Calpine gets approval to sell power plant; moves forward with bankruptcy recovery plan

San Jose, CA, Dec. 8, 2006 — Calpine Corp. announced that it has received approval from the U. S. Bankruptcy Court, Southern District of New York for the sale of the company’s 590-megawatt Aries Power Plant to Kelson Holdings LLC for $233.6 million. The transaction, subject to certain regulatory approvals, is expected to close within the next 30 to 60 days.

“This transaction represents another positive step towards our goal of emerging from Chapter 11 a stronger, more competitive power company,” said Robert P. May, Calpine’s CEO. May said the sale is consistent with the company’s strategy of focusing on “core power assets in our key power markets where Calpine can best compete” in order to recover from their bankruptcy.

In October, Calpine received Court approval to proceed with the sale process for Aries and initially obtained a $158.5 million bid from Aquila Inc. In accordance with asset sales procedures approved by the Bankruptcy Court, Calpine held an auction on Dec. 4, 2006 to allow other potential buyers to bid on the asset. At the conclusion of this auction, Kelson Holdings LLC was selected as the winning bidder.

Calpine will utilize the $233.6 million in proceeds to repay approximately $191 million of project-related debt that includes all outstanding principal, accrued interest and other debt claims. The Aries facility is a natural gas- fired, combined-cycle power plant located in Pleasant Hill, MO that has been in operation since 2001.

For related articles on the continuing Calpine bankruptcy and recovery, please read these articles:

Calpine sells excess inventory

Calpine sells interest in Wisconsin power plant

Calpine to sell interest in Cali energy center

Court OKs Calpine power plant sale

Calpine repays $645 million of its 9 5/8% First Priority Senior Secured Notes due 2014

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Calpine receives court approval of $2 billion DIP financing

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Calpine files for bankruptcy

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