Calpine Power Income Fund and its manager in dispute

Calgary, Alberta, Jan. 30, 2006 — The Independent Trustees of Calpine Power Income Fund and the directors of one of its subsidiaries and the directors of one of its subsidiaries, are disputing with the Fund’s manager, Calpine Canada Power Ltd. (the “manager”), whether or not the manager is exclusively entitled to market the tolling capacity of the Calgary Energy Centre.

The need to market the tolling capacity of Calgary Energy Centre arose after one of the manager’s affiliates repudiated the tolling agreement between it and the subsidiary of the Fund which owns the Calgary Energy Centre, which repudiation was announced on January 17, 2006.

Calpine Power Income Fund, together with its subsidiaries Calpine Commercial Trust and Calpine Power L.P. (“CLP”) (collectively, the “Fund”), have advised the manager through their counsel that they will seek a court declaration that the Fund has the exclusive right to market the tolling capacity of the Calgary Energy Centre.

This court proceeding will be heard in conjunction with an application brought by the manager and certain of its affiliates seeking a declaration that the Manager has the exclusive right to market the tolling capacity. The manager and these affiliates have initiated their court proceedings after the independent trustees and the directors of the general partner of CLP (collectively, the “independents”) advised the manager that in their view the manager is in a position of material conflict in connection with the marketing of tolling capacity and that the independents should control the marketing process.

The independents also alleged that certain conduct by the manager is in “fundamental breach” of its obligations under the Fund’s management agreements. The manager has a contrary view as to whether a material conflict exists and the appropriateness of its conduct in the circumstances.

The court proceeding is scheduled to be heard on February 2, 2006. It will be heard as part of proceedings involving the manager and certain of its affiliates under the Canadian Companies’ Creditors Arrangement Act (CCAA). The manager and these affiliates are subsidiaries of Calpine Corp., which is in voluntary proceedings for reorganization under Chapter 11 of the US Bankruptcy Code.

The manager and its affiliates in CCAA proceedings are also seeking a declaration that they have the exclusive right to pursue all avenues to restructure their business including to develop and implement a court approved marketing process to sell some or all of their property including a subordinated ownership interest in CLP owned by the manager and management agreements whereby the manager has agreed to manage and administer the Fund.

There is no certainty that the manager will implement a restructuring or other disposition transaction involving its management agreements with the Fund and subordinated ownership interest in the CLP, nor is it possible to predict the timing of any such transaction, should one evolve.

Calpine Power Income Fund is an unincorporated open-ended trust that invests in electrical power assets. Calpine Power Income Fund indirectly owns interests in power generating facilities in British Columbia, Alberta and California, as well as a participating loan interest in a power plant in Ontario and a promissory note issued by the manager.

For related stories about Calpine Corp., please read these articles:

Calpine files for bankruptcy

Calpine given time to repay debts, but not much

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