Calpine to eliminate 300 jobs, sell non-core business

San Jose, CA, Feb. 2, 2006 — Calpine Corp. announced the initial steps of a comprehensive program designed to stabilize, improve and strengthen the company’s core power generation business and its financial health. Calpine hopes the program will help to ensure that the company will emerge from its bankruptcy as a profitable, stronger and more competitive power company.

Calpine is immediately reducing activities and curtailing expenditures in certain non-core areas and business units, resulting in a staff lay off of approximately 300 positions. Combined with other cost reduction measures, including the closure of non-core offices, the company expects these actions to reduce annual operating costs by approximately $50 million.

Calpine’s lay offs and cost reduction activities return the company’s efforts to its core North American power generation business. The areas of its business that will be immediately impacted by the program include:

* Business development. The company is limiting its new business development activities and is focusing ongoing efforts on maximizing the value of its advanced development opportunities, including projects with long-term power contracts or in advanced contract negotiations. The company will look to sell select development projects and will continue to evaluate existing petroleum coke development in Texas.

* Construction. Calpine is completing construction projects with long-term power sales commitments and is exploring the opportunity to sell this business unit. The company continues to evaluate those projects without long-term power sales agreements.

* Power services. The company is discontinuing all new business activity for Calpine Power Services and will complete its service obligations under existing contracts.

* Marketing and sales. Calpine is evaluating its future participation in power markets to determine the right balance between short-term, long-term and tolling contracts for the sale of its generation. Until then, the company is curtailing its retail power sales efforts to administering current contracts and is limiting long-term power contracting efforts for its existing generation.

* Thomassen turbine systems (TTS). In keeping with its focus on the North American power generation sector, Calpine has determined that TTS is not a core business for Calpine and every effort will be made to sell this company to a third party.

Calpine and many of its subsidiaries filed for bankruptcy in an effort to reorganize under Chapter 11 on December 20, 2005, in the U.S. Bankruptcy Court for the Southern District of New York.

For related articles on the developing Calpine Corp. story, please read these articles:

Calpine Power Income Fund and its manager in dispute

Default avoided on King City Project: Calpine Power Income Fund; Scott Davido named CFO of Calpine

Calpine receives court approval of $2 billion DIP financing

Calpine announces departure of member of board

Calpine terminates tender offer for outstanding first priority senior secured notes

Calpine receives court approval of first day motions

Calpine files for bankruptcy

Calpine given time to repay debts, but not much

Calpine’s common stock to cease trading on NYSE

Fitch says Calpine exposure does not adversely affect public power sector

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