<SUBMISSION>
<ACCESSION-NUMBER>0000891618-01-500313
<TYPE>S-3/A
<PUBLIC-DOCUMENT-COUNT>7
<FILING-DATE>20010417
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>CALPINE CORP
<CIK>0000916457
<ASSIGNED-SIC>4911
<IRS-NUMBER>770212977
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>S-3/A
<ACT>33
<FILE-NUMBER>333-56712
<FILM-NUMBER>1603843
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>50 WEST SAN FERNANDO ST
<CITY>SAN JOSE
<STATE>CA
<ZIP>95113
<PHONE>4089955115
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>50 W SAN FERNANDO
<STREET2>SUITE 500
<CITY>SAN JOSE
<STATE>CA
<ZIP>95113
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>S-3/A
<SEQUENCE>1
<FILENAME>f70006a1s-3a.txt
<DESCRIPTION>AMENDMENT NO.1 TO FORM S-3
<TEXT>

<PAGE>   1


     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 17, 2001



                                                      REGISTRATION NO. 333-56712

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------


                                AMENDMENT NO. 1


                                       TO


                                    FORM S-3
                             REGISTRATION STATEMENT

                                     UNDER

                           THE SECURITIES ACT OF 1933
                            ------------------------

                              CALPINE CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S>                              <C>                              <C>
            DELAWARE                           4911                          77-0212977
 (STATES OR OTHER JURISDICTIONS    (PRIMARY STANDARD INDUSTRIAL           (I.R.S. EMPLOYER
                OF
 INCORPORATION OR ORGANIZATION)    CLASSIFICATION CODE NUMBERS)       IDENTIFICATION NUMBERS)
</TABLE>

                          50 WEST SAN FERNANDO STREET
                           SAN JOSE, CALIFORNIA 95113
                                 (408) 995-5115
  (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
                   REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

                                PETER CARTWRIGHT
      CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, CALPINE CORPORATION
                          50 WEST SAN FERNANDO STREET
                           SAN JOSE, CALIFORNIA 95113
                                 (408) 995-5115
 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
                             OF AGENT FOR SERVICE)


                                   COPIES TO:


                                BRUCE C. BENNETT
                              COVINGTON & BURLING
                          1330 AVENUE OF THE AMERICAS
                            NEW YORK, NEW YORK 10019
                                 (212) 841-1000

        APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
   From time to time after the effective date of this Registration Statement.

     If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box:  [ ]

     If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box:  [X]

     If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering:  [ ] __________

     If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering:  [ ] __________

     If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box:  [ ]

     THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>   2

        THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
        WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
        WITH THE SECURITIES AND EXCHANGE COMMISSION RELATING TO THESE SECURITIES
        IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES
        AND IS NOT SEEKING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE
        THE OFFER OR SALE IS NOT PERMITTED.


                  SUBJECT TO COMPLETION, DATED APRIL 17, 2001


PROSPECTUS


                            Up to 16,603,633 Shares


                              CALPINE CORPORATION

                                  Common Stock
                          (Par Value $.001 per share)

     This prospectus relates to the shares of common stock of Calpine
Corporation, a Delaware corporation, issuable upon exchange or redemption of the
exchangeable shares of Calpine Canada Holdings Ltd., an Alberta corporation and
an indirect wholly-owned subsidiary of Calpine, which we call Calpine Canada in
this prospectus. The exchangeable shares are being issued to the former
shareholders of Encal Energy Ltd., an Alberta corporation, in connection with
our acquisition of Encal. Each exchangeable share may be exchanged for one share
of our common stock, plus all payable and unpaid dividends, if any, on a share
of our common stock. Because the shares of our common stock offered by this
prospectus will be issued only in exchange for, or upon the redemption of, the
exchangeable shares, we will not receive any cash proceeds from this offering.


     Up to 4,649,209 shares of the common stock offered hereby may be resold by
the selling holder named in this prospectus following our issuance of common
stock to such selling holder in exchange for, or upon redemption of, its
exchangeable shares. The selling holder will receive all of the proceeds from
the sale of the securities and will pay all expenses incident to the offer and
sale of the common stock, including any underwriting discounts and selling
commissions applicable to any sale. The selling holder and any broker-dealers,
agents or underwriters that participate in the distribution of the securities
may be deemed to be "underwriters" within the meaning of the Securities Act, and
any commission received by them and any profit on the resale of the securities
purchased by them may be deemed to be underwriting commission or discounts under
the Securities Act.


     We are paying all expenses of registration incurred in connection with this
offering.


     Calpine's common stock is traded on The New York Stock Exchange under the
symbol "CPN." On April 12, 2001, the last reported sales price of the common
stock on that exchange was $51.38. Unless otherwise indicated, all dollar
references in this prospectus are to U.S. dollars.



     INVESTING IN CALPINE'S COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" ON
PAGE 7.


     NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

               The date of this prospectus is             , 2001.
<PAGE>   3

                               TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
The Company.................................................    1
Risk Factors................................................    7
Where You Can Find More Information.........................    8
Forward-Looking Statements..................................    9
Use of Proceeds.............................................   10
Selling Holder..............................................   10
Unaudited Pro Forma Combined Condensed Financial
  Statements................................................   11
Plan of Distribution........................................   20
Description of Our Capital Stock............................   24
Income Tax Considerations...................................   28
Legal Matters...............................................   37
Independent Auditors........................................   37
Index to Consolidated Financial Statements of Encal Energy
  Ltd. .....................................................  F-1
</TABLE>


                           -------------------------

     This document is called a prospectus and is part of a registration
statement that we filed with the Securities and Exchange Commission (the "SEC")
using a "shelf" registration or continuous offering process.

     The registration statement containing this prospectus, including the
exhibits to the registration statement, provides additional information about us
and the securities offered under this prospectus. The registration statement,
including the exhibits, can be read at the SEC web site or at the SEC offices
mentioned under the heading "Where You Can Find More Information."

     You should rely only on the information incorporated by reference or
provided in this prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer or soliciting a purchase of
these securities in any jurisdiction in which the offer or solicitation is not
authorized or in which the person making the offer or solicitation is not
qualified to do so or to anyone to whom it is unlawful to make the offer or
solicitation. You should not assume that the information in this prospectus or
the prospectus supplement is accurate as of any date other than the date on the
front of the document.

     The prospectus incorporates business and financial information about us
that is not included in or delivered with the document. YOU MAY REQUEST AND
OBTAIN THIS INFORMATION FREE OF CHARGE BY WRITING OR TELEPHONING US AT THE
FOLLOWING ADDRESS: CALPINE CORPORATION, 50 WEST SAN FERNANDO STREET, SAN JOSE,
CALIFORNIA 95113, ATTENTION: LISA M. BODENSTEINER, ASSISTANT SECRETARY,
TELEPHONE: (408) 995-5115.

     Unless we have indicated otherwise, references in this prospectus to
"Calpine," "we," "us," and "our" or similar terms are to Calpine Corporation and
its consolidated subsidiaries.

                                        i
<PAGE>   4

                                  THE COMPANY


     We are a leading independent power company engaged in the development,
acquisition, ownership and operation of power generation facilities and the sale
of electricity predominantly in the United States. We have experienced
significant growth in all aspects of our business over the last five years.
Currently, we own interests in 50 power plants having a net capacity of 5,849
megawatts. We also have 25 gas-fired projects under construction having a net
capacity of 14,028 megawatts and have announced plans to develop 28 gas-fired
projects (power plants and expansions of current facilities) with a net capacity
of 15,142 megawatts, including the Calgary Energy Centre, a 300 megawatt
combined-cycle, gas-fired power plant to be located in Calgary, Alberta. Upon
completion of the projects under construction, we will have interests in 74
power plants located in 21 states having a net capacity of 19,877 megawatts. Of
this total generating capacity, 96% will be attributable to gas-fired facilities
and 4% will be attributable to geothermal facilities.



     As a result of our expansion program, our revenues, cash flow, earnings and
assets have grown significantly over the last five years, as shown in the table
below.



<TABLE>
<CAPTION>
                                                                            COMPOUND ANNUAL
                                                     1996         2000        GROWTH RATE
                                                   ---------    ---------   ---------------
                                                   (DOLLARS IN MILLIONS)
<S>                                                <C>          <C>         <C>
Total Revenue....................................  $  214.6     $2,282.8           81%
EBITDA...........................................     110.7        825.9           65%
Net Income.......................................      18.7        323.5          104%
Total Assets.....................................   1,031.4      9,737.3           75%
</TABLE>



     Since our inception in 1984, we have developed substantial expertise in all
aspects of the development, acquisition and operation of power generation
facilities. We believe that the vertical integration of our extensive
engineering, construction management, operations, fuel management, power
marketing and financing capabilities provides us with a competitive advantage to
successfully implement our acquisition and development program and has
contributed to our significant growth over the past five years.


THE MARKET


     The power industry represents the third largest industry in the United
States, with an estimated end-user market of over $215 billion of electricity
sales in 2000 produced by an aggregate base of power generation facilities with
a capacity of approximately 860,000 megawatts. In response to increasing
customer demand for access to low-cost electricity and enhanced services, new
regulatory initiatives have been and are continuing to be adopted at both the
state and federal level to increase competition in the domestic power generation
industry. The power generation industry historically has been largely
characterized by electric utility monopolies producing electricity from old,
inefficient, high-cost generating facilities selling to a captive customer base.
Industry trends and regulatory initiatives have transformed the existing market
into a more competitive market where end-users purchase electricity from a
variety of suppliers, including non-utility generators, power marketers, public
utilities and others.



     There is a significant need for additional power generating capacity
throughout the United States, both to satisfy increasing demand, as well as to
replace old and inefficient generating facilities. Due to environmental and
economic considerations, we believe this new capacity will be provided
predominantly by gas-fired facilities. We believe that these market trends will
create substantial opportunities for efficient, low-cost power producers that
can produce and sell energy to customers at competitive rates.


     In addition, as a result of a variety of factors, including deregulation of
the power generation market, utilities, independent power producers and
industrial companies are disposing of power generation facilities. To date,
numerous utilities have sold or announced their intentions to sell their power
generation facilities and have focused their resources on the transmission and
distribution business segments. Many independent producers operating a limited
number of power plants are also seeking to dispose of their

                                        1
<PAGE>   5

plants in response to competitive pressures, and industrial companies are
selling their power plants to redeploy capital in their core businesses.

STRATEGY


     Our strategy is to continue our rapid growth by capitalizing on the
significant opportunities in the power market, primarily through our active
development and acquisition programs. In pursuing our growth strategy, we
utilize our management and technical knowledge to implement a fully integrated
approach to the acquisition, development and operation of power generation
facilities. This approach uses our expertise in design, engineering,
procurement, finance, construction management, fuel and resource production,
acquisition, operations and power marketing, which we believe provides us with a
competitive advantage. The key elements of our strategy are as follows:



     - Development of new and expansion of existing power plants. We are
       actively pursuing the development of new, and expansion of both baseload
       and peaking capacity at our existing, highly efficient, low-cost,
       gas-fired power plants to replace old and inefficient generating
       facilities and meet the demand for new generation.


     - Acquisition of power plants. Our strategy is to acquire power generating
       facilities that meet our stringent criteria, provide significant
       potential for revenue, cash flow and earnings growth and provide the
       opportunity to enhance the operating efficiencies of the plants.

     - Enhancement of existing power plants. We continually seek to maximize the
       power generation and revenue potential of our operating assets and
       minimize our operating and maintenance expenses and fuel costs.


BUSINESS COMBINATION WITH ENCAL



     On February 8, 2001, we announced our plans to acquire all of the common
shares of Encal Energy Ltd., a Calgary, Alberta-based natural gas and petroleum
exploration and development company, through a stock-for-stock exchange in which
Encal shareholders will receive Cdn. $12.00 per share in Calpine common
equivalent shares (called "exchangeable shares" in this prospectus) of our
subsidiary, Calpine Canada, based on an exchange ratio to be determined prior to
closing. The aggregate value of the transaction is approximately U.S. $1.2
billion, including the assumed indebtedness of Encal. With the addition of
Encal's assets, which currently produce approximately 230 million cubic feet of
gas equivalent ("mmcfe") per day, net of royalties, our net production is
expected to increase to approximately 390 mmcfe per day in North America, enough
to fuel approximately 2,300 megawatts of our power fleet. The Registration
Statement of which this prospectus is a part is being filed with the SEC in
order to register the shares of our common stock that will be issuable on
exchange of the exchangeable shares issued in connection with our business
combination with Encal and to allow for resales of such common stock by a
selling holder who is an affiliate of Encal.


RECENT DEVELOPMENTS


     PROJECT DEVELOPMENT AND CONSTRUCTION. On February 12, 2001, we announced
that the Florida Public Service Commission approved a joint application filed by
Calpine and Seminole Electric Cooperative, Inc., under which we will build the
Osprey Energy Center to supply electric power to help meet Seminole's members'
power needs.



     ISSUANCE OF SECURITIES. On February 15, 2001, we completed a public
offering of $1.15 billion of our 8 1/2% Senior Notes due 2011. The senior notes
earn interest at 8 1/2% per year, payable semi-annually, and mature on February
15, 2011.



     CALIFORNIA POWER MARKET. The deregulation of the California power market
has produced significant unanticipated results in the past year. The
deregulation froze the rates that utilities can charge their retail and business
customers in California and prohibited the utilities from buying power on a
forward basis, while wholesale power prices were not subjected to limits.


                                        2
<PAGE>   6

     In the past year, a series of factors have reduced the supply of power to
California, which has resulted in wholesale power prices that have been
significantly higher than historical levels. Several factors contributed to this
increase. These included:

     - significantly increased volatility in prices and supplies of natural gas;

     - an unusually dry fall and winter in the Pacific Northwest, which reduced
       the amount of available hydroelectric power from that region (typically,
       California imports a portion of its power from this source);

     - the large number of power generating facilities in California nearing the
       end of their useful lives, resulting in increased downtime (either for
       repairs or because they have exhausted their air pollution credits and
       replacement credits have become too costly to acquire on the secondary
       market); and


     - continued obstacles to new power plant construction in California, which
       deprived the market of new power sources that could have, in part,
       ameliorated the adverse effects of the foregoing factors.



     As a result of this situation, two major California utilities that are
subject to the retail rate freeze, including Pacific Gas & Electric Company
("PG&E"), have faced wholesale prices that far exceed the retail prices they are
permitted to charge. This has led to significant underrecovery of costs by these
utilities; and they have been widely reported to be facing the prospect of
insolvency and, on April 6, 2001, PG&E filed for bankruptcy protection under
Chapter 11 of the United States Bankruptcy Code. As a consequence, these
utilities have defaulted under a variety of contractual obligations, including
payment obligations to power generators. PG&E has defaulted on payment
obligations to us. As of March 31, 2001, we recorded approximately $267 million
in accounts receivable with PG&E, plus a $68 million note receivable not yet due
and payable. We are confident that PG&E, through a successful reorganization,
will be able to pay us for all past due power sales, in addition to electricity
deliveries made on a going-forward basis.



     We have historically sold power to PG&E, which is one of the California
utilities that is subject to the rate freeze. We are currently selling power to
PG&E pursuant to long-term qualifying facility (or "QF") contracts, which are
subject to federal regulation under Public Utility Regulatory Policies Act of
1978, as amended ("PURPA") (16 U.S.C. sec. 796 et seq.). The QF contracts
provide that the California Public Utilities Commission ("CPUC") has the
authority to determine the appropriate utility "avoided cost" to be used to set
energy payments for certain QF contracts, including those for all of our QF
plants in California which sell power to PG&E. Section 390 of the California
Public Utility Code provided QFs the option to elect to receive energy payments
based on the California Power Exchange ("PX") market clearing price. In
mid-2000, our QF facilities elected this option and were paid based upon the PX
zonal day ahead clearing price ("PX Price") from summer 2000 until January 19,
2001, when the PX ceased operating a day ahead market. Since that time, the CPUC
has ordered that the price to be paid for energy deliveries by QFs electing the
PX Price shall be based on a natural gas cost-based "transition formula." The
CPUC has conducted proceedings (R. 99-11-022) to determine whether the PX Price
was the appropriate price for the energy component upon which to base payments
to QFs which had elected the PX based pricing option. It is possible that the
CPUC could order a payment adjustment based on a different energy price
determination. We believe that the PX Price was the appropriate price for energy
payments but there can be no assurance that this will be the outcome of the CPUC
proceedings. Legislation has recently been introduced in the California
legislature (SB 47X) that would establish a fixed price for the QF contracts for
a 5 year period and would eliminate any PX Price adjustment prior to December
31, 2000. There can be no assurances that this legislation will be enacted.



     We have continued to honor our contractual obligations to PG&E under our QF
contracts. To date, we have refrained from pursuing our collection remedies with
respect to PG&E's default, however, we have been actively involved with the
California utilities, the California legislature, and other interested parties
to develop legislation designed to stabilize energy prices through the
application of a long-term energy pricing methodology (for a five-year period)
in place of the short-term pricing methodology


                                        3
<PAGE>   7


currently utilized under the QF contracts, as discussed above. We also expect
further legislation to enable the California utilities to finance over a longer
term the difference between the wholesale prices that have been paid and the
retail prices they received during last fall and into this winter. We believe
that this should enhance PG&E's ability to make payment of all past due amounts.
However, management cannot predict the timing or ultimate outcome of the
legislative process or the payment of amounts due under our contracts.



     As this situation has deteriorated, California has taken steps to restore a
predictable and reliable power market to the State. Recently, California adopted
legislation permitting it to issue long-term revenue bonds to provide funding
for wholesale purchases of power. The bonds will be repaid with the proceeds of
payments by retail customers over time. The California Department of Water
Resources ("DWR") sought bids for long-term power supply contracts. We
successfully bid in that auction, and announced, as indicated below, that we
have signed three significant long-term power supply contracts with DWR.



     On February 7, 2001, we announced the signing of a 10-year, $4.6 billion
fixed-price contract with DWR to provide electricity to the State of California.
We committed to sell up to 1,000 megawatts of electricity, with initial
deliveries of 200 megawatts starting October 1, 2001, and increasing to 1,000
megawatts by January 1, 2004. This contract will continue through 2011. The
electricity will be sold directly to DWR on a 24-hour, 7-day-a-week basis.



     On February 28, 2001, we announced the signing of two long-term power sales
contracts with DWR. Under the terms of the first contract, a $5.2 billion,
10-year, fixed-price contract, we commit to sell up to 1,000 megawatts of
generation. Initial deliveries are scheduled to begin July 1, 2001 with 200
megawatts and increase to 1,000 megawatts by as early as July 2002. Under the
terms of the second contract, a 20-year contract totaling up to $3.1 billion, we
will supply DWR with up to 495 megawatts of peaking generation, beginning with
90 megawatts as early as August 2001, and increasing up to 495 megawatts as
early as August 2002.



     On March 13, 2001, we announced the signing of a two-month deal to provide
555 megawatts of electricity to DWR from our new South Point Energy Center
during plant testing, effective immediately through May 15, 2001.



     FERC INVESTIGATION INTO CALIFORNIA WHOLESALE MARKETS. Beginning in May
2000, wholesale energy prices in the California markets increased to levels well
above 1999 levels. In response, on June 28, 2000, the ISO Board of Governors
reduced the price cap applicable to the ISO's wholesale energy and ancillary
services markets from $750/MWh to $500/MWh. The ISO subsequently reduced the
price cap to $250/MWh on August 1, 2000. During this period, however, the
California Power Exchange Corporation ("PX") maintained a separate price cap set
at a much higher level applicable to the "day-ahead" and "day-of" markets
administered by the PX. On August 23, 2000, the FERC denied a complaint filed
August 2, 2000 by San Diego Gas & Electric Company ("SDG&E") that sought to
extend the ISO's $250 price cap to all California energy and ancillary service
markets, not just the markets administered by the ISO. However, in its order
denying the relief sought by SDG&E, the FERC instructed its staff to initiate an
investigation of the California power markets and to report its findings to the
FERC and held further hearing procedures in abeyance pending the outcome of this
investigation.



     On November 1, 2000, the FERC released a Staff Report detailing the results
of the Staff investigation, together with an "Order Proposing Remedies for
California Wholesale Markets" ("November 1 Order"). In the November 1 Order, the
FERC found that the California power market structure and market rules were
seriously flawed, and that these flaws, together with short supply relative to
demand, resulted in unusually high energy prices. The November 1 Order proposed
specific remedies to the identified market flaws, including: (a) imposition of a
so-called "soft" price cap at $150/MWh to be applied to both the PX and ISO
markets, which would allow bids above $150/MWh to be accepted, but will subject
such bids to certain reporting obligations requiring sellers to provide cost
data and/or identify applicable opportunity costs and specifying that such bids
may not set the overall market clearing price, (b) elimination of the
requirement that the California utilities sell into and buy from the PX, (c)
establishment of independent non-stakeholder governing boards for the ISO and
the PX, and

                                        4
<PAGE>   8


(d) establishment of penalty charges for scheduling deviations outside of a
prescribed range. In the November 1 Order the FERC established October 2, 2000,
the date 60 days after the filing of the SDG&E complaint, as the "refund
effective date." Under the November 1 Order, rates charged for service after
that date through December 31, 2002 will remain subject to refund if determined
by the FERC not to be just and reasonable. While the FERC concluded that the
Federal Power Act and prior court decisions interpreting that act strongly
suggested that refunds would not be permissible for charges in the period prior
to October 2, 2000, it noted that it was willing to explore proposals for
equitable relief with respect to charges made in that period. All of our
receivables from PG&E relate to energy generated by QF facilities. Under FERC
regulations, QF contracts are exempt from regulation under the Federal Power
Act, which is the legislation that provides the authority for the FERC to compel
refunds or frame other equitable relief with respect to the California wholesale
markets. See "Government Regulation -- Federal Energy Regulation -- Federal
Power Act Regulation." Therefore, we believe that any refund or other equitable
remedy that the FERC may impose with respect to the California wholesale markets
will not affect our ability to pursue payment by PG&E of all past due amounts as
described above.



     On December 15, 2000, the FERC issued a subsequent order that affirmed in
large measure the November 1 Order (the "December 15 Order"). Various parties
have filed requests for administrative rehearing and for judicial review of
aspects of the FERC's December 15 Order. The outcome of these proceedings, and
the extent to which the FERC or a reviewing court may revise aspects of the
December 15 Order or the extent to which these proceedings may result in a
refund of or reduction in the amounts charged by our subsidiaries for power sold
in the ISO and PX markets, cannot be determined at this time.


                                        5
<PAGE>   9


CAPITALIZATION



     The following table sets forth, as of December 31, 2000, (1) the actual
consolidated capitalization of Calpine; and (2) the consolidated capitalization
of Calpine as adjusted to reflect the net effect of the sale of $1.15 billion of
our 8 1/2% Senior Notes due 2011 and the business combination with Encal,
including the issuance of our common stock offered hereby. The adjustments do
not reflect normal day-to-day operations. This table should be read in
conjunction with the historical consolidated financial statements and related
notes thereto included or incorporated by reference in this prospectus and the
unaudited pro forma combined condensed financial statements and related notes
thereto included in this prospectus.



<TABLE>
<CAPTION>
                                                                 DECEMBER 31, 2000
                                                              ------------------------
                                                                ACTUAL     AS ADJUSTED
                                                              ----------   -----------
                                                                    (UNAUDITED)
                                                                   (IN THOUSANDS,
                                                               EXCEPT SHARE AMOUNTS)
<S>                                                           <C>          <C>
LONG-TERM DEBT:
  Notes payable, net of current portion.....................  $  195,862   $  355,067
  Project financing, net of current portion.................   1,473,869    1,473,869
  Senior notes(1)...........................................   2,551,750    3,801,832
  Capital lease obligation, net of current portion..........     208,876      208,876
                                                              ----------   ----------
     Total long-term debt...................................   4,430,357    5,839,644
                                                              ----------   ----------
Company-obligated mandatorily redeemable convertible
  preferred securities of subsidiary trusts.................   1,122,490    1,122,490
Minority interests..........................................      37,576       37,576
                                                              ----------   ----------
STOCKHOLDERS' EQUITY:
  Preferred stock, $.001 par value:
     10,000,000 shares authorized; no shares outstanding,
       actual; and one share outstanding, as adjusted.......          --           --
                                                              ----------   ----------
  Common stock, $.001 par value:
     500,000,000 shares authorized, 283,715,058 shares
       outstanding, actual; and 300,318,691 shares
       outstanding, as adjusted(2)..........................         284          300
  Additional paid-in capital................................   1,700,505    1,896,987
  Retained earnings.........................................     536,617      512,636
  Accumulated other comprehensive loss......................        (632)     (21,282)
                                                              ----------   ----------
     Total stockholders' equity.............................   2,236,774    2,388,641
                                                              ----------   ----------
     Total capitalization...................................  $7,827,197   $9,388,351
                                                              ==========   ==========
</TABLE>


-------------------------

(1)Included in senior notes are approximately $100 million of Encal senior
   notes. See Note 6 to Encal's historical consolidated financial statements
   included in this prospectus.



(2)We have calculated the number of shares of our common stock to be offered
   hereby using an exchange ratio of 0.1493 exchangeable shares for each Encal
   common share that will be outstanding at the consummation of our business
   combination with Encal.


                          PRINCIPAL EXECUTIVE OFFICES

     Our principal executive offices are located at 50 West San Fernando Street,
San Jose, California 95113. Our telephone number is (408) 995-5115, and our home
page on the world wide web is at http://www.calpine.com. The contents of our
website are not part of this prospectus.

                                        6
<PAGE>   10

                                  RISK FACTORS


     Investing in our common stock involves risk. In addition to the risk
factors described in our Annual Report on Form 10-K for the year ended December
31, 2000, which is incorporated by reference in this prospectus, you should
carefully consider the risk factors described below, in addition to the other
information contained or incorporated by reference in this prospectus, before
making an investment decision. The risks and uncertainties described below and
incorporated by reference are not the only risks we face. Additional risks and
uncertainties not presently known to us or that we currently deem immaterial may
impair our business operations.


                     RISKS RELATING TO EXCHANGEABLE SHARES

THE EXCHANGE OF YOUR EXCHANGEABLE SHARES IS GENERALLY TAXABLE.

     Based on the tax laws as of the date of this prospectus, the exchange or
redemption of exchangeable shares is generally a taxable event in Canada and may
be a taxable event in the U.S. Your tax consequences depend on a number of
factors, including your residency and whether the shares are exchanged or
redeemed.

THE MARKET PRICE OF OUR COMMON STOCK MAY BE LESS THAN THE MARKET PRICE OF THE
EXCHANGEABLE SHARES.


     Our common stock trades on The New York Stock Exchange and the exchangeable
shares are expected to trade on The Toronto Stock Exchange. We do not plan to
list our common stock or the exchangeable shares on any other exchanges.
Although the market prices on the NYSE and TSE should reflect equivalent value,
there can be no assurances that the market price of our common stock will be
identical, or even similar, to the market price of the exchangeable shares.


OUR COMMON STOCK WILL BE FOREIGN PROPERTY FOR CANADIAN TAX PURPOSES.

     You may be required to limit your investment in our common stock or risk
incurring penalties under the Income Tax Act (Canada) if you are:

     - a registered pension plan;

     - a registered retirement savings plan;

     - a registered retirement income fund;

     - a registered education savings plan (you should consult your own tax
       advisor as additional considerations may arise as a result of the
       acquisition of the Ancillary Rights (defined below under "Income Tax
       Considerations -- Certain United States Federal Income Tax
       Considerations -- Ancillary Rights and Call Rights") to the exchangeable
       shares);

     - a deferred profit sharing plan; or

     - among some other classes of tax-exempt person.

     So long as the exchangeable shares are listed on a prescribed Canadian
stock exchange, which exchanges include the TSE, and Calpine Canada maintains a
substantial presence in Canada, the exchangeable shares will be qualified
investments for these plans or persons and will not be foreign property under
the Income Tax Act (Canada). Our common stock will, however, be foreign property
for these plans or persons. These plans or persons must limit their investment
in our common stock or risk incurring penalties under the Income Tax Act
(Canada).

                                        7
<PAGE>   11


                      WHERE YOU CAN FIND MORE INFORMATION


     We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may obtain any document we file with the SEC at
the SEC's public reference rooms in Washington, D.C., Chicago, Illinois and New
York, New York. You may obtain information on the operation of the SEC's public
reference facilities by calling the SEC at 1-800-SEC-0330. You can request
copies of these documents, upon payment of a duplicating fee, by writing to the
SEC at its principal office at 450 Fifth Street, N.W., Washington, D.C.
20549-1004. Our SEC filings are also accessible through the Internet at the
SEC's Web site at http://www.sec.gov.

     The SEC permits us to "incorporate by reference" into this prospectus the
information in documents we file with it, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be a part of this
prospectus, and later information that we file with the SEC will update and
supersede this information. We incorporate by reference the documents listed
below and any future filings made with the SEC under Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended, until the offering is
otherwise terminated:


     - Calpine's Annual Report on Form 10-K for the year ended December 31,
       2000;



     - Calpine's Current Reports on Form 8-K dated February 6, 2001 and April 9,
       2001; and


     - The description of Calpine's common stock contained in Calpine's
       Registration Statement on Form 8-A (File No. 001-12079), filed with the
       SEC on August 20, 1996, pursuant to Section 12 of the Securities Exchange
       Act.

     If you request a copy of any or all of the documents incorporated by
reference, then we will send to you the copies you requested at no charge.
However, we will not send exhibits to such documents, unless such exhibits are
specifically incorporated by reference in such documents. You should direct
requests for such copies to Calpine Corporation, 50 West San Fernando Street,
San Jose, California 95113, attention: Lisa M. Bodensteiner, Assistant
Secretary, telephone: (408) 995-5115.

     We have filed with the SEC a registration statement on Form S-3 under the
Securities Act, covering the securities described in this prospectus. This
prospectus does not contain all of the information included in the registration
statement. Any statement made in this prospectus concerning the contents of any
contract, agreement or other document is only a summary of the actual contract,
agreement or other document. If we have filed any contract, agreement or other
document as an exhibit to the registration statement, you should read the
exhibit for a more complete understanding of the document or matter involved.
Each statement regarding a contract, agreement or other document is qualified in
its entirety by reference to the actual document.

                                        8
<PAGE>   12

                           FORWARD-LOOKING STATEMENTS

     Some of the statements contained in this prospectus and incorporated by
reference into this prospectus are forward-looking statements within the meaning
of Section 27A of the Securities Act and Section 21E of the Securities Exchange
Act and are subject to the safe harbor created by the Private Securities
Litigation Reform Act of 1995. These statements include declarations regarding
our or our management's intents, beliefs or current expectations. In some cases,
you can identify forward-looking statements by terminology such as "may,"
"will," "should," "expects," "plans," "anticipates," "believes," "estimates,"
"predicts," "potential," or "continue" or the negative of such terms or other
comparable terminology. Any forward-looking statements are not guarantees of
future performance and actual results could differ materially from those
indicated by the forward-looking statements. Forward-looking statements involve
known and unknown risks, uncertainties, and other factors that may cause our or
our industry's actual results, levels of activity, performance, or achievements
to be materially different from any future results, levels of activity,
performance, or achievements expressed or implied by such forward-looking
statements.

     Among the important factors that could cause actual results to differ
materially from those indicated by such forward-looking statements are:


     - changes in government regulations, including pending changes in
      California, and anticipated deregulation of the electric energy industry;



     - commercial operations of new plants that may be delayed or prevented
      because of various development and construction risks, such as a failure
      to obtain financing and the necessary permits to operate or the failure of
      third-party contractors to perform their contractual obligations;



     - cost estimates are preliminary and actual costs may be higher than
      estimated;



     - the assurance that we will develop additional plants;



     - a competitor's development of a lower-cost generating gas-fired power
      plant;



     - the risks associated with marketing and selling power from power plants
      in the newly competitive energy market;



     - the risks associated with marketing and selling combustion turbine parts
      and components in the competitive combustion turbine parts market;



     - the risks associated with engineering, designing and manufacturing
      combustion turbine parts and components;



     - delivery and performance risks associated with combustion turbine parts
      and components attributable to production, quality control, suppliers and
      transportation;



     - the successful exploitation of an oil or gas resource that ultimately
      depends upon the geology of the resource, the total amount and cost to
      develop recoverable reserves, and operational factors relating to the
      extraction of natural gas;



     - the uncertainty of the of the California power market. Our management is
      working closely with a number of parties to resolve the current
      uncertainty. This is an ongoing process and, therefore, the outcome cannot
      be predicted. It is possible that any such outcome will include changes in
      government regulations, business and contractual relationships or other
      factors that could materially affect us, however, our management believes
      that a final resolution will not have a material adverse impact on us; and



     - other risks identified from time to time in our reports and registration
       statements filed with the SEC, including the risk factors identified in
       "Risk Factors" and in our Annual Report on Form 10-K for the year ended
       December 31, 2000, which is incorporated by reference in this prospectus.


     Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance, or achievements. Moreover, neither we

                                        9
<PAGE>   13

nor any other person assumes responsibility for the accuracy and completeness of
such statements. We are under no duty to update any of the forward-looking
statements after the date of this prospectus to conform such statements to
actual results.

                                USE OF PROCEEDS

     Because the shares of our common stock will be issued in exchange for
exchangeable shares, we will not receive any cash proceeds upon the issuance of
our common stock. In the case of resales by the selling holder, the selling
holder will receive all of the net proceeds of the resales. We will not receive
any of the proceeds of such resales.

                                 SELLING HOLDER

     The selling holder may from time to time offer and sell pursuant to this
prospectus any or all of the shares of common stock listed below that are issued
to such selling holder in exchange for, or upon redemption of, such selling
holder's exchangeable shares. The selling holder may also elect not to sell any
common stock held by it. The term "selling holder" refers to the holder listed
below. Only those shares of common stock listed below may be offered for resale
by the selling holder pursuant to this prospectus.

     The selling holder may offer and sell, from time to time following our
issuance of common stock to the selling holder in exchange for, or upon
redemption of, such selling holder's exchangeable shares, any or all of its
common stock listed below by using this prospectus. Because the selling holder
may offer all or only some portion of the common stock listed in the table, no
estimate can be given as to the amount or percentage of these shares of common
stock that will be held by the selling holder upon termination of this offering.
In addition, the selling holder may have sold, transferred or otherwise disposed
of all or a portion of its exchangeable shares since the date on which it
provided the information regarding its ownership of the exchangeable shares, and
thus its right to obtain the common stock included herein.


     The following table sets forth information with respect to the number of
shares of common stock beneficially owned by the selling holder, assuming
exchange or redemption of all of the selling holder's exchangeable shares, that
may be offered for the selling holder's account pursuant to this prospectus. We
prepared the table based on information supplied to us by the selling holder.



<TABLE>
<CAPTION>
                                             NUMBER OF SHARES OF                              NUMBER OF SHARES OF
                                                COMMON STOCK                                     COMMON STOCK
                                             BENEFICIALLY OWNED         NUMBER OF SHARES      BENEFICIALLY OWNED
            SELLING HOLDER               PRIOR TO THE OFFERING(1)(2)   BEING OFFERED(1)(2)   AFTER THE OFFERING(1)
            --------------               ---------------------------   -------------------   ---------------------
<S>                                      <C>                           <C>                   <C>
Ontario Teachers' Pension Plan
  Board(3).............................           4,649,209                 4,649,209                  0
</TABLE>


-------------------------
(1) Beneficial ownership is determined in accordance with the rules of the SEC
    and generally includes voting or investment power with respect to
    securities. The selling holder has sole voting and sole investment power
    with respect to all shares beneficially owned, subject to community property
    laws, where applicable. For purposes of this table, we have assumed all of
    the selling holder's exchangeable shares will be exchanged or redeemed for
    shares of our common stock and that the selling holder will offer and sell
    all of the shares of our common stock it receives upon the exchange of its
    exchangeable shares, however, the selling holder may offer and/or sell less
    than all of such shares of common stock.


(2) The number of shares of common stock that will be beneficially owned and
    that will be offered by the selling holder has been calculated using an
    exchange ratio of 0.1493 exchangeable shares for each Encal common share
    that will be held by the Selling Holder at the consummation of our business
    combination with Encal.



(3) As of April 16, 2001, Ontario Teachers' Pension Plan Board was the
    beneficial owner of approximately 28% of the common stock of Encal and
    accordingly is expected to be the beneficial owner of approximately 28% of
    the exchangeable shares, assuming that its ownership remains the same at the
    time that the business combination with Encal is consummated.


                                        10
<PAGE>   14

     To our knowledge, other than its stock ownership described in the above
table, the selling holder has had no position, office or material relationship
with Calpine or any of its predecessors or affiliates within the past three
years.


          UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS



     The unaudited pro forma combined financial statements set forth below are
presented to give effect to the business combination with Encal under the
pooling of interests method of accounting. The unaudited pro forma combined
financial statements have been prepared from the historical consolidated audited
financial statements of Encal and Calpine as at December 31, 2000, and for the
three years in the period then ended. The unaudited pro forma balance sheet
assumes the business combination had been consummated on December 31, 2000. The
pro forma income statement for each of the three years in the period then ended
assumes that the business combination had been consummated on January 1, 1998.



     The unaudited pro forma combined financial statements do not reflect any
cost savings or other synergies which may result from the business combination
with Encal and are not necessarily indicative of future results of operations or
financial position. The unaudited pro forma combined financial statements are
presented in accordance with United States generally accepted accounting
principles under the successful efforts method of accounting for oil and gas
properties in United States dollars. Accounting policies used in the preparation
of the unaudited pro forma combined financial statements are in accordance with
those used in the preparation of the historical consolidated financial
statements of Calpine as at December 31, 2000, and for the year then ended. The
historical consolidated audited financial statements of Encal have been
converted to United States generally accepted accounting principles, United
States dollars (see Note 2 to the unaudited pro forma combined financial
statements) and to Calpine accounting policies, the most significant difference
being the successful efforts method of accounting for oil and gas properties
(see Note 3 to the unaudited pro forma combined financial statements). The
unaudited pro forma combined financial statements should be read in conjunction
with the historical consolidated financial statements of Encal and Calpine,
including the notes thereto, included or incorporated by reference in this
prospectus.


                                        11
<PAGE>   15


                              CALPINE CORPORATION



              UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET



<TABLE>
<CAPTION>
                                                            DECEMBER 31, 2000
                                       -----------------------------------------------------------
                                                        ENCAL          PRO FORMA        PRO FORMA
                                        CALPINE      U.S. GAAP(2)    ADJUSTMENTS(3)     COMBINED
                                       ----------    ------------    --------------    -----------
                                                         (IN THOUSANDS OF U.S.$)
<S>                                    <C>           <C>             <C>               <C>
ASSETS
Current Assets.......................  $1,343,683      $ 93,423        $      --       $ 1,437,106
Property, Plant & Equipment, Net.....   7,459,055       620,032         (127,509)(a)     7,951,578
Other Non-current Assets.............     934,519            --               --           934,519
                                       ----------      --------        ---------       -----------
     Total Assets....................  $9,737,257      $713,455        $(127,509)      $10,323,203
                                       ==========      ========        =========       ===========
LIABILITIES
Accounts Payable.....................  $  765,613      $ 80,041        $      --       $   845,654

Other Current Liabilities............     403,579(i)         --           34,000(c)        437,579
Long Term Debt.......................   4,430,357       259,287               --         4,689,644
Other Non-current Liabilities........     740,868       117,868          (57,117)(b)       801,619
                                       ----------      --------        ---------       -----------
     Total Liabilities...............  $6,340,417      $457,196        $ (23,117)      $ 6,774,496
                                       ----------      --------        ---------       -----------
Company-Obligated Mandatorily
     Redeemable Convertible Preferred
     Securities of Subsidiary
       Trusts........................  $1,122,490      $     --        $      --       $ 1,122,490
Minority Interests...................      37,576            --               --            37,576
STOCKHOLDERS' EQUITY
Common Stock and Additional Paid-in
  Capital............................   1,700,789       196,498               --         1,897,287
Retained Earnings....................     536,617        80,411         (104,392)          512,636
Accumulated Other Comprehensive
  Loss-Foreign Currency
  Translation........................        (632)      (20,650)              --           (21,282)
                                       ----------      --------        ---------       -----------
     Total Stockholders' Equity......  $2,236,774      $256,259        $(104,392)      $ 2,388,641
                                       ----------      --------        ---------       -----------
Total Liabilities and Stockholders'
  Equity.............................  $9,737,257      $713,455        $(127,509)      $10,323,203
                                       ==========      ========        =========       ===========
</TABLE>


---------------


(i)Included in other current liabilities is notes payable, project financing,
   capital lease obligation, income taxes payable, accrued payroll and related
   expenses, accrued interest payable and other current liabilities as included
   in the Annual Report to Shareholders on Form 10-K for the year ended December
   31, 2000 included or incorporated by reference in this prospectus.



   See Accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
                                  Statements.


                                        12
<PAGE>   16


                              CALPINE CORPORATION



           UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME



<TABLE>
<CAPTION>
                                                             YEAR ENDED DECEMBER 31, 2000
                                              -----------------------------------------------------------
                                                                ENCAL          PRO FORMA       PRO FORMA
                                                CALPINE     U.S. GAAP(2)    ADJUSTMENTS(3)     COMBINED
                                              -----------   -------------   ---------------   -----------
                                              (IN THOUSANDS OF U.S.$, EXCEPT SHARE AND PER SHARE AMOUNTS)
<S>                                           <C>           <C>             <C>               <C>
Revenues....................................  $2,282,793      $264,308         $     --       $2,547,101
Cost of Revenues............................   1,558,676       106,178           34,228(a)     1,699,082
                                              ----------      --------         --------       ----------
Gross Profit................................     724,117       158,130          (34,228)         848,019
Project Development Expenses................      27,556            --               --           27,556
General and Administrative Expenses.........      94,113         8,438               --          102,551
                                              ----------      --------         --------       ----------
  Income from Operations....................     602,448       149,692          (34,228)         717,912
Interest Expense (Income)...................      16,799        17,983               --           34,782
Other Expense...............................      42,011         2,475               --           44,486
                                              ----------      --------         --------       ----------
  Income Before Provision for Income
     Taxes..................................     543,638       129,234          (34,228)         638,644
Provision for Income Taxes..................     218,951        61,215          (15,358)(a)      264,808
                                              ----------      --------         --------       ----------
  Income Before Extraordinary Charge........     324,687        68,019          (18,870)         373,836
  Extraordinary Charge, Net of Tax Benefit
     of $796................................       1,235            --               --            1,235
                                              ----------      --------         --------       ----------
  Net Income................................  $  323,452      $ 68,019         $(18,870)      $  372,601
                                              ==========      ========         ========       ==========
Basic Earnings per Common Share:
  Weighted Average Shares of Common Stock
     Outstanding (thousands)................     264,799       108,985                           281,070(4)
  Income Before Extraordinary Charge........  $     1.23      $   0.62                        $     1.33(4)
  Extraordinary Charge......................  $    (0.01)     $     --                        $       --(4)
  Net Income................................  $     1.22      $   0.62                        $     1.33(4)
Diluted Earnings per Common Share:
  Weighted Average Shares of Common Stock
     Outstanding Before Dilutive Effect of
     Certain Trust Preferred Securities
     (thousands)............................     280,776       110,655                           297,305(4)
  Income Before Extraordinary Charge and
     Dilutive Effect of Certain Trust
     Preferred Securities...................  $     1.16      $   0.61                        $     1.26(4)
  Dilutive Effect of Certain Trust Preferred
     Securities.............................  $    (0.05)     $     --                        $    (0.06)(4)
  Income Before Extraordinary Charge........  $     1.11      $   0.61                        $     1.20(4)
  Extraordinary Charge......................  $    (0.01)     $     --                        $       --(4)
  Net Income................................  $     1.10      $   0.61                        $     1.20(4)
</TABLE>



   See Accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
                                  Statements.


                                        13
<PAGE>   17


                              CALPINE CORPORATION



           UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME



<TABLE>
<CAPTION>
                                                          YEAR ENDED DECEMBER 31, 1999
                                           -----------------------------------------------------------
                                                            ENCAL           PRO FORMA       PRO FORMA
                                            CALPINE     U.S. GAAP(2)     ADJUSTMENTS(3)      COMBINED
                                           ---------    -------------    ---------------    ----------
                                           (IN THOUSANDS OF U.S.$, EXCEPT SHARE AND PER SHARE AMOUNTS)
<S>                                        <C>          <C>              <C>                <C>
Revenues.................................  $847,735       $135,749          $     --         $983,484
Cost of Revenues.........................   561,850         81,790            19,388(a)       663,028
                                           --------       --------          --------         --------
Gross Profit.............................   285,885         53,959           (19,388)         320,456
Project Development Expenses.............    10,712             --                --           10,712
General and Administrative Expenses......    48,671          6,996                --           55,667
                                           --------       --------          --------         --------
  Income from Operations.................   226,502         46,963           (19,388)         254,077
Interest Expense (Income)................    67,056         12,086                --           79,142
Other Expense............................     1,230          2,569                --            3,799
                                           --------       --------          --------         --------
  Income Before Provision for Income
     Taxes...............................   158,216         32,308           (19,388)         171,136
Provision for Income Taxes...............    61,973         12,669            (8,701)(a)       65,941
                                           --------       --------          --------         --------
  Income Before Extraordinary Charge.....    96,243         19,639           (10,687)         105,195
  Extraordinary Charge, Net of Tax
     Benefit of $793.....................     1,150             --                --            1,150
                                           --------       --------          --------         --------
  Net Income.............................  $ 95,093       $ 19,639          $(10,687)        $104,045
                                           ========       ========          ========         ========
Basic earnings per common share:
  Weighted Average Shares of Common Stock
     Outstanding (thousands).............   209,314        107,577                            225,375(4)
  Income Before Extraordinary Charge.....  $   0.46       $   0.18                           $   0.47(4)
  Extraordinary Charge...................  $  (0.01)      $     --                           $  (0.01)(4)
  Net Income.............................  $   0.45       $   0.18                           $   0.46(4)
Diluted Earnings per Common Share:
  Weighted Average Shares of Common Stock
     Outstanding Before Dilutive Effect
     of Certain Trust Preferred
     Securities (thousands)..............   222,644        108,742                            238,855(4)
  Income Before Extraordinary Charge and
     Dilutive Effect of Certain Trust
     Preferred Securities................  $   0.43       $   0.18                           $   0.44(4)
  Dilutive Effect of Certain Trust
     Preferred Securities................  $     --       $     --                           $     --(4)
  Income Before Extraordinary Charge.....  $   0.43       $   0.18                           $   0.44(4)
  Extraordinary Charge...................  $     --       $     --                           $     --(4)
  Net Income.............................  $   0.43       $   0.18                           $   0.44(4)
</TABLE>



   See Accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
                                  Statements.


                                        14
<PAGE>   18


                              CALPINE CORPORATION



           UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF INCOME



<TABLE>
<CAPTION>
                                                          YEAR ENDED DECEMBER 31, 1998
                                           -----------------------------------------------------------
                                                            ENCAL           PRO FORMA       PRO FORMA
                                            CALPINE     U.S. GAAP(2)     ADJUSTMENTS(3)      COMBINED
                                           ---------    -------------    ---------------    ----------
                                           (IN THOUSANDS OF U.S.$, EXCEPT SHARE AND PER SHARE AMOUNTS)
<S>                                        <C>          <C>              <C>                <C>
Revenues.................................  $555,948       $ 94,697          $     --         $650,645
Cost of Revenues.........................   378,926         70,806            17,235(a)       466,967
                                           --------       --------          --------         --------
Gross Profit.............................   177,022         23,891           (17,235)         183,678
Project Development Expenses.............     7,165             --                --            7,165
General and Administrative Expenses......    23,181          6,843                --           30,024
                                           --------       --------          --------         --------
  Income from Operations.................   146,676         17,048           (17,235)         146,489
Interest Expense (Income)................    74,378          9,006                --           83,384
Other Expense (Income)...................    (1,075)         5,733                --            4,658
                                           --------       --------          --------         --------
  Income Before Provision for Income
     Taxes...............................    73,373          2,309           (17,235)          58,447
Provision for Income Taxes...............    27,054          1,012            (7,733)(a)       20,333
                                           --------       --------          --------         --------
  Income Before Extraordinary Charge.....    46,319          1,297            (9,502)          38,114
  Extraordinary Charge, Net of Tax
     Benefit of $441.....................       641             --                --              641
                                           --------       --------          --------         --------
  Net Income.............................  $ 45,678       $  1,297          $ (9,502)        $ 37,473
                                           ========       ========          ========         ========
Basic earnings per common share:
  Weighted Average Shares of Common Stock
     Outstanding (thousands).............   160,969        105,534                            176,725(4)
  Income Before Extraordinary Charge.....  $   0.29       $   0.01                           $   0.22(4)
  Extraordinary charge...................  $  (0.01)      $     --                           $     --(4)
  Net Income.............................  $   0.28       $   0.01                           $   0.22(4)
Diluted Earnings per Common Share:
  Weighted Average Shares of Common Stock
     Outstanding Before Dilutive Effect
     of Certain Trust Preferred
     Securities (thousands)..............   169,311        106,898                            185,320(4)
  Income Before Extraordinary Charge and
     Dilutive Effect of Certain Trust
     Preferred Securities................  $   0.27       $   0.01                           $   0.21(4)
  Dilutive Effect of Certain Trust
     Preferred Securities................  $     --       $     --                           $     --(4)
  Income Before Extraordinary Charge.....  $   0.27       $   0.01                           $   0.21(4)
  Extraordinary Charge...................  $     --       $     --                           $     --(4)
  Net Income.............................  $   0.27       $   0.01                           $   0.21(4)
</TABLE>



   See Accompanying Notes to Unaudited Pro Forma Combined Condensed Financial
                                  Statements.


                                        15
<PAGE>   19


                              CALPINE CORPORATION



                          NOTES TO UNAUDITED PRO FORMA


                    COMBINED CONDENSED FINANCIAL STATEMENTS



1. BASIS OF PRESENTATION



     THE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS ARE PRESENTED TO GIVE
EFFECT TO THE ACQUISITION OF ENCAL BY CALPINE UNDER THE POOLING OF INTERESTS
METHOD OF ACCOUNTING. The unaudited pro forma combined financial statements have
been prepared from the historical consolidated audited financial statements of
Encal (see Note 2) and Calpine as at December 31, 2000 and for the three years
in the period then ended. The unaudited pro forma balance sheet assumes the
transaction had been consummated on December 31, 2000. The pro forma income
statement for each of the three years in the period then ended assumes that the
transaction had been consummated on January 1, 1998.



     The unaudited pro forma combined financial statements do not reflect any
cost savings or other synergies which may result from the transaction and are
not necessarily indicative of future results of operations or financial
position. THESE UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS ARE PRESENTED
IN ACCORDANCE WITH U.S. GAAP UNDER THE SUCCESSFUL EFFORTS METHOD OF ACCOUNTING
FOR OIL AND GAS PROPERTIES IN U.S. DOLLARS. Accounting policies used in the
preparation of the unaudited pro forma combined financial statements are in
accordance with those used in the preparation of the historical consolidated
financial statements of Calpine as at December 31, 2000 and for the year then
ended. The unaudited pro forma combined financial statements should be read in
conjunction with the historical consolidated financial statements of Encal and
Calpine, including the notes thereto, included or incorporated by reference in
this prospectus.



2. CONVERSION OF ENCAL TO U.S. GAAP AND U.S. DOLLARS



     The historical consolidated financial statements of Encal were prepared
under Canadian GAAP and in Canadian dollars. For these unaudited pro forma
combined financial statements, the historical financial information of Encal has
been converted to U.S. GAAP using the full cost method of accounting for oil and
gas properties and converted to U.S. dollars using the December 31, 2000
exchange rate as reported by the Federal Reserve Bank of New York of Cdn. $1.00
to U.S. $0.6669 and the average exchange rate as reported by the Federal Reserve
Bank of New York of (a) Cdn. $1.00 to U.S. $0.6732 for the year ended December
31, 2000, (b) Cdn. $1.00 to U.S. $0.6730 for the year ended December 31, 1999
and (c) Cdn. $1.00 to U.S. $0.6740 for the year ended December 31, 1998. See
Note 10 to Encal's historical consolidated financial statements included herein
for a description of the adjustments to convert Encal's financial statements
from Canadian GAAP to U.S. GAAP using the full cost method of accounting for oil
and gas properties.


                                        16
<PAGE>   20

                              CALPINE CORPORATION



                          NOTES TO UNAUDITED PRO FORMA


             COMBINED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)



                        U.S. GAAP BALANCE SHEET -- ENCAL



<TABLE>
<CAPTION>
                                                                   DECEMBER 31, 2000
                                                   --------------------------------------------------
                                                     ENCAL
                                                   HISTORICAL                   ENCAL        ENCAL
                                                    CANADIAN     U.S. GAAP    HISTORICAL   HISTORICAL
                                                      GAAP      ADJUSTMENTS   U.S. GAAP    U.S. GAAP
                                                      (C$)         (C$)          (C$)       (U.S.$)
                                                   ----------   -----------   ----------   ----------
                                                                     (IN THOUSANDS)
<S>                                                <C>          <C>           <C>          <C>
ASSETS
Current Assets...................................  $  140,085    $     --     $  140,085    $ 93,423
Property, Plant and Equipment, Net...............     966,771     (37,049)       929,722     620,032
Other Non-current Assets.........................       3,335      (3,335)            --          --
                                                   ----------    --------     ----------    --------
     Total Assets................................  $1,110,191    $(40,384)    $1,069,807    $713,455
                                                   ==========    ========     ==========    ========
LIABILITIES
Accounts Payable.................................  $  120,019    $     --     $  120,019    $ 80,041
Long-Term Debt...................................     388,794          --        388,794     259,287
Other Non-current Liabilities....................     186,100      (9,360)       176,740     117,868
                                                   ----------    --------     ----------    --------
Total Liabilities................................  $  694,913    $ (9,360)    $  685,553    $457,196
                                                   ----------    --------     ----------    --------
STOCKHOLDERS' EQUITY
Common Stock and Additional Paid-in Capital......     262,282          --        262,282     196,498
Retained Earnings................................     152,996     (31,024)       121,972      80,411
Accumulated Other Comprehensive Loss -- Foreign
  Currency Translation...........................          --          --             --     (20,650)
                                                   ----------    --------     ----------    --------
       Total Stockholders' Equity................  $  415,278    $(31,024)    $  384,254    $256,259
                                                   ----------    --------     ----------    --------
Total Liabilities and Stockholders' Equity.......  $1,110,191    $(40,384)    $1,069,807    $713,455
                                                   ==========    ========     ==========    ========
</TABLE>



                    U.S. GAAP STATEMENTS OF INCOME -- ENCAL



<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31, 2000
                                                      --------------------------------------------------
                                                        ENCAL
                                                      HISTORICAL                   ENCAL        ENCAL
                                                       CANADIAN     U.S. GAAP    HISTORICAL   HISTORICAL
                                                         GAAP      ADJUSTMENTS   U.S. GAAP    U.S. GAAP
                                                         (C$)         (C$)          (C$)       (U.S.$)
                                                      ----------   -----------   ----------   ----------
                                                                        (IN THOUSANDS)
<S>                                                   <C>          <C>           <C>          <C>
Revenues............................................   $392,614      $    --      $392,614     $264,308
Cost of Revenues....................................    161,738       (4,017)      157,721      106,178
                                                       --------      -------      --------     --------
Gross Profit........................................    230,876        4,017       234,893      158,130
General and Administrative Expenses.................     12,534           --        12,534        8,438
                                                       --------      -------      --------     --------
  Income from Operations............................    218,342        4,017       222,359      149,692
Interest Expense....................................     26,713           --        26,713       17,983
Other Expense.......................................      2,388        1,287         3,675        2,475
                                                       --------      -------      --------     --------
  Income Before Provision for Income Taxes..........    189,241        2,730       191,971      129,234
Provision for Income Taxes..........................     89,078        1,854        90,932       61,215
                                                       --------      -------      --------     --------
  Income Before Extraordinary Charge................    100,163          876       101,039       68,019
                                                       --------      -------      --------     --------
  Net Income........................................   $100,163      $   876      $101,039     $ 68,019
                                                       ========      =======      ========     ========
</TABLE>


                                        17
<PAGE>   21

                              CALPINE CORPORATION



                          NOTES TO UNAUDITED PRO FORMA


             COMBINED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)



<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31, 1999
                                                      --------------------------------------------------
                                                        ENCAL
                                                      HISTORICAL                   ENCAL        ENCAL
                                                       CANADIAN     U.S. GAAP    HISTORICAL   HISTORICAL
                                                         GAAP      ADJUSTMENTS   U.S. GAAP    U.S. GAAP
                                                         (C$)         (C$)          (C$)       (U.S.$)
                                                      ----------   -----------   ----------   ----------
                                                                        (IN THOUSANDS)
<S>                                                   <C>          <C>           <C>          <C>
Revenues............................................   $201,707      $    --      $201,707     $135,749
Cost of Revenues....................................    125,908       (4,377)      121,531       81,790
                                                       --------      -------      --------     --------
Gross Profit........................................     75,799        4,377        80,176       53,959
General and Administrative Expenses.................     10,395           --        10,395        6,996
                                                       --------      -------      --------     --------
  Income from Operations............................     65,404        4,377        69,781       46,963
Interest Expense....................................     17,959           --        17,959       12,086
Other Expense.......................................      1,768        2,048         3,816        2,569
                                                       --------      -------      --------     --------
  Income Before Provision for Income Taxes..........     45,677        2,329        48,006       32,308
Provision for Income Taxes..........................     20,300       (1,476)       18,824       12,669
                                                       --------      -------      --------     --------
  Income Before Extraordinary Charge................     25,377        3,805        29,182       19,639
                                                       --------      -------      --------     --------
  Net Income........................................   $ 25,377      $ 3,805      $ 29,182     $ 19,639
                                                       ========      =======      ========     ========
</TABLE>



<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31, 1998
                                                      --------------------------------------------------
                                                        ENCAL
                                                      HISTORICAL                   ENCAL        ENCAL
                                                       CANADIAN     U.S. GAAP    HISTORICAL   HISTORICAL
                                                         GAAP      ADJUSTMENTS   U.S. GAAP    U.S. GAAP
                                                         (C$)         (C$)          (C$)       (U.S.$)
                                                      ----------   -----------   ----------   ----------
                                                                        (IN THOUSANDS)
<S>                                                   <C>          <C>           <C>          <C>
Revenues............................................   $140,327      $   174      $140,501     $94,697
Cost of Revenues....................................    110,110       (5,056)      105,054      70,806
                                                       --------      -------      --------     -------
Gross Profit........................................     30,217        5,230        35,447      23,891
General and Administrative Expenses.................     10,153           --        10,153       6,843
                                                       --------      -------      --------     -------
  Income from Operations............................     20,064        5,230        25,294      17,048
Interest Expense....................................     13,362           --        13,362       9,006
Other Expense.......................................      1,490        7,017         8,507       5,733
                                                       --------      -------      --------     -------
  Income Before Provision for Income Taxes..........      5,212       (1,787)        3,425       2,309
Provision for Income Taxes..........................      2,475         (973)        1,502       1,012
                                                       --------      -------      --------     -------
  Income Before Extraordinary Charge................      2,737         (814)        1,923       1,297
                                                       --------      -------      --------     -------
  Net Income........................................   $  2,737      $  (814)     $  1,923     $ 1,297
                                                       ========      =======      ========     =======
</TABLE>


                                        18
<PAGE>   22

                              CALPINE CORPORATION



                          NOTES TO UNAUDITED PRO FORMA


             COMBINED CONDENSED FINANCIAL STATEMENTS -- (CONTINUED)



3. PRO FORMA ADJUSTMENTS



     (a) The following adjustments were made to reflect the conversion from the
full cost method of accounting for oil and gas properties to the successful
efforts method of accounting.



<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                             --------------------------------
                                                               2000        1999        1998
                                                             --------    --------    --------
                                                                 (IN THOUSANDS OF U.S.$)
<S>                                                          <C>         <C>         <C>
Capitalized costs expensed under the successful efforts
  method of accounting.....................................  $(24,058)   $(16,841)   $(14,899)
Adjustment to record depreciation, depletion and
  amortization.............................................   (10,170)     (2,547)     (2,336)
Adjustment to reflect tax effect of pro forma
  adjustments..............................................    15,358       8,701       7,733
                                                             --------    --------    --------
Decrease net income........................................  $(18,870)   $(10,687)   $ (9,502)
                                                             ========    ========    ========
</TABLE>



The cumulative adjustment to oil and gas properties at December 31, 2000 to
reflect the conversion from the full cost method to the successful efforts
method was a U.S.$127.5 million reduction to property, plant and equipment.



     (b) To adjust deferred income taxes by U.S.$57.1 million at December 31,
2000 for the tax effect of the adjustment to convert to the successful efforts
method of accounting.



     (c) Reflects the estimated direct costs associated with the transaction
between Encal and Calpine which approximate U.S.$34.0 million. These
non-recurring costs, which are subject to change, will be charged to operations
in the quarter in which the transaction is consummated. It is expected that
substantially all of the costs related to this transaction will be paid within
one year after the transaction is consummated.



4. PRO FORMA WEIGHTED AVERAGE SHARES OUTSTANDING



     The unaudited pro forma weighted average number of common shares
outstanding and weighted average number of common shares outstanding including
dilution for each period has been calculated using an exchange ratio of 0.1493
exchangeable shares for each Encal common share, based on the number of Encal
common shares that will be outstanding at the consummation of the business
transaction with Encal.


                                        19
<PAGE>   23

                              PLAN OF DISTRIBUTION

                            DISTRIBUTION BY CALPINE

     Our common stock may be issued to you in several ways:

     - You have the right to exchange or cause the redemption of your
       exchangeable shares. You may require an exchange by us or redemption by
       Calpine Canada of your exchangeable shares for our common stock. These
       rights are called your:

      - exchange put rights; and

      - retraction rights;

     - Automatic exchange or redemption. Upon the occurrence of a specified
       triggering event, you will be required to exchange your exchangeable
       shares for our common stock. These rights arise automatically upon the
       occurrence of triggering events, and are called:

      - the automatic redemption right;

      - the liquidation right; and

      - the automatic exchange right;

     - We may exercise our call rights.  Our call rights permit us to require an
       exchange of exchangeable shares for our common stock if you exercise your
       retraction rights or in any circumstance where Calpine Canada would
       redeem your exchangeable shares. The exchange may be made between you and
       one of our subsidiaries that we will designate, other than Calpine
       Canada. We plan to exercise our call rights, when available, and
       currently foresee no circumstances under which we would not exercise our
       call rights. We expect that you will receive our common stock through an
       exchange with one of our subsidiaries, as opposed to a redemption by
       Calpine Canada or through us, of your exchangeable shares for our common
       stock. While the consideration received upon an exchange with another of
       our subsidiaries or a redemption by Calpine Canada will be the same, the
       tax consequences will be substantially different. These call rights are
       called our:

      - retraction call rights;

      - liquidation call rights; and

      - redemption call rights.

YOUR RIGHTS TO EXCHANGE OR REDEEM YOUR SHARES

     We will grant your exchange put right described below to a Canadian trust
company, as trustee, for the benefit of the holders of the exchangeable shares.
You also have the right to retract any or all of your exchangeable shares.

     YOUR EXCHANGE PUT RIGHT. You may require us to exchange all or any part of
your exchangeable shares for an equivalent number of shares of our common stock,
plus all dividends on our common stock then payable but unpaid. You may exercise
your exchange put right by presenting to the trustee, at its principal offices
in Calgary, Alberta or Toronto, Ontario:

     - written notice;

     - a certificate or certificates representing the exchangeable shares you
       desire to have us exchange; and

     - other documents and instruments as provided in the voting and exchange
       trust agreement among us, Calpine Canada and the trustee.

     An exchange pursuant to this right will be completed not later than the
close of business on the third business day following receipt by the trustee of
the items listed above. The notice you provide to the trustee will be
irrevocable unless the exchange is not completed in accordance with the terms of
the voting and exchange trust agreement.

                                        20
<PAGE>   24

     YOUR RETRACTION RIGHTS. Subject to applicable law and our retraction call
right, you are entitled at any time to retract, or require Calpine Canada to
redeem, any or all of your exchangeable shares and to receive an equal number of
shares of our common stock plus all dividends on our common stock then payable
but unpaid. You may retract by presenting to the trustee or Calpine Canada:

     - a certificate or certificates representing the number of exchangeable
       shares you desire to retract; and

     - a duly executed retraction request:

      - specifying the number of exchangeable shares you desire to retract;

      - stating the retraction date on which you desire to have Calpine Canada
        redeem your shares, which must be between five and ten business days
        from the date of delivery of the request; and

      - acknowledging our overriding retraction call right to purchase all but
        not less than all of the retracted shares directly from you and that the
        retraction request will be deemed to be a revocable offer by you to sell
        the retracted shares to us or to another subsidiary designated by us in
        accordance with our retraction call right on the terms and conditions
        described below.

     Calpine Canada will promptly notify us upon receipt of a retraction
request. In order to exercise our retraction call right, we must notify Calpine
Canada of our determination to do so within two business days of our receipt of
notification. If we deliver the call notice within two business days, and you
have not revoked your retraction request, Calpine Canada will not redeem the
retracted shares and we will purchase or cause to be purchased from you the
retracted shares on the retraction date. If we do not timely deliver the call
notice and you have not revoked your retraction request, Calpine Canada will
redeem the retracted shares on the retraction date. In the event that we do
exercise our retraction call right, the closing of the purchase and sale of the
retracted shares pursuant to the retraction call right will be deemed to occur
as at the close of business on the retraction date, and no redemption by Calpine
Canada of the retracted shares will take place on the retraction date.

     You may withdraw your retraction request by giving notice in writing to
Calpine Canada before the close of business on the business day before your
retraction date. If you withdraw your retraction request, your offer to sell the
shares to us will be deemed to have been revoked. If, as a result of liquidity
or solvency requirements or other provisions of applicable law, Calpine Canada
is not permitted to redeem all the exchangeable shares you desire to retract,
Calpine Canada will redeem only those exchangeable shares you have tendered as
would be permitted by applicable law.

     If any of your exchangeable shares are not redeemed by Calpine Canada as a
consequence of applicable law or purchased by us, you will be deemed to have
required us to purchase your unretracted shares in exchange for an equal number
of shares of our common stock, plus the amount of all of our dividends, payable
and unpaid, on the retraction date or as soon as practicable thereafter pursuant
to your exchange put right.

AUTOMATIC RIGHTS

     THE AUTOMATIC REDEMPTION RIGHT. Subject to applicable law and our
redemption call rights, on an automatic redemption date, Calpine Canada will
redeem all of the then outstanding exchangeable shares in exchange for an equal
number of shares of our common stock, plus all dividends on our common stock
then payable but unpaid. Notwithstanding any proposed redemption of the
exchangeable shares, our redemption call rights give us the overriding right to
acquire, or to cause one of our other subsidiaries to acquire, on an automatic
redemption date all but not less than all of the outstanding exchangeable shares
in exchange for an equal number of shares of our common stock, plus the amount
of all of our dividends, payable and unpaid.

     An automatic redemption date is the first to occur of:

     - the date selected by the Calpine Canada board of directors, if the
       selected date is later than the first anniversary of the closing of our
       acquisition of Encal;
                                        21
<PAGE>   25

     - the date selected by the Calpine Canada board of directors, if less than
       5% of the number of exchangeable shares issuable at the closing of our
       acquisition of Encal, other than exchangeable shares held by us and
       entities owned or controlled by us, are outstanding;

     - the date on which the share purchase rights issued pursuant to our rights
       agreement separate from our common stock and become exercisable (for a
       description of our rights plan, see "Description of Our Capital
       Stock -- Anti-Takeover Effects of Provision of the Certificate of
       Incorporation, Bylaws, Rights Plan and Delaware Laws -- Rights Plan");

     - the business day prior to the record date for any meeting or vote of the
       Calpine Canada shareholders to consider any matter in which the holders
       of exchangeable shares would be entitled to vote as Calpine Canada
       shareholders, but, except as described in the bullet immediately below,
       excluding certain meetings or votes regarding certain changes to the
       rights, privileges, restrictions or conditions of the exchangeable shares
       requiring the approval of the holders of the exchangeable shares; and

     - the business day following the day on which the holders of exchangeable
       shares fail to take the necessary action at a meeting or other vote of
       holders of exchangeable shares, if and to the extent the action is
       required, to approve or disapprove, as applicable, any change to, or in
       the rights of the holders of, the exchangeable shares, if the approval or
       disapproval, as applicable, of the change would be required to maintain
       the economic and legal equivalence of the exchangeable shares and our
       common stock.

     At least 45 days before an automatic redemption date (or as soon as
reasonably practicable after Calpine Canada has knowledge of the occurrence of
an automatic redemption date, if not known 45 days before the automatic
redemption date) or before a possible automatic redemption date which may result
from a failure of the holders of the exchangeable shares to take a necessary
action as described in the bullet immediately above, Calpine Canada shall
provide you with written notice of the proposed redemption or possible
redemption of the exchangeable shares by Calpine Canada or the purchase of the
exchangeable shares by us pursuant to our redemption call right, as the case may
be. In the case of a possible automatic redemption date, the notice will be
given contingently and will be withdrawn if the contingency does not occur.

     THE LIQUIDATION RIGHT. Subject to our liquidation call right, in the event
of the liquidation, dissolution or winding-up of Calpine Canada or any other
distribution of assets of Calpine Canada among its shareholders for the purpose
of winding-up its affairs, you will be entitled to receive for each exchangeable
share one share of Calpine common stock, together with all dividends on our
common stock then payable but unpaid.

     THE AUTOMATIC EXCHANGE RIGHT. In the event of a Calpine liquidation event,
we will be deemed to have purchased each outstanding exchangeable share and you
will be deemed to have sold your exchangeable shares to us for an equal number
of shares of Calpine common stock, plus the equivalent amount of all Calpine
dividends, payable and unpaid, immediately prior to the effective time of the
Calpine liquidation event.

     A Calpine liquidation event is:

     - any determination by our board to institute voluntary liquidation,
       dissolution or winding-up proceedings of Calpine or to effect any other
       distribution of our assets among our shareholders for the purpose of
       winding-up our affairs; or

     - the earlier of receipt of notice of, and our otherwise becoming aware of,
       any threatened or instituted claim or other proceeding with respect to
       the involuntary liquidation, dissolution or winding-up of Calpine or to
       effect any other distribution of our assets among our shareholders for
       the purpose of winding-up our affairs.

                                        22
<PAGE>   26

OUR CALL RIGHTS


     In the circumstances described below, we will have overriding call rights
to acquire your exchangeable shares by delivering an equal number of shares of
our common stock, plus all dividends on our common stock then payable but
unpaid. DIFFERENT CANADIAN FEDERAL INCOME TAX CONSEQUENCES MAY ARISE DEPENDING
UPON WHETHER WE EXERCISE OUR CALL RIGHTS OR WHETHER YOUR EXCHANGEABLE SHARES ARE
REDEEMED BY CALPINE CANADA. See "Income Tax Considerations -- Canadian Federal
Income Tax Considerations." We have the right to cause one of our other
subsidiaries (other than Calpine Canada) to exercise the overriding call rights
in our place by purchasing your exchangeable shares and delivering the common
shares of our common stock and other consideration that you are entitled to
receive. In any circumstance where we are required to purchase your exchangeable
shares, we may cause this separate Canadian subsidiary to acquire from us and
deliver to you the shares of our common stock. Whether the exchange is done with
us or with one of our subsidiaries (other than Calpine Canada), the Canadian
federal income tax consequences of the exchange to the holder will be identical.
For a discussion of the United States federal income tax consequences of the
exchange, see "Income Tax Considerations -- Certain United States Federal Income
Tax Considerations -- Exchange of Exchangeable Shares."


     OUR RETRACTION CALL RIGHT. If you request the redemption by Calpine Canada
of your exchangeable shares, you will be deemed to offer your exchangeable
shares to us, and we will have an overriding retraction call right to acquire
(or cause one of our other subsidiaries to acquire) all, but not less than all,
of the exchangeable shares that you have requested Calpine Canada to redeem in
exchange for an equal number of shares of our common stock, plus all dividends
on our common stock then payable but unpaid.

     OUR LIQUIDATION CALL RIGHT. We will be granted an overriding liquidation
call right, in the event of and notwithstanding a proposed liquidation,
dissolution or winding-up of Calpine Canada or any other distribution of the
assets of Calpine Canada among its shareholders for the purpose of winding-up
its affairs, to acquire (or cause one of our other subsidiaries to acquire) all,
but not less than all, of the exchangeable shares then outstanding in exchange
for an equal number of shares of our common stock, plus all dividends on our
common stock then payable and unpaid. Upon the exercise of our liquidation call
right, you will be obligated to transfer your exchangeable shares to us (or to a
subsidiary that we designate). The acquisition of all of the outstanding
exchangeable shares upon the exercise of our liquidation call right will occur
on the effective date of the voluntary or involuntary liquidation, dissolution
or winding-up of Calpine Canada.

     OUR REDEMPTION CALL RIGHT. We have an overriding redemption call right to
acquire (or cause one of our other subsidiaries to acquire) on an automatic
redemption date all, but not less than all, of the exchangeable shares then
outstanding in exchange for an equal number of shares of our common stock, plus
all dividends on our common stock then payable but unpaid, and, upon the
exercise of our redemption call right, you will be obligated to transfer your
shares to us (or to a subsidiary that we designate).

     If we exercise one or more of our call rights, we will directly issue our
common stock to you and will become the holder of your exchangeable shares, or
we will cause one of our other subsidiaries (other than Calpine Canada) to
deliver our common stock to you and it will become the holder of your
exchangeable shares. We or, if applicable, our subsidiary, will not be entitled
to exercise any of the voting rights attached to your exchangeable shares. If we
decline to exercise our call rights when available, we will be required to issue
our common stock as Calpine Canada directs, including to Calpine Canada, which
will, in turn, transfer our common stock to you in consideration for the return
and cancellation of your exchangeable shares. In the event we do not exercise
our call rights when applicable and instead deliver our common stock as Calpine
Canada directs, you would receive the same consideration, but the Canadian tax
consequences will be substantially different. See "Income Tax
Considerations -- Canadian Federal Income Tax Considerations." However, we
anticipate that we will exercise our call rights, when available, and currently
foresee no circumstances under which we would not exercise our call rights. In
addition, we do not anticipate any restriction or limitation on the number of
exchangeable shares we or our subsidiary would acquire upon the exercise of our
call rights.

                                        23
<PAGE>   27

                         DISTRIBUTION BY SELLING HOLDER

     Following our distribution of common stock to the selling holder as
described above, the selling holder may offer and sell such common stock from
time to time directly to purchasers. Alternatively, the selling holder may from
time to time offer those shares of common stock to or through underwriters,
broker-dealers or agents, who may receive compensation in the form of
underwriting discounts, concessions or commissions from the selling holder or
the purchasers of the common stock for whom they act as agents. The selling
holder and any underwriters, broker-dealers or agents that participate in the
distribution of the common stock may be deemed to be "underwriters" within the
meaning of the Securities Act, and any profit on the sale of such common stock
and any discounts, commissions, concessions or other compensation received by
any such underwriter, broker-dealer or agent may be deemed to be underwriting
discounts and commissions under the Securities Act.

     The selling holder's common stock may be sold from time to time in one or
more transactions at fixed prices, at prevailing market prices at the time of
sale, at varying prices determined at the time of sale or at negotiated prices.
The sale of the common stock may be effected in transactions, which may involve
crosses or block transactions:

     - on any national securities exchange or quotation service on which the
       common stock may be listed or quoted at the time of sale,

     - in the over-the-counter market,

     - in transactions otherwise than on such exchanges or in the
       over-the-counter market, or

     - through the writing and exercise of options.

     At the time a particular offering of the common stock is made by the
selling holder, such selling holder must provide a copy of this prospectus,
which sets forth the name of the selling holder and the aggregate amount of
common stock being offered. A prospectus supplement will also be distributed at
the time a particular offering is made, setting forth additional information, if
any, concerning terms of the offering, including the name or names of any
underwriters, broker-dealers or agents, any discounts, commissions and other
terms constituting compensation from the selling holder and any discounts,
commissions or concessions allowed or reallowed to be paid broker-dealers.

     To comply with the securities laws of certain jurisdictions, if applicable,
the common stock will be offered or sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain jurisdictions
the common stock may not be offered or sold unless it has been registered or
qualified for sale in such jurisdictions or any exemption from registration or
qualification is available and is complied with.

     The selling holder and any other person participating in such distribution
will be subject to applicable provisions of the Securities Exchange Act and the
rules and regulations under the Securities Exchange Act, which provisions may
limit the timing of purchases and sales of any of the common stock by the
selling holder. This may affect the marketability of the offered shares of
common stock.

     We have borne all fees and expenses incurred in connection with the
registration of the common stock. The selling holder will pay all expenses
incident to the offer and sale of the common stock, including broker's
commissions and underwriting discounts and commissions, if any.

                        DESCRIPTION OF OUR CAPITAL STOCK

     Our authorized capital stock consists of 500,000,000 shares of common
stock, $.001 par value, and 10,000,000 shares of preferred stock, $.001 par
value. The following summary is qualified in its entirety by the provisions of
our certificate of incorporation and bylaws, which have been incorporated by
reference or attached as exhibits to the Registration Statement of which this
prospectus constitutes a part. The information provided below reflects the 2 for
1 split of our common stock that became effective on

                                        24
<PAGE>   28

October 7, 1999, the 2 for 1 split of our common stock that became effective on
June 8, 2000 and the 2 for 1 split of our common stock that became effective on
November 14, 2000.

COMMON STOCK

     The holders of common stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. Subject to preferences that may be
applicable to any outstanding preferred stock, the holders of common stock are
entitled to receive ratably such dividends, if any, as may be declared from time
to time by the board of directors out of legally available funds. See "Dividend
Policy." In the event of our liquidation, dissolution or winding up, the holders
of common stock are entitled to share ratably in all assets remaining after
payment of liabilities, subject to prior liquidation rights of preferred stock,
if any, then outstanding. The common stock has no preemptive or conversion
rights or other subscription rights. There are no redemption or sinking fund
provisions applicable to the common stock. All shares of common stock to be
outstanding upon the redemption or exchange of the exchangeable shares will be
fully paid and non-assessable. Pursuant to a rights agreement entered into in
June of 1997, our shares of common stock outstanding prior to the occurrence of
events specified in the rights agreement have certain preferred share purchase
rights, which are set forth in more detail in the rights agreement incorporated
by reference as an exhibit to the Registration Statement of which this
prospectus constitutes a part. See "-- Anti-Takeover Effects of Provisions of
the Certificate of Incorporation, Bylaws, Rights Plan and Delaware Law -- Rights
Plan."

PRICE RANGE OF COMMON STOCK

     Our common stock is traded on The New York Stock Exchange under the symbol
"CPN." Public trading of the common stock commenced on September 20, 1996. Prior
to that, there was no public market for the common stock. The following table
sets forth, for the periods indicated, the high and low sale price per share of
the common stock on The New York Stock Exchange.


<TABLE>
<CAPTION>
                                                            HIGH        LOW
                                                           -------    -------
<S>                                                        <C>        <C>
1999
First Quarter............................................  $ 4.672    $ 3.157
Second Quarter...........................................    7.375      4.391
Third Quarter............................................   11.969      6.852
Fourth Quarter...........................................   16.375     10.633
2000
First Quarter............................................  $30.750    $16.094
Second Quarter...........................................   35.219     18.125
Third Quarter............................................   52.250     32.250
Fourth Quarter...........................................   52.969     32.250
2001
First Quarter............................................  $ 58.04    $ 29.00
Second Quarter (through April 12, 2001)..................  $ 56.25    $ 45.00
</TABLE>



     As of April 12, 2001, there were approximately 667 holders of record of our
common stock. On April 12, 2001, the last sale price reported on The New York
Stock Exchange for our common stock was $51.38 per share.


DIVIDEND POLICY

     We do not anticipate paying any cash dividends on our common stock in the
foreseeable future because we intend to retain our earnings to finance the
expansion of our business and for general corporate purposes. In addition, our
ability to pay cash dividends is restricted under our indentures and our other
debt agreements. Future cash dividends, if any, will be at the discretion of our
board of directors and will depend upon, among other things, our future
operations and earnings, capital requirements, general

                                        25
<PAGE>   29

financial condition, contractual restrictions and such other factors as the
board of directors may deem relevant.

PREFERRED STOCK


     As of April 16, 2001, there were no shares of preferred stock outstanding.
Our board of directors has the authority, without further vote or action by our
stockholders, to issue from time to time up to 10,000,000 shares of preferred
stock in one or more series, and to fix the rights, preferences, privileges,
qualifications, limitations and restrictions granted to or imposed upon any
wholly unissued shares of undesignated preferred stock, including without
limitation dividend rights, if any, voting rights, if any, and liquidation and
conversion rights, if any. Our board of directors has the authority to fix the
number of shares constituting any series and the designations of such series
without any further vote or action by our stockholders. Our board of directors,
without stockholder approval, can issue preferred stock with voting and
conversion rights which could adversely affect the voting power of the holders
of our common stock. The issuance of preferred stock may have the effect of
delaying, deferring or preventing a change in control of our company, or could
delay or prevent a transaction that might otherwise give our stockholders an
opportunity to realize a premium over the then prevailing market price of our
common stock.



     Our board of directors has authorized the issuance of up to 500,000 shares
of Series A Participating Preferred Stock, par value $.001 per share, pursuant
to a rights plan adopted by our board of directors on June 5, 1997. On April 16,
2001, no shares of our participating preferred stock were outstanding. A
description of the rights plan and the participating preferred stock is set
forth under "-- Anti-Takeover Effects of Provisions of the Certificate of
Incorporation, Bylaws, Rights Plan and Delaware -- Rights Plan," below.



     In connection with our business combination with Encal, a series of
preferred stock, consisting of one share, will be designated as special voting
preferred stock, having a par value of $.001 per share and a liquidation
preference of $.001. Except as otherwise required by law or our certificate of
incorporation, the one share of special voting preferred stock will possess a
number of votes for the election of directors and on all other matters submitted
to a vote of our stockholders equal to the number of outstanding exchangeable
shares from time to time not owned by us or any entity controlled by us. The
holders of our common stock and the holder of the share of special voting
preferred stock will vote together as a single class on all matters on which
holders of our common stock are eligible to vote. In the event of our
liquidation, dissolution or winding-up, all outstanding exchangeable shares will
automatically be exchanged for shares of our common stock, and the holder of the
share of special voting preferred stock will not be entitled to receive any
assets available for distribution to our stockholders. The holder of the share
of special voting preferred stock will not be entitled to receive dividends. The
share of special voting preferred stock will be issued to CIBC Mellon Trust
Company, as trustee under a voting and exchange trust agreement among us,
Calpine Canada and the trustee. At such time as the one share of special voting
preferred stock has no votes attached to it because there are no exchangeable
shares outstanding not owned by us or an entity controlled by us, the share of
special voting preferred stock will be canceled.


ANTI-TAKEOVER EFFECTS OF PROVISIONS OF THE CERTIFICATE OF INCORPORATION, BYLAWS,
RIGHTS PLAN AND DELAWARE LAW

CERTIFICATE OF INCORPORATION AND BYLAWS

     Our certificate of incorporation and bylaws provide that our board of
directors is classified into three classes of directors serving staggered,
three-year terms. The certificate of incorporation also provides that directors
may be removed only by the affirmative vote of the holders of two-thirds of the
shares of our capital stock entitled to vote. Any vacancy on the board of
directors may be filled only by vote of the majority of directors then in
office. Further, the certificate of incorporation provides that any business
combination (as therein defined) requires the affirmative vote of the holders of
two-thirds of the shares of our capital stock entitled to vote, voting together
as a single class. The certificate of incorporation also provides that all
stockholder actions must be effected at a duly called meeting and not by a
consent in

                                        26
<PAGE>   30


writing. Our certificate of incorporation provides that a special meeting of
stockholders may be called only by the chairman of our board of directors, or by
the chairman or secretary upon the written request of a majority of the total
number of directors we would have if there were no vacancies on our board of
directors. These provisions of the certificate of incorporation and bylaws could
discourage potential acquisition proposals and could delay or prevent a change
in control of our company. These provisions are intended to enhance the
likelihood of continuity and stability in the composition of the board of
directors and in the policies formulated by the board of directors and to
discourage certain types of transactions that may involve an actual or
threatened change of control of our company. These provisions are designed to
reduce our vulnerability to an unsolicited acquisition proposal.


     The provisions also are intended to discourage certain tactics that may be
used in proxy fights. However, such provisions could have the effect of
discouraging others from making tender offers for our shares and, as a
consequence, they also may inhibit fluctuations in the market price of our
shares that could result from actual or rumored takeover attempts. Such
provisions also may have the effect of preventing changes in our management.


     Rights Plan. On June 5, 1997, we adopted a stockholders' rights plan to
strengthen our ability to protect our stockholders. The rights plan is designed
to protect against abusive or coercive takeover tactics that are not in the best
interests of Calpine or its stockholders. To implement the rights plan, we
declared a dividend of one preferred share purchase right for each outstanding
share of our common stock held on record as of June 18, 1997, and directed the
issuance of one preferred share purchase right with respect to each share of our
common stock that shall become outstanding thereafter until the rights become
exercisable or they expire as described below. Each right initially represents a
contingent right to purchase, under certain circumstances, one one-thousandth of
a share, called a "unit," of our Series A Participating Preferred Stock, par
value $.001 per share, at a price of $80.00 per unit, subject to adjustment. The
rights will become exercisable and trade independently from our common stock
upon the public announcement of the acquisition by a person or group of 15% or
more of our common stock, or ten days after commencement of a tender or exchange
offer that would result in the acquisition of 15% or more of our common stock.
Each unit purchased upon exercise of the rights will be entitled to a dividend
equal to any dividend declared per share of common stock and will have one vote,
voting together with the common stock. In the event of our liquidation, each
share of the participating preferred stock will be entitled to any payment made
per share of common stock.


     If we are acquired in a merger or other business combination transaction
after a person or group has acquired 15% or more of our common stock, each right
will entitle its holder to purchase at the right's exercise price a number of
the acquiring company's shares of common stock having a market value of twice
the right's exercise price. In addition, if a person or group acquires 15% or
more of our common stock, each right will entitle its holder (other than the
acquiring person or group) to purchase, at the right's exercise price, a number
of fractional shares of our participating preferred stock or shares of our
common stock having a market value of twice the right's exercise price.

     The rights expire on June 18, 2007, unless redeemed earlier by us. We can
redeem the rights at a price of $.01 per right at any time before the rights
become exercisable, and thereafter only in limited circumstances.

DELAWARE ANTI-TAKEOVER STATUTE

     We are subject to Section 203 of the Delaware General Corporation Law,
which, subject to certain exceptions, prohibits a Delaware corporation from
engaging in any business combination with any interested stockholder for a
period of three years following the date that such stockholder became an
interested stockholder, unless: (1) prior to such date, the board of directors
of the corporation approved either the business combination or the transaction
that resulted in the stockholder becoming an interested stockholder; (2) upon
consummation of the transaction that resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at least 85% of the
voting stock of the corporation outstanding at the time the transaction
commenced, excluding for purposes of determining the number of

                                        27
<PAGE>   31

shares outstanding those shares owned (x) by persons who are directors and also
officers and (y) by employee stock plans in which employee participants do not
have the right to determine confidentially whether shares held subject to the
plan will be tendered in a tender or exchange offer; or (3) on or subsequent to
such date, the business combination is approved by the board of directors and
authorized at an annual or special meeting of stockholders, and not by written
consent, by the affirmative vote of at least 66 2/3% of the outstanding voting
stock that is not owned by the interested stockholder.

     Section 203 defines business combination to include: (1) any merger or
consolidation involving the corporation or any of its direct or indirect
majority-owned subsidiaries and the interested stockholder; (2) any sale,
transfer, pledge or other disposition of 10% or more of the assets of the
corporation or any of its direct or indirect majority-owned subsidiaries
involving the interested stockholder; (3) subject to certain exceptions, any
transaction that results in the issuance or transfer by the corporation or any
of its direct or indirect majority-owned subsidiaries of any stock of the
corporation or that subsidiary to the interested stockholder; (4) any
transaction involving the corporation or any of its direct or indirect
majority-owned subsidiaries that has the effect of increasing the proportionate
share of the stock of any class or series of the corporation or that subsidiary
beneficially owned by the interested stockholder; or (5) the receipt by the
interested stockholder of the benefit of any loans, advances, guarantees,
pledges or other financial benefits provided by or through the corporation or
any of its direct or indirect majority-owned subsidiaries. In general, Section
203 defines an interested stockholder as any entity or person beneficially
owning 15% or more of the outstanding voting stock of the corporation and any
entity or person affiliated with or controlling or controlled by such entity or
person.

                           INCOME TAX CONSIDERATIONS

                   CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

     In the opinion of Macleod Dixon LLP, our Canadian counsel, the following is
a fair and adequate summary of the material Canadian federal income tax
considerations generally applicable under the Income Tax Act (Canada) (the
"Canadian Income Tax Act)" if you hold exchangeable shares or acquire our common
stock on the exchange of exchangeable shares and if, for purposes of the
Canadian Income Tax Act, you deal with us at arm's length and hold your
exchangeable shares and will hold our common stock as capital property. This
discussion does not apply to you if you are a "financial institution", as
defined in the Canadian Income Tax Act, and are therefore subject to the
mark-to-market provisions of the Canadian Income Tax Act.

     The exchangeable shares and our common stock will generally be considered
to be capital property to you unless the shares are held by you in the course of
carrying on a business of buying and selling similar securities or the shares
are acquired in a transaction considered to be an adventure in the nature of
trade. If you are a resident of Canada and the exchangeable shares might not
otherwise qualify as capital property, you may be entitled to obtain this
qualification by making the irrevocable election provided under subsection 39(4)
of the Canadian Income Tax Act. If you do not hold your exchangeable shares or
will not hold our common stock as capital property, you should consult your own
tax advisors for information and advice having regard to your particular
circumstances.

     This summary is based on the current provisions of the Canadian Income Tax
Act and regulations thereunder, the current provisions of the Convention Between
the United States of America and Canada with Respect to Taxes on Income and on
Capital, signed September 26, 1980, as amended, (the "Canada-U.S. Tax
Convention") and our counsel's understanding of the current published
administrative practices of the Canada Customs and Revenue Agency (the "CCRA").
This summary takes into account all specific proposals to amend the Canadian
Income Tax Act and regulations that have been publicly announced by the Minister
of Finance (Canada) prior to the date hereof and assumes that all of these
proposed amendments will be enacted in their present form. No assurances can be
given that any proposed amendments will be enacted in the form proposed, if at
all. Except for the foregoing, this summary does not take into account or
anticipate any changes in law, whether by legislative, administrative or
judicial decision or action, nor does it take into account provincial,
territorial or foreign income tax legislation or
                                        28
<PAGE>   32

considerations which may differ from the Canadian federal income tax
considerations described below. No advance income tax ruling has been sought or
obtained from the CCRA to confirm the tax consequences of any of the
transactions relating to the exchangeable shares or the acquisition of our
common stock on the exchange of exchangeable shares.

     For purposes of the Canadian Income Tax Act, all amounts otherwise
denominated in United States dollars relating to the acquisition, holding or
disposition of our common stock, including dividends, adjusted cost base amounts
and proceeds of disposition, must be converted into Canadian dollars based on
the prevailing United States dollar exchange rate generally at the time these
amounts arise.

     THIS SUMMARY IS OF A GENERAL NATURE ONLY AND IS NOT INTENDED TO BE, AND
SHOULD NOT BE CONSTRUED TO BE, LEGAL, BUSINESS OR TAX ADVICE TO YOU. THEREFORE,
YOU SHOULD CONSULT YOUR OWN TAX ADVISORS WITH RESPECT TO YOUR PARTICULAR
CIRCUMSTANCES.

SHAREHOLDERS RESIDENT IN CANADA

     The following portion of this summary will apply to you if, for the
purposes of the Canadian Income Tax Act and any applicable income tax treaty or
convention, you are resident or deemed to be resident in Canada at all relevant
times. This summary does not apply to you if we are or will be a "foreign
affiliate" of you as defined in the Canadian Income Tax Act.

REDEMPTION OF EXCHANGEABLE SHARES

     On a redemption (including a retraction) of your exchangeable shares by
Calpine Canada, you will be deemed to have received a dividend equal to the
amount, if any, by which the redemption proceeds exceed the paid-up capital of
the exchangeable shares so redeemed. For these purposes, the redemption proceeds
will be the fair market value of our common stock received from Calpine Canada
at the time of the redemption plus the amount, if any, of all payable and unpaid
dividends on the exchangeable shares paid on the redemption. The taxation of
dividends received on the exchangeable shares is described below. We anticipate
that we will exercise our call rights, when available, and currently foresee no
circumstances under which exchangeable shares would be redeemed by Calpine
Canada.

     On a redemption (including a retraction) of your exchangeable shares, you
will also be considered to have disposed of your exchangeable shares, but the
amount of the deemed dividend, described above, will be excluded in computing
your proceeds of disposition for purposes of computing any capital gain or
capital loss arising on the disposition. If you are a corporation, in some
circumstances, the amount of any such deemed dividend may be treated as proceeds
of disposition and not as a dividend. The taxation of capital gains and capital
losses is described below.

EXCHANGE OF EXCHANGEABLE SHARES WITH US

     On an exchange of your exchangeable shares with us or one of our Canadian
subsidiaries for our common stock, you will generally realize a capital gain (or
a capital loss) equal to the amount by which the proceeds of disposition of your
exchangeable shares, net of any reasonable costs of disposition, exceed (or are
less than) the adjusted cost base to you of the exchangeable shares immediately
before the exchange. For these purposes, the proceeds of disposition will be the
fair market value at the time of the exchange of our common stock which you
receive (plus any other amounts received by you as part of the exchange). The
taxation of capital gains and capital losses is described below.

DIVIDENDS ON EXCHANGEABLE SHARES

     If you are an individual, dividends received or deemed to be received on
the exchangeable shares will be included in computing your income, and will be
subject to the gross-up and dividend tax credit rules normally applicable to
taxable dividends received from a corporation resident in Canada.

                                        29
<PAGE>   33

     If you are a corporation other than a "specified financial institution", as
defined in the Canadian Income Tax Act, dividends received or deemed to be
received on the exchangeable shares normally will be included in your income and
be deductible in computing your taxable income.

     The exchangeable shares will be "term preferred shares", as defined in the
Canadian Income Tax Act. Consequently, if, you are a "specified financial
institution", as defined in the Canadian Income Tax Act, a dividend received on
the exchangeable shares will be deductible in computing your taxable income only
if:

          1. you did not acquire the exchangeable shares in the ordinary course
     of carrying on your business; or

          2. at the time the dividend is received, the exchangeable shares are
     listed on a prescribed stock exchange in Canada (which currently includes
     the TSE) and you, either alone or together with persons with whom you do
     not deal at arm's length, do not receive (or be deemed to receive)
     dividends in respect of more than 10% of the issued and outstanding
     exchangeable shares.

     In addition, to the extent that a deemed dividend arises on the redemption
of the exchangeable shares by Calpine Canada, the dividend may be deductible by
specified financial institutions in accordance with the exceptions outlined
above. If you are a specified financial institution, you should consult your own
tax advisors.

     If you are a "private corporation", as defined in the Canadian Income Tax
Act, or any other corporation resident in Canada and controlled or deemed to be
controlled by or for the benefit of an individual or a related group of
individuals, you may be liable under Part IV of the Canadian Income Tax Act to
pay a refundable tax of 33 1/3% of any dividends received or deemed to be
received on your exchangeable shares to the extent that these dividends are
deductible in computing your taxable income.

     If you are throughout the relevant taxation year a "Canadian-controlled
private corporation", as defined in the Canadian Income Tax Act, you may be
liable to pay an additional refundable tax of 6 2/3% on your "aggregate
investment income" for the year which will include dividends or deemed dividends
that are not deductible in computing taxable income.

     If you are a corporation, the amount of any capital losses arising from a
disposition or deemed disposition of exchangeable shares may be reduced by the
amount of any dividends received or deemed to have been received by you on the
exchangeable shares to the extent and under circumstances prescribed by the
Canadian Income Tax Act. Similar rules may apply where you are a corporation and
a member of a partnership or a beneficiary of a trust that owns these shares.

ACQUISITION AND DISPOSITION OF OUR COMMON STOCK

     The cost of our common stock received on a retraction, redemption or
exchange of exchangeable shares will be equal to the fair market value of such
exchangeable shares at the time of that event, and will be averaged with the
adjusted cost base of any other shares of our common stock held by you at that
time as capital property. A disposition or deemed disposition of our common
stock by you will generally result in the realization of a capital gain (or a
capital loss) equal to the amount by which the proceeds of disposition, net of
any reasonable costs of disposition, exceed (or are less than) the adjusted cost
base to you of these shares immediately before the disposition. The taxation of
capital gains and capital losses is described below.

DIVIDENDS ON OUR COMMON STOCK

     Dividends on our common stock will be included in your income for the
purposes of the Canadian Income Tax Act. If you are an individual, you will not
be subject to the gross-up and dividend tax credit rules in the Canadian Income
Tax Act applicable to dividends received from corporations resident in Canada.
If you are a corporation, you will be required to include these dividends in
computing your income and generally will not be entitled to deduct the amount of
these dividends in computing your taxable income.

                                        30
<PAGE>   34

     A shareholder that is throughout the relevant taxation year a
"Canadian-controlled private corporation", as defined in the Canadian Income Tax
Act, may be liable to pay an additional refundable tax of 6 2/3% of its
"aggregate investment income" for the year which will include these dividends.

     If there is United States non-resident withholding tax on any dividends you
receive on our common stock, you will generally be eligible for foreign tax
credit or deduction treatment where applicable under the Canadian Income Tax
Act.

TAXATION OF CAPITAL GAINS AND CAPITAL LOSSES

     One-half of any capital gain realized on a disposition or deemed
disposition of exchangeable shares or our common stock must be included in your
income for the year of the disposition. You generally may be able to deduct
one-half of any capital losses against one-half of any capital gains realized in
the year of the disposition. Any capital losses in excess of capital gains in
the year of the disposition may generally be carried back and deducted against
net capital gains (capital gains less capital losses) up to three taxation years
or carried forward indefinitely, to the extent and in the circumstances
prescribed in the Canadian Income Tax Act.

     Capital gains realized by an individual or trust, other than certain
trusts, may give rise to alternative minimum tax under the Canadian Income Tax
Act.

     A shareholder that is throughout the relevant taxation year a
"Canadian-controlled private corporation", as defined in the Canadian Income Tax
Act, may be liable to pay an additional refundable tax of 6 2/3% on its
"aggregate investment income" for the year which will include an amount in
respect of taxable capital gains.

FOREIGN PROPERTY INFORMATION REPORTING

     With some exceptions, any taxpayer resident in Canada in the year is a
"specified Canadian entity", as defined in the Canadian Income Tax Act. If you
are a specified Canadian entity for a taxation year or fiscal period and the
total cost amount of "specified foreign property", which would include our
common stock and the exchangeable shares, at any time in the year or fiscal
period exceeds C$100,000, you will be required to file an information return for
the year or period disclosing prescribed information, your cost amount, any
dividends received in the year, and any gains or losses realized in the year, in
respect of the specified foreign property. You should consult your own advisors
about whether you must comply with these rules with respect to the ownership of
our common stock or the exchangeable shares.

SHAREHOLDERS NOT RESIDENT IN CANADA

     The following portion of this summary will apply to you only if, for
purposes of the Canadian Income Tax Act and any applicable tax treaty or
convention, you will not be resident or deemed to be resident in Canada at any
time while you hold exchangeable shares or our common stock, and if you will not
use or hold the exchangeable shares or our common stock in the course of
carrying on a business (including an insurance business) in Canada and, except
as specifically discussed below, if those shares do not constitute "taxable
Canadian property" to you as defined in the Canadian Income Tax Act.

     The exchangeable shares will generally not be taxable Canadian property to
you at a particular time provided that these shares are listed on a prescribed
stock exchange (which includes the TSE) and you, separately or together with
persons with whom you do not deal at arm's length, have not owned (or had under
option) 25% or more of the issued shares of any class or series of the capital
stock of Calpine Canada or Encal at any time within five years preceding the
particular time. Our common stock will generally not constitute taxable Canadian
property to you.

     Provided the exchangeable shares or our common stock are not taxable
Canadian property to you, you will not be subject to tax under the Canadian
Income Tax Act on the exchange of exchangeable shares for our common stock
(except to the extent the exchange gives rise to a deemed dividend as discussed
below), or on the sale or other disposition of exchangeable shares or our common
stock.
                                        31
<PAGE>   35

     Dividends paid or deemed to be paid on the exchangeable shares will be
subject to non-resident withholding tax under the Canadian Income Tax Act at the
rate of 25%, although this rate may be reduced under the provisions of an
applicable income tax treaty or convention. For example, under the Canada-U.S.
Tax Convention, the rate of non-resident withholding tax is generally reduced to
15% in respect of dividends paid to a person who is the beneficial owner thereof
and who is resident in the United States for purposes of the convention.

     A holder whose exchangeable shares are redeemed by Calpine Canada (either
under redemption rights or pursuant to retraction rights) will be deemed to
receive a dividend equal to the amount, if any, by which the redemption proceeds
exceed the paid-up capital of the exchangeable shares at the time the
exchangeable shares are redeemed. For these purposes, the redemption proceeds
will be the fair market value of our common stock received from Calpine Canada
at the time of the redemption plus the amount, if any, of all payable and unpaid
dividends on the exchangeable shares paid on the redemption. Any deemed dividend
will be subject to non-resident withholding tax as described in the preceding
paragraph. However, we anticipate that we will exercise our call rights, when
available, and currently foresee no circumstances under which exchangeable
shares would be redeemed by Calpine Canada.

            CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

     The following discussion of the principal United States federal income tax
consequences of the receipt, ownership and disposition of exchangeable shares is
the opinion of Covington & Burling, who acted as United States counsel to
Calpine in connection with our business combination with Encal. This discussion
is based, in part, on certain representations and agreements made by Calpine,
and the assumption that such representations were, as of the date made and as of
the effective time of the business combination (the "Effective Time"), true and
correct, that such agreements will be complied with and that the business
combination will be consummated in accordance with the combination agreement and
plan of arrangement relating to the business combination.

     This discussion is based on the United States Internal Revenue Code of
1986, as amended (the "U.S. Code"), United States Treasury regulations, proposed
and final, issued thereunder, and judicial and administrative interpretations of
the U.S. Code and regulations, in each case as in effect and available as of the
date of this prospectus. These income tax laws, regulations and interpretations,
however, may change at any time, and any change could be retroactive to the date
of this prospectus. These income tax laws and regulations are also subject to
various interpretations, and the United States Internal Revenue Service (the
"IRS") or the United States courts could later disagree with the explanations or
conclusions contained in this summary.

     No statutory, judicial or administrative authority exists that directly
addresses the United States federal income tax consequences of the receipt and
ownership of instruments comparable to the exchangeable shares. Consequently,
the United States federal income tax treatment of the receipt of exchangeable
shares and the exchange of exchangeable shares for shares of Calpine common
stock is not certain. No advance ruling has been sought or obtained from the IRS
regarding the tax consequence of any of the transactions described herein and
there can be no assurance that the IRS would not challenge the conclusions
contained in the discussion below, or, if challenged, that a court would not
agree with the IRS.

     As used herein, a "United States Holder" is a beneficial owner of Encal
common shares, exchangeable shares or Calpine common stock, as the case may be,
that, for United States federal income tax purposes, is: (1) a citizen or
individual resident of the United States, (2) a corporation created or organized
in or under the laws of the United States, or of any political subdivision
thereof, (3) an estate or other entity the income of which is includible in its
gross income for United States federal income tax purposes without regard to its
source or (4) a trust if a court within the United States is able to exercise
primary supervision over the administration of such trust and one or more United
States persons have the authority to control all substantial decisions of the
trust. A "non-United States Holder" is a beneficial owner who, for United States
federal income tax purposes, is a non-resident alien individual, a foreign
                                        32
<PAGE>   36


corporation, or a foreign estate or trust. If a partnership (including for this
purpose any entity treated as a partnership for United States federal income tax
purposes) is a beneficial owner of the Encal common shares, the exchangeable
shares or Calpine common stock, as the case may be, the treatment of a partner
in the partnership will generally depend upon the status of the partner and upon
the activities of the partnership. A Holder that is a partnership and partners
in such partnership should consult their tax advisers about the United States
federal income tax consequences of receiving, holding and disposing of Encal
common shares, exchangeable shares or Calpine common stock. This summary assumes
that Encal is not a "controlled foreign corporation" and that neither Encal nor
Calpine Canada is or will become a "foreign personal holding company" or a
"passive foreign investment company" for United States federal income tax
purposes. This discussion does not address persons subject to special provisions
of United States federal income tax law, such as tax-exempt organizations,
financial institutions, insurance companies, broker-dealers, persons having a
"functional currency" other than the United States dollar, holders who hold
Encal common shares, exchangeable shares or Calpine common stock, as the case
may be, as part of a hedge, straddle, wash sale, synthetic security, conversion
transaction or other integrated investment, and holders of Encal common shares,
exchangeable shares or Calpine common stock, as the case may be, who acquired
their interests through the exercise of employee stock options or otherwise as
compensation for services. This discussion is limited to Holders who hold Encal
common shares as a capital asset and who will hold exchangeable shares and
Calpine common stock, as the case may be, as a capital asset.


     This discussion does not address aspects of United States taxation other
than United States federal income taxation under the U.S. Code, nor does it
address all aspects of United States federal income taxation that may be
applicable to a particular Holder in light of the Holder's particular
circumstances. Accordingly, all Holders are urged to consult their own tax
advisors with respect to the United States federal income tax consequences to
them of the receipt, ownership and disposition of exchangeable shares and
Calpine common stock, as the case may be, in light of their particular
circumstances. In addition, this discussion does not address the United States
state or local tax consequences or the foreign tax consequences of the business
combination on the receipt, ownership and disposition of the exchangeable shares
or Calpine common stock.

     HOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE UNITED
STATES FEDERAL, STATE AND LOCAL TAX CONSEQUENCES, THE FOREIGN TAX CONSEQUENCES
AND THE NON-TAX CONSEQUENCES OF THE BUSINESS COMBINATION, INCLUDING THE RECEIPT,
OWNERSHIP AND DISPOSITION OF EXCHANGEABLE SHARES, CALPINE COMMON STOCK AND
ANCILLARY RIGHTS (AS DEFINED BELOW) AND CALL RIGHTS (AS DEFINED BELOW).

UNITED STATES HOLDERS

RECEIPT OF EXCHANGEABLE SHARES


     Although the matter is not free from doubt, Calpine and Calpine Canada
intend to take the position that the receipt of the exchangeable shares is a
taxable event for United States federal income tax purposes and that United
States Holders who exchange Encal common shares for exchangeable shares should
recognize gain or loss. If the exchange is a taxable event, a United States
Holder will recognize gain or loss measured by the difference, if any, between
the fair market value of the consideration received in exchange for the United
States Holder's Encal common shares (i.e., the fair market value of the
exchangeable shares received together with the amount of cash received in lieu
of fractional shares, if any, or pursuant to the exercise of dissenters' rights)
and the United States Holder's tax basis in the Encal common shares exchanged
for that consideration. A United States Holder's tax basis in the exchangeable
shares received should equal the fair market value of such shares at the
Effective Time, and the holding period for such shares should begin on the day
after the Effective Time. Any gain or loss recognized upon an exchange of Encal
common shares will generally be United States source income, will be capital
gain or loss and will be long-term capital gain or loss if the United States
Holder's holding period for the Encal common shares exchanged is more than one
year at the Effective Time.


                                        33
<PAGE>   37

     There can be no assurance that the IRS will not attempt to recharacterize
the receipt of the exchangeable shares as a tax-free transaction. If the IRS
were to successfully assert such a characterization: (i) United States Holders
would recognize gain (but not loss) with respect to any cash received for
fractional shares or pursuant to the exercise of dissenters' rights (as
described below); (ii) the tax basis of the exchangeable shares received by a
United States Holder would generally equal the tax basis of the Encal common
shares surrendered, reduced by the amount of cash received in respect of such
Encal common shares and increased by the amount of gain recognized on the
receipt of the exchangeable shares; and (iii) the holding period of the
exchangeable shares received by a United States Holder would include the holding
period of the Encal common shares exchanged therefor.

ANCILLARY RIGHTS AND CALL RIGHTS

     Encal shareholders who receive exchangeable shares will also receive the
"Ancillary Rights," which comprise the liquidation right, the automatic exchange
right and your voting rights under the voting and exchange trust agreement. See
"Plan of Distribution" and "Description of Our Capital Stock -- Preferred
Stock." In addition, Encal shareholders who receive exchangeable shares may be
deemed to grant the "Call Rights," which comprise the liquidation call right,
the redemption call right and the retraction call right, which are each
described in "Plan of Distribution." Calpine and Calpine Canada believe that the
Ancillary Rights received and any Call Rights deemed to be granted by Encal
shareholders generally will have only nominal value and, therefore, that neither
their receipt or grant, as the case may be, nor the lapse of any Call Rights,
should result in any material United States federal income tax consequences,
although the value of such rights could vary depending on the circumstances of a
particular Encal shareholder. It is possible, however, that the Service could
take the position that the Ancillary Rights and the Call Rights have greater
than nominal value. In such event, the receipt of Ancillary Rights and the lapse
of any Call Rights could generate taxable income or loss of more than a nominal
amount. Such gain or loss should be capital gain or loss to the United States
Holder. United States Holders should consult their tax advisors with respect to
the potential tax consequences of the receipt of the Ancillary Rights and the
grant of the Call Rights pursuant to the business combination.

EXCHANGE OF EXCHANGEABLE SHARES

     There is no authority directly addressing the proper characterization of
instruments similar to the exchangeable shares together with the associated
Ancillary Rights and Call Rights or the exchange of exchangeable shares for
Calpine common stock (including an exchange upon the occurrence of an automatic
redemption date). As a result, the consequences to a United States Holder of
such an exchange are unclear.


     A United States Holder may be justified in taking the position that the
exchangeable shares (together with the associated Ancillary Rights and Call
Rights) should be treated as stock of Calpine for United States federal income
tax purposes and therefore that the exchange of the exchangeable shares for
Calpine common stock is not a taxable event. If a United States Holder takes
such a position, the aggregate tax basis of the Calpine common stock received
pursuant to the exchange would equal the United States Holder's aggregate tax
basis in the exchangeable shares and the holding period of the Calpine common
stock received by such Holder would include the holding period of the
exchangeable shares surrendered in the exchange. Calpine and Calpine Canada
intend to take the position that the exchangeable shares, together with the
Ancillary Rights and the Call Rights, represent stock of Calpine.


     Alternatively, if the exchangeable shares are characterized as representing
an equity interest in Calpine Canada for United States federal income tax
purposes, a United States Holder who exchanges its exchangeable shares for
shares of Calpine common stock generally would recognize gain or loss. Such gain
or loss would be measured by the difference, if any, between the fair market
value of the shares of Calpine common stock at the time of the exchange and the
United States Holder's tax basis in the exchangeable shares surrendered, and
would generally be capital gain or loss, except with respect to any declared but
unpaid dividends on the exchangeable shares. Under this alternative
characterization, a United States Holder's tax basis in the shares of Calpine
common stock received would be equal to the fair market value
                                        34
<PAGE>   38

of such shares at the time of the exchange and the holding period for such
shares would begin on the day after the exchange. However, even if the
exchangeable shares are characterized as representing an equity interest in
Calpine Canada, under certain limited circumstances, the exchange by a United
States Holder of exchangeable shares for Calpine common stock may be
characterized as a tax-free transaction. Whether an exchange by a particular
United States Holder would be tax-free will depend upon the facts and
circumstances existing at the time of the exchange and cannot be accurately
predicted at the date of this prospectus.

     For United States federal income tax purposes, gain recognized on the
exchange of exchangeable shares for shares of Calpine common stock generally
will be treated as United States source gain, except that, under the terms of
the Canada-U.S. Tax Convention, such gain may be treated as sourced in Canada.
Any Canadian tax imposed on the exchange may be available as a credit against
United States federal income taxes, subject to applicable limitations. A United
States Holder that is ineligible for a foreign tax credit with respect to any
Canadian tax paid may be entitled to a deduction therefor in computing United
States taxable income.

DISTRIBUTIONS ON THE EXCHANGEABLE SHARES


     Calpine Canada and Calpine intend to treat dividends, if any, received by a
United States Holder with respect to the exchangeable shares as dividends from
Calpine. A United States Holder may be justified in taking this position. A
United States Holder of exchangeable shares who takes this position generally
will be required to include in gross income as ordinary income dividends paid on
the exchangeable shares to the extent paid out of the earnings and profits of
Calpine. Such dividends paid in Canadian dollars will be includible in the
income of a United States Holder in a United States dollar amount calculated by
reference to the exchange rate in effect on the date the dividends are deemed
received. United States Holders should consult their own tax advisors regarding
the treatment of any foreign currency gain or loss on any Canadian dollars
received which are not converted into United States dollars on such date.


     Alternatively, it is possible that the IRS could take the position that any
dividends received by a United States Holder with respect to the exchangeable
shares are dividends from Calpine Canada. If the IRS were successful in
asserting this position, any dividends paid on the exchangeable shares out of
Calpine Canada's earnings and profits would be treated as foreign source
dividend income and would generally not be eligible for the dividends received
deduction allowed to corporate shareholders under the U.S. Code.


     Under the terms of the Canada-U.S. Tax Convention, distributions with
respect to the exchangeable shares received by United States Holders would be
subject to Canadian withholding tax at a rate of 15% irrespective of any
position that Calpine or the IRS may take. Subject to certain limitations of
United States federal income tax law, a United States Holder should generally be
entitled to either a credit against its United States federal income tax
liability or a deduction in computing United States taxable income for Canadian
income taxes withheld from distributions with respect to the exchangeable
shares. The use of a credit may, however, be limited or precluded entirely if
the United States Holder has no income that is treated as non-United States
source income for United States federal income tax purposes.


DISSENTING SHAREHOLDERS

     A United States Holder who exercises the right to dissent from the business
combination will recognize gain or loss on the exchange of such Holder's Encal
common shares for cash in an amount equal to the difference between the amount
of cash received (other than amounts, if any, which are or are deemed to be
interest for United States federal income tax purposes, which amounts will be
taxed as ordinary income) and such Holder's basis in its Encal common shares.
Such gain or loss generally will be United States source income, will be capital
gain or loss if the Encal common shares were held as capital assets at the
Effective Time and will be long-term capital gain or loss if the United States
Holder's holding period for the Encal common shares is more than one year at
such time.

                                        35
<PAGE>   39

NON-UNITED STATES HOLDERS

     The following discussion is applicable to a non-United States Holder.

RECEIPT, EXCHANGE OR OTHER DISPOSITION OF EXCHANGEABLE SHARES AND CALPINE COMMON
STOCK

     Subject to the discussion below under "-- Foreign Investment in Real
Property Tax Act," a non-United States Holder generally will not be subject to
United States federal income tax on any gain realized on the receipt of
exchangeable shares in exchange for Encal common shares, on the sale or exchange
of the exchangeable shares, or on the sale or exchange of shares of Calpine
common stock, unless (i) such gain (A) in the absence of an applicable tax
treaty, is effectively connected with a trade or business of the non-United
States Holder in the United States, or (B) if a tax treaty applies, is
attributable to a permanent establishment maintained by the non-United States
Holder in the United States or (ii) unless an applicable tax treaty provides
otherwise the non-United States Holder is an individual who holds the Encal
common shares, the exchangeable shares or the Calpine common stock, as the case
may be, as a capital asset and is present in the United States for 183 days or
more in the taxable year of disposition, and certain other conditions are
satisfied.

DISTRIBUTIONS ON THE EXCHANGEABLE SHARES AND CALPINE COMMON STOCK


     Because Calpine and Calpine Canada intend to treat the dividends, if any,
paid to non-United States Holders in respect of the exchangeable shares as
dividends from Calpine, such amounts will generally be subject to United States
withholding tax at a rate of 30% for United States federal income tax purposes.
In general, dividends received by a non-United States Holder with respect to
Calpine common stock that are not effectively connected with the conduct by such
Holder of a trade or business in the United States will also be subject to
United States withholding tax at a rate of 30 percent. The withholding rate may
be reduced by an applicable income tax treaty in effect between the United
States and the non-United States Holder's country of residence (currently 15%,
generally, on dividends paid to residents of Canada under the Canada-U.S. Tax
Convention).


FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT

     Notwithstanding the discussion above, under the Foreign Investment in Real
Property Tax Act of 1980 ("FIRPTA"), gain or loss recognized by a non-United
States Holder on the sale or exchange of Calpine common stock, as well as any
gain or loss recognized on the sale or exchange of exchangeable shares (if such
shares are treated by the IRS as representing stock of Calpine), will be subject
to United States federal income tax as if such gain or loss were effectively
connected with a United States trade or business if such shares are treated as
"United States real property interests" ("USRPIs") (as defined below) and the
non-United States Holder is a greater than 5% shareholder.


     A USRPI generally includes any interest (other than an interest solely as a
creditor) in a "United States real property holding corporation" (a "USRPHC").
Calpine common stock and exchangeable shares will be USRPIs unless it is
established under specific procedures that Calpine is not (and was not for the
prior five-year period) a USRPHC. A corporation is a USRPHC if the fair market
value of its interests in United States real property equals or exceeds 50% of
the sum of the fair market value of all of its interests in real property and
all of its other assets used or held for use in a trade or business (as defined
in applicable regulations). Calpine cannot give any assurance as to whether it
is, at any time within the past five years it has been, or will in the future
become a USRPHC.



     If it is determined that Calpine is, has been in the past five years or in
the future becomes, a USRPHC, so long as Calpine's stock is regularly traded on
an established securities market, an exemption should apply, except with respect
to (i) a non-United States Holder of exchangeable shares, if on the date such
exchangeable shares were acquired by such non-United States Holder the shares
had a fair market value greater than the fair market value on such date of 5
percent of Calpine common stock; and (ii) a non-United States Holder whose
beneficial and/or constructive ownership of Calpine common stock exceeds 5%.
This exception should apply to both the Calpine common stock and to the
exchangeable

                                        36
<PAGE>   40

shares. Any investor that may approach or exceed the 5% ownership threshold
discussed above, either alone or in conjunction with related persons, should
consult its own tax advisor concerning the United States tax consequences that
may result. A non-United States Holder who sells or otherwise disposes of
exchangeable shares or Calpine common stock may be required to inform its
transferee whether such shares constitute a United States real property
interest.

     The foregoing discussion of the possible application of the FIRPTA rules to
non-United States Holders is only a summary of certain material aspects of these
rules. Because the United States federal income tax consequences to a non-United
States Holder under FIRPTA may be significant and are complex, non-United States
Holders are urged to discuss those consequences with their tax advisors.

BACKUP WITHHOLDING AND INFORMATION REPORTING

UNITED STATES HOLDERS

     Payments of dividends made on, or the proceeds of the sale or other
disposition of, the exchangeable shares and shares of Calpine common stock, as
the case may be, may be subject to information reporting and United States
federal backup withholding tax at the rate of 31% if the recipient of such
payment fails to supply an accurate taxpayer identification number or otherwise
fails to comply with applicable United States information reporting or
certification requirements. Any amount withheld from a payment to a United
States Holder under the backup withholding rules is allowable as a credit
against the Holder's United States federal income tax, provided that the
required information is furnished to the IRS.

NON-UNITED STATES HOLDERS

     A non-United States Holder may be required to comply with certification
procedures to establish that the Holder is not a United States person in order
to avoid backup withholding tax requirements with respect to distributions on
the exchangeable shares and shares of Calpine common stock, as the case may be.
In addition, Calpine must report annually to the IRS and to each non-United
States Holder the amount of any dividends paid to and the tax withheld with
respect to, such Holder, regardless of whether any tax was actually withheld.
Copies of these information returns may also be made available under the
provisions of a specific treaty or agreement to the tax authorities of the
country in which the non-United States Holder resides.

                                 LEGAL MATTERS

     The validity of the shares of our common stock issuable hereunder will be
passed upon for us by Covington & Burling, New York, New York. Certain U.S.
federal income tax matters have been passed upon by Covington & Burling, and
certain Canadian federal income tax matters have been passed upon by Macleod
Dixon LLP, Calgary, Canada.

                              INDEPENDENT AUDITORS


     Calpine's audited financial statements incorporated by reference in this
prospectus and elsewhere in this registration statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
reports with respect thereto, and are included herein in reliance upon the
authority of said firm as experts in giving such reports.



     Ernst & Young LLP, independent auditors, have audited the consolidated
financial statements of Encal as at December 31, 2000 and 1999, and for each of
the years in the three year period ended December 31, 2000, as set forth in
their report. We have included Encal's financial statements in this prospectus
and elsewhere in the registration statement in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.


                                        37
<PAGE>   41


        INDEX TO CONSOLIDATED FINANCIAL STATEMENTS OF ENCAL ENERGY LTD.



<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Auditor's Report............................................  F-2
Consolidated Balance Sheets as at December 31, 2000 and
  1999......................................................  F-3
Consolidated Statements of Earnings and Retained Earnings
  for the Years Ended December 31, 2000, 1999 and 1998......  F-4
Consolidated Statements of Cash Flows for the Years Ended
  December 31, 2000, 1999 and 1998..........................  F-5
Notes to the Consolidated Financial Statements..............  F-6
</TABLE>


                                       F-1
<PAGE>   42


                                AUDITORS' REPORT



To the Directors of Encal Energy Ltd.



     We have audited the consolidated balance sheets of Encal Energy Ltd. as at
December 31, 2000 and 1999 and the consolidated statements of earnings and
retained earnings and cash flows for each of the years in the three year period
ended December 31, 2000. These consolidated financial statements are the
responsibility of the management of Encal. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.



     We conducted our audits in accordance with auditing standards generally
accepted in Canada and the United States. Those standards require that we plan
and perform an audit to obtain reasonable assurance whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation.



     In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of Encal as at December 31, 2000
and 1999 and the results of its operations and its cash flows for each of the
years in the three year period ended December 31, 2000 in accordance with
accounting principles generally accepted in Canada.



/s/ ERNST & YOUNG LLP
Chartered Accountants



Calgary, Canada


February 16, 2001


                                       F-2
<PAGE>   43


                          CONSOLIDATED BALANCE SHEETS



                               AS AT DECEMBER 31


                               (CDN. $ THOUSANDS)



<TABLE>
<CAPTION>
                                                                  2000        1999
                                                                ---------    -------
<S>                                                             <C>          <C>
ASSETS
CURRENT
Cash........................................................       11,064         --
Accounts Receivable.........................................      117,666     58,337
Inventory...................................................       11,355      7,784
                                                                ---------    -------
                                                                  140,085     66,121
PETROLEUM PROPERTY AND EQUIPMENT (NOTE 4)...................      966,771    706,375
DEFERRED FOREIGN EXCHANGE LOSSES (NOTE 6)...................        3,335      2,048
                                                                ---------    -------
                                                                1,110,191    774,544
                                                                =========    =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Accounts Payable............................................      120,019     69,965
                                                                ---------    -------
BANK DEBT (NOTE 5)..........................................      238,724    229,214
SENIOR NOTES PAYABLE (NOTE 6)...............................      150,070     72,165
SITE RESTORATION AND RECLAMATION............................       15,204     11,959
FUTURE INCOME TAXES.........................................      170,896     81,818
                                                                ---------    -------
                                                                  574,894    395,156
                                                                ---------    -------
SHAREHOLDERS' EQUITY
Share Capital (Note 7)......................................      262,282    256,590
Retained Earnings...........................................      152,996     52,833
                                                                ---------    -------
                                                                  415,278    309,423
                                                                ---------    -------
                                                                1,110,191    774,544
                                                                =========    =======
</TABLE>



     See accompanying notes



On behalf of the Board:



<TABLE>
<S>                                            <C>
          (signed) David D. Johnson                     (signed) Robert G. Jennings
                   Director                                       Director
</TABLE>


                                       F-3
<PAGE>   44


           CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS



                        FOR THE YEARS ENDED DECEMBER 31


                  (CDN. $ THOUSANDS EXCEPT PER SHARE AMOUNTS)



<TABLE>
<CAPTION>
                                                                 2000       1999       1998
                                                                -------    -------    -------
<S>                                                             <C>        <C>        <C>
REVENUES
Petroleum and Natural Gas Sales.............................    545,684    253,373    176,463
Royalties...................................................    127,428     44,505     29,269
Hedging Charges (Note 8)....................................     25,642      7,161      6,867
                                                                -------    -------    -------
                                                                392,614    201,707    140,327
                                                                -------    -------    -------
EXPENSES
Production..................................................     59,156     47,908     41,910
General and Administrative..................................     12,534     10,395     10,153
Financing Charges...........................................     26,713     17,959     13,362
Depletion and Depreciation..................................    102,582     78,000     68,200
                                                                -------    -------    -------
                                                                200,985    154,262    133,625
                                                                -------    -------    -------
EARNINGS BEFORE TAXES.......................................    191,629     47,445      6,702
                                                                -------    -------    -------
TAXES
Future Income Taxes (Note 9)................................     89,078     20,300      2,475
Large Corporations Tax......................................      2,388      1,768      1,490
                                                                -------    -------    -------
                                                                 91,466     22,068      3,965
                                                                -------    -------    -------
NET EARNINGS FOR THE YEAR...................................    100,163     25,377      2,737
RETAINED EARNINGS, BEGINNING OF YEAR........................     52,833     27,456     24,719
                                                                -------    -------    -------
RETAINED EARNINGS, END OF YEAR..............................    152,996     52,833     27,456
                                                                =======    =======    =======
EARNINGS PER SHARE
Basic.......................................................       0.92       0.24       0.03
Fully Diluted...............................................       0.88       0.23       0.03
                                                                =======    =======    =======
</TABLE>



     See accompanying notes


                                       F-4
<PAGE>   45


                     CONSOLIDATED STATEMENTS OF CASH FLOWS



                        FOR THE YEARS ENDED DECEMBER 31


                  (CDN. $ THOUSANDS EXCEPT PER SHARE AMOUNTS)



<TABLE>
<CAPTION>
                                                               2000        1999        1998
                                                             --------    --------    --------
<S>                                                          <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Earnings for the Year................................     100,163      25,377       2,737
Depletion and Depreciation...............................     102,582      78,000      68,200
Future Income Taxes......................................      89,078      20,300       2,475
Amortization of Deferred Foreign Exchange Losses (Note
  6).....................................................         713         648         732
                                                             --------    --------    --------
CASH FLOWS FROM OPERATING ACTIVITIES.....................     292,536     124,325      74,144
Change in Non-Cash Working Capital from Operating
  Activities (Note 3)....................................     (27,718)    (21,326)        159
                                                             --------    --------    --------
                                                              264,818     102,999      74,303
                                                             --------    --------    --------
CASH FLOWS FROM FINANCING ACTIVITIES
Bank Debt................................................       9,510      82,478      74,777
Senior Notes Payable (Note 6)............................      75,905         (39)         27
Common Shares............................................       5,692       7,183       4,898
                                                             --------    --------    --------
                                                               91,107      89,622      79,702
                                                             --------    --------    --------
CASH FLOWS USED IN INVESTING ACTIVITIES
Additions to Petroleum Property and Equipment............    (237,847)   (174,520)   (148,121)
Acquisitions of Petroleum Property and Equipment.........    (146,923)    (50,414)    (64,454)
Sales of Petroleum Property and Equipment................      25,730      28,325      49,069
Site Restoration and Reclamation.........................        (693)       (214)       (899)
Change in Non-Cash Working Capital from Investing
  Activities (Note 3)....................................      14,872       4,202      10,400
                                                             --------    --------    --------
                                                             (344,861)   (192,621)   (154,005)
                                                             --------    --------    --------
CHANGE IN CASH...........................................      11,064          --          --
                                                             ========    ========    ========
CASH FLOWS FROM OPERATIONS PER SHARE
  Basic..................................................        2.68        1.16        0.70
  Fully Diluted..........................................        2.53        1.10        0.67
                                                             ========    ========    ========
</TABLE>



     See accompanying notes


                                       F-5
<PAGE>   46


                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS



                       DECEMBER 31, 2000, 1999, AND 1998


   (TABULAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS UNLESS OTHERWISE STATED)



1.   NATURE OF BUSINESS AND BASIS OF PRESENTATION



     Encal Energy Ltd. (the "Company" or "Encal") operates in the oil and gas
industry in Alberta and British Columbia. The consolidated financial statements
include the accounts of Encal and its wholly-owned subsidiaries, are stated in
Canadian dollars and have been prepared in accordance with accounting principles
generally accepted in Canada ("Canadian GAAP"). A summary of the differences
between accounting principles generally accepted in Canada and those generally
accepted in the United States ("US GAAP") is contained in Note 10 to these
statements.



     The preparation of financial statements in conformity with Canadian GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities as at the date of the financial statements and the reported amounts
of revenues and expenses during the period. Actual results could differ from
those estimates.



2.   SIGNIFICANT ACCOUNTING POLICIES



INVENTORY



     Inventory is carried at the lower of average cost and net realizable value.



PETROLEUM PROPERTY AND EQUIPMENT



     Encal follows the full cost method of accounting for petroleum and natural
gas properties. All costs relating to the acquisition of, exploration for and
development of petroleum and natural gas reserves are capitalized. Such costs
include lease acquisition costs, geological and geophysical costs, lease rentals
on undeveloped properties, costs of drilling both productive and non-productive
wells, lease and well equipment, geological and geophysical salaries and
overhead expenses related to exploration and development activities. Proceeds
from disposal of properties are normally applied as a reduction of the cost of
remaining assets without recognition of a gain or loss unless the disposal would
result in a change of 20 percent or more in the depletion rate.



     Encal applies a ceiling test to capitalized costs to ensure that such costs
do not exceed estimated future net revenues from production of gross proven
reserves at year end market prices less future production, general and
administrative, financing, site restoration and reclamation, net of salvage
values, and income tax costs plus the lower of cost or estimated market value of
unproved properties.



     Depletion of petroleum and natural gas properties is calculated using the
unit-of-production method based on estimated gross proven oil and gas reserves.
Reserves are converted to common units on the approximate equivalent energy
basis.



     Depreciation of corporate assets is provided using the straight line method
at rates varying between 20 percent to 33 percent, based on the estimated
service lives of the related assets.



SITE RESTORATION AND RECLAMATION



     Encal provides for the total future liability for site restoration and
reclamation costs on wells and facilities using the unit-of-production method
over the estimated life of the oil and gas reserves. The liability is based on
estimates of the anticipated method and extent of site restoration, using
current costs and in accordance with existing legislation and industry practice.
Current year charges of $3,938,000 (1999 -- $2,770,000) is included in depletion
and depreciation expense, with the accumulated provision being shown as a
long-term liability. Actual site restoration costs are deducted from the
provision in the year incurred.


                                       F-6
<PAGE>   47

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)



                       DECEMBER 31, 2000, 1999, AND 1998


   (TABULAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS UNLESS OTHERWISE STATED)



FOREIGN CURRENCY TRANSLATION



     Monetary assets and liabilities denominated in foreign currencies are
translated into Canadian dollars at year end exchange rates. Exchange gains or
charges are included in earnings in the period incurred with the exception of
the unrealized gains or losses on translation of long-term monetary liabilities,
which are deferred and amortized over the remaining terms of such liabilities on
a straight line basis.



MEASUREMENT UNCERTAINTY



     The amounts recorded for depletion and depreciation and impairment of
petroleum property and equipment and for future site restoration and reclamation
are based on estimates of gross oil and gas reserves and future costs. By their
nature, these estimates and those related to the future cash flows used to
assess impairment, are subject to measurement uncertainty and the impact on the
consolidated financial statements of future periods could be material.



JOINT OPERATIONS



     Substantially all of the exploration and production activities of Encal are
conducted jointly with others. These consolidated financial statements reflect
only Encal's proportionate interest in such activities.



PER SHARE INFORMATION



     Per share information is calculated on the basis of the weighted average
number of common shares outstanding during the year. Fully diluted per share
information is calculated on the basis of the weighted average number of common
shares that would have been outstanding during the year had all the stock
options been exercised at the beginning of the year, or if the option was issued
during the year, the date of their issuance.



DERIVATIVE FINANCIAL INSTRUMENTS



     Encal utilizes derivative financial instrument contracts to reduce its
exposures to changes in petroleum and natural gas prices, the Canadian/US dollar
exchange rate and interest rates. Where petroleum and natural gas price swaps
denominated in US dollars are entered into, Encal may use forward foreign
exchange contracts to hedge against unfavorable Canadian/US dollar exchange
rates. Gains and charges incurred on these contracts are recognized in earnings
concurrently with the hedged transaction. In the case of interest rate swaps,
the differential to be paid or received is accrued as interest rates change and
is recognized over the term of the swap agreements. In accordance with Canadian
GAAP, the fair values of these contracts are not reflected in the consolidated
financial statements.



FUTURE INCOME TAXES



     Encal follows the liability method of accounting for income taxes. Under
this method, future tax assets and liabilities are determined based on
differences between the carrying value and the tax basis of assets and
liabilities, and measured using the substantively enacted tax rates and laws
expected to be in effect when the differences are expected to reverse. The
effect on future tax assets and liabilities of a change in tax rates is
recognized in earnings in the period in which the change is substantively
enacted.



SHARE BASED COMPENSATION PLAN



     Encal has a share based compensation plan which is described in Note 7. No
compensation expense is recognized for this plan when options are granted to
management, employees and directors. Any consideration paid by management,
employees or directors on exercise of options is credited to share capital.


                                       F-7
<PAGE>   48

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)



                       DECEMBER 31, 2000, 1999, AND 1998


   (TABULAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS UNLESS OTHERWISE STATED)



3.   CHANGE IN NON-CASH WORKING CAPITAL



<TABLE>
<CAPTION>
                                                                 2000       1999       1998
                                                                -------    -------    ------
<S>                                                             <C>        <C>        <C>
Cash provided by (used for):
Accounts Receivable.........................................    (59,329)   (30,034)   (9,937)
Inventory...................................................     (3,571)     2,423    (4,284)
Accounts Payable............................................     50,054     10,487    24,780
                                                                -------    -------    ------
Change in Non-Cash Working Capital..........................    (12,846)   (17,124)   10,559
                                                                =======    =======    ======
These changes relate to the following activities:
Change in Non-Cash Working Capital from Operating
  Activities................................................    (27,718)   (21,326)      159
Change in Non-Cash Working Capital from Investing
  Activities................................................     14,872      4,202    10,400
                                                                -------    -------    ------
                                                                (12,846)   (17,124)   10,559
                                                                =======    =======    ======
Cash Payments for Interest and Income Taxes
Interest Paid on Debt.......................................     25,330     13,213     8,958
Large Corporations Tax......................................      2,595      1,411     1,549
                                                                -------    -------    ------
                                                                 27,925     14,624    10,507
                                                                =======    =======    ======
</TABLE>



4.   PETROLEUM PROPERTY AND EQUIPMENT



<TABLE>
<CAPTION>
                                          DECEMBER 31, 2000                     DECEMBER 31, 1999
                                 -----------------------------------   -----------------------------------
                                              ACCUMULATED      NET                  ACCUMULATED      NET
                                             DEPLETION AND    BOOK                 DEPLETION AND    BOOK
                                   COST      DEPRECIATION     VALUE      COST      DEPRECIATION     VALUE
                                 ---------   -------------   -------   ---------   -------------   -------
<S>                              <C>         <C>             <C>       <C>         <C>             <C>
Petroleum and Natural Gas
  Properties...................  1,383,882     (419,325)     964,557   1,027,368     (323,974)     703,394
Corporate Assets...............     12,272      (10,058)       2,214       9,746       (6,765)       2,981
                                 ---------     --------      -------   ---------     --------      -------
                                 1,396,154     (429,383)     966,771   1,037,114     (330,739)     706,375
                                 =========     ========      =======   =========     ========      =======
</TABLE>



     The cost of unevaluated property excluded from the depletion base as at
December 31, 2000 was $109.7 million (1999 -- $85.4 million).



5.   BANK DEBT



     The Company has an unsecured $370 million term credit facility and a $30
million operating credit facility from Canadian chartered banks of which $238.7
million was outstanding under the term credit facility at December 31, 2000
(1999 -- $229.2 million). The bank debt bears interest at the lenders' prime
lending rate, bankers' acceptance rates plus applicable margins or U.S. Libor
rates plus applicable margins. Interest rates for 2000 averaged 7.23% (1999 --
6.45%; 1998 -- 6.61%). The term credit facility is structured as a 364-day
revolving credit, extendable annually with the lenders' approval. In the event
the lenders do not consent to such extension, the revolving credit will convert
to a five-year non-revolving reducing facility with semi-annual principal
reductions in order that the facility be repaid by the maturity date of January
30, 2006. Financial covenants require that debt not exceed the borrowing base
limit of $500 million.


                                       F-8
<PAGE>   49

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)



                       DECEMBER 31, 2000, 1999, AND 1998


   (TABULAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS UNLESS OTHERWISE STATED)



6.   SENIOR NOTES PAYABLE



     The senior notes payable represent two separate issues of U.S.$50 million
senior unsecured notes. The first issue bears interest at 7.61% and matures on
July 11, 2007. These notes are repayable in five equal annual installments of
U.S.$10 million beginning July 11, 2003, with interest payable semi-annually in
arrears until maturity. The second issue bears interest at 8.06% with a 10 year
term maturing December 21, 2010. These 8.06% notes are repayable in five equal,
annual installments of U.S.$10 million beginning December 21, 2006 with interest
payable quarterly in arrears until maturity.



     As at December 31, 2000, the aggregate deferred foreign exchange loss
arising upon translation of the two series of senior notes at the year end
exchange rate was $3.3 million (1999 -- $2.0 million) net of accumulated
amortization.



7.   SHARE CAPITAL



AUTHORIZED



Unlimited number of Class A Preferred Shares-issuable in series


Unlimited number of Class B Preferred Shares-issuable in series


Unlimited number of Common Shares



<TABLE>
<CAPTION>
ISSUED AND OUTSTANDING COMMON SHARES                               NUMBER          VALUE
------------------------------------                            -------------    ---------
                                                                ($ THOUSANDS EXCEPT SHARE
                                                                         AMOUNTS)
<S>                                                             <C>              <C>
Balance at December 31, 1997................................     104,784,161      244,509
Issued Pursuant to the Exercise of Stock Options............       1,450,947        4,898
                                                                 -----------      -------
Balance at December 31, 1998................................     106,235,108      249,407
Issued Pursuant to the Exercise of Stock Options............       2,044,768        7,183
                                                                 -----------      -------
Balance at December 31, 1999................................     108,279,876      256,590
Issued Pursuant to the Exercise of Stock Options............       1,291,589        5,692
                                                                 -----------      -------
Balance at December 31, 2000................................     109,571,465      262,282
                                                                 ===========      =======
</TABLE>



     The weighted average number of shares outstanding (basic) is 108,984,564
(1999 -- 107,577,397; 1998 -- 105,533,966). The weighted average number of
shares outstanding (fully diluted) is 116,301,742 (1999 -- 113,970,878; 1998 --
111,683,774). For 2000, the fully diluted earnings include imputed interest of
$1,792,000 (1999 -- $867,000; 1998 -- $669,000) on the assumed proceeds from the
exercise of options.



STOCK OPTIONS



     Under the terms of the stock option plan, options to purchase common shares
may be granted to management, employees and directors at an exercise price and
for an exercise period as determined by the Board of Directors. All outstanding
options were granted for a five year term. Encal's stock option plan includes
two types of options: traditional options and executive incentive options. The
difference between the two types of options is their vesting provisions.
Traditional options vest over a period of time, whereas executive incentive
options vest when the common shares reach a target price over a 20 consecutive
trading day period. At December 31, 2000, options to purchase 7,479,195 common
shares were outstanding at prices ranging from $3.65 to $9.20 per share and
expiring between 2001 to 2005.


                                       F-9
<PAGE>   50

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)



                       DECEMBER 31, 2000, 1999, AND 1998


   (TABULAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS UNLESS OTHERWISE STATED)



     Outstanding executive incentive options are as follows:



<TABLE>
<CAPTION>
                                                                                VESTING TARGET PRICES
                                                                    EXERCISE          ($/SHARE)
                                                                      PRICE     ----------------------
GRANT DATE                                               NUMBER     ($/SHARE)    33.33%*     66.67%**
----------                                              ---------   ---------   ---------   ----------
<S>                                                     <C>         <C>         <C>         <C>
December 6, 1996.....................................   1,400,000     3.65         5.74         6.38
March 24, 1997.......................................     225,000     4.10         5.74         6.38
July 29, 1998........................................     541,667     5.74         9.03        10.04
September 10, 1999...................................   1,083,333     8.25        10.04        11.16
                                                        ---------
                                                        3,250,000
                                                        =========
</TABLE>


---------------


* Reflects a 12 percent compound annual growth rate over four years from the
  date of grant



**Reflects a 15 percent compound annual growth rate over four years from the
  date of grant



     Activity in the stock option plan through December 31, 2000 was as follows:



<TABLE>
<CAPTION>
                                                                          EXERCISE PRICES
OPTIONS OUTSTANDING                                   NUMBER OF OPTIONS     ($/OPTION)      TOTAL VALUE
-------------------                                   -----------------   ---------------   -----------
                                                             ($ THOUSANDS EXCEPT SHARE AMOUNTS)
<S>                                                   <C>                 <C>               <C>
Balance at December 31, 1997.......................       5,792,604         2.66 - 5.35       $20,611
  Granted..........................................       2,733,501         4.40 - 6.00        14,641
  Cancelled........................................        (149,589)        2.70 - 5.10          (545)
  Exercised........................................      (1,450,943)        2.66 - 4.70        (4,897)
                                                         ----------         -----------       -------
Balance at December 31, 1998.......................       6,925,573         2.66 - 6.00       $29,810
  Granted..........................................       2,386,200         5.70 - 8.25        18,466
  Cancelled........................................        (215,668)        3.50 - 7.75        (1,182)
  Exercised........................................      (2,044,765)        2.66 - 5.35        (7,182)
                                                         ----------         -----------       -------
Balance at December 31, 1999.......................       7,051,340         2.70 - 8.25       $39,912
  Granted..........................................       2,129,850         6.25 - 9.20        17,407
  Cancelled........................................        (410,406)        3.30 - 8.00        (2,370)
  Exercised........................................      (1,291,589)        2.70 - 7.75        (5,692)
                                                         ----------         -----------       -------
Balance at December 31, 2000.......................       7,479,195         3.65 - 9.20       $49,257
                                                         ==========         ===========       =======
</TABLE>



     Additional details on Encal's stock options outstanding as at December 31,
2000 are as follows:



<TABLE>
<CAPTION>
               OUTSTANDING OPTIONS                             EXERCISABLE OPTIONS
  ----------------------------------------------   --------------------------------------------
     RANGE OF                       WEIGHTED         WEIGHTED                      WEIGHTED
  EXERCISE PRICES   NUMBER OF   AVERAGE EXERCISE   AVERAGE YEARS   NUMBER OF   AVERAGE EXERCISE
     ($/SHARE)       OPTIONS    PRICE ($/SHARE)      TO EXPIRY      OPTIONS    PRICE ($/SHARE)
  ---------------   ---------   ----------------   -------------   ---------   ----------------
  <S>               <C>         <C>                <C>             <C>         <C>
           3.65     1,056,124         3.65               1         1,056,124         3.65
    4.00 - 4.99       351,267         4.22               1           337,534         4.21
    5.00 - 5.99     2,073,852         5.38               3         1,150,133         5.38
    6.00 - 6.99       443,977         6.37               4            79,609         6.46
    7.00 - 7.99        81,500         7.75               4            27,167         7.75
    8.00 - 9.20     3,472,475         8.33               5           180,556         8.25
                    ---------                                      ---------
    3.65 - 9.20     7,479,195         6.54               3         2,831,123         4.83
                    =========                                      =========
</TABLE>


                                       F-10
<PAGE>   51

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)



                       DECEMBER 31, 2000, 1999, AND 1998


   (TABULAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS UNLESS OTHERWISE STATED)



     As at December 31, 2000, Encal has reserved 1,164,169 Common Shares for
future issuance under the stock option plan.



8.   FINANCIAL INSTRUMENTS



     Encal's financial instruments recognized in the balance sheet consist of
accounts receivable, accounts payable, bank debt and senior notes payable. The
fair value of these financial instruments approximates their carrying amounts.
Encal's hedging charges and gains are as follows:



<TABLE>
<CAPTION>
                                                                 2000      1999      1998
                                                                ------    ------    ------
<S>                                                             <C>       <C>       <C>
Crude Oil Hedging (Gains) Charges...........................    25,642     7,832    (3,467)
Crude Oil Foreign Exchange Hedging (Gains) Charges..........        --      (433)    6,657
Natural Gas Foreign Exchange Hedging (Gains) Charges........        --      (238)    3,677
                                                                ------    ------    ------
Net Hedging Charges.........................................    25,642     7,161     6,867
                                                                ======    ======    ======
Financing Charges -- Interest Rate Swap (Gains) Charges.....        62       114       (29)
                                                                ======    ======    ======
</TABLE>



     Encal is a party to certain off-balance sheet derivative financial
instruments, including crude oil, natural gas and interest rate swap contracts
and fixed physical natural gas contracts. Encal enters into these contracts for
the purpose of protecting a portion of its future Canadian dollar earnings and
cash flows from operations from the volatility of crude oil and natural gas
commodity prices, US/Canadian dollar exchange rates and interest rates. The swap
contracts reduce fluctuations in petroleum and natural gas revenues and
financing charges by locking in fixed forward prices on a portion of Encal's
petroleum and natural gas sales, locking in the associated forward foreign
exchange exposure, and locking in fixed interest rates on a portion of its
floating rate debt.



     Contracts outstanding in respect of financial instruments were as follows:



<TABLE>
<CAPTION>
                                                             AS AT DECEMBER 31, 2000
                                            ---------------------------------------------------------
                                                 QUANTITY           ENCAL RECEIVES       ENCAL PAYS
CRUDE OIL SWAPS                             (BARRELS PER MONTH)     (U.S.$WTI/BBL)     (U.S.$WTI/BBL)
---------------                             -------------------    ----------------    --------------
<S>                                         <C>                    <C>                 <C>
January 2001 to December 2001...........          30,000           $25.00 - $34.85*         WTI
January 2001 to December 2002...........          40,000           $21.00 - $29.05*         WTI
</TABLE>



<TABLE>
<CAPTION>
                                                                NOTIONAL AMOUNT
INTEREST RATE SWAPS                                                  (C$)          RATE (%)
-------------------                                             ---------------    --------
<S>                                                             <C>                <C>
January 2001 to February 5, 2001............................      $50,000,000        6.77
</TABLE>



<TABLE>
<CAPTION>
                                                                AS AT DECEMBER 31, 1999
                                               ---------------------------------------------------------
                                                    QUANTITY          AVERAGE FIXED PRICE       HEDGE
CRUDE OIL SWAPS                                (BARRELS PER MONTH)      (U.S.$WTI/BBL)       TERMINATION
---------------                                -------------------    -------------------    -----------
<S>                                            <C>                    <C>                    <C>
                                                     66,000            $          17.85       Dec 2000
                                                     36,000            $17.50 - $21.25*       Dec 2000
                                                     42,000            $19.50 - $25.25*       Dec 2000
                                                     17,000            $21.00 - $27.75*       Jun 2000
</TABLE>


---------------


*Represents an aggregation of all transactions of like terms with a minimum
 floor and a maximum cap.


                                       F-11
<PAGE>   52

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)



                       DECEMBER 31, 2000, 1999, AND 1998


   (TABULAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS UNLESS OTHERWISE STATED)



PHYSICAL NATURAL GAS CONTRACTS



<TABLE>
<CAPTION>
                                                             AS AT DECEMBER 31, 2000
                                                   --------------------------------------------
                                                      NOTIONAL            ENCAL
                                                   CONTRACT AMOUNT      RECEIVES        ENCAL
                                                       (GJ/D)            ($/GJ)          PAYS
                                                   ---------------    -------------    --------
<S>                                                <C>                <C>              <C>
Fixed Price -- Alberta
Contract Period
April to October 2001 - 2003...................        10,000                  2.41      NIT
January 2001 to October 2003...................         5,000                  2.40      NIT
January 2001 to March 2001.....................         5,000                  7.01      NIT
April 2001 to October 2001.....................         5,000                  5.68      NIT
Costless Collars -- Alberta
January 2001 to March 2001.....................        45,000         5.50 - 17.50*      NIT
April 2001 to October 2001.....................         5,000         4.50 -  7.75*      NIT
Costless Collars -- British Columbia
January 2001 to March 2001.....................        20,000         7.45 - 15.10*    STN2/NIT
</TABLE>



<TABLE>
<CAPTION>
                                                             AS AT DECEMBER 31, 1999
                                                   --------------------------------------------
                                                      NOTIONAL            ENCAL
                                                   CONTRACT AMOUNT      RECEIVES        ENCAL
                                                       (GJ/D)            ($/GJ)          PAYS
                                                   ---------------    -------------    --------
<S>                                                <C>                <C>              <C>
Contract Period
April to October 2000 - 2003...................        10,000                  2.41      NIT
January 2000 to October 2003...................         5,000                  2.40      NIT
</TABLE>


---------------


*Represents an aggregation of all transactions of like terms with a minimum
 floor and a maximum cap.



     On settlement, these contracts result in cash receipts to or payments by
Encal for the difference between the fixed contract price (or in the case of
costless collars, the fixed floor or cap, as applicable) and floating market
rates for the applicable dollars and volumes fixed during the contract term.
Such cash receipts or payments offset corresponding decreases or increases in
Encal's risk management losses or interest expense.



     At December 31, 2000, the estimated fair values of the above financial
instrument contracts were as follows:



<TABLE>
<CAPTION>
RECEIVABLE (PAYABLE)                                             2000       1999
--------------------                                            -------    -------
<S>                                                             <C>        <C>
Crude Oil Swaps.............................................        481     (5,331)
Interest Rate Swaps.........................................         (1)        --
Physical Natural Gas Contracts..............................    (55,621)    (5,980)
</TABLE>



     The above estimated fair values are based on the market value of these
instruments at the year end and represent the amounts Encal would receive or pay
to terminate the contracts at year end. These instruments have no book values
recorded in the consolidated financial statements.



     Encal may be exposed to certain losses in the event of non-performance by
counterparties to these contracts. Encal mitigates this risk by entering into
transactions with major international financial


                                       F-12
<PAGE>   53

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)



                       DECEMBER 31, 2000, 1999, AND 1998


   (TABULAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS UNLESS OTHERWISE STATED)



institutions and commodity dealers with appropriate credit ratings and by
ensuring that this credit risk is not concentrated with a small number of
counterparties.



9.   FUTURE INCOME TAXES



     The liability for future income taxes is primarily due to the excess of the
carrying value of property plant and equipment over the associated tax basis.



     The actual income tax provision differs from the expected amount calculated
by applying the Canadian combined federal and provincial corporate income tax
rate to earnings before income taxes. The major components of these differences
are as follows:



<TABLE>
<CAPTION>
                                                                 2000       1999       1998
                                                                -------    -------    -------
<S>                                                             <C>        <C>        <C>
Earnings Before Income Taxes................................    191,629     47,445      6,702
Corporate Income Tax Rate...................................      44.87%     44.88%     44.87%
                                                                -------    -------    -------
Expected Future Income Taxes................................     85,984     21,293      3,007
Increase (Decrease) in Future Income Taxes Resulting From:
  Non-deductible Crown Charges..............................     49,361     18,349     12,543
  Resource Allowance........................................    (42,564)   (17,697)   (12,074)
  Alberta Royalty Tax Credit................................       (233)      (617)      (636)
  Attributed Canadian Royalty Income........................     (3,793)      (788)      (939)
  Other.....................................................        323       (240)       574
                                                                -------    -------    -------
Future Income Taxes.........................................     89,078     20,300      2,475
                                                                =======    =======    =======
</TABLE>



     Encal has the following deductions as December 31, 2000 available for
future income tax purposes:



<TABLE>
<CAPTION>
                                                                           MAXIMUM ANNUAL
                                                                           RATE OF CLAIM
                                                                           --------------
<S>                                                             <C>        <C>
Canadian Exploration Expense................................     22,000          100%
Canadian Development Expense................................    106,000           30%
Canadian Oil and Gas Property Expense.......................    253,000           10%
Undepreciated Capital Cost..................................    152,000       6 - 30%
                                                                -------
                                                                533,000
                                                                =======
</TABLE>



     In addition to the deductions above, Encal has $55.6 million of attributed
royalty income available for deduction from future Alberta taxable income.


                                       F-13
<PAGE>   54

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)



                       DECEMBER 31, 2000, 1999, AND 1998


   (TABULAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS UNLESS OTHERWISE STATED)



10. U.S. GAAP AND U.S. DOLLAR SUMMARY INFORMATION



     Encal's financial statements have been prepared in accordance with Canadian
GAAP. These principles, as they pertain to Encal's consolidated financial
statements, differ from US GAAP as follows:



     The application of US GAAP would have the following effects on net earnings
and comprehensive income as reported:



<TABLE>
<CAPTION>
                                                                (FOR YEARS ENDED DECEMBER 31)
                                                                -----------------------------
                                                                 2000       1999       1998
                                                                -------    -------    -------
<S>                                                             <C>        <C>        <C>
Net Earnings -- Canadian GAAP...............................    100,163     25,377      2,737
                                                                -------    -------    -------
Deferred Foreign Exchange Losses(1).........................     (1,287)    (2,048)    (7,017)
Depletion and Depreciation(2)...............................      4,017      4,377      5,056
Future Income Taxes(2)......................................     (1,854)     1,476        973
Foreign Exchange Forward Contracts(3).......................         --         --        174
                                                                -------    -------    -------
                                                                    876      3,805       (814)
                                                                -------    -------    -------
Net Earnings and Comprehensive Income -- US GAAP............    101,039     29,182      1,923
                                                                =======    =======    =======
Net Earnings per Share -- Basic.............................       0.93       0.27       0.02
  Fully Diluted(4)..........................................       0.91       0.26       0.02
</TABLE>



     The application of US GAAP would have the following effects on the balance
sheets as reported:



<TABLE>
<CAPTION>
                                                                   (AS AT DECEMBER 31)
                                                         ---------------------------------------
                                                                2000                 1999
                                                         ------------------   ------------------
                                                         CANADIAN     US      CANADIAN     US
                                                           GAAP      GAAP       GAAP      GAAP
                                                         --------   -------   --------   -------
<S>                                                      <C>        <C>       <C>        <C>
Petroleum Property and Equipment(2)...................   966,771    929,722   706,375    665,309
Deferred Foreign Exchange Losses(1)...................     3,335         --     2,048         --
Future Income Taxes(2)................................   170,896    161,536    81,818     70,604
Retained Earnings.....................................   152,996    121,972    52,833     20,933
</TABLE>


---------------


(1)Under US GAAP, unrealized gains or losses arising on translation of long term
   liabilities repayable in foreign funds would be included in earnings in the
   period in which they arise. See Note 2 for Canadian GAAP treatment.



(2)Under US GAAP, the discounted future net cash flows from proven reserves,
   discounted at 10 percent over the remaining productive life, plus the lower
   of cost or estimated fair market value of unproved properties, net of future
   taxes, must exceed the net book value of such properties, net of future taxes
   and estimated site restoration, or a writedown is required. Under Canadian
   GAAP, the ceiling test calculation is computed on an undiscounted basis. At
   December 31, 2000, 1999 and 1998, no ceiling test writedowns under either
   Canadian GAAP or US GAAP were required. Under US GAAP, the ceiling test
   calculation in years prior to 1995 resulted in differences in the carrying
   values of petroleum property and equipment, future income taxes liability,
   depletion and depreciation, and future income taxes expense.



(3)Under US GAAP, foreign exchange forward contracts associated with anticipated
   future transactions are recognized in the financial statements at fair value,
   with any resulting gain or loss immediately reflected in income. Under
   Canadian GAAP, these contracts are accounted for as a hedge of the
   anticipated future transactions. Accordingly, gains and losses arising on the
   contracts are deferred and recognized in income in the period in which the
   underlying transactions are recognized.



(4)In determining fully diluted earnings per share, US GAAP requires the use of
   the treasury-stock method. Under this method, the fully diluted weighted
   average number of shares outstanding is calculated assuming that the proceeds
   obtained upon exercise of outstanding options are used to purchase common
   stock at the average market price during the period with the incremental
   shares included in the denominator of the fully diluted calculation.


                                       F-14
<PAGE>   55

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)



                       DECEMBER 31, 2000, 1999, AND 1998


   (TABULAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS UNLESS OTHERWISE STATED)



U.S.$ EQUIVALENTS



     The following information is based on US GAAP and translated from Canadian
dollars into US dollars at the average exchange rates for each of the years
presented.



<TABLE>
<CAPTION>
                                                                      YEAR ENDED DECEMBER 31
                                                                -----------------------------------
                                                                  2000         1999         1998
                                                                ---------    ---------    ---------
                                                                 (U.S.$ THOUSANDS EXCEPT PER SHARE
                                                                             AMOUNTS)
<S>                                                             <C>          <C>          <C>
Petroleum and Natural Gas Sales.............................     365,608      170,541      118,230
Net Earnings and Comprehensive Income.......................      68,019       19,639        1,296
  Per Share -- Basic........................................        0.62         0.18         0.01
  Per Share -- Fully Diluted................................        0.61         0.18         0.01
Cash Flow from Operations...................................     195,999       83,298       49,677
  Per Share -- Basic........................................        1.80         0.78         0.47
  Per Share -- Fully Diluted................................        1.77         0.74         0.46
Average Exchange Rate (C$)..................................        0.67         0.67         0.67
</TABLE>



STOCK OPTION PLAN



     In accordance with APB 25 no amount of compensation expense has been
recognized in the financial statements for stock options granted to management,
employees and directors. The following table provides pro forma net earnings and
net earnings per share in accordance with US GAAP had stock options been
recognized as compensation expense based on the estimated fair value of the
options on the grant date in accordance with SFAS No. 123.



<TABLE>
<CAPTION>
                                             2000                  1999                  1998
                                      -------------------   -------------------   -------------------
                                      US GAAP   PRO FORMA   US GAAP   PRO FORMA   US GAAP   PRO FORMA
                                      -------   ---------   -------   ---------   -------   ---------
<S>                                   <C>       <C>         <C>       <C>         <C>       <C>
Net Earnings (C$ thousands).........  101,039    96,391     29,182     26,386      1,923        40
Net Earnings per Share ($/share)....    0.93       0.88       0.27       0.25       0.02      0.00
</TABLE>



     The pro forma amounts may not be indicative of future results. Additional
awards in future years are anticipated.



     Stock options granted in 2000 had an estimated weighted average fair value
of $2.87 per option (1999 -- $2.81 per option, 1998 -- $1.85 per option). All
options issued by Encal permit the holder to purchase one common share at the
stated exercise price.



     The estimated fair value of stock options issued was determined using the
Black-Scholes model using the following weighted average assumptions:



<TABLE>
<CAPTION>
                                                                2000    1999    1998
                                                                ----    ----    ----
<S>                                                             <C>     <C>     <C>
Risk Free Interest Rate (%).................................    7.23    6.50    5.13
Estimated Hold Period Prior to Exercise (years).............       4       4       4
Volatility in the Price of Encal's Common Shares (%)........    35.4    35.5    34.6
</TABLE>



NEW PRONOUNCEMENTS



     In June 1998, the Financial Accounting Standards Board issued Statement No.
133 (FAS 133) Accounting for Derivative Instruments and Hedging Activities,
which together with its related amendments FAS 137 and FAS 138, are required to
be adopted in years beginning after June 15, 2000.


                                       F-15
<PAGE>   56

         NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)



                       DECEMBER 31, 2000, 1999, AND 1998


   (TABULAR AMOUNTS IN THOUSANDS OF CANADIAN DOLLARS UNLESS OTHERWISE STATED)



Encal has adopted the new Statements effective January 1, 2001. These Statements
will require Encal to recognize all derivatives on the balance sheet at fair
value. Derivatives that are not hedges must be adjusted to fair value through
income. If the derivative is a hedge, depending on the nature of the hedge,
changes in the fair value of derivatives will either be offset against the
change in fair value of the hedged assets, liabilities or firm commitments
through earnings, or recognized in other comprehensive income until the hedged
item is recognized in earnings. The ineffective portion of a derivative's change
in fair value will be immediately recognized in earnings.



     Based on Encal's derivative position at December 31, 2000, Encal estimates
that upon adoption of these Statements, it will record a $0.3 million gain (net
of tax) for the cumulative effect of an accounting change.



11. SUBSEQUENT EVENT



     On February 8, 2001 Encal announced that it had entered into a combination
agreement with Calpine Corporation ("Calpine") (NYSE: CPN) whereby Calpine will
offer $12.00 of equivalent shares of Calpine common stock for each outstanding
Encal common share.



     As a result of the arrangement, shareholders will receive a fixed value of
C$12.00 per common share, payable in the form of exchangeable shares of Calpine
Canada Holdings Ltd., a Canadian subsidiary of Calpine. The number of
exchangeable shares to be received for each common share will be determined
based on the weighted average trading price of the shares of Calpine common
stock for the ten consecutive trading days ending on the third trading day
before the special meeting, including any adjournment thereof, and based on the
average exchange rate from U.S. dollars to Canadian dollars for such ten day
period. Each exchangeable share will have economic and voting rights equivalent
to one share of Calpine common stock and will be exchangeable for one share of
Calpine common stock.



     The transaction has been unanimously approved by the Boards of Directors of
both companies, and will require approval by at least 66 2/3% of Encal
shareholders and Encal optionholders, voting as one class. Encal's major
shareholder, Ontario Teachers' Pension Plan Board, plus the directors and
officers of Encal, who collectively own approximately 33% of the fully diluted
shares, have agreed to vote their shares and options in favor of the
transaction. Encal expects to mail its Information Proxy Circular to
shareholders in March 2001.


                                       F-16
<PAGE>   57

                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

     The following table sets forth the costs and expenses payable by Calpine in
connection with issuance and distribution of the securities being registered.
All amounts are estimates subject to future contingencies except the SEC
registration statement filing fee.

<TABLE>
<S>                                                           <C>
SEC registration statement filing fee.......................  $349,500
Accounting fees and expenses................................    75,000
Legal fees and expenses.....................................    50,000
Printing fees...............................................    75,000
Transfer agent fees.........................................     5,000
Miscellaneous...............................................    15,500
                                                              --------
  Total.....................................................  $570,000
                                                              ========
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

     Section 145 of the General Corporation Law of the State of Delaware (the
"Delaware Law") empowers a Delaware corporation to indemnify any persons who
are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceedings, whether civil, criminal,
administrative or investigative (other than action by or in the right of such
corporation), by reason of the fact that such person was an officer or director
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such officer or
director acted in good faith and in a manner he reasonably believed to be in or
not opposed to the corporation's best interests, and, for criminal proceedings,
had no reasonable cause to believe his conduct was unlawful. A Delaware
corporation may indemnify officers and directors in an action by or in the right
of the corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation in the performance of his duty. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses which
such officer or director actually and reasonably incurred.

     In accordance with Delaware Law, the certificate of incorporation of
Calpine contains a provision to limit the personal liability of the directors of
Calpine for violations of their fiduciary duty. This provision eliminates each
director's liability to Calpine or its stockholders for monetary damages except
(i) for any breach of the director's duty of loyalty to Calpine or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware Law providing for liability of directors for unlawful payment of
dividends or unlawful stock purchases or redemptions, or (iv) for any
transaction from which a director derived an improper personal benefit. The
effect of this provision is to eliminate the personal liability of directors for
monetary damages for actions involving a breach of their fiduciary duty of care,
including any such actions involving gross negligence. The certificate of
incorporation further provides that, if the Delaware Law is amended to further
reduce the liability of a corporation's directors for breaches of fiduciary
duty, then a director of Calpine shall not be liable for any such breach to the
fullest extent permitted by the law as so amended.

     Article Ten of the bylaws of Calpine provides for indemnification of the
officers and directors of Calpine to the fullest extent permitted by applicable
law.

     Calpine has entered into indemnification agreements with its directors and
officers. These agreements provide substantially broader indemnity rights than
those provided under the Delaware Law and Calpine's

                                       II-1
<PAGE>   58

bylaws. The indemnification agreements are not intended to deny or otherwise
limit third-party or derivative suits against Calpine or its directors or
officers, but if a director or officer were entitled to indemnity or
contribution under the indemnification agreement, the financial burden of a
third-party suit would be borne by Calpine, and Calpine would not benefit from
derivative recoveries against the director or officer. Such recoveries would
accrue to the benefit of Calpine but would be offset by Calpine's obligations to
the director or officer under the indemnification agreement. In addition, the
directors of Calpine are insured under officers and directors liability
insurance policies.

ITEM 16. EXHIBITS


<TABLE>
<CAPTION>
    EXHIBIT
    NUMBER                             DESCRIPTION
    -------                            -----------
    <C>        <S>
      +2.1     Combination Agreement, dated as of February 7, 2001, by and
               between Calpine Corporation and Encal Energy Ltd.(a)
      +2.2     Form of Plan of Arrangement Under Section 186 of the
               Business Corporations Act (Alberta) (included as Exhibit A
               to Exhibit 2.1) Involving and Affecting Encal and the
               Holders of its Common Shares and Options(a)
      *2.3     Amending Agreement to the Combination Agreement, dated as of
               March 16, 2001, between Calpine Corporation and Encal Energy
               Ltd.
      +3.1     Amended and Restated Certificate of Incorporation of Calpine
               Corporation(a)
      +3.2     Certificate of Correction of Calpine Corporation(a)
      +3.3     Certificate of Designation of Series A Participating
               Preferred Stock of Calpine Corporation(a)
      +3.4     Amended Certificate of Designation of Series A Participating
               Preferred Stock of Calpine Corporation(a)
      +3.5     Amended and Restated By-laws of Calpine Corporation(b)
      +4.1     Form of Exchangeable Share Provisions and Other Provisions
               to Be Included in the Articles of Calpine Canada Holdings
               Ltd. (included as Exhibit B to Exhibit 2.1)
      +4.2     Form of Support Agreement between Calpine Corporation and
               Calpine Canada Holdings Ltd. (included as Exhibit C to
               Exhibit 2.1)
      +4.3     Rights Agreement, dated as of June 5, 1997, between Calpine
               Corporation and First Chicago Trust Company of New York, as
               Rights Agent(c)
      *5.1     Opinion of Covington & Burling
      *8.1     Opinion of Covington & Burling as to certain U.S. tax
               matters
      *8.2     Opinion of Macleod Dixon LLP as to certain Canadian tax
               matters
      +9.1     Form of Voting and Exchange Trust Agreement between Calpine
               Corporation, Calpine Canada Holdings Ltd. and CIBC Mellon
               Trust Company, as trustee (included as Exhibit D to Exhibit
               2.1)
     *23.1     Consent of Arthur Andersen LLP, independent public
               accountants
     *23.2     Consent of Ernst & Young LLP, independent auditors
     *23.3     Consents of Covington & Burling (included in Exhibits 5.1
               and 8.1)
     *23.4     Consent of Macleod Dixon LLP (included in Exhibit 8.2)
     +24.1     Power of Attorney of Officers and Directors of Calpine
               Corporation (set forth on the signature pages of this
               Registration Statement)
</TABLE>


-------------------------

 *  Filed herewith.


 +  Previously filed or incorporated by reference.


(a)Incorporated by reference to Calpine's Annual Report on Form 10-K for the
   year ended December 31, 2000 and filed on March 15, 2001.



(b)Incorporated by reference to Calpine's Registration Statement on Form S-1
   (File No. 333-07497).


                                       II-2
<PAGE>   59


(c) Incorporated by reference to Calpine's Registration Statement on Form 8-A
    filed with the SEC on June 18, 1997 and amended by Calpine's Registration
    Statement on Form 8-A/A filed with the SEC on June 24, 1997 (File No.
    001-12079).


ITEM 17. UNDERTAKINGS

     The undersigned registrant hereby undertakes:

          (1) To file, during any period in which offers or sales are being
     made, a post-effective amendment to this registration statement to include
     any material information with respect to the plan of distribution not
     previously disclosed in the registration statement or any material change
     to such information in the registration statement.

          (2) That, for the purpose of determining any liability under the
     Securities Act of 1933, each such post-effective amendment shall be deemed
     to be a new registration statement relating to the securities offered
     therein, and the offering of such securities at that time shall be deemed
     to be the initial bona fide offering thereof.

          (3) To remove from registration by means of a post-effective amendment
     any of the securities being registered which remain unsold at the
     termination of the offering.

          (4) If the registrant is a foreign private issuer, to file a
     post-effective amendment to the registration statement to include any
     financial statements required by Rule 3-19 of this chapter at the start of
     any delayed offering or throughout a continuous offering. Financial
     statements and information otherwise required by Section 10(a)(3) of the
     Act need not be furnished, provided, that the registrant includes in the
     prospectus, by means of a post-effective amendment, financial statements
     required pursuant to this paragraph (a)(4) and other information necessary
     to ensure that all other information in the prospectus is at least as
     current as the date of those financial statements. Notwithstanding the
     foregoing, with respect to registration statements on Form F-3, a
     post-effective amendment need not be filed to include financial statements
     and information required by Section 10(a)(3) of the Act or Rule 3-19 of
     this chapter if such financial statements and information are contained in
     periodic reports filed with or furnished to the Commission by the
     registrant pursuant to Section 13 or Section 15(d) of the Securities
     Exchange Act of 1934 that are incorporated by reference in the Form F-3.

     The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

     The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 under Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the SEC such indemnification is against
public policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses
                                       II-3
<PAGE>   60

incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by them is against public
policy as expressed in the Securities Act of 1933 and will be governed by the
final adjudication of such issue.

     The undersigned registrant hereby undertakes that:

     (1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

     (2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

                                       II-4
<PAGE>   61

                                   SIGNATURES


     Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing this Amendment No. 1 to the Registration Statement on
Form S-3 and has duly caused this Amendment No. 1 to the Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized in the
City of San Jose, State of California, on this 16th day of April, 2001.


                                          CALPINE CORPORATION

                                          By:       /s/ ANN B. CURTIS

                                            ------------------------------------
                                                       Ann B. Curtis
                                                  Executive Vice President
                                                and Chief Financial Officer


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Amendment No. 1 to the Registration Statement on Form S-3 has been signed below
by the following persons on behalf of the Registrant and in the capacities and
on the dates indicated.



<TABLE>
<CAPTION>
                      SIGNATURE                                     TITLE                     DATE
                      ---------                                     -----                     ----
<S>                                                      <C>                             <C>
                          *                               Chairman, President, Chief     April 16, 2001
-----------------------------------------------------       Executive Officer and
                  Peter Cartwright                                 Director

                  /s/ ANN B. CURTIS                       Executive Vice President,      April 16, 2001
-----------------------------------------------------    Chief Financial Officer and
                    Ann B. Curtis                                  Director

                          *                                   Vice President and         April 16, 2001
-----------------------------------------------------    Controller, Chief Accounting
                Charles B. Clark, Jr.                              Officer

                          *                                        Director              April 16, 2001
-----------------------------------------------------
                  Jeffrey E. Garten

                          *                                        Director              April 16, 2001
-----------------------------------------------------
                  Michael P. Polsky

                          *                                        Director              April 16, 2001
-----------------------------------------------------
                   Susan C. Schwab

                          *                                        Director              April 16, 2001
-----------------------------------------------------
                 George J. Stathakis

                          *                                        Director              April 16, 2001
-----------------------------------------------------
                   John O. Wilson
</TABLE>


                                       II-5
<PAGE>   62


<TABLE>
<CAPTION>
                      SIGNATURE                                     TITLE                     DATE
                      ---------                                     -----                     ----
<S>                                                      <C>                             <C>
                          *                                        Director              April 16, 2001
-----------------------------------------------------
                  V. Orville Wright

               *By: /s/ ANN B. CURTIS                                                    April 16, 2001
   ----------------------------------------------
                    Ann B. Curtis
                  Attorney-in-fact
</TABLE>


                                       II-6
<PAGE>   63

                               INDEX TO EXHIBITS


<TABLE>
<CAPTION>
EXHIBIT
NUMBER                             DESCRIPTION
-------                            -----------
<C>        <S>
  +2.1     Combination Agreement, dated as of February 7, 2001, by and
           between Calpine Corporation and Encal Energy Ltd.(a)
  +2.2     Form of Plan of Arrangement Under Section 186 of the
           Business Corporations Act (Alberta) (included as Exhibit A
           to Exhibit 2.1) Involving and Affecting Encal and the
           Holders of its Common Shares and Options(a)
  *2.3     Amending Agreement to the Combination Agreement, dated as of
           March 16, 2001, between Calpine Corporation and Encal Energy
           Ltd.
  +3.1     Amended and Restated Certificate of Incorporation of Calpine
           Corporation(a)
  +3.2     Certificate of Correction of Calpine Corporation(a)
  +3.3     Certificate of Designation of Series A Participating
           Preferred Stock of Calpine Corporation(a)
  +3.4     Amended Certificate of Designation of Series A Participating
           Preferred Stock of Calpine Corporation(a)
  +3.5     Amended and Restated By-laws of Calpine Corporation(b)
  +4.1     Form of Exchangeable Share Provisions and Other Provisions
           to Be Included in the Articles of Calpine Canada Holdings
           Ltd. (included as Exhibit B to Exhibit 2.1)
  +4.2     Form of Support Agreement between Calpine Corporation and
           Calpine Canada Holdings Ltd. (included as Exhibit C to
           Exhibit 2.1)
  +4.3     Rights Agreement, dated as of June 5, 1997, between Calpine
           Corporation and First Chicago Trust Company of New York, as
           Rights Agent(c)
  *5.1     Opinion of Covington & Burling
  *8.1     Opinion of Covington & Burling as to certain U.S. tax
           matters
  *8.2     Opinion of Macleod Dixon LLP as to certain Canadian tax
           matters
  +9.1     Form of Voting and Exchange Trust Agreement between Calpine
           Corporation, Calpine Canada Holdings Ltd. and CIBC Mellon
           Trust Company, as trustee (included as Exhibit D to Exhibit
           2.1)
 *23.1     Consent of Arthur Andersen LLP, independent public
           accountants
 *23.2     Consent of Ernst & Young LLP, independent auditors
 *23.3     Consents of Covington & Burling (included in Exhibits 5.1
           and 8.1)
 *23.4     Consent of Macleod Dixon LLP (included in Exhibit 8.2)
 +24.1     Power of Attorney of Officers and Directors of Calpine
           Corporation (set forth on the signature pages of this
           Registration Statement)
</TABLE>


-------------------------

 *  Filed herewith.


 +  Previously filed or incorporated by reference.


(a)Incorporated by reference to Calpine's Annual Report on Form 10-K for the
   year ended December 31, 2000 and filed on March 15, 2001.



(b)Incorporated by reference to Calpine's Registration Statement on Form S-1
   (File No. 333-07497).



(c) Incorporated by reference to Calpine's Registration Statement on Form 8-A
    filed with the SEC on June 18, 1997 and amended by Calpine's Registration
    Statement on Form 8-A/A filed with the SEC on June 24, 1997 (File No.
    001-12079).



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2.3
<SEQUENCE>2
<FILENAME>f70006a1ex2-3.txt
<DESCRIPTION>EXHIBIT 2.3
<TEXT>

<PAGE>   1
                                                                     EXHIBIT 2.3


                               AMENDING AGREEMENT

     THIS AMENDING AGREEMENT made as of March 16, 2001 BETWEEN:

          ENCAL ENERGY LTD., a body corporate incorporated under the laws of the
          Province of Alberta with its head office in Calgary, Alberta
          (hereinafter called "ECo")

                                       AND

          CALPINE CORPORATION, a body corporate incorporated under the laws of
          the State of Delaware with its head office in San Jose, California
          (hereinafter called "CCo")

     WHEREAS ECo and CCo entered into a combination agreement (the "Combination
Agreement") dated effective as of February 7, 2001;

     AND WHEREAS ECo and CCo have agreed to certain technical amendments to the
Combination Agreement and the schedules thereto (the "Amending Agreement");

     NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the
covenants and agreements herein contained and other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties hereto do hereby covenant and agree as follows:

                                   ARTICLE 1
                                 INTERPRETATION

1.1  Capitalized terms used herein, including the recitals hereto, which are
     defined in the Combination Agreement, shall have the meanings ascribed
     thereto in this Amending Agreement.

1.2  Any provision of this Amending Agreement which may be invalid shall be
     ineffective to the extent of such invalidity only, without affecting the
     validity of the remaining provisions of this Amending Agreement or the
     Combination Agreement as amended hereby, it being the intent and purpose
     that the Combination Agreement, as amended by this Amending Agreement
     should survive and be valid to the maximum extent permitted by applicable
     law.

                                   ARTICLE 2
                                   AMENDMENTS

2.1  The Combination Agreement shall be amended as follows:

     (a)  By adding the word "and" to the end of section 5.1(f) and deleting the
          word "and" at the end of section 5.1(g) and replacing it with a
          period.

     (b)  Section 7.4 shall be deleted and replaced with the following:

          Promptly after the Effective Time, CCo will notify in writing each
          holder of a ECo Option of the exchange of such ECo Option for an
          option to purchase CCo Common Stock (the "New Options") in accordance
          with


<PAGE>   2
                                      -2-


          the Plan of Arrangement, and CCo will confirm its agreement to honour
          such options in accordance with their terms.

     (c)  The second reference to "CCo Common Stock" contained in section 3.4(a)
          shall be replaced with "CCo preferred stock" and a close parenthesis
          mark shall be added after the words "Rights Agent".

2.2  The Plan of Arrangement attached as Exhibit A to the Combination Agreement
     shall be amended as follows:

     (a)  Section 2.1(e) shall be deleted and replaced with the following:

          holders of ECo Common Shares who are residents of Canada for the
          purposes of the ITA and who receive Exchangeable Shares under Section
          2.1(a) shall be entitled to make an income tax election pursuant to
          section 85 of the ITA (and any applicable provicial legislation) with
          respect to the transfer of their ECo Common Shares to CCo Sub by
          providing two signed copies of the necessary election forms to CCo Sub
          within 90 days following the Effective Date, duly completed with the
          details of the number of shares transferred and the applicable agreed
          amounts for the purposes of such elections. Thereafter, subject to the
          election forms complying with the provisions of the ITA (and any
          applicable provincial legislation), the forms will be signed by CCo
          Sub and returned to such holders of ECo Common Shares for filing with
          the Canada Customs and Revenue Agency (and any applicable provincial
          taxation authority).

     (b)  Section 2.2 shall be deleted and replaced with the following:

          A Shareholder who has transferred his ECo Common Shares to CCo Sub as
          contemplated under Section 2.1(a) shall be considered to have received
          any of the ancillary rights and benefits associated with the
          Exchangeable Shares in consideration for the grant by the Shareholder
          to CCo and CCo Sub of certain rights and benefits as against the
          Shareholder in respect of the Exchangeable Shares. To the extent that
          the value of the ancillary rights and benefits received by the
          Shareholder exceeds the value of the rights and benefits given up by
          the Shareholder to CCo and CCo Sub, the Shareholder shall be
          considered to have disposed of a portion of his ECo Common Shares in
          consideration for such excess ancillary rights and benefits, and to
          have disposed of the remaining portion (the "share portion") of such
          ECo Common Shares solely in consideration for Exchangeable Shares. The
          share portion (expressed as a number) shall be equal to the number of
          ECo Common Shares obtained when the total number of ECo Common Shares
          transferred by the Shareholder to CCo Sub is multiplied by the
          aggregate fair market value of the Exchangeable Shares received by the
          Shareholder divided by the sum of such aggregate fair market value and
          the amount, if any, by which the aggregate fair market value of the
          ancillary rights and benefits received by the Shareholder exceeds the
          aggregate fair market value of the rights and benefits granted by the
          Shareholder to CCo and CCo Sub in respect of the Exchangeable Shares.


<PAGE>   3
                                      -3-


2.3  The Exchangeable Share Provisions and Other Provisions to be Included in
     the Articles of Incorporation of CCo Sub attached as Exhibit B to the
     Combination Agreement shall be amended as follows:

     (a)  After section 14.6, the following shall be inserted as section 14.7.

          For the purposes of subsection 191(4) of the Income Tax Act (Canada)
          the "specified amount" in respect of each Exchangeable Share shall be
          $o [with amount to be inserted once the "CCo Average Price" as defined
          in the Plan of Arrangement has been determined, and such amount to be
          the CCo Average Price minus $CDN 5.00].

2.4  The Support Agreement attached as Exhibit C to the Combination Agreement
     shall be amended as follows:

     (a)  The reference to "alone or together with any" contained in section 2.9
          shall be replaced with "or a".

2.5  The Voting and Exchange Trust Agreement attached as Exhibit D to the
     Combination Agreement shall be amended as follows:

     (a)  The definition of "CCo Holdco" shall be removed and replaced with the
          following:

               "Cco Holdco" means a Subsidiary of CCo (other than Cco Sub).

                                   ARTICLE 3I
                                  MISCELLANEOUS

3.1  This Amending Agreement together with the provisions of the Combination
     Agreement and Confidentiality Agreement constitute the entire agreement
     between the parties hereto, and for greater certainty, other than as
     specifically provided in this Amending Agreement, the provisions of the
     Combination Agreement and the Confidentiality Agreement remain in full
     force and effect and unamended.

3.2  Notwithstanding the date of execution hereof, the effective date of this
     amendment to the Combination Agreement and exhibits thereto shall be
     February 7, 2001 and all references to the Combination Agreement and
     exhibits thereto dated February 7, 2001 shall be deemed to include this
     document.

3.3  This Amending Agreement may be executed in one or more counterparts, each
     of which shall be deemed an original, but all of which together shall
     constitute one and the same instrument.

<PAGE>   4
                                      -4-

     IN WITNESS WHEREOF, the parties hereto have executed this Amending
Agreement the 16th day of March, 2001.

                                    ENCAL ENERGY LTD.

                                    Per: /s/ DAVID D. JOHNSON
                                        ----------------------------------------
                                        David D. Johnson
                                        President and Chief Executive Officer



                                    Per: /s/ STEVEN A. ALLAIRE
                                        ----------------------------------------
                                        Steven A. Allaire
                                        Vice President, Finance, Chief Financial
                                        Officer and Corporate Secretary



                                     CALPINE CORPORATION

                                     Per:
                                         ---------------------------------------

                                     Per:
                                         ---------------------------------------

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5.1
<SEQUENCE>3
<FILENAME>f70006a1ex5-1.txt
<DESCRIPTION>EXHIBIT 5.1
<TEXT>

<PAGE>   1
                                                                     EXHIBIT 5.1

                       [Letterhead of Covington & Burling]

                                 April 18, 2001

Calpine Corporation
50 West San Fernando Street
San Jose, California 95113

Ladies and Gentlemen:

         In connection with the registration under the Securities Act of 1933,
as amended (the "Act"), pursuant to the Registration Statement on Form S-3 (File
No. 333-56712) (the "Registration Statement") filed with the Securities and
Exchange Commission, of 16,603,633 shares of Common Stock, par value $.001 per
share (the "Shares"), of the Company, issuable upon exchange of Exchangeable
Shares, without par value (the "Exchangeable Shares") of Calpine Canada Holdings
Ltd., we have reviewed such corporate records, certificates and other documents,
and such questions of law, as we have considered necessary or appropriate for
the purposes of this opinion.

         We have assumed that all signatures are genuine, that all documents
submitted to us as originals are authentic and that all copies of documents
submitted to us conform to the originals.

         Based upon the foregoing, and subject to the qualifications set forth
below, we are of the opinion that the Shares have been duly authorized and
reserved for issuance upon exchange of Exchangeable Shares and, when issued upon
such exchange in accordance with the terms of (1) the Exchangeable Shares, (2)
the Combination Agreement, dated as of February 7, 2001, as amended, between the
Company and Encal Energy Ltd. and (3) the Support Agreement, dated as of April
18, 2001, between the Company and Calpine Canada Holdings Ltd., and assuming
compliance with the Act, the Shares will be validly issued, fully paid and
nonassessable.

         The foregoing opinion is subject to the qualifications that we express
no opinion as to (i) waivers of defenses or statutory or constitutional rights
or waivers of unmatured claims or rights, (ii) rights to indemnification,
contribution or exculpation to the extent that they purport


<PAGE>   2

Calpine Corporation
April l8, 2001
Page 2


to indemnify any party against, or release or limit any party's liability for,
its own breach or failure to comply with statutory obligations, or to the extent
such provisions are contrary to public policy, or (iii) rights to collection of
liquidated damages or penalties on overdue or defaulted obligations.

         We are members of the bar of the State of New York. We do not purport
to be experts in, and do not express any opinion on, any laws other than the law
of the State of New York, the Delaware General Corporation Law and the Federal
law of the United States of America.

         We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to our firm under the heading "Legal
Matters" in the Prospectus contained in the Registration Statement. In giving
such consent, we do not thereby admit that we are in the category of persons
whose consent is required under Section 7 of the Act.

                                  Very truly yours,



                                  /s/ COVINGTON & BURLING



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-8.1
<SEQUENCE>4
<FILENAME>f70006a1ex8-1.txt
<DESCRIPTION>EXHIBIT 8.1
<TEXT>

<PAGE>   1
                                                                     EXHIBIT 8.1

                       [Letterhead of Covington & Burling]


                                 April 18, 2001



Calpine Corporation
50 West San Fernando Street
San Jose, CA 95113

Ladies and Gentlemen:

         We have acted as your United States tax counsel in connection with the
registration under the Securities Act of 1933, as amended (the "Act"), pursuant
to the Registration Statement on Form S-3 (File No. 333-56712) (the
"Registration Statement") filed with the Securities and Exchange Commission, of
16,603,633 shares of Common Stock, par value $.001 per share (the "Common
Stock"), of the Company, issuable upon exchange of Exchangeable Shares, without
par value (the "Exchangeable Shares") of Calpine Canada Holdings Ltd.

         We have relied upon certain representations made by you in connection
with the Registration Statement. We have reviewed such corporate records,
certificates and other documents, and such questions of law, as we have
considered necessary or appropriate for the purposes of this opinion. We have
assumed that all signatures are genuine, that all documents submitted to us as
originals are authentic and that all copies of documents submitted to us conform
to the originals.

         Based upon and subject to the foregoing, the statements in the
Registration Statement under the caption "Certain United States Federal Income
Tax Considerations" represents our opinion of the United States federal income
tax law matters referred to therein and such statements are (subject to the
qualifications and other matters stated therein) accurate with respect to the
Common Stock in all material respects.

         The foregoing opinion is based on the Internal Revenue Code of 1986, as
amended, Treasury Regulations promulgated thereunder, Internal Revenue Service

<PAGE>   2


rulings and pronouncements, and judicial decisions now in effect, any of which
may be changed at any time with retroactive effect.

         We are members of the bar of the State of New York. We do not express
any opinion on any matters other than the United States federal income tax law
matters specifically referred to herein.

         We hereby consent to the filing of this opinion as Exhibit 8.1 to the
Registration Statement. In giving such consent, we do not hereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Act.

                                      Very truly yours,

                                      /s/ COVINGTON & BURLING

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-8.2
<SEQUENCE>5
<FILENAME>f70006a1ex8-2.txt
<DESCRIPTION>EXHIBIT 8.2
<TEXT>

<PAGE>   1
                                                                     EXHIBIT 8.2


                        [Letterhead of Macleod Dixon LLP]


                                                                  April 18, 2001



Calpine Corporation
50 West San Fernando Street
San Jose, California, 95113

Ladies and Gentlemen:

         We have acted as Canadian tax counsel to Calpine Corporation, a
Delaware corporation ("Calpine"), in connection with the registration of the
Shelf Registration Statement on Form S-3 (the "Registration Statement") with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Securities Act"), on March 8, 2001 and amended on
April 21, 2001 of Calpine common stock, par value $.001 per share (the "Common
Stock"). In addition, Encal Energy Ltd. ("Encal") has prepared, and we have
reviewed a Management Information Circular and Proxy Statement (the "Proxy
Statement") which was dated March 16, 2001. The Proxy Statement relates to the
proposed acquisition of Encal by Calpine upon the terms and conditions set forth
in the Combination Agreement dated as of February 7, 2001, as amended, and the
exhibits thereto (the "Combination Agreement") to be implemented by means of an
exchange of Encal shares (other than shares of holders who perfect their dissent
rights) for Exchangeable Shares of Calpine Canada Holdings Ltd. pursuant to a
plan of arrangement in substantially the form set forth as Exhibit A to the
Combination Agreement (the "Plan of Arrangement").

         In connection with this opinion, we have examined the Registration
Statement, the Proxy Statement, the Combination Agreement and such other
documents and corporate records as we have deemed necessary or appropriate in
order to enable us to render the opinion below. For purposes of this opinion, we
have assumed (i) the validity and accuracy of the documents and corporate
records that we have examined and the facts and representations concerning the
registration of shares of Calpine common stock that have come to our attention
during our engagement and (ii) that the issuance of shares of Calpine common
stock pursuant to the Registration Statement will be consummated in the manner
described in the Registration Statement.

         This opinion is based on the current provisions of the Income Tax Act
(Canada) and regulations thereunder, the current provisions of the Convention
Between the United States of America and Canada with Respect to Taxes on Income
and on Capital, signed September 26, 1980, as amended, and our understanding of
the current published administrative practices of the Canada Customs and Revenue
Agency. This opinion takes into account all specific proposals to amend the
Income Tax Act (Canada) and regulations that have been publicly announced by the
Minister of Finance (Canada) prior to the date hereof and assumes that all of
these proposed amendments will be enacted in their present form. No assurances
can be given that any proposed


<PAGE>   2

amendments will be enacted in the form proposed, if at all. Except for the
foregoing, this opinion does not take into account or anticipate any changes in
law, whether by legislative, administrative or judicial decision or action, nor
does it take into account provincial, territorial or foreign income tax
legislation or considerations which may differ from the Canadian federal income
tax considerations described in the Registration Statement. In addition, we have
assumed that all parties to the Combination Agreement have acted, and will act,
in accordance with the terms of such Combination Agreement and that the
Combination Agreement will be consummated pursuant to the terms and conditions
set forth therein without the waiver or modification of any such terms and
conditions.

         Based upon and subject to the foregoing, the confirmation by Calpine of
the accuracy of certain assumptions and representations underlying this opinion,
and the qualifications, limitations, and assumptions contained in the portion of
the Registration Statement captioned "Income Tax Considerations-Canadian Federal
Income Tax Considerations," we hereby confirm, as to matters of Canadian federal
income tax law, our opinion contained in the Registration Statement under the
caption "Income Tax Considerations - Canadian Federal Income Tax
Considerations".

         We have not considered and render no opinion on any aspect of law other
than as expressly set forth above.

         This opinion is furnished to you solely for use in connection with the
Registration Statement and may not be used for any other purpose without our
prior written consent. We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement. In giving such consent, we do not thereby
admit that we are in the category of persons whose consent is required under
Section 7 of the Securities Act.

                                  Yours truly,

                                  /s/ Macleod Dixon LLP
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>6
<FILENAME>f70006a1ex23-1.txt
<DESCRIPTION>EXHIBIT 23.1
<TEXT>

<PAGE>   1
                                                                    EXHIBIT 23.1


                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation by
reference in this Amendment No. 1 to the Registration Statement on Form S-3 (No.
333-56712) of our report, dated March 14, 2001 included in Calpine Corporation's
Form 10-K for the year ended December 31, 2000 and to all references to our Firm
included in this Amendment No. 1 to the Registration Statement.

San Jose, California
   April 16, 2001


/s/ ARTHUR ANDERSEN LLP
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.2
<SEQUENCE>7
<FILENAME>f70006a1ex23-2.txt
<DESCRIPTION>EXHIBIT 23.2
<TEXT>

<PAGE>   1
                                                                    EXHIBIT 23.2



                         CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Independent Auditors"
and the use of our report dated February 16, 2001 in the Amendment No. 1 to the
Registration Statement (Form S-3 No. 333-56712) and related Prospectus of
Calpine Corporation for the registration of up to 16,603,633 shares of its
common stock.

Calgary, Canada
April 16, 2001

                                                  Signed Ernst & Young, LLP
                                                  Independent Accountants
</TEXT>
</DOCUMENT>
</SUBMISSION>
