CPN: NYSE 15.12
+0.00 +0% Volume: January 19, 2018
America’s Premier Power Generation Company
... Creating Power for a Sustainable Future

Calpine Reports Second Quarter 2008 Financial and Operating Results

08/11/2008

Continued Improvement in Operations Demonstrated by a 47% Increase in Commodity Margin and a 45% Increase in Adjusted EBITDA

HOUSTON & SAN JOSE, Calif., Aug 11, 2008 (BUSINESS WIRE) -- Calpine Corporation (NYSE:CPN) ("Calpine" or the "Company") today reported financial and operating results for the three and six months ended June 30, 2008. Calpine's Quarterly Report on Form 10-Q, including its unaudited financial statements, for the quarter ended June 30, 2008, has been filed with the Securities and Exchange Commission ("SEC") and can be found on the SEC's website at http://www.sec.gov.

Second Quarter Highlights

                                  Three Months Ended Six Months Ended
                                       June 30,          June 30,
                                  ------------------ -----------------
                                    2008      2007     2008     2007
                                  --------- -------- -------- --------
Operating Revenues (millions)     $  2,828  $ 2,060  $ 4,779  $ 3,722
GAAP Net Income/(Loss) (millions) $    197  $  (500) $   (17) $  (959)
Commodity Margin (millions) (a,b) $    785  $   535  $ 1,271  $   957
Adjusted EBITDA (millions) (a,c)  $    474  $   326  $   768  $   576
Megawatt-Hours Generated
 (thousands)                        21,211   21,439   42,117   41,782
Average Total Megawatts in
 Operation(d)                       23,113   25,091   23,113   25,223
Average Capacity Factor
 (excluding peakers)                 46.4%    43.3%    46.3%    42.5%


  (a)    Commodity Margin and Adjusted EBITDA are non-GAAP financial
          measures important to management in assessing the Company's
          performance and are defined in the Company's 2008 Form 10-Q
          Report and reconciled therein to the most comparable GAAP
          measures. Such reconciliations are also provided below.
          These non-GAAP measures do not purport to represent or
          replace such GAAP measures.
  (b)    "Commodity Margin" includes electricity and steam revenues,
          hedging and optimization activities, renewable energy credit
          revenue, transmission revenue and expenses, and fuel and
          purchased energy expense, but excludes mark-to-market
          activity and other service revenues.
  (c)    Earnings Before Interest, Tax, Depreciation and Amortization,
          as adjusted.
  (d)    Includes only MW consolidated by the Company and excludes
          capacity not currently in operation and not operated by
          Calpine. Reduction since 2007 due to sales of power plants
          between June 30, 2007 and June 30, 2008.

Zamir Rauf, Calpine's interim Chief Financial Officer, stated, "I am encouraged by our ability to demonstrate continued progress during the second quarter, as we remain focused on excellence in our core operations. For the second quarter in a row, we have delivered considerable improvements in Commodity Margin and Adjusted EBITDA over the prior year period. I am confident that the Calpine team will continue to deliver clean and reliable energy to our customers over the course of 2008, while at the same time delivering value to our shareholders."

2008 Second Quarter Financial Results

For the three months ended June 30, 2008, Calpine reported operating revenues in excess of $2.8 billion, representing an increase of 37% over the corresponding prior year period. Operating revenues increased primarily as a result of a 39% increase in the Company's average realized electric price for the three months ended June 30, 2008, compared to the same period in 2007. As a result, electricity and steam revenues increased by 41% during the second quarter of 2008, as compared to the 2007 period. These increases were partially offset by mark-to-market losses on derivative electricity contracts that do not qualify for hedge accounting, which totaled $8 million for the three months ended June 30, 2008, as compared to mark-to-market gains of $147 million recognized in the prior year period.

Commodity Margin increased by $250 million, or 47%, overall and by 28%, 87% and 40% in the Company's West, Texas and Southeast segments, respectively, for the three months ended June 30, 2008, compared to the same period in 2007. These increases were due primarily to higher market spark spreads in these segments. Commodity Margin was relatively unchanged in Calpine's North segment.

Adjusted EBITDA increased by 45% for three months ended June 30, 2008, as compared to the same period in 2007. This increase is largely driven by the Commodity Margin increase discussed above.

For the three months ended June 30, 2008, Calpine's total MW in operation for consolidated projects decreased by 8% to 23,113 MW from 25,091 for the three months ended June 30, 2007 as a result of assets sold, deconsolidated or mothballed during 2007. Generation volume was relatively unchanged despite this decrease. The Company generated approximately 21.2 million megawatt-hours during the second quarter of 2008, which equated to an average capacity factor (excluding peakers)(1) of 46.4%, at an average realized electric price of $99.58/MWh. For the same period in 2007, Calpine generated 21.4 million MWh, which equated to an average capacity factor (excluding peakers) of 43.3%, at an average realized electric price of $71.42/MWh.

Plant operating expense decreased during the three months ended June 30, 2008, compared to the same period in 2007 primarily as a result of a $7 million decrease in insurance costs due to increased recoveries in the second quarter of 2008, a $3 million decrease in property taxes and a $4 million decrease in expense for major maintenance and parts repair costs. The decrease was partially offset by an $8 million increase in routine maintenance costs.

Sales, general and other administrative expenses were higher for the three months ended June 30, 2008, compared to the same period in 2007 due to a $5 million increase in personnel costs associated primarily with higher stock compensation expense arising from the grant of equity awards during the first quarter of 2008, as well as a $4 million increase in consulting expenses.

Interest expense decreased for the three months ended June 30, 2008, compared to the three months ended June 30, 2007, due largely to lower average debt balances and lower interest rates. During the first quarter of 2008, in connection with the Company's emergence from Chapter 11 and the implementation of the Company's Plan of Reorganization, a portion of the Company's debt was discharged through payment of cash and issuance of reorganized Calpine Corporation common stock. Additionally, interest rates on the Company's variable rate debt were lower for the three months ended June 30, 2008, compared to the same period in 2007, due to a decrease in LIBOR over the same periods. The decrease was partially offset by losses recorded on interest rate swaps related to the Company's floating rate debt during the second quarter of 2008.

2008 Six Month Financial Results

For the six months ended June 30, 2008, Calpine reported operating revenues of nearly $4.8 billion, as compared to $3.7 billion in the same period of the prior year. This 28% increase in operating revenues is primarily due to a 29% increase in the Company's average realized electric price for the six months ended June 30, 2008, compared to the same period in 2007. As a result, electricity and steam revenues increased by 31% during the six months ended June 30, 2008, compared to 2007. These increases were partially offset by higher mark-to-market losses on derivative electricity contracts that do not qualify for hedge accounting treatment, which totaled $104 million for the six-months ended June 30, 2008, compared to mark-to-market gains of $135 million for the corresponding 2007 period.

Commodity Margin increased by $314 million, or 33%, overall and by 23%, 73% and 25% in the Company's West, Texas and Southeast segments, respectively, for the six months ended June 30, 2008, compared to the same period in 2007. These increases were due primarily to higher market spark spreads in these segments. Commodity Margin was relatively unchanged in Calpine's North segment.

Adjusted EBITDA increased by 33% for six months ended June 30, 2008, as compared to the same period in 2007. This increase is largely driven by the Commodity Margin increase discussed above.

For the six months ended June 30, 2008, Calpine's total MW in operation for consolidated projects decreased by 8% to 23,113 MW as compared to the corresponding prior year period as a result of assets sold, deconsolidated or mothballed during 2007. Generation volume was relatively unchanged despite this decrease. The Company generated approximately 42.1 million megawatt-hours during the first half of 2008, which equated to an average capacity factor (excluding peakers) of 46.3%, at an average realized electric price of $87.42/MWh. For the same period in 2007, Calpine generated nearly 41.8 million MWh, which equated to an average capacity factor (excluding peakers) of 42.5%, at an average realized electric price of $67.71/MWh.

Plant operating expense increased during the six months ended June 30, 2008, compared to the same period in 2007 primarily as a result of a $22 million increase in expense for major maintenance and parts repair costs and a $21 million increase in expenses for outages caused by equipment failures. Also contributing to the increase were higher property taxes of $7 million and an increase of $9 million in plant personnel costs.

Sales, general and other administrative expenses were higher for the six months ended June 30, 2008, compared to the same period in 2007 due primarily to an $11 million increase in personnel costs associated primarily with higher stock compensation expense arising from the grant of equity awards during the first half of 2008, as well as a $4 million increase in consulting expenses.

Interest expense increased for the six months ended June 30, 2008, compared to the prior year period, due largely to $148 million in non-recurring post-petition interest related to pre-petition obligations recorded during the first quarter of 2008. Also contributing to the increase was higher interest expense related to interest rate swaps that did not qualify for hedge accounting and an increase in related party interest expense on settlement obligations related to certain of the Company's Canadian subsidiaries recorded prior to their reconsolidation in February 2008. The increase was partially offset by lower average debt balances and lower interest rates, as noted above. Additionally, the Company repaid its $300 million bridge facility in March 2008 with proceeds received from the sales of the Hillabee and Fremont development project assets. Calpine lowered its effective interest rates compared to the same period in 2007 through the refinancings in late March 2007 of the Company's $2.5 billion of secured notes and term loans issued by its subsidiary, Calpine Generating Company, with proceeds received under the Company's $5.0 billion debtor-in-possession credit facility, which carried lower interest rates.

Financing Transactions

During the second quarter, Calpine completed the following financing transactions:

-- Refinanced the term loan facility and preferred interests associated with the Metcalf Energy Center with proceeds of a new $265 million term loan facility.

-- Established a 12-month, $200 million unsecured contingent letter of credit facility. Capacity under this facility will be contingent upon natural gas futures contract prices exceeding certain thresholds, with $50 million of letters of credit immediately available.

-- Established a two-year, $300 million secured commodity collateral revolver, which shares in the lien structure of Company's exit credit facility lenders.

Operations Update

During the second quarter of 2008, Calpine performed an increased number of scheduled outages across the gas turbine fleet. Major maintenance is performed at specific intervals throughout a power plant's service life. Since Calpine placed 29 plants in service in the 2001-2002 time frame, many have reached their 24,000 or 48,000 hour major inspection operating intervals. These inspections take longer than other inspections and generally lead to lower plant availability. These outages are typically scheduled during the first and second quarters during periods of lower electricity demand.

Also during the second quarter, Calpine:

-- Operated with zero lost time accidents;

-- Generated 21.2 million MWh for the quarter, as compared to 21.4 million MWh in 2007;

-- Achieved mechanical completion on the Greenfield Energy Center; and

-- Performed 5 unplanned outages of 15 days or longer, primarily as a result of miscellaneous gas turbine and steam turbine valve issues.

NRG Proposal

On May 14, 2008, Calpine received an unsolicited proposal from NRG Energy, Inc. ("NRG") regarding a potential combination between the Company and NRG. The terms of NRG's proposal included an all-stock merger transaction at a fixed exchange ratio of 0.534x. On May 30, 2008, Calpine announced that its Board of Directors had determined that NRG's proposal was inadequate and materially undervalued Calpine's unique asset portfolio and future prospects. Calpine and NRG, and their respective advisors, subsequently exchanged certain information in order to ascertain whether there was a basis for discussions between Calpine and NRG to explore a business combination. Following the exchange of certain information, it was determined that there was no basis for entering into discussions regarding a potential business combination with NRG.

Management Succession Update

As noted in a separate press release issued today, Calpine's Board of Directors announced that it has appointed Jack A. Fusco as President and Chief Executive Officer, effective August 10, 2008. Mr. Fusco will also serve as a member of Calpine's Board of Directors. Mr. Fusco succeeds Robert P. May, who served as Calpine's Chief Executive Offer since December 2005 and earlier this year announced his intention to retire when his successor was in place.

During the second quarter, Calpine also announced the appointment of Zamir Rauf to the position of interim Chief Financial Officer. Mr. Rauf brings extensive industry and company-specific experience to the position, having most recently served as Calpine's Senior Vice President, Finance and Treasurer.

Investor Conference Call and Webcast

Calpine will host a conference call to discuss its financial and operating results for the three and six months ended June 30, 2008, on Monday, August 11, 2008, at 11:00 a.m. ET / 10:00 a.m. CT. A listen-only webcast of the call may be accessed through the Company's website at www.calpine.com, or by dialing 888-204-4485 at least ten minutes prior to the beginning of the call.

An archived recording of the call will be made available on the website, and can also be accessed by dialing 888-203-1112 or 719-457-0820 (International) and providing confirmation code 2254630.

About Calpine

Calpine Corporation is helping meet the needs of an economy that demands more and cleaner sources of electricity. Founded in 1984, Calpine is a major U.S. power company, currently capable of delivering nearly 24,000 megawatts of clean, cost-effective, reliable, and fuel-efficient electricity to customers and communities in 18 states in the United States. The Company operates low-carbon, natural gas-fired, and renewable geothermal power plants. Using advanced technologies, Calpine generates electricity in a reliable and environmentally responsible manner for the customers and communities it serves. Please visit www.calpine.com for more information.

Forward Looking Information

In addition to historical information, this release contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Words such as "believe," "intend," "expect," "anticipate," "plan," "may," "will" and similar expressions identify forward-looking statements. Such statements include, among others, those concerning expected financial performance and strategic and operational plans, as well as all assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and that a number of risks and uncertainties could cause actual results to differ materially from those anticipated in the forward-looking statements. Such risks and uncertainties include, but are not limited to: (i) Calpine's ability to implement its business plan; (ii) financial results that may be volatile and may not reflect historical trends; (iii) seasonal fluctuations of results and exposure to variations in weather patterns; (iv) potential volatility in earnings associated with fluctuations in prices for commodities such as natural gas and power; (v) ability to manage liquidity needs and comply with covenants related to its exit credit facility and other existing financing obligations; (vi) Calpine's ability to complete the implementation of its Plan of Reorganization and the discharge of its chapter 11 cases including successfully resolving any remaining claims; (vii) disruptions in or limitations on the transportation of natural gas and transmission of electricity; (viii) the expiration or termination of power purchase agreements and the related results on revenues; (ix) risks associated with the operation of power plants including unscheduled outages; (x) factors that impact the output of Calpine's geothermal resources and generation facilities, including unusual or unexpected steam field well and pipeline maintenance and variables associated with the waste water injection projects that supply added water to the steam reservoir; (xi) risks associated with power project development and construction activities; (xii) ability to attract, retain and motivate key employees including filling certain significant positions within Calpine's management team; (xiii) ability to attract and retain customers and counterparties; (xiv) competition; (xv) risks associated with marketing and selling power from plants in the evolving energy markets; (xvi) present and possible future claims, litigation and enforcement actions; (xvii) effects of the application of laws or regulations, including changes in laws or regulations or the interpretation thereof; and (xviii) other risks identified from time-to-time in Calpine's reports and registration statements filed with the SEC, including, without limitation, the risk factors identified in its Annual Report on Form 10-K for the year ended December 31, 2007. Actual results or developments may differ materially from the expectations expressed or implied in the forward-looking statements and Calpine undertakes no obligation to update any such statements. Unless specified otherwise, all information set forth in this release is as of today's date and Calpine undertakes no duty to update this information. For additional information about Calpine's chapter 11 reorganization or general business operations, please refer to Calpine's Annual Report on Form 10-K for the fiscal year ended December 31, 2007, and any other recent Calpine report to the Securities and Exchange Commission. These filings are available by visiting the Securities and Exchange Commission's website at www.sec.gov or Calpine's website at www.calpine.com.

__________

(1) The average capacity factor (excluding peakers) is calculated by dividing (a) total MWh generated by our power plants (excluding peakers) by the product of multiplying (b) the weighted average MW in operation during the period by (c) the total hours in the period. The average capacity factor, excluding peakers is thus a measure of total actual generation as a percent of total potential generation.

                 CALPINE CORPORATION AND SUBSIDIARIES

                CONSOLIDATED CONDENSED BALANCE SHEETS
                             (Unaudited)

                                             June 30,    December 31,
                                               2008          2007
                                           ------------  ------------
                                              (in millions, except
                                              share and per share
                                                    amounts)
                  ASSETS
Current assets:
 Cash and cash equivalents                 $        370  $      1,915
 Accounts receivable, net of allowance of
  $31 and $54                                     1,443           878
 Accounts receivable, related party                   1           226
 Materials and supplies                             152           114
 Margin deposits and other prepaid expense          836           452
 Restricted cash, current                           357           422
 Current derivative assets                        5,053           731
 Current assets held for sale                        --           195
 Other current assets                               113            98
                                           ------------  ------------
  Total current assets                            8,325         5,031

 Property, plant and equipment, net              12,131        12,292
 Restricted cash, net of current portion            168           159
 Investments                                        386           260
 Long-term derivative assets                        694           290
 Other assets                                       917         1,018
                                           ------------  ------------
  Total assets                             $     22,621  $     19,050
                                           ============  ============
   LIABILITIES & STOCKHOLDERS' EQUITY
                 (DEFICIT)
Current liabilities:
 Accounts payable                          $      1,190  $        642
 Accrued interest payable                           101           324
 Debt, current portion                              308         1,710
 Current derivative liabilities                   5,486           806
 Income taxes payable                                49            51
 Other current liabilities                          318           571
                                           ------------  ------------
  Total current liabilities                       7,452         4,104

 Debt, net of current portion                    10,104         9,946
 Deferred income taxes, net of current
  portion                                           127            38
 Long-term derivative liabilities                 1,029           578
 Other long-term liabilities                        235           245
                                           ------------  ------------
Total liabilities not subject to
 compromise                                      18,947        14,911
Liabilities subject to compromise                    --         8,788
Commitments and contingencies
Minority interest                                     3             3
Stockholders' equity (deficit):
 Preferred stock, $.001 par value per
  share; authorized 100,000,000 shares,
  none issued and outstanding in 2008;
  authorized 10,000,000 shares, none
  issued and outstanding in 2007                     --            --
 Common stock, $.001 par value per share;
  authorized 1,400,000,000 shares,
  423,127,138 shares issued and
  423,126,665 shares outstanding in 2008;
  authorized 2,000,000,000 shares,
  568,314,685 issued and 479,314,685
  outstanding in 2007                                 1             1
 Additional paid-in capital                      12,185         3,263
 Accumulated deficit                             (7,724)       (7,685)
 Accumulated other comprehensive loss              (791)         (231)
                                           ------------  ------------
  Total stockholders' equity (deficit)            3,671        (4,652)
                                           ------------  ------------
    Total liabilities and stockholders'
     equity (deficit)                      $     22,621  $     19,050
                                           ============  ============


                 CALPINE CORPORATION AND SUBSIDIARIES

           CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                             (Unaudited)

                               Three Months Ended   Six Months Ended
                                    June 30,            June 30,
                               ------------------  ------------------
                                 2008      2007      2008      2007
                               --------  --------  --------  --------
                                (in millions, except share and per
                                           share amounts)
Operating revenues             $  2,828  $  2,060  $  4,779  $  3,722

Cost of revenue:
Fuel and purchased energy
 expense                          2,008     1,456     3,613     2,727
Plant operating expense             206       211       438       379
Depreciation and amortization
 expense                            108       118       219       236
Other cost of revenue                30        33        62        70
                               --------  --------  --------  --------
 Total cost of revenue            2,352     1,818     4,332     3,412
                               --------  --------  --------  --------
  Gross profit                      476       242       447       310
Sales, general and other
 administrative expense              48        39        96        79
Other operating (income)
 expense                             (5)        3        --        12
                               --------  --------  --------  --------
 Income from operations             433       200       351       219
Interest expense                    206       264       625       564
Interest (income)                   (14)      (17)      (27)      (34)
Minority interest income             --        (3)       --        (1)
Other (income) expense, net           1        (6)       11        (7)
                               --------  --------  --------  --------
 Income (loss) before
  reorganization items and
  income taxes                      240       (38)     (258)     (303)
Reorganization items                 18       469      (261)      574
                               --------  --------  --------  --------
 Income (loss) before income
  taxes                             222      (507)        3      (877)
Provision (benefit) for income
 taxes                               25        (7)       20        82
                               --------  --------  --------  --------
    Net income (loss)          $    197  $   (500) $    (17) $   (959)
                               ========  ========  ========  ========
Basic earnings (loss) per
 common share:
  Weighted average shares of
   common stock outstanding
   (in thousands)               485,004   479,175   485,002   479,155
                               --------  --------  --------  --------
   Net income (loss) (a)       $   0.41  $  (1.04) $  (0.04) $  (2.00)
                               ========  ========  ========  ========
Diluted earnings (loss) per
 common share:
 Weighted average shares of
  common stock outstanding (in
  thousands)                    485,732   479,175   485,002   479,155
                               --------  --------  --------  --------
    Net income (loss) (a)      $   0.41  $  (1.04) $  (0.04) $  (2.00)
                               ========  ========  ========  ========

__________

(a) All shares of the Company's common stock outstanding prior to
 January 31, 2008 were canceled pursuant to the Plan of
 Reorganization, and new shares of reorganized Calpine Corporation
 common stock were issued. Although loss per share information for the
 three and six months ended June 30, 2007, is presented, it is not
 comparable to the information for the three and six months ended June
 30, 2008, due to the changes in the Company's capital structure on
 January 31, 2008, which also included termination of all outstanding
 convertible securities.


Consolidated Commodity Margin

The following table reconciles the Company's Commodity Margin to its
 GAAP results for the three and six months ended June 30, 2008 and
 2007 (in millions):

                                 Three Months Ended  Six Months Ended
                                      June 30,           June 30,
                                 ------------------  ----------------
                                   2008      2007     2008     2007
                                 ---------  -------  -------  -------

Operating revenues               $   2,828  $ 2,060  $ 4,779  $ 3,722
(Less): Other service revenues         (11)     (16)     (22)     (44)
(Less): Fuel and purchased
 energy expense                     (2,008)  (1,456)  (3,613)  (2,727)
Adjustment to remove:
Mark-to-market commodity
 activity, net(1)                      (24)     (53)     127        6
                                  --------   ------   ------   ------
  Consolidated commodity margin  $     785  $   535  $ 1,271  $   957
                                  ========   ======   ======   ======
__________
(1) Included in operating revenues and fuel and purchased energy
 expense.


Commodity Margin by Segment

The following table shows the Company's Commodity Margin by segment
 for the three and six months ended June 30, 2008 and 2007 (in
 millions):

                                 Three Months Ended  Six Months Ended
                                      June 30,           June 30,
                                 ------------------  ----------------
                                   2008      2007     2008     2007
                                 ---------  -------  -------  -------

West                             $     340  $   265  $   609  $   495
Texas                                  258      138      388      224
Southeast                               91       65      128      102
North                                   72       75      134      138
Other                                   24       (8)      12       (2)
                                  --------   ------   ------   ------
  Consolidated commodity margin  $     785  $   535  $ 1,271  $   957
                                  ========   ======   ======   ======


Supplemental Power Data

                                  Three Months Ended  Six Months Ended
                                       June 30,           June 30,
                                  ------------------  ----------------
                                  2008(1)   2007(1)   2008(1)  2007(1)
                                  --------  --------  -------  -------

Generation (in MWh, in thousands)   21,211    21,439   42,117   41,782

Average realized electric price
 (per MWh)                        $  99.58  $  71.42  $ 87.42  $ 67.71

Average commodity margin (per
 MWh)                             $  37.01  $  24.95  $ 30.18  $ 22.90

Average cost of natural gas (per
 MMBtu)                           $   8.74  $   6.67  $  8.14  $  6.52

__________

(1) Excludes plants which have been deconsolidated, sold, are not
 operated by Calpine, or are no longer in operation as of the date
 deconsolidated or sold.


Adjusted EBITDA

The below table provides a reconciliation of Adjusted EBITDA to the
 Company's cash flow from operations and GAAP net income (loss) (in
 millions):

                                 Three Months Ended  Six Months Ended
                                      June 30,           June 30,
                                 ------------------  ----------------
                                   2008      2007     2008     2007
                                 --------  --------  -------  -------
Cash provided by (used in)
 operating activities            $   (324) $     48  $  (586) $  (184)
Less:
 Changes in operating assets and
  liabilities, excluding the
  effects of acquisition             (306)       51     (432)     (78)
 Additional adjustments to
  reconcile GAAP net income
  (loss) to net cash provided by
  (used in) operating
  activities:
  Depreciation and amortization
   (1)                                125       141      280      284
  Deferred income taxes, net           21        (7)      85       82
  Change in derivatives and
   derivative contracts
   classified as financing
   activities                        (362)      (73)    (192)     (10)
  Reorganization items                  3       434     (322)     497
  Other                                (2)        2       12       --
                                 --------  --------  -------  -------
GAAP net income (loss)                197      (500)     (17)    (959)
Add:
 Adjustments to reconcile
  Adjusted EBITDA to net income
  (loss):
  Interest expense, net of
   interest income                    192       247      598      530
  Depreciation and amortization
   expense, excluding deferred
   financing costs(1)                 118       129      240      258
  Provision (benefit) for income
   taxes                               25        (7)      20       82
  Impairment charges                    6        --        6        2
  Reorganization items                 18       469     (261)     574
  Major maintenance expense            42        46       96       74
  Losses on repurchase or
   extinguishment of debt               6        --       13       --
  Operating lease expense              11        13       23       24
  (Gains) losses on derivatives
   (non-cash portion)                (151)      (65)      28       (2)
  Other                                10        (6)      22       (7)
                                 --------  --------  -------  -------
    Adjusted EBITDA              $    474  $    326  $   768  $   576
                                 ========  ========  =======  =======

__________

(1) Depreciation and amortization in the GAAP net income (loss)
 calculation on the Company's Consolidated Condensed Statements of
 Operations excludes amortization of other assets and amounts
 classified as sales, general and other administrative expenses.


Cash Flow Activities

The following table summarizes the Company's cash flow activities for
 the six months ended June 30, 2008 and 2007 (in millions):

                                                   2008       2007
                                                 ---------  ---------
Beginning cash and cash equivalents              $   1,915  $   1,077
                                                 ---------  ---------
Net cash provided by (used in):
 Operating activities                                 (586)      (184)
 Investing activities                                  469        343
 Financing activities                               (1,428)       168
                                                 ---------  ---------
   Net increase (decrease) in cash and cash
    equivalents                                     (1,545)       327
                                                 ---------  ---------
     Ending cash and cash equivalents            $     370  $   1,404
                                                 =========  =========

SOURCE: Calpine Corporation

Calpine Corporation
Media Relations:
Mel Scott, 713-570-4553
scottm@calpine.com
Investor Relations:
Andre K. Walker, 713-830-8775
andrew@calpine.com