Calpine Purchases Remaining 50% Interests in Two Gas-Fired Plants; Acquisition Makes Calpine Largest Independent Power Producer in Texas.

SAN JOSE, Calif.--(BUSINESS WIRE)--April 1, 1998--In a transaction making it the largest independent power producer in Texas, Calpine Corporation (NYSE:CPN) today announced it has acquired the remaining 50 percent interest in Texas Cogeneration Company (TCC), owner of two large natural gas-fired power plants in Texas City and Pasadena, TX (827 megawatts of capacity).

Calpine, the San Jose, CA-based independent power company, purchased the remaining interest in TCC from Dominion Cogen, Inc. for approximately $53 million, plus contingent purchase payments beginning in 2000 that could approximate 2.9 percent of project revenue. As part of this acquisition, Calpine now owns a 7.5 percent interest in a 165 megawatt natural gas-fired cogeneration plant located in Bayonne, NJ.

Calpine Fuels Texas Corporation, a wholly owned subsidiary of Calpine, now purchases natural gas for the Texas power plants from Enron Capital & Trade Resources Corp. In a related transaction, Calpine Fuels Texas paid approximately $105 million to Enron Capital & Trade to restructure its existing gas contracts.

"In less than a year, Calpine has established a solid generation base to serve the growing Texas energy market," said Ron Walter, senior vice president of Calpine. "We're continuing to expand our operations by acquiring and developing modern, efficient gas-fired power plants throughout the state. By 2001, we expect to have over 1,700 megawatts of low-cost, clean power production on line in Texas."

Calpine now owns a 100 percent interest in the 450 megawatt Texas City Power Plant located in Texas City, TX and the 377 megawatt Clear Lake Power Plant in Pasadena, TX. Calpine purchased an initial 50 percent interest in, and began operating, the plants in June 1997.

The Texas City and Clear Lake power plants are natural gas-fired, combined-cycle cogeneration facilities. The plants provide electricity to Texas Utilities Electric Company, Texas New Mexico Power Company and Houston Lighting & Power. As cogenerators, they also provide electricity and steam to Union Carbide Corporation's chemical facility and to Celanese Chemical Group, Inc.'s organic chemicals plant. Texas Utilities recently amended its power sales agreement, extending power deliveries from the Texas City plant through September 2002.

"The Texas wholesale market offers tremendous opportunities for low-cost power producers like the Texas City and Clear Lake plants," stated Walter.

Calpine's Texas power sales organization, based in Houston, plays an integral role in maximizing the value of the company's operating portfolio and aggressive power development program.

In Pasadena, TX, Calpine is nearing completion on a 240 megawatt natural gas-fired power plant. The Pasadena 1 Power Plant, slated for start-up in July, will generate electricity and steam for sale to Phillips Petroleum Company's Houston Chemical Complex. Additional capacity is being sold to other wholesale customers.

"Pasadena 1 is Calpine's premiere merchant power plant. It will be the lowest-cost, gas-fired power producer serving the Texas market," noted Walter. "As a leader in the newly emerging merchant power industry, we're building on our Pasadena success as we bring on line new merchant plants in the market."

In south Texas, Calpine was recently selected by the Magic Valley Electric Cooperative to enter exclusive negotiations to supply the co-op's electrical needs beginning in 2001 and running through 2021. Power will be supplied by a state-of-the-art, 700 megawatt natural gas-fired plant under development in Edinburg, TX. Plans to develop other modern, gas-fired facilities in the state are underway.

Calpine Corporation is a leading independent power company dedicated to providing customers with low-cost electricity and thermal energy. The company was founded in 1984 and is publicly traded on the New York Stock Exchange under the symbol CPN. For more information on Calpine, visit its website at www.calpine.com. -0-

Note to Editors: This news release discusses certain matters that may be considered "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the intent, belief or current expectations of Calpine Corporation ("the Company") and its management. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties that could materially affect actual results such as, but not limited to, (i) general operating risks, (ii) changes in government regulations and anticipated deregulation of the electric energy industry; (iii) commercial operations of new merchant plants that may be delayed because of various development and construction risks, such as a failure to obtain the necessary permits to operate or the failure of third-party contractors to perform their contractual obligations (iv) no assurance that the Company will develop additional merchant plants, (v) a competitor's development of a lower-cost generating gas-fired power plant or (vi) the risks associated with marketing and selling power from merchant power plants in the newly competitive energy market. Prospective investors are also referred to the other risks identified from time to time in the Company's reports and registration statements filed with the Securities and Exchange Commission.

CONTACT: Calpine

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

Rick Barraza, 408/995-5115 Ext. 1125 (IR)