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Calpine's Russell City Energy Center to be Nation's First Power Plant With Federal Greenhouse Gas Emissions Limit

Calpine to build 600-MW power plant, create economic stimulus for San Francisco Bay Area

HAYWARD, Calif.--(BUSINESS WIRE)--Jun. 24, 2009-- The Bay Area Air Quality Management District(BAAQMD) notified interested stakeholders that it is seeking public input on a draft permit to construct what will be the nation’s first power plant with a federal limit on emissions of carbon dioxide (CO2) and other greenhouse gases.

Calpine Corporation (NYSE: CPN) has been working in cooperation with the BAAQMD to respond to comments submitted by a number of environmental and local public interest groups, including the Sierra Club and EarthJustice, regarding the company’s proposed 600-megawatt Russell City Energy Center to be built in Hayward, Calif. As a result, Calpine has agreed to changes in the project’s permit conditions, including reductions in a number of emission limits, which will make it one of the cleanest natural gas-fired power plants in the nation.

“By taking this historic and early action to limit greenhouse gas emissions, Calpine demonstrates that our long-term commitment to environmental stewardship is fundamental to our corporate philosophy,” said Jack A. Fusco , president and chief executive officer of Calpine. “The combined-cycle technology allows us to commit to lower emissions while increasing efficiency – meaning we use less natural gas and emit fewer greenhouse gases while delivering more power to our customers and ultimately the American consumer.”

Powered by cleaner burning natural gas, Russell City Energy Center will use advanced combined-cycle technology, which captures and uses the exhaust from gas turbines to generate additional energy in a steam turbine, resulting in an approximate 40 percent increase in fuel efficiency.

“As a physicist with NASA and the Lawrence Livermore Lab, I studied climate change starting in the 1970s. I support the project because it will preserve Hayward’s air quality, while replacing power generated from plants that produce nearly twice the greenhouse gases and more than twice the amount of other pollutants,” said Councilman Bill Quirk of the Hayward City Council. “Equally as important, the project also is an economic stimulus for Hayward, spurring economic growth, creating jobs for local residents and generating millions of dollars in new revenue, a real benefit in these tough times,” he added.

Russell City Energy Center will produce significant economic benefits for the City of Hayward and the Bay Area, creating 650 union construction jobs, injecting millions into the local economy and generating approximately $30 million in one-time tax revenue and $4 million annually in property tax revenue to help fund local government services. Construction is expected to begin in 2010 and be completed in 2012.

The facility will use 100 percent reclaimed water from the City of Hayward’s Water Pollution Control Facility for cooling and will convert it into steam for electricity production. This environmentally responsible process conserves water and prevents four million gallons of wastewater per day from being discharged into San Francisco Bay.

Russell City Energy Center also will donate $10 million to help build a new library for Hayward and is working with stakeholders to make improvements and support programs that enhance the enjoyment of the San Francisco Bay shoreline.

“This project responds to the national call for new clean energy sources that will move our nation toward green energy and protects the electrical grid in the Bay Area,” said Barry Luboviski , secretary-treasurer, Building and Construction Trades Council of Alameda County, AFL-CIO. “We are looking forward to getting the project underway and putting people back to work.”

The California Energy Commission granted a license for the plant in September 2007 and the California Public Utilities Commission approved a 10-year power purchase agreement in April 2009 under whichPG&E will purchase the electricity generated by the plant.

“This is an important project for the City of Hayward. We are proud to support a project that is not only environmentally responsible but also makes a significant investment in Hayward,” said Jim Wieder , President & CEO of the Hayward Chamber of Commerce.

The new permit conditions for the facility are set forth in a draft additional Statement of Basis made available today by the BAAQMD at www.baaqmd.gov. In this document, the BAAQMD finds that by assuring the plant uses the most energy-efficient technology to generate power from fossil fuels, the proposed plant will limit its emissions of heat-trapping greenhouse gases. BAAQMD is soliciting input from interested stakeholders at this time and intends to issue an official notice of the proposed permit decision, upon scheduling a formal public comment period and hearing.

Russell City Energy Center has agreed to a limit on the plant’s overall efficiency or “heat rate,” which is the amount of fuel it takes to generate a kilowatt-hour of electricity. At baseload conditions, the plant is designed to operate at an efficiency rate that results in approximately 800 lbs of CO2 per megawatt-hour of power delivered to the grid. This is less than half the 1,700 lbs of CO2 per megawatt-hour emitted by even the most advanced coal-fired generating technologies. It also is substantially lower than the California Public Utilities Commission’s 1,100 lbs/megawatt-hour standard, which applies to investor-owned utilities entering into new long-term power purchase contracts.

Compliance with this limit will be demonstrated by conducting an annual performance test, using the industry-standard method developed by the American Society of Mechanical Engineers for measuring overall plant efficiency. This annual test is intended to ensure that the plant continues to be operated and maintained to achieve expected efficiency levels over time.

The Russell City Energy Center project is jointly owned by Calpine Corporation, which holds a 65 percent stake and serves as managing partner, and an affiliate of GE Energy Financial Services, which holds a 35 percent non-managing member interest.

For more information about Russell City Energy Center visit www.russellcityenergycenter.com.

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 over 24,000 megawatts of clean, cost-effective, reliable and fuel-efficient electricity to customers and communities in 16 states in the United States and Canada. Calpine owns, leases, and operates low-carbon, natural gas-fired, and renewable geothermal power plants. Using advanced technologies, Calpinegenerates 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

This release contains 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. 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 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. Please see the risks identified in this release or in Calpine's reports and registration statements filed with the Securities and Exchange Commission, including, without limitation, the risk factors identified in its Quarterly Report on Form 10-Q for the three months ended March 31, 2009, and its Annual Report on Form 10-K for the year ended December 31, 2008. These filings are available by visiting the Securities and Exchange Commission's web site at www.sec.gov or Calpine's web site at www.calpine.com. 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.

Source: Calpine Corporation

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