Calpine to Acquire SkyGen Energy; Company to Increase 2004 Operating Portfolio to Over 40,000 Megawatts of Generation.

Business Editors/Energy Writers

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

Calpine Corporation (NYSE:CPN) today announced plans to acquire Northbrook, Ill.-based SkyGen Energy LLC (SkyGen Energy) from Michael Polsky and from Wisvest Corporation, a Wisconsin Energy Corp. affiliate, for $450 million, plus the assumption of certain obligations of SkyGen Energy.

The SkyGen Energy acquisition -- along with other recently announced acquisitions -- will increase Calpine's 2004 operating portfolio to over 40,000 net megawatts of generation.

SkyGen Energy is a leading developer, owner and operator of independent power projects in North America. Upon closing of the transaction, expected during the third quarter of 2000, Calpine will increase its power portfolio by up to 13,500 net megawatts of natural gas-fired generation in the U.S., and will acquire 34 General Electric 7 FA gas turbines to power its newly acquired development projects.

Under the terms of the agreement, Calpine will add three operating facilities (780 net megawatts), three projects under construction (812 net megawatts), 13 late-stage development facilities (5,258 net megawatts) and 16 project development opportunities (6,615 net megawatts).

This acquisition provides several strategic benefits to Calpine. In addition to providing the company with a strong mix of gas-fired cogeneration and peaking facilities in new and strategic markets, SkyGen Energy's team of energy professionals with experience in large-scale industrial cogeneration projects -- and its proven track record and pipeline of projects with long-term power and steam sales agreements -- will complement Calpine's existing cogeneration and merchant power mix. SkyGen Energy's outstanding portfolio, combined with Calpine's expertise in finance, construction, operations and power marketing provide significant strategic value for Calpine.

Calpine Chief Executive Officer and President Peter Cartwright stated, "I am extremely pleased that Michael Polsky and his team will be joining Calpine. SkyGen Energy is one of the premier power plant developers in the country. Michael's vision for the U.S. power industry closely parallels my own."

SkyGen was founded by Michael Polsky in 1991. SkyGen will continue to develop its portfolio of development projects as a wholly owned subsidiary of Calpine. Michael Polsky will serve as President of SkyGen and as a member of Calpine's Board of Directors.

Michael Polsky stated, "The addition of SkyGen to the Calpine organization will create the most powerful and dynamic power producer in U.S."

SkyGen Energy currently employs 70 energy professionals. As part of the SkyGen Energy acquisition, Michael Polsky will receive approximately 1.1 million shares of Calpine common stock. In addition, Calpine will make contingent payments for completion of certain project development milestones. Goldman Sachs & Co. acted as financial advisor to SkyGen Energy, with Credit Suisse First Boston serving as Calpine's advisor.

To fund the SkyGen Energy and other recently announced acquisitions, Calpine has obtained a $1 billion short-term credit facility with The Bank of Nova Scotia, Credit Suisse First Boston and CIBC World Markets. The company expects to refinance this facility in the capital markets.

Based in San Jose, Calif., Calpine Corporation is dedicated to providing customers with reliable and competitively priced electricity. Calpine is focused on clean, efficient combined-cycle, natural gas-fired generation and is the nation's largest producer of renewable geothermal energy. Calpine has launched the largest power development program in the U.S. To date, the company has a combined interest in approximately 26,700 megawatts of electric generation capacity in operation, under construction and announced development in 25 states and Alberta, Canada. The company was founded in 1984 and is publicly traded on the New York Stock Exchange under the symbol CPN. For more information about Calpine, visit its website at www.calpine.com.

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