loan and interest receivable from Calpine
 Canada Whitby Holdings Company                   37,718     39,652
Distributions payable to Calpine Commercial Trust (4,404)    (3,890)
Distributions payable to the Manager              (1,778)    (1,761)
Accounts payable to Calpine Corporation           (4,556)    (1,613)
Accounts payable to the Fund                         (65)      (306)
Loan payable to the Fund                         (11,549)   (11,993)
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Interest earned with respect to the Whitby Loan was $0.8 million and $2.5 million for the three and nine months ended September 30, 2005 ($0.9 million and $2.5 million for the three and nine months ended September 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 nine months ended September 30, 2005, the Partnership recognized revenues of $14.1 million and $41.8 million ($13.5 million and $40.6 million for the three and nine months ended September 30, 2004) from CESCP related to this agreement.

Calpine Power Income Fund (TSX:CF.UN)