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Calpine Agrees to Sell 25% Undivided Interest in Freestone Energy Center to Rayburn Country Electric Cooperative

10/29/2010

HOUSTON, Oct 29, 2010 (BUSINESS WIRE) -- Calpine Corporation (NYSE:CPN) has signed an agreement to sell a 25% undivided interest in the 1,038 MW Freestone Energy Center to Rayburn Country Electric Cooperative Inc. (Rayburn) for $215 million. The combined-cycle natural gas-fired power plant is located near Fairfield, Texas, in the North Zone of ERCOT.

Calpine, which remains the majority owner, will continue to operate the plant and in exchange will receive annual operating and management fees from Rayburn. Rayburn will receive 25% of the economic benefit of the plant's output, enabling it to better serve its customers in rural north and east Texas. The agreement is subject to regulatory agency approval and is expected to close in December of this year.

"We are pleased to have Rayburn Country as a partner and look forward to helping them to serve their customers with reliable, cost-effective and environmentally responsible power from the Freestone plant," said Calpine Executive Vice President and Chief Commercial Officer Thad Hill. "For Calpine, this transaction demonstrates our ability to be opportunistic and creative in unlocking embedded value in our portfolio to enhance liquidity and give us greater capital flexibility, all toward the end of improving shareholder value."

Freestone Energy Center, which began commercial operation in June 2002, is a natural gas-fired combined-cycle facility. In 2009, it earned Bronze Member status in the Texas Commission on Environmental Quality's Clean Texas Program. Using advanced technology, the Freestone plant generates power first via four electricity-producing natural gas turbines. Then it uses heat from that process to create steam that drives two steam turbines. This highly fuel-efficient approach allows Calpine to dramatically reduce emissions compared to older fossil-fuel facilities. A combined-cycle facility consumes about 40 percent less natural gas per megawatt-hour-produced than older technology plants, making it a cost-effective and low-carbon source of electricity.

"Rayburn has been exploring options to purchase an ownership in an electric generation plant in the north Texas area for several years," said Rayburn President and CEO John Kirkland. "The Freestone Energy Center is a perfect size and generation match to Rayburn's load and we feel very fortunate to partner with a company like Calpine, which demonstrates a high degree of professionalism and generation expertise." Kirkland also stated that, "Rayburn and its member systems are looking forward to working together with Calpine to supply our members with power from this plant for many years in the future."

About Rayburn Country Electric Cooperative

Headquartered in Rockwall, Texas, Rayburn is a rural electric generation and transmission cooperative which provides the wholesale power requirements for five rural electric distribution cooperatives. Rayburn's member cooperatives include Fannin County Electric Cooperative Inc., Farmers Electric Cooperative Inc., Grayson-Collin Electric Cooperative Inc., Lamar County Electric Cooperative Association and Trinity Valley Electric Cooperative Inc., which together provide electric service in sixteen counties in North Central and Northeast Texas.

About Calpine

Founded in 1984, Calpine Corporation is a major U.S. power company, currently capable of delivering nearly 29,000 megawatts of clean, cost-effective, reliable and fuel-efficient power from its 93 operating plants to customers and communities in 21 U.S. states and Canada. Calpine Corporation is committed to helping meet the needs of an economy that demands more and cleaner sources of electricity. Calpine owns, leases and operates low-carbon, natural gas-fired and renewable geothermal power plants. Using advanced technologies, Calpine generates power in a reliable and environmentally responsible manner for the customers and communities it serves. Please visit our website at http://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 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 Annual Report on Form 10-K for the year ended Dec. 31, 2009, and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2010. These filings are available by visiting the Securities and Exchange Commission's website at http://www.sec.gov or Calpine's website at http://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

Calpine Corporation
Media Relations:
Norma F. Dunn, 713-830-8883
norma.dunn@calpine.com
or
Investor Relations:
Andre Walker, 713-830-8775
andrew@calpine.com
or
Rayburn Country Electric Cooperative Inc.
John Kirkland, 469-402-2100