Calpine responds to Reuters article

SAN JOSE, Calif., Aug. 27, 2004 (PRNewswire-FirstCall) — In response to yesterday’s Reuters’ article regarding a RateFinancials Inc. report, Calpine Corporation is compelled to point out flagrant, misleading and inaccurate allegations as reported by Reuters. The company’s requests for a copy of this report were refused by both RateFinancials Inc. and Reuters. Although Calpine responded to questions related to these inaccuracies in advance of the article, Reuters elected not to reflect the company’s position.

The Reuter’s article states that Calpine, “. . . has underplayed expenses, allowing it to show better results at its gas-fired plants . . .” Calpine accurately reports the costs of producing gas (exploration, operating and lifting costs and depreciation and depletion expense) that is consumed in its own plants. In fact, as RateFinancials apparently fails to grasp and Reuter’s initially elected not to report, under U.S. Generally Accepted Accounting Principles (GAAP) inter-company transactions (such as Calpine’s sales of its own gas production to its power plants) must be eliminated in consolidation. In addition to complying with GAAP, the company provides further analysis of its fuel expense in the management discussion and analysis section of the company’s financial reports.

The Reuters’ article also states, “. . . companies have considerable leeway in judging what qualifies as impairment.” In accordance with GAAP, Calpine regularly performs tests for asset impairment. These tests are performed at least annually and are also performed more frequently whenever events or circumstances occur that could impact the test. To date, the company has taken write-downs for impairment related to certain development projects, oil and gas fields and excess turbines. As we reported to Reuters, all of the company’s other assets pass the impairment test, therefore no further write-downs have been appropriate.

Calpine remains committed to the integrity and transparency of its financial statements. While the company understands the media’s role in disseminating news — even when it may not agree with it — Calpine is compelled to respond to bias and significantly misleading information.

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