Calpine Signs On Sacramento Municipal Utility District as Long-Term Customer for New Sutter Power Plant.

Business Editors

SAN JOSE, Calif.--(BUSINESS WIRE)--Jan. 18, 2000

San Jose, Calif.-based Calpine Corporation (NYSE:CPN) announced it has entered into an agreement to provide the Sacramento Municipal Utility District (SMUD) with a five-year supply of electricity from its 545-megawatt Sutter Power Plant, currently under construction in Sutter County, north of Sacramento, Calif.

Calpine will provide 150 megawatts of electricity to SMUD's growing customer base beginning with plant start-up in the summer of 2001 -- in time to help offset anticipated system strains in northern California. SMUD currently serves more than one million electric customers throughout northern California.

"This power purchase agreement is the first of its kind between SMUD and a merchant power plant," said SMUD General Manager Jan Schori. "It proves that there are opportunities in the new restructured environment for municipal utilities and `for profit' entities to work together to achieve mutual benefits. We look forward to doing business with Calpine under this new contract structure which meets SMUD's unique risk profile and energy needs."

The Sutter Power Plant is the first energy facility to be licensed in California's deregulated electric power market and represents the cleanest natural gas-fired facility to be permitted in the United States.

Jake Rudisill, Calpine's vice president-Western region, stated, "This contract represents a new industry paradigm of an energy supplier meeting a customer's needs -- with benefits for both sides. We appreciate SMUD's confidence in Calpine's ability to provide the Sacramento area with a reliable, environmentally responsible source of electricity."

Sutter is one of several natural gas-fired energy centers that Calpine is developing which will help alleviate energy shortages and accelerate retirement of the state's aging power fleet. In northern California alone, Calpine currently produces 1,322 net megawatts of electricity, with 1,045 megawatts under construction and an additional 740 megawatts in announced development in northern California.

Based in San Jose, Calif., Calpine Corporation is a leading independent power company dedicated to providing customers with reliable and competitively priced electricity. Calpine is the nation's largest producer of renewable geothermal energy and is focused on clean, efficient combined-cycle natural gas-fired generation. Nationally, Calpine currently has a net interest in approximately 12,800 megawatts of electric generating capacity in operation, under construction or announced development in 16 states across the country

-- representing the largest power development program in the country. The company was founded in 1984 and is publicly traded on the New York Stock Exchange under the symbol CPN. For more information about Calpine, visit its website at www.calpine.com.

This news release discusses certain matters that may be considered "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the intent, belief or current expectations of Calpine Corporation ("the Company") and its management. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties that could materially affect actual results such as, but not limited to, (i) changes in government regulations and anticipated deregulation of the electric energy industry; (ii) commercial operations of new plants that may be delayed or prevented because of various development and construction risks, such as a failure to obtain financing and the necessary permits to operate or the failure of third-party contractors to perform their contractual obligations, (iii) cost estimates are preliminary and actual cost may be higher than estimated, (iv) the assurance that the Company will develop additional plants, (v) a competitor's development of a lower-cost generating gas-fired power plant or (vi) the risks associated with marketing and selling power from power plants in the newly competitive energy market. Prospective investors are also referred to the other risks identified from time to time in the Company's reports and registration statements filed with the Securities and Exchange Commission.