<SUBMISSION>
<ACCESSION-NUMBER>0000891618-05-000256
<TYPE>10-K
<PUBLIC-DOCUMENT-COUNT>18
<PERIOD>20041231
<FILING-DATE>20050331
<DATE-OF-FILING-DATE-CHANGE>20050331
<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>10-K
<ACT>34
<FILE-NUMBER>001-12079
<FILM-NUMBER>05721782
</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>10-K
<SEQUENCE>1
<FILENAME>f05222e10vk.htm
<DESCRIPTION>FORM 10-K
<TEXT>
<HTML>
<HEAD>
<TITLE>e10vk</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 2pt;">
<DIV style="width: 100%; border-top: 2.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 3pt;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 14pt; margin-top: 4pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt;">
<B>Washington,&nbsp;D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 26%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Form&nbsp;10-K</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 12pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="14%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="83%">&nbsp;</TD>
</TR>

<TR style="font-size: 10pt;">
    <TD align="center" nowrap>(Mark One)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="wingdings">&#254;
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <B>ANNUAL REPORT PURSUANT TO SECTION&nbsp;13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <B>For the fiscal year ended December&nbsp;31, 2004</B></TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <B>or</B></TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD align="center" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="wingdings">&#111;</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <B>TRANSITION REPORT PURSUANT TO SECTION&nbsp;13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <B>For the transition period
    from &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;to</B></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Commission file number: 1-12079</B>
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 26%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Calpine Corporation</B>
</DIV>

<DIV align="center" style="font-size: 8pt;">
<I>(A Delaware Corporation)</I>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>I.R.S. Employer Identification No.&nbsp;77-0212977</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>50 West San&nbsp;Fernando Street</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>San&nbsp;Jose, California 95113</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>Telephone: (408)&nbsp;995-5115</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Securities registered pursuant to Section&nbsp;12(b) of the
Act:</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>Calpine Corporation Common Stock, $.001&nbsp;Par Value
Registered on the New York Stock Exchange</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Securities registered pursuant to Section&nbsp;12(g) of the
Act:</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>None</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Indicate by check mark whether the registrant (1)&nbsp;has filed
all reports required to be filed by Section&nbsp;13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12&nbsp;months (or for such shorter period that the registrant
was required to file such reports), and (2)&nbsp;has been
subject to such filing requirements for the past
90&nbsp;days.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Yes&nbsp;<FONT face="wingdings">&#254;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No&nbsp;<FONT face="wingdings">&#111;
</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Indicate by check mark if disclosure of delinquent filers
pursuant to Item&nbsp;405 of Regulation&nbsp;S-K is not
contained herein, and will not be contained, to the best of
registrant&#146;s knowledge, in definitive proxy or information
statements incorporated by reference in Part&nbsp;III of this
Form&nbsp;10-K or any amendment to this
Form&nbsp;10-K.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="wingdings">&#111;
</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule&nbsp;12b-2 of the Securities Exchange
Act).&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Yes&nbsp;<FONT face="wingdings">&#254;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No&nbsp;<FONT face="wingdings">&#111;
</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
State the aggregate market value of the common equity held by
non-affiliates of the registrant as of June&nbsp;30, 2004, the
last business day of the registrant&#146;s most recently
completed second fiscal quarter: approximately
$1.9&nbsp;billion. Common stock outstanding as of March&nbsp;30,
2005: 538,017,458&nbsp;shares.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>DOCUMENTS INCORPORATED BY REFERENCE</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Portions of the documents listed below have been incorporated by
reference into the indicated parts of this report, as specified
in the responses to the item numbers involved.
</DIV>

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<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="54%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="43%">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (1)&nbsp;Designated portions of the Proxy Statement relating to
    the 2005 Annual Meeting of Shareholders</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">
    Part&nbsp;III (Items&nbsp;10, 11,&nbsp;12, 13 and 14)&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="center" style="font-size: 3pt; margin-top: 8pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 100%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 4pt;">
<DIV style="width: 100%; border-top: 2.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>
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<P><HR noshade><P>

<DIV align="left" style="font-size: 10pt;">

</DIV>

<DIV align="left" style="font-size: 10pt;">
<!-- TOC -->
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name="tocpage"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>FORM 10-K</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>ANNUAL REPORT</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>For the Year Ended December&nbsp;31, 2004</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>TABLE OF CONTENTS</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="69%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Page</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD colspan="9" align="center" valign="top">
    <B>&nbsp;<A HREF='#101'>PART&nbsp;I</A></B></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">&nbsp;<A HREF='#102'>Item&nbsp;1.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#102'>Business</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">&nbsp;<A HREF='#103'>Item&nbsp;2.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#103'>Properties</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>46</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">&nbsp;<A HREF='#104'>Item&nbsp;3.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#104'>Legal Proceedings</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">&nbsp;<A HREF='#105'>Item&nbsp;4.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#105'>Submission of Matters to a Vote of Security
    Holders</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="9" align="center" valign="top">
    <B>&nbsp;<A HREF='#106'>PART&nbsp;II</A></B></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">&nbsp;<A HREF='#107'>Item&nbsp;5.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#107'>Market for Registrant&#146;s Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>49</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">&nbsp;<A HREF='#108'>Item&nbsp;6.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#108'>Selected Financial Data</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">&nbsp;<A HREF='#109'>Item&nbsp;7.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#109'>Management&#146;s Discussion and Analysis
    of Financial Condition and Results of Operations</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>54</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">&nbsp;<A HREF='#110'>Item&nbsp;7A.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#110'>Quantitative and Qualitative Disclosures
    About Market Risk</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>109</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">&nbsp;<A HREF='#111'>Item&nbsp;8.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#111'>Financial Statements and Supplementary
    Data</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>109</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">&nbsp;<A HREF='#112'>Item&nbsp;9.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#112'>Changes in and Disagreements With
    Accountants on Accounting and Financial Disclosure</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>109</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">&nbsp;<A HREF='#113'>Item&nbsp;9A.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#113'>Controls and Procedures</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>109</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">&nbsp;<A HREF='#114'>Item&nbsp;9B.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#114'>Other Information</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>111</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="9" align="center" valign="top">
    <B>&nbsp;<A HREF='#115'>PART&nbsp;III</A></B></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">&nbsp;<A HREF='#116'>Item&nbsp;10.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#116'>Directors and Executive Officers of the
    Registrant</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>111</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">&nbsp;<A HREF='#117'>Item&nbsp;11.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#117'>Executive Compensation</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>111</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">&nbsp;<A HREF='#118'>Item&nbsp;12.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#118'>Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>111</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">&nbsp;<A HREF='#119'>Item&nbsp;13.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#119'>Certain Relationships and Related
    Transactions</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>112</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">&nbsp;<A HREF='#120'>Item&nbsp;14.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#120'>Principal Accounting Fees and Services</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>112</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="9" align="center" valign="top">
    <B>&nbsp;<A HREF='#121'>PART&nbsp;IV</A></B></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">&nbsp;<A HREF='#122'>Item&nbsp;15.</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    &nbsp;<A HREF='#122'>Exhibits, Financial Statement Schedules</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>112</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    &nbsp;<A HREF='#123'>Signatures and Power of Attorney</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>125</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    &nbsp;<A HREF='#124'>Index to Consolidated Financial Statements
    and Other Information</A></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f05222exv10w1w9.txt">EXHIBIT 10.1.9</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f05222exv10w1w10.txt">EXHIBIT 10.1.10</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f05222exv10w1w11.txt">EXHIBIT 10.1.11</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f05222exv10w3w6w1.txt">EXHIBIT 10.3.6.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f05222exv10w3w13.txt">EXHIBIT 10.3.13</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f05222exv12w1.txt">EXHIBIT 12.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f05222exv21w1.txt">EXHIBIT 21.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f05222exv23w1.txt">EXHIBIT 23.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f05222exv23w2.txt">EXHIBIT 23.2</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f05222exv23w3.txt">EXHIBIT 23.3</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f05222exv23w4.txt">EXHIBIT 23.4</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f05222exv31w1.txt">EXHIBIT 31.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f05222exv31w2.txt">EXHIBIT 31.2</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f05222exv32w1.txt">EXHIBIT 32.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f05222exv99w1.txt">EXHIBIT 99.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="f05222exv99w2.txt">EXHIBIT 99.2</A></FONT></TD></TR>
</TABLE>
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</DIV>

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<B>PART&nbsp;I</B>
</DIV>

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<A name='102'></A>
</DIV>

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    <TD width="92%"></TD>
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<TR valign="top">
    <TD><B>Item&nbsp;1.</B></TD>
    <TD>
    <B><I>Business</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>In addition to historical information, this report contains
forward-looking statements within the meaning of
Section&nbsp;27A of the Securities Act of 1933, as amended, and
Section&nbsp;21E of the Securities Exchange Act of 1934, as
amended. We use words such as &#147;believe,&#148;
&#147;intend,&#148; &#147;expect,&#148; &#147;anticipate,&#148;
&#147;plan,&#148; &#147;may,&#148; &#147;will&#148; and similar
expressions to identify forward-looking statements. Such
statements include, among others, those concerning our expected
financial performance and strategic and operational plans, as
well as all assumptions, expectations, predictions, intentions
or beliefs about future events. You are cautioned that any such
forward-looking statements are not guarantees of future
performance and that a number of risks and uncertainties could
cause actual results to differ materially from those anticipated
in the forward-looking statements. Such risks and uncertainties
include, but are not limited to, (i)&nbsp;the timing and extent
of deregulation of energy markets and the rules and regulations
adopted with respect thereto, (ii)&nbsp;the timing and extent of
changes in commodity prices for energy, particularly natural gas
and electricity, and the impact of related derivatives
transactions, (iii)&nbsp;unscheduled outages of operating
plants, (iv)&nbsp;unseasonable weather patterns that reduce
demand for power, (v)&nbsp;economic slowdowns that can adversely
affect consumption of power by businesses and consumers,
(vi)&nbsp;various development and construction risks that may
delay or prevent commercial operations of new plants, such as
failure to obtain the necessary permits to operate, failure of
third-party contractors to perform their contractual obligations
or failure to obtain project financing on acceptable terms,
(vii)&nbsp;uncertainties associated with cost estimates, that
actual costs may be higher than estimated,
(viii)&nbsp;development of lower-cost power plants or of a lower
cost means of operating a fleet of power plants by our
competitors, (ix)&nbsp;risks associated with marketing and
selling power from power plants in the evolving energy market,
(x)&nbsp;factors that impact exploitation of oil or gas
resources, such as the geology of a resource, the total amount
and costs to develop recoverable reserves, and legal title,
regulatory, gas administration, marketing and operational
factors relating to the extraction of natural gas,
(xi)&nbsp;uncertainties associated with estimates of oil and gas
reserves, (xii)&nbsp;the effects on our business resulting from
reduced liquidity in the trading and power generation industry,
(xiii)&nbsp;our ability to access the capital markets on
attractive terms or at all, (xiv)&nbsp;uncertainties associated
with estimates of sources and uses of cash, that actual sources
may be lower and actual uses may be higher than estimated,
(xv)&nbsp;the direct or indirect effects on our business of a
lowering of our credit rating (or actions we may take in
response to changing credit rating criteria), including
increased collateral requirements, refusal by our current or
potential counterparties to enter into transactions with us and
our inability to obtain credit or capital in desired amounts or
on favorable terms, (xvi)&nbsp;present and possible future
claims, litigation and enforcement actions, (xvii)&nbsp;effects
of the application of regulations, including changes in
regulations or the interpretation thereof, and
(xviii)&nbsp;other risks identified in this report. Current
information set forth in this filing has been updated to
March&nbsp;30, 2005, and we undertake no duty to further update
this information. All other information in this filing is
presented as of the specific date noted and has not been updated
since that time.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We file annual, quarterly and periodic reports, proxy statements
and other information with the SEC. You may obtain and copy any
document we file with the SEC at the SEC&#146;s public reference
room at 450&nbsp;Fifth Street, N.W., Washington,&nbsp;D.C.
20549. You may obtain information on the operation of the
SEC&#146;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&nbsp;Fifth Street, N.W.,
Washington,&nbsp;D.C. 20549-1004. The SEC maintains an Internet
website at <I>http://www.sec.gov </I>that contains reports,
proxy and information statements, and other information
regarding issuers that file electronically with the SEC. Our SEC
filings are accessible through the Internet at that website.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our reports on Forms&nbsp;10-K, 10-Q and 8-K, and amendments to
those reports, are available for download, free of charge, as
soon as reasonably practicable after these reports are filed
with the SEC, at our website at www.calpine.com. The content of
our website is not a part of this report. You may request a copy
of our SEC filings, at no cost to you, by writing or telephoning
us at: Calpine Corporation, 50 West San&nbsp;Fernando Street,
San&nbsp;Jose, California 95113, attention: Lisa M.
Bodensteiner, Assistant Secretary, telephone:
(408)&nbsp;995-5115. We will not send exhibits to the documents,
unless the exhibits are specifically requested and you pay our
fee for duplication and delivery.
</DIV>

<P align="center" style="font-size: 10pt;">3
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<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>OVERVIEW</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We are an integrated power company with a comprehensive and
growing power services business. Based in San&nbsp;Jose,
California, we were established as a corporation in 1984 and
operate through a variety of divisions, subsidiaries and
affiliates. We own and operate power generation facilities and
sell electricity, predominantly in the United States but also in
Canada and the United Kingdom. We focus on two efficient and
clean types of power generation technologies: natural gas-fired
combustion turbine and geothermal. We lease and operate a
significant fleet of geothermal power plants at The Geysers in
California, and have a net operating portfolio of 92 clean
burning natural gas power plants capable of producing 26,649
megawatts (&#147;MW&#148;) and an additional 11 plants in
construction. We offer to third parties energy procurement,
liquidation and risk management services through Calpine Energy
Services, L.P. (&#147;CES&#148;) and offer combustion turbine
component parts and repair and maintenance services world-wide
through Calpine Turbine Services (&#147;CTS&#148;), which
includes Power Systems Mfg., LLC (&#147;PSM&#148;) located in
Jupiter, Florida, and Netherlands-based Thomassen Turbine
Systems B.V. (&#147;TTS&#148;). We also offer engineering,
procurement, construction management, commissioning and
operations and maintenance (&#147;O&#38;M&#148;) services
through Calpine Power Services, Inc. (&#147;CPSI&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our integrated operating capabilities have given us a proven
track record in the development and construction of new power
facilities. Our Calpine Construct organization consists of an
experienced team of construction management professionals who
ensure that our projects are built using our standard design
specifications reflecting our exacting operational standards. We
have established relationships with leading equipment
manufacturers for gas turbine generators, steam turbine
generators, heat recovery steam generators and other key
equipment. While future projects will be developed only when we
have attractive power contracts in place, we will continue to
leverage these capabilities and relationships to ensure that our
power plants are completed on time and are the best built and
lowest cost energy facilities possible.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have a sophisticated O&#38;M organization based in Folsom,
California which staffs and oversees the commissioning and
operations of our power plants. With the objective of enhancing
the performance of our modern portfolio of gas-fired power
plants and lowering our replacement parts and maintenance costs,
we capitalize on PSM&#146;s capabilities to design and
manufacture high performance combustion system and turbine blade
parts. PSM manufactures new vanes, blades, combustors and other
replacement parts for our plants and for those owned and
operated by third parties as well. It offers a wide range of Low
Emissions Combustion (&#147;LEC&#148;) systems and advanced
airfoils designed to be compatible for retrofitting or replacing
existing combustion systems or components operating in General
Electric and Siemens Westinghouse turbines.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We also have in place an experienced gas production and
management team which gives us a broad range of fuel sourcing
options, and we own 389&nbsp;billion cubic feet equivalent
(&#147;Bcfe&#148;) of net proved natural gas reserves located
primarily in the Sacramento Basin of California and Gulf Coast
regions of the United States. We are currently (as of March
2005) capable of producing, net to Calpine&#146;s interest,
approximately 100&nbsp;million cubic feet equivalent
(&#147;MMcfe&#148;) of natural gas per day.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
CES provides us with the trading and risk management services
needed to schedule power sales and to ensure fuel is delivered
to our power plants on time to meet delivery requirements and to
manage and optimize the value of our physical power generation
and gas production assets. CES currently manages approximately
3% of the U.S.&nbsp;gas and power demand. Our marketing and
sales organization complements CES&#146;s activities and is
organized not only to serve our traditional load serving client
base of local utilities, municipalities and cooperatives but
also to meet the needs of our growing list of wholesale and
large retail customers. As a general goal, we seek to have 65%
of our available capacity sold under long-term contracts or
hedged by our risk management group. Currently we have 54% of
our available capacity sold or hedged for 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Additionally, we continue to strengthen our system operations
management and information technology capabilities to enhance
the economic performance of our portfolio of assets in our major
markets and to provide load-following and ancillary services to
our customers. These operational optimization systems, combined
with our sales, marketing and risk management capabilities,
enable us to add value to traditional commodity products.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Through our development and construction program and past
acquisitions, we have built and now operate a modern and
efficient portfolio of gas-fired generation assets. Our low cost
position, integrated operations and skill sets have allowed us
to weather a multi-year downturn in the North American energy
industry. We have demonstrated the flexibility to adapt to
fundamental market changes. Specifically, we responded to the
market downturn by reducing capital expenditures, selling or
monetizing various gas, power and contractual assets,
restructuring our equipment procurement obligations, and
reorganizing to reflect our transition from a development
focused company to a company focused on integrated operations
and services.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>THE MARKET FOR ELECTRICITY</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The electric power industry represents one of the largest
industries in the United States and impacts nearly every aspect
of our economy, with an estimated end-user market of nearly
$268&nbsp;billion of electricity sales in 2004 based on
information published by the Energy Information Administration
of the Department of Energy (&#147;EIA&#148;). Historically, the
power generation industry has been largely characterized by
electric utility monopolies producing electricity from old,
inefficient, polluting, high-cost generating facilities selling
to a captive customer base. However, industry trends and
regulatory initiatives have transformed some markets into more
competitive grounds where load-serving entities and end-users
may purchase electricity from a variety of suppliers, including
independent power producers (&#147;IPPs&#148;), power marketers,
regulated public utilities and others. For the past decade, the
power industry has been deregulated at the wholesale level
allowing generators to sell directly to the load serving
entities such as public utilities, municipalities and electric
cooperatives. Although industry trends and regulatory
initiatives aimed at further deregulation have slowed, the power
industry continues to transform into a more competitive market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The North American Electric Reliability Council
(&#147;NERC&#148;) estimates that in the United States, peak
(summer)&nbsp;electric demand in 2004 totaled approximately
729,000&nbsp;MW, while summer generating capacity in 2004
totaled approximately 872,000&nbsp;MW, creating a peak summer
reserve margin of 143,000&nbsp;MW, or 19.6%, which compares to
an estimated peak summer reserve margin of 144,000&nbsp;MW, or
20.3% in 2003. Historically, utility reserve margins have been
targeted to be at least 15% above peak demand to provide for
load forecasting errors, scheduled and unscheduled plant outages
and local area grid protection. The United States market
consists of regional electric markets not all of which are
effectively interconnected, so reserve margins vary from region
to region.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Even though most new power plants are fueled by natural gas, the
majority of power generated in the U.S.&nbsp;is still produced
by coal and nuclear power plants. The EIA has estimated that
approximately 50% of the electricity generated in the
U.S.&nbsp;is fueled by coal, 20% by nuclear sources, 18% by
natural gas, 7% by hydro, and 5% from fuel oil and other
sources. As regulations continue to evolve, many of the current
coal plants will likely be faced with having to install a
significant amount of costly emission control devices. This
activity could cause some of the oldest and dirtiest coal plants
to be retired, thereby allowing a greater proportion of power to
be produced by cleaner natural gas-fired generation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Due primarily to the completion of gas-fired combustion turbine
projects, we have seen power supplies increase and higher
reserve margins in the last several years accompanied by a
decrease in liquidity in the energy trading markets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
According to Edison Electric Institute (&#147;EEI&#148;)
published data, the growth rate of overall consumption of
electricity in 2004 compared to 2003 was estimated to be 1.9%.
The estimated growth rates in our major markets were as follows:
South Central (primarily Texas) 3.9%, Pacific Southwest
(primarily California) 3.3%, and Southeast 2.5%. The growth rate
in supply has been diminishing with many developers canceling or
delaying completion of their projects as a result of current
market conditions. The supply and demand balance in the natural
gas industry continues to be strained with gas prices averaging
$6.13&nbsp;per million British thermal unit (&#147;Btu&#148;)
(&#147;MMBtu&#148;) in 2005 through February, compared to
averages of approximately $5.72 and $6.20&nbsp;per MMBtu in the
same periods in 2004 and 2003, respectively. In addition,
capital market participants are slowly making progress in
restructuring their portfolios, thereby stabilizing financial
pressures on the industry. Overall, we expect the market to
continue these trends and work through the current oversupply of
power in several regions within the next few years. As the
supply-demand picture improves, we expect to see
</DIV>

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<DIV align="left" style="font-size: 10pt;">
spark spreads (the difference between the cost of fuel and
electricity revenues) improve and capital markets regain their
interest in helping to repower America with clean, highly
efficient energy technologies.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>STRATEGY</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our vision is to become North America&#146;s most efficient,
cost competitive and environmentally friendly power company with
a comprehensive and profitable service business. We believe that
with our efficient fleet of power generation facilities and
economies of scale, we are positioned to operate profitably and
with reasonable volatility as the supply and demand picture
improves and we increase the proportion of contractual sales. In
achieving our corporate strategic objectives, the number one
priority for our company is maintaining the highest level of
integrity in all of our endeavors. We have posted on our website
(www.calpine.com) our Code of Conduct applicable to all
employees, including our principal executive officer, principal
financial officer and principal accounting officer. We intend to
post on our website any amendment to or waiver from our Code of
Conduct required to be disclosed under Item&nbsp;5.05 of
Form&nbsp;8-K.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our timeline to achieve our strategic objectives is partially a
function of improvement in market fundamentals. When necessary,
we will slow or delay our growth activities in order to ensure
that our financial health is secure and our investment
opportunities meet our long-term rate of return requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Near-Term Objectives</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our ability to adapt as needed to market dynamics has led us to
develop a set of near-term strategic objectives that will guide
our activities as market fundamentals improve. These include:
</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Continue to focus on our liquidity position as our second
    highest priority after integrity;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Continue to improve our balance sheet through the extinguishment
    or repurchase of debt;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Complete our current construction program and start construction
    of new projects in strategic locations only when power contracts
    and financing are available and attractive returns are expected;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Put excess gas turbines to work in new projects, subject to the
    conditions stipulated above, or sell them;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Continue to lower operating and overhead costs per megawatt hour
    (&#147;MWh&#148;) produced and improve operating performance
    with an increasingly efficient power plant fleet;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Utilize our marketing and sales capabilities to selectively
    increase our power contract portfolio;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Grow our services businesses to complement our integrated power
    operations.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Longer-Term Objectives</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We plan, through our strategy to (1)&nbsp;achieve the
lowest-cost position in the industry by applying our fully
integrated areas of expertise to the cost-effective development,
construction, financing, fueling and operation of the most
modern and efficient power generation facilities and by
achieving economies of scale in general, administrative and
other support costs, and (2)&nbsp;enhance the value of the power
we generate in the marketplace by (a)&nbsp;operating our plants
as a system, (b)&nbsp;selling directly to load-serving entities
and, to the extent allowable, to industrial customers, in each
of the markets in which we participate, (c)&nbsp;offering
load-following and other ancillary services to our customers,
and (d)&nbsp;providing effective marketing, risk management and
asset optimization activities through our CES and marketing and
sales organizations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our &#147;system approach&#148; refers to our ability to cluster
our standardized, highly efficient power generation assets
within a given energy market and to sell the energy from that
system of power plants, rather than using &#147;unit
specific&#148; marketing contracts. The clustering of
standardized power generation assets allows for significant
economies of scale to be achieved. Specifically, construction
costs, supply chain activities such as inventory and warehousing
costs, labor, and fuel procurement costs can all be reduced with
this approach. The choice to focus on highly efficient and clean
technologies reduces our fuel consumption, a major expense when
operating power plants. Furthermore, our lower-than-market heat
rate (high efficiency advantage) provides us
</DIV>

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<DIV align="left" style="font-size: 10pt;">
a competitive advantage in times of rising fuel prices, and our
systems approach to fuel purchases reduces imbalance charges
when a plant is forced out of service. Finally, utilizing our
system approach in a sales contract allows us to provide power
to a customer from whichever plant in the system is most
economical at a given period of time. In addition, the operation
of plants can be coordinated when increasing or decreasing power
output throughout the day to enhance overall system efficiency,
thereby enhancing the heat rate advantage already enjoyed by the
plants. In total, this approach lays a foundation for a
sustainable competitive cost advantage in operating our plants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The integration of gas production, hedging, optimization and
marketing activities achieves additional cost reductions while
simultaneously enhancing revenues. Our fleet of natural gas
burning power plants requires a large amount of gas to operate.
Our fuel strategy is to supplement purchases of gas with
production from our own gas reserves. Owning gas reserves
provides a natural hedge against gas price volatility, while
providing a secure and reliable source of fuel and lowering our
fuel costs over time. The ownership of gas provides our CES risk
management organization with additional flexibility when
structuring fixed price transactions with our customers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Recent trends confirm that both buyers and sellers of power and
gas benefit from signing long-term power contracts. By signing
long-term power contracts with fixed or heat-rate based pricing
(a component of which is the gas index), we are able to reduce
our exposure to the severe volatility often seen with power and
gas prices. The trend towards signing long-term contracts is
creating opportunities for companies, such as ours, that own
power plants and gas reserves to negotiate directly with buyers
(end users and load serving entities) that need power.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our marketing and sales organization is dedicated to serving
wholesale and industrial customers with reliable, cost-effective
electricity and a full range of services. The organization
offers customers: (1)&nbsp;wholesale bulk energy; (2)&nbsp;firm
supply energy; (3)&nbsp;fully dispatchable energy; (4)&nbsp;full
service requirements energy; (5)&nbsp;renewable energy;
(6)&nbsp;energy scheduling services; (7)&nbsp;engineering,
construction, O&#38;M services; and (8)&nbsp;turbine parts and
long-term maintenance agreements. Our physical, financial and
intellectual assets and our generating facilities, pooled into
unique energy centers in key markets, enable us to create
customizable energy solutions for our customers, delivering
power when, where and in the capacity our customers need. Our
power marketing experience gives us the know-how to structure
innovative deals that meet our customers&#146; particular
requirements. For example, we work with our customers to tailor
energy contracts to help them offset pricing risk and other
variables. We have developed our &#147;Virtual Power Plant&#148;
product which provides customers with an energy resource that is
reliable and flexible. It gives customers all of the advantages
of owning and operating their own plants without many of the
risks, by gaining access to a portfolio of highly efficient
generation assets and by implementing our IT solutions to allow
power to be dispatched as needed. As of March&nbsp;2, 2005, our
marketing and sales team is pursuing 24,633&nbsp;MW of active
opportunities with 198 customers across the United States and
Canada. This customer base includes municipalities,
cooperatives, investor owned utilities, industrial customers and
commercial customers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The ultimate objective of our financing strategy is to achieve
and maintain an investment grade credit and bond rating from the
major rating agencies. In order to achieve this objective we
have reduced capital expenditures and are continuing to seek
ways to reduce our debt and improve our liquidity. We intend to
employ various approaches for extending or refinancing existing
credit facilities and for financing new plants, with a goal of
retaining maximum system operating flexibility. The availability
of capital at attractive terms consistent with achieving our
liquidity goals will be a key requirement to enable us to
develop and construct new plants. We have adjusted to recent
market conditions by taking near-term actions focused on
liquidity. We have been successful throughout the last few years
at selling certain less strategically important assets,
monetizing several contracts, buying back our debt, issuing
convertible and non-convertible senior notes, and raising
non-recourse project financing.
</DIV>

<P align="center" style="font-size: 10pt;">7

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>COMPETITION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We are engaged in several different types of business activities
each of which has a unique competitive environment. To better
understand the competitive landscape we face, it is helpful to
look at five different groupings of business activities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Development and Construction.</I> We face competition from
IPPs, non-regulated subsidiaries of utilities, and increasingly
from regulated utilities and large end-users of electricity. In
addition, there are only a few primary suppliers of key gas
turbine, steam turbine and heat recovery steam generator
equipment used in state of the art gas turbine power plants.
Periodically we face strong competition with respect to securing
the best construction personnel and contractors. Regulatory and
community pressures against locating a power plant at a specific
site can often be substantial, causing months or years of delays.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Power Plant Operations.</I> The power sales competitive
landscape consists of a patchwork of highly competitive and
highly regulated markets. This patchwork has been caused by
inconsistent transitions to deregulated markets across North
America. For example, in markets where there is open
competition, our gas-fired or geothermal merchant capacity (that
which has not been sold under a long-term contract) competes
directly on a real time basis with all other sources of
electricity such as nuclear, coal, oil, gas-fired, and renewable
energy provided by others. However, there are other markets
where the local utility still predominantly uses its own supply
to satisfy its own demand before dispatching competitively
provided power from others. Each of these markets offers a
unique and challenging power sales environment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>We also compete to be the low cost producer of power.</I> We
strive to have better efficiency, start and stop using less
fuel, operate with the fewest forced outages and maximum
availability and to accomplish all of this while producing less
pollutants than competing gas plants and those using other fuels.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Asset Acquisition and Divestiture.</I> The recent downturn in
the electricity industry has prompted many companies to sell
assets to improve their financial positions. In addition, the
postponement of plans for construction of new power plants is
also creating a competitive market for the sale of excess
equipment. In the past year, new entrants such as private equity
funds, financial institutions and utilities have acquired power
plants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Gas Production and Operations.</I> Gas production is also
highly competitive and is populated by numerous participants
including majors, large independents and smaller &#147;wild
cat&#148; type exploration companies. Recently, the competition
in this sector has increased due to a fundamental shift in the
supply and demand balance for gas in North America. This shift
has driven gas prices higher and has led to increased production
activities and development of alternative supply options such as
liquid natural gas or coal gasification. In the near-term,
however, we expect that the market to find and produce natural
gas will remain highly competitive.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Power Marketing and Sales.</I> Power marketing and sales
generally includes all those activities associated with
identifying customers, negotiating, and selling energy and
service contracts to load-serving entities and large scale
industrial and retail end-users. In the past year, there has
been a trend for financial institutions and hedge funds to enter
the marketing and trading business. However, many of these
players are focused on financial products and standard physical
transactions. Power generators like Calpine continue to focus on
selling nonstandard physical products directly to load serving
entities.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>ENVIRONMENTAL STEWARDSHIP</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Calpine&#146;s goal is to produce low-cost electricity with
minimal impact on the environment. To achieve this we&#146;ve
assembled the largest fleet of combined-cycle natural gas-fired
power plants and the largest fleet of geothermal power
facilities in North America.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Both fleets utilize state-of-the-art technology to achieve our
goal of environmentally friendly power generation.
</DIV>

<P align="center" style="font-size: 10pt;">8

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our fleet of more than 25,800&nbsp;MW of modern, combined-cycle
natural gas-fired power plants is highly efficient. They consume
significantly less fuel to generate a MWh of electricity than
older boiler/steam turbine power plants. This means that less
air pollutants enter the environment per unit of electricity
produced, and far less pollutants are emitted compared to
electricity generated by coal-fired power plants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Calpine&#146;s 750-MW fleet of geothermal power plants utilizes
natural heat sources from within the earth to generate
electricity with negligible air emissions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The table below summarizes approximate air pollutant emission
rates from Calpine&#146;s combined-cycle natural gas-fired power
plants and our geothermal power plants compared to average
emission rates from US coal, oil and gas-fired power plants.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="27%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="21" align="center" nowrap><B>Air Pollutant Emission Rates&nbsp;&#151; Pounds of Pollutant Emitted per MWh of Electricity Generated</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="21" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Average US</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>Calpine Power Plants</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Coal, Oil&nbsp;&#38;</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Gas-Fired</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Combined-Cycle</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Less Than</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Geothermal</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Less Than</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Air Pollutants</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Power Plant (1)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Power Plant (2)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Avg US Plant</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Power Plant (3)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Avg US Plant</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Nitrogen Oxides, NO <SUB>x</SUB></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Acid rain, smog and fine particulate formation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.53</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>93.2% Less</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.00074</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>99.9% Less</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Sulphur Dioxide, SO <SUB>2</SUB></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Acid rain and fine particulate formation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>99.9% Less</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.00015</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>99.9% Less</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Mercury, Hg</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Neurotoxin</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.000037</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100% Less</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.000008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>78.4% Less</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Carbon Dioxide, CO <SUB>2</SUB></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Principal greenhouse gas&nbsp;&#151; contributor to climate
    change</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,930</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>890</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>53.9% Less</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>85.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>95.6% Less</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Particulate Matter, PM</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Respiratory health effects</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.038</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>92.4% Less</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.014</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>97.2% Less</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    The US fossil fuel fleet&#146;s emission rates were obtained
    from the United States Department of Energy&#146;s Electric
    Power Annual Report for 2003. Emission rates are based on 2003
    emissions and net generation.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Calpine&#146;s combined-cycle power plant emission rates are
    based on 2003 data.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    Calpine&#146;s geothermal power plant emission rates are based
    on 2003 data and include expected results from the mercury
    abatement program currently in process.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Calpine&#146;s environmental record has been widely recognized.
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Calpine&#146;s Board of Directors unanimously adopted a
    resolution restricting investments in low carbon dioxide
    emitting power plants.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    PSM is developing gas turbine components to improve turbine
    efficiency and to reduce emissions.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Calpine Power Company has instituted a program of proprietary
    operating procedures to reduce gas consumption and lower air
    pollutant emissions per MWh of electricity generated.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Calpine and its Chairman, President and CEO, Peter Cartwright,
    received the designation of &#147;Clean Air Champion&#148; from
    the New York League of Conservation Voters in recognition of our
    efforts to improve the quality of New York&#146;s air.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Peter Cartwright was recognized as the &#147;Business Leader of
    the Year&#148; by <I>Scientific American Magazine </I>for his
    commitment to low carbon technologies.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">9

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    The American Lung Associations of the Bay Area selected Calpine
    and its Geysers geothermal operation for the 2004 Clean Air
    Award for Technology Development to recognize
    &#147;Calpine&#146;s commitment to clean renewable energy, which
    improves air quality and helps us all breathe easier.&#148;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Calpine and General Electric Co. teamed up for the North America
    launch of GE&#146;s most advanced gas turbine technology, the
    <I>H
    System</I><SUP style="font-size: 85%; vertical-align: text-top"><FONT style="font-variant:SMALL-CAPS">tm</FONT></SUP>,
    which will utilize a more efficient gas turbine combined-cycle
    system. The 775-MW project located in Southern California is
    expected to enter commercial operation in 2008.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Calpine joined the US Environmental Protection Agency&#146;s
    Climate Leaders Program, which is intended to encourage climate
    change strategies, help establish future greenhouse gas
    (&#147;GHG&#148;) emission reduction goals, and increase energy
    efficiency among participants. As part of Climate Leaders,
    Calpine will submit data on 2003 carbon dioxide (CO<SUB>2</SUB>)
    emissions from all its natural gas-fired power plants, for The
    Geysers&nbsp;&#151; Calpine&#146;s geothermal power generating
    plants in Northern California, and for Calpine natural gas
    production facilities located throughout the United States.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Calpine became the first independent power producer to earn the
    distinction of <I>Climate Action
    Leader</I><SUP style="font-size: 85%; vertical-align: text-top"><FONT style="font-variant:SMALL-CAPS">tm</FONT></SUP>
    by certifying its 2003 CO<SUB>2</SUB> emissions inventory with
    the California Climate Action Registry. Calpine is now publicly
    and voluntarily reporting its CO<SUB>2</SUB> emissions from
    generation of electricity in California under this rigorous
    registry program.</TD>
</TR>

</TABLE>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>RECENT DEVELOPMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On January&nbsp;13, 2005, we announced that we are evaluating
strategic financial alternatives for our Saltend Energy Centre,
including the potential sale of the power plant. We have
retained Credit Suisse First Boston to act as our advisor and
assist us with this process. Net proceeds from any sale of the
facility would be used to redeem our existing
$360.0&nbsp;million Two-Year Redeemable Preferred Shares and
$260.0&nbsp;million Redeemable Preferred Shares Due
July&nbsp;30, 2005. Any remaining proceeds will be used in
accordance with the asset sale provisions of our existing bond
indentures.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On January&nbsp;28, 2005, our indirect subsidiary Metcalf Energy
Center, LLC (&#147;Metcalf&#148;)obtained a $100.0&nbsp;million,
non-recourse credit facility for the Metcalf Energy Center in
San&nbsp;Jose, California. Loans extended to Metcalf under the
facility will fund the balance of construction activities for
the 602-MW, natural gas-fired power plant. The facility will
mature in July 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On January&nbsp;31, 2005, we received funding on a
$260.0&nbsp;million offering of Redeemable Preferred Shares Due
July&nbsp;30, 2005 issued by our subsidiary, Calpine European
Financing (Jersey) Limited. The shares were offered in a private
placement in the United States under Regulation&nbsp;D under the
Securities Act of 1933 and outside of the United States pursuant
to Regulation&nbsp;S under the Securities Act of 1933. The
Redeemable Preferred Shares, priced at U.S.&nbsp;LIBOR plus
850&nbsp;basis points, were offered at 99% of par. The proceeds
from the offering of the shares were used in accordance with the
provisions of our existing bond indentures.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On February&nbsp;22, 2005, we announced that our Inland Empire
Energy Center site was selected for the North American launch of
General Electric&#146;s most advanced gas turbine technology,
the <I>H
System</I><SUP style="font-size: 85%; vertical-align: text-top"><FONT style="font-variant:SMALL-CAPS">tm</FONT></SUP>.
We will provide construction services to GE which will initially
own and operate the facility. Additionally, we will purchase a
portion of the power capacity. The Inland Empire Energy Center
site is located in the unincorporated community of Romoland in
Riverside County, California. The project is targeted to be
online by the summer of 2008 and will be capable of meeting the
energy needs of almost 600,000 households in one of the fastest
growing regions in the state.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On March&nbsp;1, 2005, our indirect subsidiary, Calpine
Steamboat Holdings, LLC, closed on a $503.0&nbsp;million
non-recourse project finance facility that will provide
$466.5&nbsp;million to complete the construction of the Mankato
Energy Center (&#147;Mankato&#148;) in Blue Earth County,
Minnesota, and the Freeport Energy center in Freeport, Texas.
The remaining $36.5&nbsp;million of the facility provides a
letter of credit for Mankato that is required to serve as
collateral available to Northern States Power Company if Mankato
does not meet its obligations under the power purchase
agreement. The project finance facility will initially be
structured as a
</DIV>

<P align="center" style="font-size: 10pt;">10

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
construction loan, converting to a term loan upon commercial
operations of the plants, and will mature in December 2011. The
facility will initially be priced at LIBOR plus 1.75%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On March&nbsp;31, 2005, our indirect subsidiary, Deer Park
Energy Center, Limited Partnership (&#147;Deer Park&#148;),
signed a 650 MW, six-year power sales agreement with Merrill
Lynch Commodities, Inc. (&#147;MLCI&#148;). As part of this
agreement, Deer Park received an upfront payment of
approximately $195&nbsp;million, net of fees and expenses. Deer
Park expects to receive approximately $70&nbsp;million in
additional upfront payments over the next several months upon
satisfying certain conditions under the power sales agreement,
resulting in net payments to Deer Park totaling approximately
$265&nbsp;million. Deer Park has also arranged to purchase
natural gas from MLCI over the term of the power sales
agreement, which will reduce the working capital required to
secure a long-term fuel supply for the facility. See
Note&nbsp;28 of the Notes to Consolidated Financial Statements
for further details regarding this transaction.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Subsequent to December&nbsp;31, 2004, the Company repurchased
$31.8&nbsp;million in principal amount of its outstanding
8<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT>%&nbsp;Senior
Notes Due 2011 in exchange for $23.0&nbsp;million in cash plus
accrued interest. The Company also repurchased
$48.7&nbsp;million in principal amount of its outstanding
8<FONT style="font-size: 70%"><SUP>5</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%
Senior Notes Due 2010 in exchange for $35.0&nbsp;million in cash
plus accrued interest. The Company recorded a pre-tax gain on
these transactions in the amount of $22.5&nbsp;million before
write-offs of unamortized deferred financing costs and the
unamortized premiums or discounts.
</DIV>

<P align="center" style="font-size: 10pt;">11
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>DESCRIPTION OF POWER GENERATION FACILITIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<IMG src="f05222f0522200.gif" alt="(CALPINE POWER PORTFOLIO GRAPH)">
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="59%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Market Share</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>NERC Region/ Country</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Projects</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Megawatts</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(NERC/UK)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    WECC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,382</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    ERCOT</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,572</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    SERC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,365</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    MAIN</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,292</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    SPP</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,674</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    NEPOOL</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,272</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    FRCC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    MAAC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>865</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    ECAR</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    MAPP</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>375</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    NYPOOL</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>334</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    NPCC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>*</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>TOTAL NERC</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30,713</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    UK</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Mexico</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>236</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>TOTAL</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32,149</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt;">
<DIV style="width: 30%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="2%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>*&nbsp;</TD>
    <TD align="left">
    less than 1%.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">12
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At March&nbsp;30, 2005, we had ownership or lease interests in
92 operating power generation facilities representing
26,649&nbsp;MW of net capacity. Of these projects, 73 are
gas-fired power plants with a net capacity of 25,899&nbsp;MW,
and 19 are geothermal power generation facilities with a net
capacity of 750&nbsp;MW. We also have 11 gas-fired projects
currently under construction with a net capacity of
5,500&nbsp;MW. In addition, and not included in the table above,
we expect to complete construction of 10&nbsp;advanced
development projects with a net capacity of 6,095&nbsp;MW. The
timing of the completion of these projects will be based on
market fundamentals and when our return on investment criteria
are expected to be met, and when power sales contracts and
financing are available on attractive terms. Each of the power
generation facilities currently in operation produces
electricity for sale to a utility, other third-party end user,
or to an intermediary such as a marketing company. Thermal
energy produced by the gas-fired cogeneration facilities is sold
to industrial and governmental users.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our gas-fired and geothermal power generation projects produce
electricity and thermal energy that is sold pursuant to
short-term and long-term power sales agreements
(&#147;PSAs&#148;) or into the spot market. Revenue from a power
sales agreement often consists of either or both of the
following components: energy payments and capacity payments.
Energy payments are based on a power plant&#146;s net electrical
output, and payment rates are typically either at fixed rates or
indexed to fuel costs. Capacity payments are based on a power
plant&#146;s available capacity. Energy payments are earned for
each kilowatt-hour of energy delivered, while capacity payments,
under certain circumstances, are earned whether or not any
electricity is scheduled by the customer and delivered.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Upon completion of our projects under construction, we will
provide operating and maintenance services for 101 of the 103
power plants in which we have an interest. Such services include
the operation of power plants, geothermal steam fields, wells
and well pumps, gas fields, gathering systems and gas pipelines.
We also supervise maintenance, materials purchasing and
inventory control, manage cash flow, train staff and prepare
operating and maintenance manuals for each power generation
facility that we operate. As a facility develops an operating
history, we analyze its operation and may modify or upgrade
equipment or adjust operating procedures or maintenance measures
to enhance the facility&#146;s reliability or profitability.
These services are sometimes performed for third parties under
the terms of an operating and maintenance agreement pursuant to
which we are generally reimbursed for certain costs, paid an
annual operating fee and may also be paid an incentive fee based
on the performance of the facility. The fees payable to us may
be subordinated to any lease payments or debt service
obligations of financing for the project.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In order to provide fuel for the gas-fired power generation
facilities in which we have an interest, natural gas reserves
are acquired or natural gas is purchased from third parties
under supply agreements and gas hedging contracts. We manage a
gas-fired power facility&#146;s fuel supply so that we protect
the plant&#146;s spark spread.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We currently hold interests in geothermal leaseholds in Lake and
Sonoma Counties in northern California (&#147;The Geysers&#148;)
that produce steam that is supplied to our leased geothermal
power generation facilities for use in producing electricity. In
late 2003 we began to inject waste water from the City of Santa
Rosa Recharge Project into our geothermal reservoirs. We expect
this recharge project to extend the useful life and enhance the
performance of The Geysers geothermal resources and power plants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Certain power generation facilities in which we have an interest
have been financed primarily with project financing that is
structured to be serviced out of the cash flows derived from the
sale of electricity and thermal energy produced by such
facilities and provides that the obligations to pay interest and
principal on the loans are secured almost solely by the capital
stock or partnership interests, physical assets, contracts
and/or cash flow attributable to the entities that own the
facilities. The lenders under non-recourse project financing
generally have no recourse for repayment against us or any of
our assets or the assets of any other entity other than
foreclosure on pledges of stock or partnership interests and the
assets attributable to the entities that own the facilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Substantially all of the power generation facilities in which we
have an interest are located on sites which we own or are leased
on a long-term basis. See Item&nbsp;2. &#147;Properties.&#148;
</DIV>

<P align="center" style="font-size: 10pt;">13

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Set forth below is certain information regarding our operating
power plants and plants under construction as of March&nbsp;30,
2005.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>Megawatts</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Calpine Net</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>With</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Calpine Net</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Interest</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Baseload</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Peaking</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Interest</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>with</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>of Plants</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Capacity</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Capacity</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Baseload</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Peaking</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    In operation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Geothermal power plants</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>750</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gas-fired power plants</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>73</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,930</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,189</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,753</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25,899</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Under construction</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    New facilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,181</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,789</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,892</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,500</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,861</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33,728</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26,395</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32,149</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Operating Power Plants</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Country,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Calpine Net</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>US</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>With</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Calpine Net</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Interest</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>State or</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Baseload</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Peaking</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Calpine</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Interest</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>with</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total 2004</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Can.</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Capacity</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Capacity</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Interest</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Baseload</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Peaking</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Generation</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2" align="center" nowrap><B>Power Plant</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Province</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(MW)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(MW)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Percentage</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(MW)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(MW)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>MWh(1)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Geothermal Power Plants</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sonoma County (12 plants)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>456.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>456.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>456.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>456.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,135,181</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Lake County (2 plants)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>131.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>131.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>131.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>131.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,114,292</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Calistoga</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>620,520</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sonoma</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>375,733</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    West Ford Flat</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>227,453</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Bear Canyon</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>142,204</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Aidlin</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>139,256</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total Geothermal Power Plants (19)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>750.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>750.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>750.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>750.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,754,639</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Gas-Fired Power Plants</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Saltend Energy Centre</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>UK</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,200.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,200.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,200.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,200.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,008,046</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Freestone Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>TX</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,022.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,022.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,022.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,022.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,569,089</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deer Park Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>TX</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>792.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,019.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>792.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,019.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,798,265</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oneta Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>OK</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>994.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>994.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>994.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>994.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>827,661</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Delta Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>799.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>882.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>799.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>882.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,765,080</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Morgan Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>AL</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>722.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>852.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>722.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>852.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>848,933</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Decatur Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>AL</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>793.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>852.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>793.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>852.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>311,531</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Baytown Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>TX</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>742.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>830.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>742.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>830.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,632,478</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Broad River Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>SC</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>847.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>847.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>426,705</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pasadena Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>TX</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>776.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>777.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>776.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>777.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,932,210</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Magic Valley Generating Station</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>TX</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>700.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>751.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>700.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>751.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,802,004</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Hermiston Power Project</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>OR</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>546.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>642.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>546.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>642.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,073,944</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Columbia Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>SC</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>464.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>641.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>464.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>641.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>542,376</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Rocky Mountain Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CO</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>479.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>621.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>479.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>621.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,080,538</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Osprey Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>FL</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>530.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>609.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>530.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>609.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,492,792</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Acadia Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>LA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,092.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,210.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>546.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>605.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,521,934</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Riverside Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>WI</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>518.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>603.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>518.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>603.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>689,659</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">14

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Country,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Calpine Net</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>US</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>With</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Calpine Net</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Interest</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>State or</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Baseload</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Peaking</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Calpine</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Interest</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>with</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total 2004</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Can.</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Capacity</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Capacity</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Interest</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Baseload</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Peaking</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Generation</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD align="center" nowrap><B>Power Plant</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Province</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(MW)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(MW)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Percentage</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(MW)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(MW)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>MWh(1)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Aries Power Project</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>MO</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>523.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>590.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>523.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>590.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>839,176</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ontelaunee Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>PA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>561.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>584.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>561.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>584.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,343,393</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Channel Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>TX</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>527.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>574.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>527.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>574.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,467,759</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Brazos Valley Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>TX</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>450.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>570.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>450.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>570.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,441,071</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Los Medanos Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>497.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>566.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>497.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>566.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,683,759</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sutter Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>535.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>543.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>535.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>543.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,475,986</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Corpus Christi Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>TX</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>414.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>537.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>414.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>537.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,297,928</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Texas City Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>TX</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>457.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>534.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>457.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>534.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,389,041</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Carville Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>LA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>455.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>531.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>455.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>531.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,755,790</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    South Point Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>AZ</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>520.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>530.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>520.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>530.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,900,047</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Westbrook Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>ME</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>528.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>528.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>528.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>528.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,451,414</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Zion Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>IL</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>513.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>513.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,978</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    RockGen Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>WI</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>460.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>460.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>240,072</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Clear Lake Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>TX</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>344.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>400.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>344.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>400.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,397,923</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Hidalgo Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>TX</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>392.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>392.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>78.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>307.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>307.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,931,793</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Blue Spruce Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CO</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>285.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>285.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>149,316</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Goldendale Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>WA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>237.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>271.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>237.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>271.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>210,601</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Tiverton Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>RI</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>267.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>267.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>267.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>267.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,860,478</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Rumford Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>ME</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>263.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>263.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>263.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>263.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,664,835</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Santa Rosa Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>FL</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>250.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>250.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>250.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>250.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,848</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Hog Bayou Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>AL</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>235.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>237.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>235.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>237.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>120,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pine Bluff Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>AR</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>184.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>215.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>184.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>215.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,450,765</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Los Esteros Critical Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>188.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>188.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>278,873</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Dighton Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>MA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>170.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>170.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>170.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>170.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>639,784</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Morris Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>IL</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>137.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>156.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>137.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>156.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>562,882</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Auburndale Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>FL</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>150.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>150.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>150.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>150.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>901,206</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gilroy Peaking Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>135.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>135.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>72,388</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gilroy Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>117.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>128.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>117.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>128.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>274,311</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    King City Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>120.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>120.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>120.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>120.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>952,050</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Parlin Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>NJ</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>98.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>118.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>98.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>118.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>109,994</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Auburndale Peaking Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>FL</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>116.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>116.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,495</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Kennedy International Airport Power Plant (&#147;KIAC&#148;)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>NY</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>99.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>105.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>99.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>105.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>577,632</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pryor Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>OK</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>90.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>90.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>342,127</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Grays Ferry Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>PA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>166.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>175.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>83.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>87.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>618,319</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Calgary Energy Centre</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>AB</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>252.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>286.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>85.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>891,629</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Island Cogeneration</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>BC</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>219.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>250.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>65.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,663,518</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pittsburg Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>64.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>64.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>64.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>64.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>211,005</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Bethpage Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>NY</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>271,594</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Newark Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>NJ</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>203,019</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Greenleaf 1 Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>49.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>49.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>49.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>49.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>341,427</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Greenleaf 2 Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>49.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>49.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>49.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>49.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>328,262</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">15

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Country,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Calpine Net</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>US</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>With</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Calpine Net</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Interest</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>State or</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Baseload</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Peaking</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Calpine</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Interest</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>with</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total 2004</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Can.</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Capacity</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Capacity</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Interest</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Baseload</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Peaking</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Generation</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2" align="center" nowrap><B>Power Plant</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Province</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(MW)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(MW)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Percentage</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(MW)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(MW)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>MWh(1)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Wolfskill Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,900</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Yuba City Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,558</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Feather River Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,034</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Creed Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,483</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Lambie Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,156</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Goose Haven Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,193</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Riverview Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,637</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Stony Brook Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>NY</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>329,168</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Bethpage Peaking Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>NY</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>46.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>46.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>112,033</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    King City Peaking Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,545</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Androscoggin Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>ME</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>136.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>136.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>680,898</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Watsonville Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>206,244</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Agnews Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>197,810</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Philadelphia Water Project</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>PA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>83.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Whitby Cogeneration</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>ON</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total Gas-Fired Power Plants(73)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,930.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,189.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,753.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25,899.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>97,371,392</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total Operating Power Plants(92)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,680.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,939.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,503.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26,649.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>104,126,031</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Consolidated Projects including plants with operating leases</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,236.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26,368.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,822.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25,905.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Equity (Unconsolidated) Projects</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,444.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,571.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>681.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>744.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Generation MWh is shown here as 100% of each plant&#146;s gross
    generation in MWh.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Projects Under Construction (All gas-fired)</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Calpine Net</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>With</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Calpine Net</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Interest</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Baseload</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Peaking</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Calpine</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Interest</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>With</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Capacity</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Capacity</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Interest</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Baseload</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Peaking</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="left" nowrap><B>Power Plant</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>US State</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(MW)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(MW)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Percentage</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(MW)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(MW)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Projects Under Construction</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Hillabee Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>AL</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>710.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>770.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>710.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>770.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pastoria Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>759.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>769.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>759.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>769.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fremont Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>OH</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>550.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>700.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>550.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>700.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Metcalf Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>556.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>602.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>556.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>602.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Otay Mesa Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>CA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>510.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>593.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>510.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>593.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Washington Parish Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>LA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>509.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>565.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>509.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>565.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fox Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>WI</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>490.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>560.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>490.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>560.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Mankato Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>MN</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>292.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>375.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>292.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>375.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Freeport Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>TX</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>200.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>250.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>200.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>250.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Valladolid&nbsp;III Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>Mexico</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>525.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>525.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>236.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>236.3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Bethpage Energy Center 3</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>NY</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>79.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>79.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>79.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>79.9</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total Projects Under Construction</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,180.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,788.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,892.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,500.2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">16

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<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>ACQUISITIONS OF POWER PROJECTS AND PROJECTS UNDER
CONSTRUCTION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have extensive experience in the development and acquisition
of power generation projects. We have historically focused
principally on the development and acquisition of interests in
gas-fired and geothermal power projects, although we may also
consider projects that utilize other power generation
technologies. We have significant expertise in a variety of
power generation technologies and have substantial capabilities
in each aspect of the development and acquisition process,
including design, engineering, procurement, construction
management, fuel and resource acquisition and management, power
marketing, financing and operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As indicated above under &#147;Strategy,&#148; our development
and acquisition activities have been scaled back, for the
indefinite future, to focus on liquidity and operational
priorities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Acquisitions</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We may consider acquisitions of interests in operating projects
as well as projects under development where we would assume
responsibility for completing the development of the project. In
the acquisition of power generation facilities, we generally
seek to acquire 100% ownership of facilities that offer us
attractive opportunities for earnings growth, and that permit us
to assume sole responsibility for the operation and maintenance
of the facility. In evaluating and selecting a project for
acquisition, we consider a variety of factors, including the
type of power generation technology utilized, the location of
the project, the terms of any existing power or thermal energy
sales agreements, gas supply and transportation agreements and
wheeling agreements, the quantity and quality of any geothermal
or other natural resource involved, and the actual condition of
the physical plant. In addition, we assess the past performance
of an operating project and prepare financial projections to
determine the profitability of the project. Acquisition activity
is dependent on the availability of financing on attractive
terms, the expectation of returns that meet our long-term
requirements and consistency with our long-term liquidity
objectives.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Although our preference is to own 100% of the power plants we
acquire or develop, there are situations when we take less than
100% ownership. Examples of situations in which we took or may
take less than a 100% interest in a power plant include:
(a)&nbsp;our acquisitions of other IPPs such as Cogeneration
Corporation of America in 1999 and SkyGen Energy LLC in 2000 in
which minority interest projects were included in the portfolio
of assets owned by the acquired entities (Grays Ferry Power
Plant (50% now owned by Calpine) and Androscoggin Energy Center
(32.3% now owned by Calpine), respectively);
(b)&nbsp;opportunities to co-invest with non-regulated
subsidiaries of regulated electric utilities, which under PURPA
are restricted to 50% ownership of cogeneration qualifying
facilities; and (c)&nbsp;opportunities to invest in merchant
power projects with partners who bring marketing, funding,
permitting or other resources that add value to a project, for
example, Acadia Energy Center in Louisiana (50% owned by Calpine
and 50% owned by Cleco Midstream Resources, an affiliate of
Cleco Corporation). None of our equity investment or cost method
projects have nominal carrying values as a result of material
recurring losses except for Androscoggin Energy Center, which
filed for bankruptcy protection in November 2004. See
Note&nbsp;6 of the Notes to Consolidated Financial Statements
for further details. Further, there is no history of impairment
in any of these investments except the Androscoggin project.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Projects Under Construction</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The development and construction of power generation projects
involves numerous elements, including evaluating and selecting
development opportunities, designing and engineering the
project, obtaining PSAs in some cases, acquiring necessary land
rights, permits and fuel resources, obtaining financing,
procuring equipment and managing construction. We intend to
focus on completing projects already in construction and
starting new projects only when power contracts and financing
are available and attractive returns are expected.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Hillabee Energy Center.</I> On February&nbsp;24, 2000, we
announced plans to build, own and operate the Hillabee Energy
Center, a 770&nbsp;MW, natural gas-fired cogeneration facility
in Tallapoosa County, Alabama.
</DIV>

<P align="center" style="font-size: 10pt;">17
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<DIV align="left" style="font-size: 10pt;">
The project is 75% complete, but we have suspended further
construction activity until a power contract is available. We
expect commercial operation of the facility will commence in
2007 or later.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Pastoria Energy Center.</I> In April 2001 we acquired the
rights to develop the 769&nbsp;MW Pastoria Energy Center, a
combined-cycle project planned for Kern County, California.
Construction began in mid-2001, and commercial operation is
scheduled to begin in May 2005 for phase one and in June 2005
for phase two.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Fremont Energy Center.</I> On May&nbsp;23, 2000, we announced
plans to build, own and operate the Fremont Energy Center, a
700&nbsp;MW natural gas-fired electricity generating facility to
be located near Fremont, Ohio. The project is 68% complete, but
we have suspended further construction activity until a power
contract is available. Commercial operation is expected to
commence in the summer of 2007 or later.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Metcalf Energy Center.</I> On April&nbsp;30, 1999, we
submitted an Application for Certification with the California
Energy Commission (&#147;CEC&#148;) to build, own and operate
the Metcalf Energy Center, a 602&nbsp;MW natural gas-fired
electricity generating facility located in San&nbsp;Jose,
California. Construction of the facility began in June 2002, and
commercial operation is anticipated to commence in the summer of
2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Otay Mesa Energy Center.</I> On July&nbsp;10, 2001, we
acquired Otay Mesa Generating Company, LLC and the associated
development rights including a license from the CEC. The
593&nbsp;MW facility is located in southern San&nbsp;Diego
County, California. Construction began in 2001. In October 2003
we signed a term sheet setting forth the principal terms and
conditions for a ten-year, 570&nbsp;MW power sales agreement
with San&nbsp;Diego Gas&nbsp;&#38; Electric Co.
(&#147;SDG&#38;E&#148;). Under the final agreement, we will
supply electricity to SDG&#38;E from the Otay Mesa Energy
Center. Power deliveries are scheduled to begin in 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Washington Parish Energy Center.</I> On January&nbsp;26,
2001, we announced the acquisition of the development rights
from Cogentrix Energy, Inc., an independent power company based
in North Carolina, for the 565&nbsp;MW Washington Parish Energy
Center, located near Bogalusa, Louisiana. The project is 72%
complete, but we have suspended further construction activity
until a power contract is available. We expect commercial
operation of the facility will commence in 2007 or later.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Fox Energy Center.</I> In 2003 we acquired the fully
permitted development rights to the 560&nbsp;MW Fox Energy
Center in Kaukauna, Wisconsin, which will be used to fulfill an
existing contract with Wisconsin Public Service. Commercial
operation is expected to begin in the fall of 2005, and in
December 2005 for Phase Two. We entered into a financing
transaction with respect to Fox Energy Center in November 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Freeport Energy Center.</I> In May 2004 we announced plans to
build and own a 250&nbsp;MW, natural gas-fired cogeneration
energy center in Freeport, Texas. Under a 25-year agreement, up
to 200&nbsp;MW of electricity and one million pounds per hour of
steam generated at the facility will be sold to the Dow Chemical
Co. (&#147;Dow&#148;) Freeport, Texas, facility. Dow will
operate this facility. Construction of the facility began in
June 2004. Commercial operations will commence in multiple
phases, with the first phases expected to occur in the fall of
2005 and the last phase in November 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Mankato Power Plant.</I> In March 2004 we announced plans to
build, own and operate a 375&nbsp;MW, natural gas-fired power
plant in Mankato, Minnesota. Electric power generated at the
facility will be sold to Northern States Power Co. under a
20-year purchased power agreement. Construction began in March
2004 and we expect commercial operation of the facility to
commence in June 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Valladolid&nbsp;III Energy Center.</I> In October 2003 we
announced, together with Mitsui&nbsp;&#38; Co., Ltd.
(&#147;Mitsui&#148;) of Tokyo, Japan, an intention to build, own
and operate a 525&nbsp;MW, natural gas-fired energy center for
Comision Federal de Electricidad (&#147;CFE&#148;)&nbsp;at
Valladolid in the Yucatan Peninsula. The facility will deliver
electricity to CFE under a 25-year power sales agreement. We are
supplying two combustion gas turbines to the project, giving us
a 45-percent interest in the facility. Mitsui and Chubu Electric
will own the remaining interest. Construction began in May 2004
and we expect commercial operation of the facility to commence
in June 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Bethpage Energy Center 3.</I> In May 2004 we announced plans
to build, own and operate a 79.9&nbsp;MW, natural gas-fired
energy center in Hicksville, New York, adjacent to our existing
cogeneration facility, the Bethpage Power Plant. Electricity
generated at the facility will be sold to the Long Island Power
Authority
</DIV>

<P align="center" style="font-size: 10pt;">18

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<DIV align="left" style="font-size: 10pt;">
(&#147;LIPA&#148;)&nbsp;under a 20-year power contract, which
includes capacity and related energy and ancillary services.
Construction began in July 2004 and commercial operation is
expected to commence in July 2005.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>OIL AND GAS PROPERTIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 1997, we began an equity gas strategy to diversify the gas
sources for our natural gas-fired power plants by purchasing
Montis Niger, Incorporated, a gas production and pipeline
company operating primarily in the Sacramento Basin in northern
California. We currently supply the majority of the fuel
requirements for the Greenleaf 1 and 2 Power Plants from these
reserves. In October 1999, we purchased Sheridan Energy, Inc.
(&#147;Sheridan&#148;), a natural gas exploration and production
company operating in northern California and the Gulf Coast
region. The Sheridan acquisition provided the initial management
team and operational infrastructure to evaluate and acquire oil
and gas reserves to keep pace with our growth in gas-fired power
plants. In December 1999, we added Vintage Petroleum,
Inc.&#146;s interest in the Rio Vista Gas Unit and related
areas, representing primarily natural gas reserves located in
the Sacramento Basin in northern California. Sheridan was merged
into Calpine in April 2000 and Calpine Natural Gas L.P.
(&#147;CNGLP&#148;) was subsequently established to manage our
oil and gas properties in the U.S.&nbsp;On April&nbsp;19, 2001,
we completed a merger with Encal Energy Ltd., a Calgary,
Alberta-based natural gas and petroleum exploration and
development company. Upon completion of the acquisition, we
gained approximately 664&nbsp;Bcfe of proved natural gas
reserves, net of royalties. This transaction also provided
access to firm gas transportation capacity from Western Canada
to California and the eastern U.S.&nbsp;On October&nbsp;22,
2001, we completed the acquisition of 100% of the voting stock
of Michael Petroleum Corporation, a natural gas exploration and
production company. The acquired assets consisted of
approximately 531&nbsp;wells, producing approximately
33.5&nbsp;Mmcfe per day totaling approximately 82,590&nbsp;net
acres.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2002, 2003 and 2004, certain divestments were completed to
further focus operations on gas production and to enhance
liquidity. In October 2003 we established the Calpine Natural
Gas Trust (&#147;CNGT&#148;) by selling a portion of our
Canadian reserves to the publicly traded trust. We retained a
25% interest in CNGT, which had proved reserves of approximately
72&nbsp;Bcfe (18&nbsp;Bcfe, net to Calpine&#146;s equity
interest) at December&nbsp;31, 2003. In September 2004 we sold
our Rocky Mountain gas reserves in the New Mexico San&nbsp;Juan
Basin and Colorado Piceance Basin for approximately
$218.7&nbsp;million in net cash. Contemporaneously, we completed
the sale of our Canadian natural gas reserves and petroleum
assets, including the 25% interest in CNGT, for approximately
Cdn$841.7&nbsp;million (US$651.4&nbsp;million) in net cash.
These divestments are discussed in detail under Note&nbsp;10 of
the Notes to Consolidated Financial Statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Equity equivalent net production from U.S.&nbsp;continuing
operations averaged approximately 112&nbsp;MMcfe/day for the
year ended December&nbsp;31, 2004, enough to fuel approximately
1,340&nbsp;MW of our power plant fleet, assuming an average
capacity factor of 50%. We are currently (in March 2005) capable
of producing, net to Calpine&#146;s interest, approximately
89&nbsp;MMcfe of natural gas per day.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the year ended December&nbsp;31, 2004, we recorded
impairment charges of $202.1&nbsp;million related to reduced
proved reserve projections based on the year end independent
engineer&#146;s report. See Note&nbsp;4 of the Notes to
Consolidated Financial Statements for more information on the
impairment charge.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>MARKETING, HEDGING, OPTIMIZATION, AND TRADING ACTIVITIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Most of the electric power generated by our plants is
transferred to our marketing and risk management unit, CES,
which sells it to load-serving entities such as utilities,
industrial and large retail end users, and to other third
parties including power trading and marketing companies. Because
a sufficiently liquid market does not exist for electricity
financial instruments (typically, exchange and over-the-counter
traded contracts that net settle rather than entail physical
delivery) at most of the locations where we sell power, CES also
enters into physical purchase and sale transactions as part of
its hedging, balancing and optimization activities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The hedging, balancing and optimization activities that we
engage in are directly related to exposures that arise from our
ownership and operation of power plants and gas reserves and are
designed to protect or enhance our &#147;spark spread&#148; (the
difference between our fuel cost and the revenue we receive for
our electric
</DIV>

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generation). In many of these transactions CES purchases and
resells power and gas in contracts with third parties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We utilize derivatives, which are defined in Statement of
Financial Accounting Standards (&#147;SFAS&#148;) No.&nbsp;133,
&#147;Accounting for Derivative Instruments and Hedging
Activities,&#148; (&#147;SFAS No.&nbsp;133&#148;) as amended by
SFAS&nbsp;No.&nbsp;138, &#147;Accounting for Certain Derivative
Investments,&#148; (&#147;SFAS No.&nbsp;138&#148;) and
SFAS&nbsp;No.&nbsp;149, &#147;Amendment of Statement 133 on
Derivative Investment Hedging Activities,&#148; (&#147;SFAS
No.&nbsp;149&#148;) to include many physical commodity contracts
and commodity financial instruments such as exchange-traded
swaps and forward contracts, to optimize the returns that we are
able to achieve from our power and gas assets. From time to time
we have entered into contracts considered energy trading
contracts under Emerging Issues Task Force (&#147;EITF&#148;)
Issue No.&nbsp;02-03, &#147;Issues Related to Accounting for
Contracts Involved in Energy Trading and Risk Management
Activities&#148; (&#147;EITF Issue No.&nbsp;02-03&#148;).
However, our risk managers have low capital at risk and value at
risk limits for energy trading, and our risk management policy
limits, at any given time, our net sales of power to our
generation capacity and limits our net purchases of gas to our
fuel consumption requirements on a total portfolio basis. This
model is markedly different from that of companies that engage
in significant commodity trading operations that are unrelated
to underlying physical assets. Derivative commodity instruments
are accounted for under the requirements of
SFAS&nbsp;No.&nbsp;133. The EITF reached a consensus under EITF
Issue No.&nbsp;02-03 that gains and losses on derivative
instruments within the scope of SFAS&nbsp;No.&nbsp;133 should be
shown net in the income statement if the derivative instruments
are held for trading purposes. In addition we present on a net
basis certain types of hedging, balancing and optimization
revenues and costs of revenue under EITF Issue No.&nbsp;03-11,
&#147;Reporting Realized Gains and Losses on Derivative
Instruments That Are Subject to FASB Statement No.&nbsp;133 and
Not &#145;Held for Trading Purposes&#146; As Defined in EITF
Issue No.&nbsp;02-03: &#145;Issues Involved in Accounting for
Derivative Contracts Held for Trading Purposes and Contracts
Involved in Energy Trading and Risk Management
Activities&#146;&nbsp;&#148; (&#147;EITF Issue
No.&nbsp;03-11&#148;), which we adopted prospectively on
October&nbsp;1, 2003. See Item&nbsp;7&nbsp;&#151;
&#147;Management&#146;s Discussion and Analysis&nbsp;&#151;
Application of Critical Accounting Policies&#148; and
Note&nbsp;2 to the Consolidated Financial Statements for a
discussion of the effects of adopting this standard.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In some instances economic hedges may not be designated as
hedges for accounting purposes. An example of an economic hedge
that is not a hedge for accounting purposes would be a long-term
fixed price electric sales contract that economically hedges us
against the risk of falling electric prices, but which for
accounting purposes can be exempted from derivative accounting
under SFAS&nbsp;No.&nbsp;133 as a normal purchase and sale. For
a further discussion of our derivative accounting methodology,
see Item&nbsp;7&nbsp;&#151; &#147;Management&#146;s Discussion
and Analysis of Financial Condition and Results of
Operation&nbsp;&#151; Application of Critical Accounting
Policies.&#148;
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>GOVERNMENT REGULATION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We are subject to complex and stringent energy, environmental
and other governmental laws and regulations at the federal,
state and local levels in connection with the development,
ownership and operation of our energy generation facilities.
Federal laws and regulations govern transactions by electric and
gas utility companies, the types of fuel which may be utilized
by an electricity generating plant, the type of energy which may
be produced by such a plant, the ownership of a plant, and
access to and service on the transmission grid. In most
instances, public utilities that serve retail customers are
subject to rate regulation by the state&#146;s related utility
regulatory commission. A state utility regulatory commission is
often primarily responsible for determining whether a public
utility may recover the costs of wholesale electricity purchases
or other supply procurement-related activities through the
retail rates the utility charges its customers. The state
utility regulatory commission may, from time to time, impose
restrictions or limitations on the manner in which a public
utility may transact with wholesale power sellers, such as
independent power producers. Under certain circumstances where
specific exemptions are otherwise unavailable, state utility
regulatory commissions may have broad jurisdiction over
non-utility electric power plants. Energy producing facilities
also are subject to federal, state and local laws and
administrative regulations which govern the emissions and other
substances produced, discharged or disposed of by a plant and
the geographical location, zoning, land use and operation of a
plant. Applicable federal environmental laws typically have both
state and local enforcement and
</DIV>

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implementation provisions. These environmental laws and
regulations generally require that a wide variety of permits and
other approvals be obtained before the commencement of
construction or operation of an energy producing facility and
that the facility then operate in compliance with such permits
and approvals.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In light of the circumstances in California, the Pacific Gas and
Electric Company (&#147;PG&#38;E&#148;) bankruptcy and the Enron
Corp. (&#147;Enron&#148;) bankruptcy, among other events in
recent years, there are a number of federal legislative and
regulatory initiatives that could result in changes in how the
energy markets are regulated. We do not know whether these
legislative and regulatory initiatives will be adopted or, if
adopted, what form they may take. We cannot provide assurance
that any legislation or regulation ultimately adopted would not
adversely affect our existing projects. See the risk factors set
forth under &#147;&#151;&nbsp;Risk Factors&nbsp;&#151;
California Power Market&#148; and &#147;&#151;&nbsp;Government
Regulations.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Federal Energy Regulation</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD><B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></TD>
    <TD>
    <B><I>PURPA</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Public Utility Regulatory Policies Act of 1978, as amended
(&#147;PURPA&#148;), and the regulations adopted thereunder by
the Federal Energy Regulatory Commission (&#147;FERC&#148;)
provide certain incentives for cogeneration facilities and small
power production facilities, which satisfy FERC&#146;s criteria
for qualifying facility status (&#147;QFs&#148;). First,
FERC&#146;s implementing regulations exempt most QFs from the
Public Utility Holding Company Act of 1935, as amended
(&#147;PUHCA&#148;), many provisions of the Federal Power Act
(&#147;FPA&#148;), and state laws concerning rate, financial,
and organizational regulation. These exemptions are important to
us and our competitors. Second, FERC&#146;s regulations require
that electric utilities purchase electricity generated by QFs at
a price based on the purchasing utility&#146;s avoided cost, and
that the utility sell back-up power to the QF on a
non-discriminatory basis. FERC&#146;s regulations define
&#147;avoided costs&#148; as the incremental costs to an
electric utility of electric energy or capacity, or both, which,
but for the purchase from QFs, such utility would generate
itself or purchase from another source.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
To be a QF, a cogeneration facility must produce electricity and
useful thermal energy for an industrial or commercial process or
heating or cooling applications in certain proportions to the
facility&#146;s total energy output, and must meet certain
efficiency standards. A geothermal small power production
facility may qualify as a QF if, in most cases, its generating
capability does not exceed 80 megawatts. Finally, no more than
50% of the equity of a QF can be owned by one or more electric
utilities or their affiliates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We believe that each of the facilities in which we own an
interest and which operates as a QF meets or will meet the
requirements for QF status. Certain factors necessary to
maintain QF status are, however, subject to the risk of events
outside our control. For example, some of our facilities have
temporarily been rendered incapable of meeting such requirements
due to the loss of a thermal energy customer and we have
obtained limited waivers (for up to two years) of the applicable
QF requirements from FERC. We cannot provide assurance that such
waivers will in every case be granted. During any such waiver
period, we would seek to replace the thermal energy customer or
find another use for the thermal energy which meets PURPA&#146;s
requirements, but no assurance can be given that these remedial
actions would be available.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If one of our facilities should lose its QF status, the facility
would no longer be entitled to the exemptions from PUHCA and the
FPA. Loss of QF status could also trigger certain rights of
termination under the facility&#146;s power sales agreement,
could subject the facility to rate regulation as a public
utility under the FPA and state law, and could result in us
inadvertently becoming an electric utility holding company by
owning more than 10% of the voting securities of, or
controlling, a public utility company that would no longer be
exempt from PUHCA. Loss of the PUHCA exemption could cause all
of our remaining QFs to lose their respective QF status, because
no more than 50% of a QF&#146;s equity may be owned by such
electric utility holding companies. Loss of QF status may also
trigger defaults under covenants to maintain QF status in the
projects&#146; power sales agreements, steam sales agreements
and financing agreements and may result in termination,
penalties or acceleration of indebtedness under such agreements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under Section&nbsp;32 of PUHCA, the owner of a facility can
become an Exempt Wholesale Generator (&#147;EWG&#148;) if the
owner is engaged directly, or indirectly through one or more
affiliates, and exclusively in the
</DIV>

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business of owning and/or operating an eligible electric
generating facility and all of the facility&#146;s output is
sold at wholesale for resale rather than directly to end users.
As an EWG, the owner of the eligible generating facility is
exempt from PUHCA even if the generating facility does not
qualify as a QF. Therefore, another possible response to the
loss or potential loss of QF status would be to apply to have
the facility&#146;s owner qualify as an EWG. However, assuming
this changed status would be permissible under the terms of the
applicable power sales agreement, rate approval from FERC would
be required. In addition, the facility would be required to
cease selling electricity to any retail electric customers (such
as the thermal energy customer) to retain its EWG status.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Public Utility Holding Company Regulation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under PUHCA, any corporation, partnership or other defined
entity which owns or controls 10% or more of the outstanding
voting securities of a public utility company, or a company
which is a holding company for a public utility company, is
subject to registration with the Securities and Exchange
Commission (&#147;SEC&#148;) and regulation under PUHCA, unless
eligible for an exemption or unless an appropriate application
is filed with, and an order is granted by, the SEC declaring the
applicant not to be a holding company. A holding company of a
public utility company that is subject to registration is
required by PUHCA to limit its utility operations to a single
integrated utility system and to divest any other operations not
functionally related to the operation of that utility system.
Approval by the SEC is required for nearly all important
financial and business transactions to be conducted by a
registered holding company. Under PURPA, most QFs are exempt
from regulation under PUHCA.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Energy Policy Act of 1992, among other things, amends PUHCA
to allow EWGs, under certain circumstances, to own and operate
non-QF electric generating facilities without subjecting those
producers to registration or regulation under PUHCA. The effect
of such amendments has been to enhance the development of
non-QFs which do not have to meet the fuel, production and
ownership requirements of PURPA. We believe that these
amendments benefit us by expanding our ability to own and
operate facilities that do not qualify for QF status. However,
the creation of an EWG class of generators has also resulted in
increased competition by allowing utilities and their affiliates
to develop such facilities which are not subject to the
constraints of PUHCA.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Federal Natural Gas Transportation Regulation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have an ownership interest in 84 gas-fired power plants in
operation or under construction. The cost of natural gas is
ordinarily the largest expense of a gas-fired project and is
critical to the project&#146;s economics. The risks associated
with using natural gas can include the need to arrange
gathering, processing, extraction, blending, and storage, as
well as transportation of the gas from great distances,
including obtaining removal, export and import authority if the
gas is transported from Canada; the possibility of interruption
of the gas supply or transportation (depending on the quality of
the gas reserves purchased or dedicated to the project, the
financial and operating strength of the gas supplier, whether
firm or non-firm transportation is purchased and the operations
of the gas pipeline); and obligations to take a minimum quantity
of gas and pay for it (i.e., take-and-pay obligations).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the Natural Gas Act, FERC has jurisdiction over the
transportation and storage of natural gas in interstate
commerce. With respect to most transactions that do not involve
the construction of pipeline facilities, regulatory
authorization can be obtained on a self-implementing basis.
However, interstate pipeline rates and terms and conditions for
such services are subject to continuing FERC oversight.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Federal Power Act Regulation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under the Federal Power Act (&#147;FPA&#148;), FERC is
authorized to regulate the transmission of electric energy and
the sale of electric energy at wholesale in interstate commerce.
Unless otherwise exempt, any person that owns or operates
facilities used for such purposes is a public utility subject to
FERC jurisdiction. FERC regulation under the FPA includes
approval of the disposition of FERC-jurisdictional utility
property, authorization of the issuance of securities by public
utilities, regulation of the rates, terms and conditions for
</DIV>

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<DIV align="left" style="font-size: 10pt;">
the transmission or sale of electric energy at wholesale in
interstate commerce, the regulation of interlocking
directorates, and the imposition of a uniform system of accounts
and reporting requirements for public utilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
FERC regulations implementing PURPA provide that a QF is exempt
from regulation under the foregoing provisions of the FPA. An
EWG is not exempt from the FPA and therefore an EWG that makes
sales of electric energy at wholesale in interstate commerce is
subject to FERC regulation as a public utility. However, many of
the regulations which customarily apply to traditional public
utilities have been waived or relaxed for EWGs and other
non-traditional public utilities that can demonstrate that they
cannot exercise market power. Upon making the necessary showing,
EWGs meeting FERC&#146;s requirements are granted authorization
to charge market-based rates, blanket authority to issue
securities, and waivers of certain FERC requirements pertaining
to accounts, reports and interlocking directorates. The granting
of such authorities and waivers is intended to implement
FERC&#146;s policy to foster a more competitive wholesale power
market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Many of the generating projects in which we own an interest are
or will be operated as QFs and therefore are or will be exempt
from FERC regulation under the FPA. However, the majority of our
generating projects are or will be EWGs, most of which are or
will be subject to FERC jurisdiction under the FPA. Several of
our affiliates have been granted authority to engage in sales at
market-based rates and blanket authority to issue securities,
and have also been granted certain waivers of FERC regulations
available to non-traditional public utilities; however, we
cannot assure that such authorities or waivers will not be
revoked for these affiliates or will be granted in the future to
other affiliates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Federal Open Access Electric Transmission Regulation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 1996, FERC issued Order Nos.&nbsp;888 and 889, introducing
competitive reforms and increasing access to the electric power
grid. Order No.&nbsp;888 required the &#147;functional
unbundling&#148; of transmission and generation assets by the
transmission-owning utilities subject to its jurisdiction. Under
Order No.&nbsp;888, the jurisdictional transmission-owning
utilities, and many non-jurisdictional transmission owners
(through reciprocity requirements), were required to adopt
FERC&#146;s pro forma open access transmission tariff
establishing terms of non-discriminatory transmission service.
Order No.&nbsp;889 required transmission-owning utilities to
provide the public with an electronic system for buying and
selling transmission capacity in transactions with the utilities
and abide by specific standards of conduct when using their
transmission systems to make wholesale sales of power. In
addition, these orders established the operational requirements
of Independent System Operators (&#147;ISO&#148;), which are
entities that have been given authority to operate the
transmission assets of certain jurisdictional and
non-jurisdictional utilities in a particular region. The
interpretation and application of the requirements of Order Nos.
888 and 889 continues to be refined through subsequent FERC
proceedings. These orders have been subject to review, and those
parts of the orders that have been the subject of judicial
appeals have been affirmed, in large part, by the courts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition to its Open Access efforts under Order Nos. 888 and
889, our business can be affected by a variety of other FERC
policies and proposals, including Order No.&nbsp;2000, issued in
December 1999, which was designed to encourage the voluntary
formation of Regional Transmission Organizations; a proposed
&#147;Standard Market Design,&#148; issued in July 2002 under
which the allocation of transmission capacity, the dispatch of
generation in light of transmission constraints, the
coordination of transmission upgrades and allocation of
associated costs, and other issues would be addressed through a
set of standard rules; and Order No.&nbsp;2003, issued in July
2003, which established uniform procedures for generator
interconnection to the transmission grid. All of these policies
and proposals continue to evolve, and FERC may amend or revise
them, or may introduce new policies or proposals, in the future.
In addition, such policies and proposals, in their final form,
would be subject to potential judicial review. The impact of
such policies and proposals on our business is uncertain and
cannot be predicted at this time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Western Energy Markets</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
There was significant price volatility in both wholesale
electricity and gas markets in the Western United States for
much of calendar year 2000 and extending through the second
quarter of 2001. Due to a number of
</DIV>

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<DIV align="left" style="font-size: 10pt;">
factors, including drier than expected weather, which led to
lower than normal hydro-electric capacity in California and the
Northwestern United States, inadequate natural gas pipeline and
electric generation capacity to meet higher than anticipated
energy demand in the region, the inability of the California
utilities to manage their exposure to such price volatility due
to regulatory and financial constraints, and evolving market
structures in California, prices for electricity and natural gas
were much higher than anticipated. A number of federal and state
investigations and proceedings were commenced to address the
crisis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
There are currently a number of proceedings pending at FERC
which were initiated as a direct result of the price levels and
volatility in the energy markets in the Western United States
during this period. Many of these proceedings were initiated by
buyers of wholesale electricity seeking refunds for purchases
made during this period or the reduction of price terms in
contracts entered into at this time. We have been a party to
some of these proceedings. See &#147;&#151;&nbsp;Risk
Factors&nbsp;&#151; California Power Market&#148; and
&#147;Legal Proceedings&#148; in Note&nbsp;25 of the Notes to
Consolidated Financial Statements. As part of certain
proceedings, and as a result of its own investigations, FERC has
ordered the implementation of certain measures for wholesale
electricity markets in California and the Western United States,
including, the implementation of price caps on the day ahead or
real-time prices for electricity and a continuing obligation of
electricity generators to offer uncommitted generation capacity
to the California Independent System Operator. FERC is
continuing to investigate the causes of the price volatility in
the Western United States during this period. It is uncertain at
this time when these proceedings and investigations at FERC will
conclude or what will be the final resolution thereof. See
&#147;&#151;&nbsp;Risk Factors&nbsp;&#151; California Power
Market&#148; below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Other federal and state governmental entities have and continue
to conduct various investigations into the causes of the price
volatility in the energy markets in the Western United States
during 2000-2001. It is uncertain at this time when these
investigations will conclude or what the results may be. The
impact on our business of the results of the investigations
cannot be predicted at this time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>State Regulation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
State public utility commissions (&#147;PUCs&#148;) have
historically had broad authority to regulate both the rates
charged by, and the financial activities of, electric utilities
operating in their states and to promulgate regulation for
implementation of PURPA. Since a power sales agreement becomes a
part of a utility&#146;s cost structure (generally reflected in
its retail rates), power sales agreements with independent
electricity producers, such as EWGs, are potentially under the
regulatory purview of PUCs and in particular the process by
which the utility has entered into the power sales agreements.
If a PUC has approved the process by which a utility secures its
power supply, a PUC is generally inclined to authorize the
purchasing utility to pass through to the utility&#146;s retail
customers the expenses associated with a power purchase
agreement with an independent power producer. However, a
regulatory commission under certain circumstances may not allow
the utility to recover through retail rates its full costs to
purchase power from a QF or an EWG. In addition, retail sales of
electricity or thermal energy by an independent power producer
may be subject to PUC regulation depending on state law.
Independent power producers which are not QFs under PURPA, or
EWGs pursuant to the Energy Policy Act of 1992, are considered
to be public utilities in many states and are subject to broad
regulation by a PUC, ranging from requirement of certificate of
public convenience and necessity to regulation of
organizational, accounting, financial and other corporate
matters. Because all of Calpine&#146;s affiliates are either QFs
or EWGs, none of its affiliates are currently subject to such
regulation. However, states may also assert jurisdiction over
the siting and construction of electricity generating facilities
including QFs and EWGs and, with the exception of QFs, over the
issuance of securities and the sale or other transfer of assets
by these facilities. In California, for example, the PUC has
been required by statute to adopt and enforce maintenance and
operation standards for generating facilities &#147;located in
the state,&#148; including EWGs but excluding QFs, for the
purpose of ensuring their reliable operation. The adopted
standards are now in effect.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
State PUCs also have jurisdiction over the transportation of
natural gas by local distribution companies (&#147;LDCs&#148;).
Each state&#146;s regulatory laws are somewhat different;
however, all generally require the LDC to obtain approval from
the PUC for the construction of facilities and transportation
services if the LDCs generally applicable tariffs do not cover
the proposed transaction. LDC rates are usually subject to
continuing
</DIV>

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<DIV align="left" style="font-size: 10pt;">
PUC oversight. We own and operate numerous midstream assets in a
number of states where we have plants and/or oil and gas
production.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Environmental Regulations</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The exploration for and development of geothermal resources,
oil, gas liquids and natural gas, and the construction and
operation of wells, fields, pipelines, various other mid-stream
facilities and equipment, and power projects, are subject to
extensive federal, state and local laws and regulations adopted
for the protection of the environment and to regulate land use.
The laws and regulations applicable to us primarily involve the
discharge of emissions into the water and air and the use of
water, but can also include wetlands preservation, endangered
species, hazardous materials handling and disposal, waste
disposal and noise regulations. These laws and regulations in
many cases require a lengthy and complex process of obtaining
licenses, permits and approvals from federal, state and local
agencies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Noncompliance with environmental laws and regulations can result
in the imposition of civil or criminal fines or penalties. In
some instances, environmental laws also may impose clean-up or
other remedial obligations in the event of a release of
pollutants or contaminants into the environment. The following
federal laws are among the more significant environmental laws
as they apply to us. In most cases, analogous state laws also
exist that may impose similar, and in some cases more stringent,
requirements on us as those discussed below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Clean Air Act</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Federal Clean Air Act of 1970 (&#147;the Clean Air
Act&#148;) provides for the regulation, largely through state
implementation of federal requirements, of emissions of air
pollutants from certain facilities and operations. As originally
enacted, the Clean Air Act sets guidelines for emissions
standards for major pollutants (i.e., sulfur dioxide and
nitrogen oxide) from newly built sources. In late 1990, Congress
passed the Clean Air Act Amendments (&#147;the 1990
Amendments&#148;). The 1990 Amendments attempt to reduce
emissions from existing sources, particularly previously
exempted older power plants. We believe that all of our
operating plants and relevant oil and gas related facilities are
in compliance with federal performance standards mandated under
the Clean Air Act and the 1990 Amendments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Clean Water Act</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Federal Clean Water Act (the &#147;Clean Water Act&#148;)
establishes rules regulating the discharge of pollutants into
waters of the United States. We are required to obtain
wastewater and storm water discharge permits for wastewater and
runoff, respectively, from certain of our facilities. We believe
that, with respect to our geothermal and oil and gas operations,
we are exempt from newly promulgated federal storm water
requirements. We are required to maintain a spill prevention
control and countermeasure plan with respect to certain of our
oil and gas facilities. We believe that we are in material
compliance with applicable discharge requirements of the Clean
Water Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Oil Pollution Act of 1990</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Oil Pollution Act of 1990 (&#147;OPA&#148;) applies to our
offshore facilities in the U.S.&nbsp;Gulf of Mexico regulating
oil pollution prevention measures and financial responsibility
requirements. We believe that we are in material compliance with
applicable OPA requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Safe Drinking Water Act</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Part&nbsp;C of the Safe Water Drinking Act (&#147;SWDA&#148;)
mandates the underground injection control (&#147;UIC&#148;)
program. The UIC regulates the disposal of wastes by means of
deep well injection. Deep well injection is a common method of
disposing of saltwater, produced water and other oil and gas
wastes. We believe that we are in material compliance with
applicable UIC requirements of the SWDA.
</DIV>

<P align="center" style="font-size: 10pt;">25

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Resource Conservation and Recovery Act</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Resource Conservation and Recovery Act (&#147;RCRA&#148;)
regulates the generation, treatment, storage, handling,
transportation and disposal of solid and hazardous waste. We
believe that we are exempt from solid waste requirements under
RCRA. However, particularly with respect to our solid waste
disposal practices at the power generation facilities and steam
fields located at The Geysers, we are subject to certain solid
waste requirements under applicable California laws. Based on
the exploration and production exception, many oil and gas
wastes are exempt from hazardous wastes regulation under RCRA.
For those wastes generated in association with the exploration
and production of oil and gas which are classified as hazardous
wastes, we undertake to comply with the RCRA requirements for
identification and disposal. Various state environmental and
safety laws also regulate the oil and gas industry. We believe
that our operations are in material compliance with RCRA and all
such laws.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Comprehensive Environmental Response, Compensation, and
Liability Act</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (&#147;CERCLA&#148; or
&#147;Superfund&#148;), requires cleanup of sites from which
there has been a release or threatened release of hazardous
substances and authorizes the United States Environmental
Protection Agency to take any necessary response action at
Superfund sites, including ordering potentially responsible
parties (&#147;PRPs&#148;) liable for the release to take or pay
for such actions. PRPs are broadly defined under CERCLA to
include past and present owners and operators of, as well as
generators of wastes sent to, a site. As of the present time, we
are not subject to liability for any Superfund matters. However,
we generate certain wastes, including hazardous wastes, and send
certain of our wastes to third party waste disposal sites. As a
result, there can be no assurance that we will not incur
liability under CERCLA in the future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Canadian Environmental, Health and Safety Regulations</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our Canadian power projects are also subject to extensive
federal, provincial and local laws and regulations adopted for
the protection of the environment and to regulate land use. We
believe that we are in material compliance with all applicable
requirements under Canadian law related to same.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Regulation of Canadian Gas</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Canadian natural gas industry is subject to extensive
regulation by federal and provincial authorities. At the federal
level, a party exporting gas from Canada must obtain an export
license from the National Energy Board (&#147;NEB&#148;). The
NEB also regulates Canadian pipeline transportation rates and
the construction of pipeline facilities. Gas producers also must
obtain a removal permit or license from each provincial
authority before natural gas may be removed from the province,
and provincial authorities regulate intra-provincial pipeline
and gathering systems. In addition, a party importing natural
gas into the United States or exporting natural gas from the
United States first must obtain an import or export
authorization from the U.S.&nbsp;Department of Energy.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Regulation of U.S.&nbsp;Gas</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The U.S.&nbsp;natural gas industry is subject to extensive
regulation by federal, state and local authorities. Calpine
holds onshore and offshore federal leases involving the
U.S.&nbsp;Dept. of Interior (Bureau of Land Management, Bureau
of Indian Affairs and the Minerals Management Service). At the
federal level, various federal rules, regulations and procedures
apply, including those issued by the U.S.&nbsp;Dept. of Interior
as noted above, and the U.S.&nbsp;Dept. of Transportation
(U.S.&nbsp;Coast Guard and Office of Pipeline Safety). At the
state and local level, various agencies and commissions regulate
drilling, production and midstream activities. We have state and
private oil and gas leases covering developed and undeveloped
properties located in Arkansas, California, Colorado, Kansas,
Louisiana, Mississippi, Missouri, Montana, New Mexico, Oklahoma,
Texas and Wyoming. These federal, state and local authorities
have various permitting, licensing and bonding requirements.
Varied remedies are available for enforcement of these federal,
state and local rules, regulations and procedures, including
fines, penalties, revocation of permits and licenses, actions
affecting the value of
</DIV>

<P align="center" style="font-size: 10pt;">26
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<DIV align="left" style="font-size: 10pt;">
leases, wells or other assets, and suspension of production. As
a result, there can be no assurance that we will not incur
liability for fines and penalties or otherwise subject us to the
various remedies as are available to these federal, state and
local authorities. However, we believe that we are currently in
material compliance with these federal, state and local rules,
regulations and procedures.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>RISK FACTORS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Capital Resources; Liquidity</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>We must meet ongoing debt obligations.</I> We have
substantial indebtedness that we incurred to finance the
acquisition and development of power generation facilities that
we may be unable to service and that restricts our activities.
As of December&nbsp;31, 2004, our total consolidated funded debt
was $18.0&nbsp;billion, our total consolidated assets were
$27.2&nbsp;billion and our stockholders&#146; equity was
$4.5&nbsp;billion. Whether we will be able to meet our debt
service obligations and repay, extend, or refinance our
outstanding indebtedness will be dependent primarily upon the
operational performance of our power generation facilities and
of our oil and gas properties, movements in electric and natural
gas prices over time, and our marketing and risk management
activities, as well as general economic, financial, competitive,
legislative, regulatory and other factors that are beyond our
control.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This high level of indebtedness has important consequences,
including:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    limiting our ability to borrow additional amounts for working
    capital, capital expenditures, debt service requirements,
    execution of our growth strategy, or other purposes;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    limiting our ability to use operating cash flow in other areas
    of our business because we must dedicate a substantial portion
    of these funds to service the debt;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    increasing our vulnerability to general adverse economic and
    industry conditions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    limiting our ability to capitalize on business opportunities and
    to react to competitive pressures and adverse changes in
    government regulation;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    limiting our ability or increasing the costs to refinance
    indebtedness;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    limiting our ability to enter into marketing, hedging,
    optimization and trading transactions by reducing the number of
    counterparties with whom we can transact as well as the volume
    of those transactions.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Our debt instruments impose significant operating and
financial restrictions on us; any failure to comply with these
restrictions could have a material adverse effect on our
liquidity and our operations.</I> The indentures and other
instruments governing our outstanding debt impose significant
operating and financial restrictions on us. These restrictions
could adversely affect us by limiting our ability to plan for or
react to market conditions or to meet our capital needs. These
restrictions limit or prohibit our ability to, among other
things:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    incur additional indebtedness and issue preferred stock;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    make prepayments on or purchase indebtedness in whole or in part;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    pay dividends and other distributions with respect to our
    capital stock or repurchase our capital stock or make other
    restricted payments;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    make certain investments;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    enter into transactions with affiliates;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    create or incur liens to secure debt;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    consolidate or merge with another entity, or allow one of our
    subsidiaries to do so;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    lease, transfer or sell assets and use proceeds of permitted
    asset leases, transfers or sales;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">27
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<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    incur dividend or other payment restrictions affecting certain
    subsidiaries;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    make capital expenditures;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    engage in certain business activities;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    acquire facilities or other businesses.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In particular, the covenants in certain of our existing debt
agreements currently impose the following restrictions on our
activities:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Certain of our indentures place conditions on our ability to
    issue indebtedness if our interest coverage ratio (as defined in
    those indentures) is below 2:1. Currently, our interest coverage
    ratio (as so defined) is below 2:1 and, consequently, we
    generally would not be allowed to issue new debt, except for
    (i)&nbsp;certain types of new indebtedness that refinances or
    replaces existing indebtedness, and (ii)&nbsp;non-recourse debt
    and preferred equity interests issued by our subsidiaries for
    purposes of financing certain types of capital expenditures,
    including plant development, construction and acquisition
    expenses. In addition, if and so long as our interest coverage
    ratio is below 2:1, our ability to invest in unrestricted
    subsidiaries and non-subsidiary affiliates and make certain
    other types of restricted payments will be limited. Moreover,
    certain of our indentures will prohibit any further investments
    in non-subsidiary affiliates if and for so long as our interest
    coverage ratio (as defined therein) is below 1.75:1 and, as of
    December&nbsp;31, 2004, such interest coverage ratio had fallen
    below 1.75:1.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Certain of our indebtedness issued in the last half of 2004 was
    permitted under our indentures on the basis that the proceeds
    would be used to repurchase or redeem existing indebtedness.
    While we completed a portion of such repurchases during the
    fourth quarter of 2004 and the first quarter of 2005, we are
    still in the process of completing the required amount of
    repurchases. While the amount of indebtedness that must still be
    repurchased will ultimately depend on the market price of our
    outstanding indebtedness at the time the indebtedness is
    repurchased, based on current market conditions, we currently
    anticipate that we will spend up to approximately
    $202.9&nbsp;million on additional repurchases in order to fully
    satisfy this requirement. Our bond purchase requirement was
    estimated to be approximately $270&nbsp;million as of
    December&nbsp;31, 2004, and this amount has been classified as a
    current liability on our consolidated balance sheet.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    When we or one of our subsidiaries sells a significant asset or
    issues preferred equity, our indentures generally require that
    the net proceeds of the transaction be used to make capital
    expenditures or to repurchase or repay certain types of
    subsidiary indebtedness, in each case within 365&nbsp;days of
    the closing date of the transaction. In light of this
    requirement, and taking into account the amount of capital
    expenditures currently budgeted for 2005, we anticipate that we
    will need to use approximately $250.0&nbsp;million of the net
    proceeds of the $360.0&nbsp;million Two-Year Redeemable
    Preferred Shares issued on October&nbsp;26, 2004 and
    approximately $200.0&nbsp;million of the net proceeds of the
    $260.0&nbsp;million Redeemable Preferred Shares issued on
    January&nbsp;31, 2005, to repurchase or repay certain subsidiary
    indebtedness. The $250.0&nbsp;million has been classified as a
    current liability on our consolidated balance sheet as of
    December&nbsp;31, 2004. The actual amount of the net proceeds
    that will be required to be used to repurchase or repay
    subsidiary debt will depend upon the actual amount of the net
    proceeds that is used to make capital expenditures, which may be
    more or less than the amount currently budgeted.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition: (a)&nbsp;if Calpine Corporation&#146;s ownership
changes, the indentures and other instruments governing
approximately $9.8&nbsp;billion of our senior notes and term
loans may require us to make an offer to purchase those senior
notes and term loans, (b)&nbsp;pursuant to the terms of the
indentures under which our contingent convertible senior notes
were issued, upon the occurrence of certain defined triggering
events (which include our common stock reaching certain price
levels), the holders of the notes have the right to require that
the notes be converted into a combination of cash (in an amount
equal to the par value of the notes so converted) and our common
shares (with respect to any additional value required to be
delivered to the holders) and (c)&nbsp;with respect to our
Contingent Convertible Notes due 2014, we may not make such
payments upon conversion unless we meet a specified ratio of
consolidated cash flow to fixed charges; currently, we do not
satisfy such ratio. We may not have the financial resources
necessary or may otherwise be
</DIV>

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<DIV align="left" style="font-size: 10pt;">
restricted from purchasing those senior notes and term loans, or
making such cash payments to holders of those contingent
convertible notes in these events.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our ability to comply with these covenants may be affected by
events beyond our control, and any material deviations from our
forecasts could require us to seek waivers or amendments of
covenants or alternative sources of financing or to reduce
expenditures. We cannot assure you that such waivers, amendments
or alternative financing could be obtained, or if obtained,
would be on terms acceptable to us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If we are unable to comply with the terms of our indentures and
other debt agreements, or if we fail to generate sufficient cash
flow from operations, or to refinance our debt as described
below, we may be required to refinance all or a portion of our
senior notes and other debt or to obtain additional financing or
sell additional assets. However, we may be unable to refinance
or obtain additional financing because of our already high
levels of debt and the debt incurrence restrictions under our
existing indentures and other debt agreements. If our cash flow
is insufficient and refinancing or additional financing is
unavailable, we may be forced to default on our senior notes and
other debt obligations. Such a default or other breach of the
covenants or restrictions contained in any of our existing or
future debt instruments could result in an event of default
under those instruments and, due to cross-default and
cross-acceleration provisions, under our other debt instruments.
Upon an event of default under our debt instruments, the debt
holders could elect to declare the entire debt outstanding
thereunder to be due and payable and could terminate any
commitments they had made to supply us with further funds. If
any of these events occur, we cannot assure you that we will
have sufficient funds available to repay in full the total
amount of obligations that become due as a result of any such
acceleration, or that we will be able to find additional or
alternative financing to refinance any accelerated obligations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>We must either repay or refinance our debt maturing in 2005
and 2006.</I> Since the latter half of 2001, there has been a
significant contraction in the availability of capital for
participants in the energy sector. This has been due to a range
of factors, including uncertainty arising from the collapse of
Enron and a perceived surplus of electric generating capacity.
These factors have continued through 2003 and 2004, during which
contracting credit markets and decreased spark spreads have
adversely impacted our liquidity and earnings. While we have
been able to access the capital and bank credit markets, it has
been on significantly different terms than in the past. We
recognize that terms of financing available to us in the future
may not be attractive. To protect against this possibility and
due to current market conditions, we scaled back our capital
expenditure program to enable us to conserve our available
capital resources.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2005, the following payments will be due on our outstanding
debt: (i)&nbsp;$186.1&nbsp;million in aggregate principal amount
of
8<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">4</FONT>%&nbsp;Senior
Notes Due 2005 (ii)&nbsp;$148.1&nbsp;million aggregate principal
amount of notes issued by our subsidiary Power Contract
Financing, L.L.C. (&#147;PCF&#148;) in connection with the
monetization of a power contract with California Department of
Water Resources (&#147;CDWR&#148;) and
(iii)&nbsp;$260.0&nbsp;million in Redeemable Preferred Shares
issued by our subsidiary Calpine European Financing (Jersey)
Limited; in 2006, the following payments will be due on our
outstanding debt: (i)&nbsp;$111.6&nbsp;million in aggregate
principal amount of
7<FONT style="font-size: 70%"><SUP>5</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%&nbsp;Senior
Notes Due 2006, (ii)&nbsp;$152.7&nbsp;million in aggregate
principal amount of
10<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT>%&nbsp;Senior
Notes Due 2006, (iii)&nbsp;$360.0&nbsp;million in Two-Year
Redeemable Preferred Shares issued by our subsidiary Calpine
(Jersey) Limited, and (iv)&nbsp;$155.9&nbsp;million in aggregate
principal amount of the notes issued by PCF in connection with
the CDWR power contract monetization. In addition, as of
December&nbsp;31, 2004, we have approximately
$181.2&nbsp;million and $163.8&nbsp;million of miscellaneous
debt and capital lease obligations that are maturing or for
which scheduled principal payments will be made in 2005 and
2006, respectively. As discussed above, we are also required to
repurchase or redeem approximately $520&nbsp;million of
indebtedness (current estimate) in the aggregate pursuant to our
indentures during 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, our $517.5&nbsp;million of outstanding HIGH
TIDES&nbsp;III (of which $115.0&nbsp;million have been
repurchased and are currently held by us) are scheduled to be
remarketed no later than August&nbsp;1, 2005. In the event of a
failed remarketing, the HIGH TIDES&nbsp;III, unless earlier
redeemed, will remain outstanding as convertible securities at a
term rate equal to the treasury rate plus 6%&nbsp;per annum and
with a term conversion price equal to 105% of the average
closing price of our common stock for the five consecutive
trading days after the applicable final failed remarketing
termination date. We currently anticipate refinancing all or a
</DIV>

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<DIV align="left" style="font-size: 10pt;">
portion of the outstanding HIGH TIDES prior to the scheduled
remarketing date, through the issuance of convertible debt or
another form of equity-linked security, possibly combined with a
share lending facility modeled after the Share Lending Agreement
we entered into on September&nbsp;30, 2004. We may also consider
using our common stock to effect stock-for-debt exchanges with,
or to raise cash to fund the purchase of HIGH TIDES from, some
of the existing holders of the outstanding HIGH TIDES.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We cannot assure you that our business will generate sufficient
cash flow from operations or that future borrowings will be
available to us in an amount sufficient to enable us to pay our
indebtedness when due, or to fund our other liquidity needs. We
may need to refinance all or a portion of our indebtedness, on
or before maturity. While we believe we will be successful in
repaying or refinancing all of our debt on or before maturity,
we cannot assure you that we will be able to do so.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>We may not have sufficient cash to service our indebtedness
and other liquidity requirements.</I> Our ability to make
payments on and to refinance our indebtedness, and to fund
planned capital expenditures and research and development
efforts, will depend on our ability to generate cash in the
future. To date, we have obtained cash from our operations;
borrowings under credit facilities; issuance of debt, equity,
trust preferred securities and convertible debentures and
contingent convertible notes; proceeds from sale/leaseback
transactions; sale or partial sale of certain assets; contract
monetizations and project financing. Taking into account our
construction program and other planned capital expenditures and
research and development, our debt service and repayment
obligations and our bond repurchase obligations described above,
we are currently projecting that unrestricted cash on hand
together with cash from operations will not by itself be
sufficient to meet our cash and liquidity needs for the year. We
have therefore continued, and expanded, our liquidity-enhancing
program, which program includes the possible sale or
monetization of certain of our assets. The success of this
liquidity program will depend on our being able to complete
these anticipated asset sale and monetization transactions,
which may in turn be impacted by a number of factors, including
general economic and capital market conditions; conditions in
energy markets; regulatory approvals and developments;
limitations imposed by our existing agreements; and other
factors, many of which are beyond our control. See also
&#147;&#151;&nbsp;We may be unable to secure additional
financing in the future.&#148; Some of the anticipated liquidity
transactions involve the monetization or prepayment of future
revenues and could therefore negatively impact cash flow in
future years. While we believe we will be successful in
completing a sufficient number of these anticipated
transactions, we cannot assure you that we will be able to do
so. Accordingly, we may not be able to generate sufficient cash
to meet all of our commitments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>We may be unable to secure additional financing in the
future.</I> Each power generation facility that we acquire or
develop will require substantial capital investment. Our ability
to arrange financing (including any extension or refinancing)
and the cost of the financing are dependent upon numerous
factors. Access to capital (including any extension or
refinancing) for participants in the energy sector, including
for us, has been significantly restricted since late 2001. Other
factors include:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    general economic and capital market conditions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    conditions in energy markets;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    regulatory developments;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    credit availability from banks or other lenders for us and our
    industry peers, as well as the economy in general;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    investor confidence in the industry and in us;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the continued success of our current power generation
    facilities;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    provisions of tax and securities laws that are conducive to
    raising capital.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have financed our existing power generation facilities using
a variety of leveraged financing structures, consisting of
senior secured and unsecured indebtedness, including
construction financing, project financing, revolving credit
facilities, term loans and lease obligations. As of
December&nbsp;31, 2004, we had approximately $18.0&nbsp;billion
of total consolidated funded debt, consisting of
$5.2&nbsp;billion of secured construction/project
</DIV>

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<DIV align="left" style="font-size: 10pt;">
financing, $0.3&nbsp;billion of capital lease obligations,
$9.2&nbsp;billion in senior notes and institutional term loans,
$1.3&nbsp;billion in convertible senior notes, $0.5&nbsp;billion
in preferred interests, $0.5&nbsp;billion of trust preferred
securities and $1.0&nbsp;billion of secured and unsecured notes
payable and borrowings under lines of credit. Additionally, we
had operating leases with an aggregate present value of future
minimum lease payments of $1.3&nbsp;billion. Each project
financing and lease obligation is structured to be fully paid
out of cash flow provided by the facility or facilities financed
or leased. In the event of a default under a financing agreement
which we do not cure, the lenders or lessors would generally
have rights to the facility and any related assets. In the event
of foreclosure after a default, we might not retain any interest
in the facility. While we intend to utilize non-recourse or
lease financing when appropriate, market conditions and other
factors may prevent similar financing for future facilities. It
is possible that we may be unable to obtain the financing
required to develop our power generation facilities on terms
satisfactory to us. In addition, if new debt is added to our
current debt levels, the risks associate with our substantial
leverage that we now face could intensify.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have from time to time guaranteed certain obligations of our
subsidiaries and other affiliates. Our lenders or lessors may
also seek to have us guarantee the indebtedness for future
facilities. Guarantees render our general corporate funds
vulnerable in the event of a default by the facility or related
subsidiary. Additionally, certain of our indentures may restrict
our ability to guarantee future debt, which could adversely
affect our ability to fund new facilities. Our indentures
generally do not limit the ability of our subsidiaries to incur
non-recourse or lease financing or to issue preferred stock for
investment in new facilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Our credit ratings have been downgraded and could be
downgraded further.</I> On September&nbsp;23, 2004,
Standard&nbsp;&#38; Poor&#146;s (&#147;S&#38;P&#148;) assigned
our first priority senior secured debt a rating of B+ and
reaffirmed their ratings on our second priority senior secured
debt at B, our corporate rating at B (with outlook negative),
our senior unsecured debt rating at CCC+, and our preferred
stock rating at CCC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On October&nbsp;4, 2004, Fitch, Inc. assigned our first priority
senior secured debt a rating of BB-. At that time, Fitch also
downgraded our second priority senior secured debt from BB- to
B+, downgraded our senior unsecured debt rating from B- to CCC+,
and reconfirmed our preferred stock rating at CCC. Fitch&#146;s
rating outlook for the Company is stable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Moody&#146;s Investors Service currently has a senior implied
rating on the Company of B2 (with a stable outlook), and rates
our senior unsecured debt at Caa1 and our preferred stock at
Caa3.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Many other issuers in the power generation sector have also been
downgraded by one or more of the ratings agencies during this
period. Such downgrades can have a negative impact on our
liquidity by reducing attractive financing opportunities and
increasing the amount of collateral required by trading
counterparties. We cannot assure you that Moody&#146;s, Fitch
and S&#38;P will not further downgrade our credit ratings in the
future. If our credit ratings are downgraded, we could be
required to, among other things, pay additional interest under
our credit agreements, or provide additional guarantees,
collateral, letters of credit or cash for credit support
obligations, and it could increase our cost of capital, make our
efforts to raise capital more difficult and have an adverse
impact on our subsidiaries&#146; and our business, financial
condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In light of our current credit ratings, many of our customers
and counterparties are requiring that our and our
subsidiaries&#146; obligations be secured by letters of credit
or cash. Banks issuing letters of credit for our or our
subsidiaries&#146; accounts are similarly requiring that the
reimbursement obligations be cash-collateralized. In a typical
commodities transaction, the amount of security that must be
posted can change depending on the mark-to-market value of the
transaction. These letter of credit and cash collateral
requirements increase our cost of doing business and could have
an adverse impact on our overall liquidity, particularly if
there were a call for a large amount of additional cash or
letter of credit collateral due to an unexpectedly large
movement in the market price of a commodity. We are exploring
with counterparties and financial institutions various
alternative approaches to credit support, including the
utilization of liens on our generating facilities and other
assets to secure our subsidiaries&#146; obligations under
certain power purchase agreements and other commercial
arrangements, in lieu of cash collateral or letter of credit
posting requirements. Such alternative arrangements could,
however, also add to our cost of doing business.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Our ability to repay our debt depends upon the performance of
our subsidiaries.</I> Almost all of our operations are conducted
through our subsidiaries and other affiliates. As a result, we
depend almost entirely upon their earnings and cash flow to
service our indebtedness, including our ability to pay the
interest and principal of our senior notes. The financing
agreements of certain of our subsidiaries and other affiliates
generally restrict their ability to pay dividends, make
distributions, or otherwise transfer funds to us prior to the
payment of their other obligations, including their outstanding
debt, operating expenses, lease payments and reserves. While
certain of our indentures and other debt instruments limit our
ability to enter into agreements that restrict our ability to
receive dividends and other distributions from our subsidiaries,
these limitations are subject to a number of significant
exceptions (including exceptions permitting such restrictions
arising out of subsidiary financings).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We may utilize project financing, preferred equity and other
types of subsidiary financing transactions when appropriate in
the future. Our indentures and other debt instruments place
limitations on our ability and the ability of our subsidiaries
to incur additional indebtedness. However, they permit our
subsidiaries to incur additional construction/project financing
indebtedness and to issue preferred stock to finance the
acquisition and development of new power generation facilities
and to engage in certain types of non-recourse financings and
issuance of preferred stock. If new subsidiary debt and
preferred stock is added to our current debt levels, the risks
associated with our substantial leverage that we now face could
intensify.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Our senior notes and our other senior debt are effectively
subordinated to all indebtedness and other liabilities of our
subsidiaries and other affiliates and may be effectively
subordinated to our secured debt to the extent of the assets
securing such debt.</I> Our subsidiaries and other affiliates
are separate and distinct legal entities and, except in limited
circumstances, have no obligation to pay any amounts due with
respect to our indebtedness or indebtedness of other
subsidiaries or affiliates, and do not guarantee the payment of
interest on or principal of such indebtedness. In the event of
our bankruptcy, liquidation or reorganization (or the
bankruptcy, liquidation or reorganization of a subsidiary or
affiliate), such subsidiaries&#146; or other affiliates&#146;
creditors, including trade creditors and holders of debt issued
by such subsidiaries or affiliates, will generally be entitled
to payment of their claims from the assets of those subsidiaries
or affiliates before any assets are made available for
distribution to us or the holders of our indebtedness. In
addition, we are also permitted to reorganize our subsidiaries
in a manner that allows creditors of one subsidiary to collect
against assets currently held by another subsidiary. As a
result, holders of our indebtedness will be effectively
subordinated to all present and future debts and other
liabilities (including trade payables) of our subsidiaries and
affiliates, and holders of debt of one of our subsidiaries or
affiliates will effectively be so subordinated with respect to
all of our other subsidiaries and affiliates. As of
December&nbsp;31, 2004, our subsidiaries had $5.2&nbsp;billion
of secured construction/project financing (including the Calpine
Construction Finance Company, L.P. (&#147;CCFC I&#148;) and
Calpine Generating Company, LLC (&#147;CalGen&#148;), formerly
Calpine Construction Finance Company&nbsp;II, LLC
(&#147;CCFC&nbsp;II&#148;), financings described below). We may
incur additional project financing indebtedness in the future,
which will be effectively senior to our other secured and
unsecured debt.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, our unsecured notes and our other unsecured debt
are effectively subordinated to all of our secured indebtedness
to the extent of the value of the assets securing such
indebtedness. Our secured indebtedness includes our
$785&nbsp;million first-priority senior secured notes and our
$3.7&nbsp;billion second-priority senior secured term loans and
notes. These notes and term loans are secured by, respectively,
first-priority and second-priority liens on, among other things,
substantially all of the assets owned directly by Calpine
Corporation, including its natural gas and power plant assets
and the equity in all of the subsidiaries directly owned by
Calpine Corporation. Our $786.8&nbsp;million of CCFC I secured
institutional term loans and notes is secured by the assets and
contracts associated with the seven natural gas-fired electric
generating facilities owned by CCFC I and its subsidiaries (as
adjusted for approved dispositions and acquisitions, such as the
completed sale of Lost Pines Power Project and the acquisition
of the Brazos Valley Power Plant) and the CCFC I lenders&#146;
and note holders&#146; recourse is limited to such security. Our
$2.6&nbsp;billion of CalGen secured institutional term loans,
notes and revolving credit facility are secured, through a
combination of direct and indirect stock pledges and asset
liens, by CalGen&#146;s 14 power generating facilities and
related assets located throughout the United States, and the
CalGen lenders&#146; and note holders&#146; recourse is limited
to such security. We have additional non-recourse project
financings, secured in each case by the assets of the project
being
</DIV>

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<DIV align="left" style="font-size: 10pt;">
financed. We may incur additional secured indebtedness in the
future, which will be effectively senior, to the extent of the
assets securing that debt, to our unsecured debt and to our
other secured debt not secured by those assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Operations</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Revenue may be reduced significantly upon expiration or
termination of our PSAs.</I> Some of the electricity we generate
from our existing portfolio is sold under long-term PSAs that
expire at various times. We also sell power under short to
intermediate term (one to five year) contracts. When the terms
of each of these various PSAs expire, it is possible that the
price paid to us for the generation of electricity under
subsequent arrangements may be reduced significantly.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our power sales contracts have an aggregate value in excess of
current market prices (measured over the next five years) of
approximately $3.3&nbsp;billion at December&nbsp;31, 2004. We
are at risk of loss in margins to the extent that these
contracts expire or are terminated and we are unable to replace
them on comparable terms. We have two customers with which we
have multiple contracts that, when combined, constitute greater
than 10% of this value: CDWR, $1.4&nbsp;billion, and PG&#38;E,
$0.4&nbsp;billion. The values by customer are comprised of these
multiple individual contracts that expire beginning in 2009 and
contain termination provisions standard to contracts in our
industry such as negligence, performance default or prolonged
events of force majeure.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Use of commodity contracts, including standard power and gas
contracts (many of which constitute derivatives), can create
volatility in earnings and may require significant cash
collateral.</I> During 2004 we recognized $13.5&nbsp;million in
mark-to-market gains on electric power and natural gas
derivatives after recognizing $26.4&nbsp;million in losses in
2003. Additionally, we recognized as a cumulative effect of a
change in accounting principle, an after-tax gain of
approximately $181.9&nbsp;million from the adoption of
Derivatives Implementation Group (&#147;DIG&#148;) Issue
No.&nbsp;C20, &#147;Scope Exceptions: Interpretation of the
Meaning of Not Clearly and Closely Related in
Paragraph&nbsp;10(b) regarding Contracts with a Price Adjustment
Feature&#148; (&#147;DIG Issue No.&nbsp;C20&#148;) on
October&nbsp;1, 2003. See Item&nbsp;7. &#147;Management&#146;s
Discussion and Analysis of Financial Condition and Results of
Operation&nbsp;&#151; Application of Critical Accounting
Policies&#148; for a detailed discussion of the accounting
requirements relating to electric power and natural gas
derivatives. In addition, U.S.&nbsp;generally accepted
accounting principles (&#147;GAAP&#148;) treatment of
derivatives in general, and particularly in our industry,
continues to evolve. We may enter into other transactions in
future periods that require us to mark various derivatives to
market through earnings. The nature of the transactions that we
enter into and the volatility of natural gas and electric power
prices will determine the volatility of earnings that we may
experience related to these transactions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As a result, in part, of the fallout from Enron&#146;s
declaration of bankruptcy on December&nbsp;2, 2001, companies
using derivatives, many of which are commodity contracts, have
become more sensitive to the inherent risks of such
transactions. Consequently (and for us, as a result of our
recent downgrades), many companies, including us, are required
to post cash collateral for certain commodity transactions in
excess of what was previously required. As of December&nbsp;31,
2004, we had $248.9&nbsp;million in margin deposits with
counterparties, net of deposits posted by counterparties with
us, $78.0&nbsp;million in prepaid gas and power payments and had
posted $115.9&nbsp;million of letters of credit, compared to
$188.0&nbsp;million, $60.6&nbsp;million and $14.5&nbsp;million,
respectively, at December&nbsp;31, 2003. Future cash collateral
requirements may increase based on the extent of our involvement
in commodity transactions and movements in commodity prices and
also based on our credit ratings and general perception of
creditworthiness in this market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>We may be unable to obtain an adequate supply of natural gas
in the future.</I> To date, our fuel acquisition strategy has
included various combinations of our own gas reserves, gas
prepayment contracts, short-, medium-and long-term supply
contracts and gas hedging transactions. In our gas supply
arrangements, we attempt to match the fuel cost with the fuel
component included in the facility&#146;s PSAs in order to
minimize a project&#146;s exposure to fuel price risk. In
addition, the focus of CES is to manage the spark spread for our
portfolio of generating plants and we actively enter into
hedging transactions to lock in gas costs and spark spreads. We
believe that there will be adequate supplies of natural gas
available at reasonable prices for each of our facilities when
current gas supply agreements expire. However, gas supplies may
not be available for the
</DIV>

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<DIV align="left" style="font-size: 10pt;">
full term of the facilities&#146; PSAs, and gas prices may
increase significantly. Additionally, our credit ratings may
inhibit our ability to procure gas supplies from third parties.
If gas is not available, or if gas prices increase above the
level that can be recovered in electricity prices, there could
be a negative impact on our results of operations or financial
condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of December&nbsp;31, 2004, we obtained approximately 7% of
our physical natural gas supply needs through owned natural gas
reserves. We obtain the remainder of our physical natural gas
supply from the market and utilize the natural gas financial
markets to hedge our exposures to natural gas price risk. Our
current less than investment grade credit rating increases the
amount of collateral that certain of our suppliers require us to
post for purchases of physical natural gas supply and hedging
instruments. To the extent that we do not have cash or other
means of posting credit, we may be unable to procure an adequate
supply of natural gas or natural gas hedging instruments. In
addition, the fact that our deliveries of natural gas depend
upon the natural gas pipeline infrastructure in markets where we
operate power plants exposes us to supply disruptions in the
unusual event that the pipeline infrastructure is damaged or
disabled.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Our power project development and acquisition activities may
not be successful.</I> The development of power generation
facilities is subject to substantial risks. In connection with
the development of a power generation facility, we must
generally obtain:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    necessary power generation equipment;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    governmental permits and approvals;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    fuel supply and transportation agreements;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    sufficient equity capital and debt financing;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    electrical transmission agreements;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    water supply and wastewater discharge agreements;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    site agreements and construction contracts.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We may be unsuccessful in accomplishing any of these matters or
in doing so on a timely basis. In addition, project development
is subject to various environmental, engineering and
construction risks relating to cost-overruns, delays and
performance. Although we may attempt to minimize the financial
risks in the development of a project by securing a favorable
power sales agreement, obtaining all required governmental
permits and approvals, and arranging adequate financing prior to
the commencement of construction, the development of a power
project may require us to expend significant sums for
preliminary engineering, permitting, legal and other expenses
before we can determine whether a project is feasible,
economically attractive or financeable. If we are unable to
complete the development of a facility, we might not be able to
recover our investment in the project. The process for obtaining
initial environmental, siting and other governmental permits and
approvals is complicated and lengthy, often taking more than one
year, and is subject to significant uncertainties. We cannot
assure you that we will be successful in the development of
power generation facilities in the future or that we will be
able to successfully complete construction of our facilities
currently in development, nor can we assure you that any of
these facilities will be profitable or have value equal to the
investment in them even if they do achieve commercial operation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>We have grown substantially in recent years partly as a
result of acquisitions of interests in power generation
facilities, geothermal steam fields and natural gas reserves and
facilities.</I> The integration and consolidation of our
acquisitions with our existing business requires substantial
management, financial and other resources and, ultimately, our
acquisitions may not be successfully integrated. In addition, as
we transition from a development company to an operating
company, we are not likely to continue to grow at historical
rates due to reduced acquisition activities in the near future.
We have also substantially curtailed our development efforts in
response to our reduced liquidity. Although the domestic power
industry is continuing to undergo consolidation and may offer
acquisition opportunities at favorable prices, we believe that
we are likely to confront significant competition for those
opportunities and, due to the constriction in the availability
of capital resources for acquisitions and other expansion, to
the extent that any opportunities are identified, we
</DIV>

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<DIV align="left" style="font-size: 10pt;">
may be unable to effect any acquisitions. Similarly, to the
extent we seek to divest assets, we may not be able to do so at
attractive prices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Our projects under construction may not commence operation as
scheduled.</I> The commencement of operation of a newly
constructed power generation facility involves many risks,
including:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    start-up problems;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the breakdown or failure of equipment or processes;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    performance below expected levels of output or efficiency.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
New plants have no operating history and may employ recently
developed and technologically complex equipment. Insurance
(including a layer of insurance provided by a captive insurance
subsidiary) is maintained to protect against certain risks,
warranties are generally obtained for limited periods relating
to the construction of each project and its equipment in varying
degrees, and contractors and equipment suppliers are obligated
to meet certain performance levels. The insurance, warranties or
performance guarantees, however, may not be adequate to cover
lost revenues or increased expenses. As a result, a project may
be unable to fund principal and interest payments under its
financing obligations and may operate at a loss. A default under
such a financing obligation, unless cured, could result in our
losing our interest in a power generation facility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In certain situations, PSAs entered into with a utility early in
the development phase of a project may enable the utility to
terminate the PSA or to retain security posted as liquidated
damages under the PSA. Currently, six of our 11 projects under
construction are party to PSAs containing such provisions and
could be materially affected if these provisions were triggered.
The six projects are our Freeport, Valladolid, Mankato,
Bethpage, Fox and Otay Mesa facilities. The situations that
could allow a utility to terminate a PSA or retain posted
security as liquidated damages include:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the cessation or abandonment of the development, construction,
    maintenance or operation of the facility;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    failure of the facility to achieve construction milestones by
    agreed upon deadlines, subject to extensions due to force
    majeure events;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    failure of the facility to achieve commercial operation by
    agreed upon deadlines, subject to extensions due to force
    majeure events;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    failure of the facility to achieve certain output minimums;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    failure by the facility to make any of the payments owing to the
    utility under the PSA or to establish, maintain, restore, extend
    the term of, or increase the posted security if required by the
    PSA;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a material breach of a representation or warranty or failure by
    the facility to observe, comply with or perform any other
    material obligation under the PSA;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    failure of the facility to obtain material permits and
    regulatory approvals by agreed upon deadlines;&nbsp;or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the liquidation, dissolution, insolvency or bankruptcy of the
    project entity.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Our power generation facilities may not operate as
planned.</I> Upon completion of our projects currently under
construction, we will operate 100 of the 103 power plants in
which we will have an interest. The continued operation of power
generation facilities, including, upon completion of
construction, the facilities owned directly by us, involves many
risks, including the breakdown or failure of power generation
equipment, transmission lines, pipelines or other equipment or
processes, and performance below expected levels of output or
efficiency. From time to time our power generation facilities
have experienced equipment breakdowns or failures, and in 2004
we recorded expenses totaling approximately $54.3&nbsp;million
for these breakdowns or failures compared to $11.0&nbsp;million
in 2003. Continued high failure rates of Siemens Westinghouse
(&#147;SW&#148;) provided equipment represent the highest risk
for such breakdowns, although we have programs in place that we
believe will eventually substantially reduce these failures and
provide plants with SW equipment availability factors
competitive with plants using other manufacturers&#146;
equipment.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Although our facilities contain various redundancies and back-up
mechanisms, a breakdown or failure may prevent the affected
facility from performing under any applicable PSAs. Although
insurance is maintained to partially protect against operating
risks, the proceeds of insurance may not be adequate to cover
lost revenues or increased expenses. As a result, we could be
unable to service principal and interest payments under our
financing obligations which could result in losing our interest
in one or more power generation facility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>We cannot assure you that our estimates of oil and gas
reserves are accurate.</I> Estimates of proved oil and gas
reserves and the future net cash flows attributable to those
reserves are prepared by independent petroleum and geological
engineers. There are numerous uncertainties inherent in
estimating quantities of proved oil and gas reserves and cash
flows attributable to such reserves, including factors beyond
our control and that of our engineers. Reserve engineering is a
subjective process of estimating underground accumulations of
oil and gas that cannot be measured in an exact manner. The
accuracy of an estimate of quantities of reserves, or of cash
flows attributable to such reserves, is a function of the
available data, assumptions regarding future oil and gas prices
and expenditures for future development and exploitation
activities, and of engineering and geological interpretation and
judgment. Additionally, reserves and future cash flows may be
subject to material downward or upward revisions, based upon
production history, development and exploration activities and
prices of oil and gas. Actual future production, revenue, taxes,
development expenditures, operating expenses, underlying
information, quantities of recoverable reserves and the value of
cash flows from such reserves may vary significantly from the
assumptions and underlying information set forth herein. In
addition, different reserve engineers may make different
estimates of reserves and cash flows based on the same available
data. We recorded impairment charges of $202.1&nbsp;million
related to reduced proved reserve projections at year end 2004
based on the year-end independent engineer&#146;s report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Our geothermal energy reserves may be inadequate for our
operations.</I> The development and operation of geothermal
energy resources are subject to substantial risks and
uncertainties similar to those experienced in the development of
oil and gas resources. The successful exploitation of a
geothermal energy resource ultimately depends upon:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the heat content of the extractable steam or fluids;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the geology of the reservoir;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the total amount of recoverable reserves;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    operating expenses relating to the extraction of steam or fluids;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    price levels relating to the extraction of steam or fluids or
    power generated;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    capital expenditure requirements relating primarily to the
    drilling of new wells.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with each geothermal power plant, we estimate the
productivity of the geothermal resource and the expected decline
in productivity. The productivity of a geothermal resource may
decline more than anticipated, resulting in insufficient
reserves being available for sustained generation of the
electrical power capacity desired. An incorrect estimate by us
or an unexpected decline in productivity could, if material,
adversely affect our results of operations or financial
condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Geothermal reservoirs are highly complex. As a result, there
exist numerous uncertainties in determining the extent of the
reservoirs and the quantity and productivity of the steam
reserves. Reservoir engineering is an inexact process of
estimating underground accumulations of steam or fluids that
cannot be measured in any precise way, and depends significantly
on the quantity and accuracy of available data. As a result, the
estimates of other reservoir specialists may differ materially
from ours. Estimates of reserves are generally revised over time
on the basis of the results of drilling, testing and production
that occur after the original estimate was prepared. We cannot
assure you that we will be able to successfully manage the
development and operation of our geothermal reservoirs or that
we will accurately estimate the quantity or productivity of our
steam reserves.
</DIV>

<P align="center" style="font-size: 10pt;">36

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Market</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Competition could adversely affect our performance.</I> The
power generation industry is characterized by intense
competition, and we encounter competition from utilities,
industrial companies, marketing and trading companies, and other
IPPs. In recent years, there has been increasing competition
among generators in an effort to obtain PSAs, and this
competition has contributed to a reduction in electricity prices
in certain markets. In addition, many states are implementing or
considering regulatory initiatives designed to increase
competition in the domestic power industry. For instance, the
California Public Utilities Commission (&#147;CPUC&#148;) issued
decisions that provided that all California electric users
taking service from a regulated public utility could elect to
receive direct access service commencing April 1998; however,
the CPUC suspended the offering of direct access to any customer
not receiving direct access service as of September&nbsp;20,
2001, due to the problems experienced in the California energy
markets during 2000 and 2001. As a result, uncertainty exists as
to the future course for direct access in California in the
aftermath of the energy crisis in that state. In Texas,
legislation phased in a deregulated power market, which
commenced on January&nbsp;1, 2001. This competition has put
pressure on electric utilities to lower their costs, including
the cost of purchased electricity, and increasing competition in
the supply of electricity in the future will increase this
pressure.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Our international investments may face uncertainties.</I> We
have investments in operating power projects in Canada, an
investment in an energy service business in the Netherlands, an
investment in a power generation facility in construction in
Mexico, and an investment in a power generation facility in the
U.K. that is in operation and is being evaluated for possible
sale (see &#147;Recent Developments&#148; above). We may pursue
additional international investments in the future subject to
the limitations on our expansion plans due to current capital
market constraints. International investments are subject to
unique risks and uncertainties relating to the political, social
and economic structures of the countries in which we invest.
Risks specifically related to investments in non-United States
projects may include:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    fluctuations in currency valuation;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    currency inconvertibility;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    expropriation and confiscatory taxation;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    increased regulation;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    approval requirements and governmental policies limiting returns
    to foreign investors.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>California Power Market</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The volatility in the California power market from mid-2000
through mid-2001 has produced significant unanticipated results,
and as described in the following risk factors, the unresolved
issues arising in that market, where 42 of our 103 power plants
are located, could adversely affect our performance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>We may be required to make refund payments to the CalPX and
CAISO as a result of the California Refund Proceeding.</I> On
August&nbsp;2, 2000, the California Refund Proceeding was
initiated by a complaint made at FERC by SDG&#38;E under
Section&nbsp;206 of the FPA alleging, among other things, that
the markets operated by the CAISO and the California Power
Exchange (&#147;CalPX&#148;) were dysfunctional. FERC
established a refund effective period of October&nbsp;2, 2000,
to June&nbsp;19, 2001 (the &#147;Refund Period&#148;), for sales
made into those markets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On December&nbsp;12, 2002, an Administrative Law Judge issued a
Certification of Proposed Finding on California Refund Liability
(&#147;December 12 Certification&#148;) making an initial
determination of refund liability. On March&nbsp;26, 2003, FERC
issued an order (the &#147;March 26 Order&#148;) adopting many
of the findings set forth in the December 12 Certification. In
addition, as a result of certain findings by the FERC staff
concerning the unreliability or misreporting of certain reported
indices for gas prices in California during the Refund Period,
FERC ordered that the basis for calculating a party&#146;s
potential refund liability be modified by substituting a gas
proxy price based upon gas prices in the producing areas plus
the tariff transportation rate for the California gas price
indices previously adopted in the California Refund Proceeding.
We believe, based on the information that we have analyzed to
date, that any refund liability that may be attributable to us
could total
</DIV>

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<DIV align="left" style="font-size: 10pt;">
approximately $9.9&nbsp;million (plus interest, if applicable),
after taking the appropriate set-offs for outstanding
receivables owed by the CalPX and CAISO to Calpine. We believe
we have appropriately reserved for the refund liability that by
our current analysis would potentially be owed under the refund
calculation clarification in the March 26 Order. The final
determination of the refund liability and the allocation of
payment obligations among the numerous buyers and sellers in the
California markets is subject to further Commission proceedings.
It is possible that there will be further proceedings to require
refunds from certain sellers for periods prior to the originally
designated Refund Period. In addition, the FERC orders
concerning the Refund Period, the method for calculating refund
liability and numerous other issues are pending on appeal before
the U.S.&nbsp;Court of Appeals for the Ninth Circuit. At this
time, we are unable to predict the timing of the completion of
these proceedings or the final refund liability. Thus, the
impact on our business is uncertain.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>We have been mentioned in a show cause order in connection
with the FERC investigation into western markets regarding the
CalPX and CAISO tariffs and may be found liable for payments
thereunder.</I> On February&nbsp;13, 2002, FERC initiated an
investigation of potential manipulation of electric and natural
gas prices in the western United States. This investigation was
initiated as a result of allegations that Enron and others used
their market position to distort electric and natural gas
markets in the West. The scope of the investigation is to
consider whether, as a result of any manipulation in the
short-term markets for electric energy or natural gas or other
undue influence on the wholesale markets by any party since
January&nbsp;1, 2000, the rates of the long-term contracts
subsequently entered into in the West are potentially unjust and
unreasonable. On August&nbsp;13, 2002, the FERC staff issued the
Initial Report on Company-Specific Separate Proceedings and
Generic Reevaluations; Published Natural Gas Price Data; and
Enron Trading Strategies (the &#147;Initial Report&#148;),
summarizing its initial findings in this investigation. There
were no findings or allegations of wrongdoing by Calpine set
forth or described in the Initial Report. On March&nbsp;26,
2003, the FERC staff issued a final report in this investigation
(the &#147;Final Report&#148;). In the Final Report, the FERC
staff recommended that FERC issue a show cause order to a number
of companies, including Calpine, regarding certain power
scheduling practices that may have been in violation of the
CAISO&#146;s or CalPX&#146;s tariff. The Final Report also
recommended that FERC modify the basis for determining potential
liability in the California Refund Proceeding discussed above.
Calpine believes that it did not violate these tariffs and that,
to the extent that such a finding could be made, any potential
liability would not be material.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Also, on June&nbsp;25, 2003, FERC issued a number of orders
associated with these investigations, including the issuance of
two show cause orders to certain industry participants. FERC did
not subject Calpine to either of the show cause orders. FERC
also issued an order directing the FERC Office of Markets and
Investigations to investigate further whether market
participants who bid a price in excess of $250&nbsp;per MWh hour
into markets operated by either the CAISO or the CalPX during
the period of May&nbsp;1, 2000, to October&nbsp;2, 2000, may
have violated CAISO and CalPX tariff prohibitions. No individual
market participant was identified. We believe that we did not
violate the CAISO and CalPX tariff prohibitions referred to by
FERC in this order; however, we are unable to predict at this
time the final outcome of this proceeding or its impact on
Calpine.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>The energy payments made to us during a certain period under
our QF contracts with PG&#38;E may be retroactively adjusted
downward as a result of a CPUC proceeding.</I> Our QF contracts
with PG&#38;E provide that the CPUC has the authority to
determine the appropriate utility &#147;avoided cost&#148; to be
used to set energy payments by determining the short run avoided
cost (&#147;SRAC&#148;) energy price formula. In mid-2000 our QF
facilities elected the option set forth in Section&nbsp;390 of
the California Public Utilities Code, which provided QFs the
right to elect to receive energy payments based on the CalPX
market clearing price instead of the SRAC price administratively
determined by the CPUC. Having elected such option, our QF
facilities were paid based upon the CalPX zonal day-ahead
clearing price (&#147;CalPX Price&#148;) for various periods
commencing in the summer of 2000 until January&nbsp;19, 2001,
when the CalPX ceased operating a day-ahead market. The CPUC has
conducted proceedings (R.99-11-022) to determine whether the
CalPX Price was the appropriate price for the energy component
upon which to base payments to QFs which had elected the
CalPX-based pricing option. One CPUC Commissioner at one point
issued a proposed decision to the effect that the CalPX Price
was the appropriate energy price to pay QFs who selected the
pricing option then offered by Section&nbsp;390. No final
decision, however, has been issued to date. Therefore, it is
possible that the CPUC could order a
</DIV>

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<DIV align="left" style="font-size: 10pt;">
payment adjustment based on a different energy price
determination. On January&nbsp;10, 2001, PG&#38;E filed an
emergency motion (the &#147;Emergency Motion&#148;) requesting
that the CPUC issue an order that would retroactively change the
energy payments received by QFs based on CalPX-based pricing for
electric energy delivered during the period commencing during
June 2000 and ending on January&nbsp;18, 2001. On April&nbsp;29,
2004, PG&#38;E, the Utility Reform Network, a consumer advocacy
group, and the Office of Ratepayer Advocates, an independent
consumer advocacy department of the CPUC (collectively, the
&#147;PG&#38;E Parties&#148;), filed a Motion for Briefing
Schedule&nbsp;Regarding True-Up of Payments to QF Switchers (the
&#147;April 2004 Motion&#148;). The April 2004 Motion requests
that the CPUC set a briefing schedule in R.99-11-022 to
determine what is the appropriate price that should be paid to
the QFs that had switched to the CalPX Price. The PG&#38;E
Parties allege that the appropriate price should be determined
using the methodology that has been developed thus far in the
California Refund Proceeding discussed above. Supplemental
pleadings have been filed on the April 2004 Motion, but neither
the CPUC nor the assigned administrative law judge has issued
any rulings with respect to either the April 2004 Motion or the
initial Emergency Motion. We believe that the CalPX Price was
the appropriate price for energy payments for our QFs during
this period, but there can be no assurance that this will be the
outcome of the CPUC proceedings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>The availability payments made to us under our Geysers&#146;
Reliability Must Run contracts have been challenged by certain
buyers as having been not just and reasonable.</I> CAISO,
California Electricity Oversight Board, Public Utilities
Commission of the State of California, PG&#38;E, SDG&#38;E, and
Southern California Edison Company (collectively referred to as
the &#147;Buyers Coalition&#148;) filed a complaint on
November&nbsp;2, 2001 at FERC requesting the commencement of a
FPA Section&nbsp;206 proceeding to challenge one component of a
number of separate settlements previously reached on the terms
and conditions of &#147;reliability must run&#148; contracts
(&#147;RMR Contracts&#148;) with certain generation owners,
including Geysers Power Company, LLC, which settlements were
also previously approved by FERC. RMR Contracts require the
owner of the specific generation unit to provide energy and
ancillary services when called upon to do so by the ISO to meet
local transmission reliability needs or to manage transmission
constraints. The Buyers Coalition has asked FERC to find that
the availability payments under these RMR Contracts are not just
and reasonable. Geysers Power Company, LLC filed an answer to
the complaint in November 2001. To date, FERC has not
established a Section&nbsp;206 proceeding. The outcome of this
litigation and the impact on our business cannot be determined
at the present time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Government Regulation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>We are subject to complex government regulation which could
adversely affect our operations.</I> Our activities are subject
to complex and stringent energy, environmental and other
governmental laws and regulations. The construction and
operation of power generation facilities and oil and gas
exploration and production require numerous permits, approvals
and certificates from appropriate foreign, federal, state and
local governmental agencies, as well as compliance with
environmental protection legislation and other regulations.
While we believe that we have obtained the requisite approvals
and permits for our existing operations and that our business is
operated in accordance with applicable laws, we remain subject
to a varied and complex body of laws and regulations that both
public officials and private individuals may seek to enforce.
Existing laws and regulations may be revised or reinterpreted,
or new laws and regulations may become applicable to us that may
have a negative effect on our business and results of
operations. We may be unable to obtain all necessary licenses,
permits, approvals and certificates for proposed projects, and
completed facilities may not comply with all applicable permit
conditions, statutes or regulations. In addition, regulatory
compliance for the construction of new facilities is a costly
and time-consuming process. Intricate and changing environmental
and other regulatory requirements may necessitate substantial
expenditures to obtain and maintain permits. If a project is
unable to function as planned due to changing requirements or
local opposition, it may create expensive delays, extended
periods of non-operation or significant loss of value in a
project.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Environmental regulations have had and will continue to have an
impact on our cost of doing business and our investment
decisions. For example, the existing market-based cap-and-trade
emissions allowance system in Texas requires operators to either
reduce NOx emissions or purchase additional NOx allowances in
</DIV>

<P align="center" style="font-size: 10pt;">39

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<DIV align="left" style="font-size: 10pt;">
the marketplace. Rather than purchase additional allowances, we
have chosen to install additional NOx emission controls as part
of a $31&nbsp;million steam capacity upgrade at our Texas City
facility and to retrofit our Clear Lake, Texas facility with
similar technology at a cost of approximately $17&nbsp;million.
These new emission control systems will allow us to meet our
thermal customers&#146; needs while reducing the need to
purchase allowances for our facilities in Texas.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our operations are potentially subject to the provisions of
various energy laws and regulations, including PURPA, PUHCA, the
FPA, and state and local regulations. PUHCA provides for the
extensive regulation of public utility holding companies and
their subsidiaries. PURPA provides QFs (as defined under PURPA)
and owners of QFs exemptions from certain federal and state
regulations, including rate and financial regulations. The FPA
regulates wholesale sales of power, as well as electric
transmission in interstate commerce.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under current federal law, we are not subject to regulation as a
holding company under PUHCA, and will not be subject to such
regulation as long as the plants in which we have an interest
(1)&nbsp;qualify as QFs, (2)&nbsp;are subject to another
exemption or waiver or (3)&nbsp;are owned or operated by an EWG
under the Energy Policy Act of 1992. In order to be a QF, a
facility must be not more than 50% owned by one or more electric
utility companies, electric utility holding companies, or any
combination thereof. Generally, any geothermal power facility
which produces not more than 80 MW of electricity and meets
PURPA ownership requirements qualifies for QF status. In
addition, a QF that is a cogeneration facility, such as the
plants in which we currently have interests, must produce
electricity as well as thermal energy for use in an industrial
or commercial process in specified minimum proportions. The QF
also must meet certain minimum energy efficiency standards.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If any of the plants in which we have an interest lose their QF
status or if amendments to PURPA are enacted that substantially
reduce the benefits currently afforded QFs, we could become a
public utility holding company, which could subject us to
significant federal, state and local regulation, including rate
regulation. If we become a holding company, which could be
deemed to occur prospectively or retroactively to the date that
any of our plants loses its QF status, all of our other QF power
plants could lose QF status because, under FERC regulations, no
more than 50% of a QF&#146;s equity can be owned by an electric
utility, electric utility holding company, or any combination
thereof. In addition, a loss of QF status could, depending on
the particular power purchase agreement, allow the power
purchaser to cease taking and paying for electricity or to seek
refunds of past amounts paid and thus could cause the loss of
some or all contract revenues or otherwise impair the value of a
project. If a power purchaser were to cease taking and paying
for electricity, there can be no assurance that the costs
incurred in connection with the project could be recovered
through sales to other purchasers. Such events could adversely
affect our ability to service our indebtedness. See
&#147;Item&nbsp;1&nbsp;&#151; Business&nbsp;&#151; Government
Regulation&nbsp;&#151; Federal Energy Regulation&nbsp;&#151;
Federal Power Act Regulation.&#148; A cogeneration QF could lose
its QF status if it does not continue to meet FERC&#146;s
operating and efficiency requirements. Such possible loss of QF
status could occur, for example, if the QF&#146;s steam host,
typically an industrial facility, fails for operating, permit or
economic reasons to use sufficient quantities of the QF&#146;s
steam output. We cannot assure you that all of our steam hosts
will continue to take and use sufficient quantities of their
respective QF&#146;s steam output.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In light of the experiences in the California electricity and
natural gas markets in 2000 and 2001, and the PG&#38;E and Enron
bankruptcy filings in 2001, among other events in recent years,
there are a number of federal legislative and regulatory
initiatives that could result in changes in how the energy
markets are regulated. For example, Congress has considered
proposed legislation that would repeal PUHCA, and would amend
PURPA, among other ways, by, in certain circumstances, limiting
its mandatory purchase obligation to existing contracts. We do
not know whether these legislative or regulatory initiatives
will be adopted or, if adopted, what form they may take. We
cannot provide assurance that any legislation or regulation
ultimately adopted would not adversely affect our existing
projects.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, many states are implementing or considering
regulatory initiatives designed to increase competition in the
domestic power generation industry and increase access to
electric utilities&#146; transmission and distribution systems
for IPPs and electricity consumers. However, in light of the
circumstances in the California electricity and natural gas
markets and the bankruptcies of both PG&#38;E and Enron, the
pace and
</DIV>

<P align="center" style="font-size: 10pt;">40

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<DIV align="left" style="font-size: 10pt;">
direction of further deregulation at the state level in many
jurisdictions is uncertain. See &#147;California Power
Market&#148; risk factors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Other Risk Factors</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>We depend on our management and employees.</I> Our success is
largely dependent on the skills, experience and efforts of our
people. While we believe that we have excellent depth throughout
all levels of management and in all key skill levels of our
employees, the loss of the services of one or more members of
our senior management or of numerous employees with critical
skills could have a negative effect on our business, financial
conditions and results of operations and future growth. We have
an employment agreement with our Chief Executive Officer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Seismic disturbances could damage our projects.</I> Areas
where we operate and are developing many of our geothermal and
gas-fired projects are subject to frequent low-level seismic
disturbances. More significant seismic disturbances are
possible. Our existing power generation facilities are built to
withstand relatively significant levels of seismic disturbances,
and we believe we maintain adequate insurance protection.
However, earthquake, property damage or business interruption
insurance may be inadequate to cover all potential losses
sustained in the event of serious seismic disturbances.
Additionally, insurance for these risks may not continue to be
available to us on commercially reasonable terms.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Our results are subject to quarterly and seasonal
fluctuations.</I> Our quarterly operating results have
fluctuated in the past and may continue to do so in the future
as a result of a number of factors, including:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    seasonal variations in energy prices;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    variations in levels of production;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the timing and size of acquisitions;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the completion of development and construction projects.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Additionally, because we receive the majority of capacity
payments under some of our PSAs during the months of May through
October, our revenues and results of operations are, to some
extent, seasonal.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>The ultimate outcome of the legal proceedings relating to our
activities cannot be predicted. Any adverse determination could
have a material adverse effect on our financial condition and
results of operations.</I> We are party to various litigation
matters arising out of the normal course of business, the more
significant of which are summarized in Note&nbsp;25 of the Notes
to Consolidated Financial Statements. These matters include
securities class action lawsuits, such as Hawaii Structural
Ironworkers Pension Fund&nbsp;v. Calpine et&nbsp;al., which
relates to our April 2002 equity offering and also named the
underwriters of that offering as defendants. The ultimate
outcome of each of these matters cannot presently be determined,
nor can the liability that may potentially result from a
negative outcome be reasonably estimated presently for every
case. The liability we may ultimately incur with respect to any
one of these matters in the event of a negative outcome may be
in excess of amounts currently accrued with respect to such
matters and, as a result, these matters may potentially be
material to our financial condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>The price of our common stock is volatile.</I> The market
price for our common stock has been volatile in the past, and
several factors could cause the price to fluctuate substantially
in the future. These factors include without limitation:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    general conditions in our industry, the power markets in which
    we participate, or the worldwide economy;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    announcements of developments related to our business or sector;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    fluctuations in our results of operations;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    our debt-to-equity ratios and other leverage ratios;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    effects of significant events relating to the energy sector in
    general;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">41

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    issuances, including though sales or lending facilities, of
    substantial amounts of our common stock or other securities into
    the marketplace;</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    dilution or potential dilution caused by stock-for-debt
    exchanges or issuances of indebtedness convertible into our
    common stock, including any exchanges or convertible debt
    transactions relating to the outstanding HIGH TIDES&nbsp;III;</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    an outbreak of war or hostilities;</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    a shortfall in revenues or earnings compared to securities
    analysts&#146; expectations;</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    changes in analysts&#146; recommendations or
    projections;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    announcements of new acquisitions or development projects by us.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The market price of our common stock may fluctuate significantly
in the future, and these fluctuations may be unrelated to our
performance. General market price declines or market volatility
in the future could adversely affect the price of our common
stock, and the current market price may not be indicative of
future market prices.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>EMPLOYEES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of December&nbsp;31, 2004, we employed 3,505 people, of whom
62 were represented by collective bargaining agreements. We have
never experienced a work stoppage or strike, and we consider
relations with our employees to be good. Although we are an
asset-based company, we are successful because of the talents,
intelligence, resourcefulness and energy level of our employees.
As discussed throughout this business section, our employee
knowledge base enables us to optimize the value and
profitability of our electricity production and prudently manage
the risks inherent in our business.
</DIV>

<P align="center" style="font-size: 10pt;">42

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>SUMMARY OF KEY ACTIVITIES</B>
</DIV>

<DIV style="margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Summary of Key Activities</I></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Finance&nbsp;&#151; New Issuances and Amendments:</I></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="66%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Date</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Amount</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>1/9/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>250.0&nbsp;million</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    An initial purchaser of the 4.75%&nbsp;Convertible Senior Notes
    due 2023 exercises in full its purchase option</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2/20/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>250.0&nbsp;million</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Complete a non-recourse project financing for Rocky Mountain
    Energy Center at a rate of LIBOR plus 250&nbsp;basis points,
    refinanced in June 2004</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3/23/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2.6&nbsp;billion&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    CalGen completes its offering of secured institutional term
    loans, notes and revolving credit facility</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4/26/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Successfully complete consent solicitation to effect certain
    amendments to the Indentures governing the Senior Notes issued
    between 1996 and 1999</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6/2/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>85.0&nbsp;million</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Power Contract Financing III, LLC issues zero coupon notes</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6/29/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>661.5&nbsp;million</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Rocky Mountain Energy Center, LLC, and Riverside Energy Center,
    LLC, close an offering of First Priority Secured Floating Rate
    Term Loans Due 2011 and a letter of credit-linked deposit
    facility</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>8/5/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>250.0&nbsp;million</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Calpine Energy Management, L.P. enters into a letter of credit
    facility with Deutsche Bank that expires October 2005</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>9/30/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>785.0&nbsp;million</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Receive funding on offering of
    9<FONT style="font-size: 70%"><SUP>5</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%
    First Priority Senior Secured Notes due 2014, offered at 99.212%
    of par</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>9/30/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>736.0&nbsp;million</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Receive funding on offering of Contingent Convertible Notes due
    2014 offered at 83.9% of par</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>9/30/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Enter into a ten-year Share Lending Agreement, loaning
    89&nbsp;million shares of newly issued Calpine common stock to
    Deutsche Bank AG London in connection with the issuance of the
    Contingent Convertible Notes due 2014</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>9/30/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>255.0&nbsp;million</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Establish a new Cash Collateralized Letter of Credit Facility
    with Bayerische Landesbank</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10/26/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>360.0&nbsp;million</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Calpine (Jersey) Limited completes an offering of Two-Year
    Redeemable Preferred Shares priced at 3-month US LIBOR plus
    700&nbsp;basis points</TD>
</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Finance&nbsp;&#151; Repurchases and Extinguishments:</I></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Date</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Amount</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>5/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>78.8&nbsp;million</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Retirement of Newark and Parlin Power Plants project financing</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>5/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>82.0&nbsp;million</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Redemption of King City preferred interest due to lease
    restructuring</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>9/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>266.2&nbsp;million</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Repurchase $266.2&nbsp;million in principal amount of
    outstanding 4.75%&nbsp;Convertible Senior Notes due 2023 in
    exchange for $177.0&nbsp;million in cash</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>9/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>115.0&nbsp;million</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Repurchase $115.0&nbsp;million par value of HIGH TIDES&nbsp;III
    for $111.6&nbsp;million in cash</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>9/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>199.5&nbsp;million</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Mandatory paydown of
    5<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%
    First Priority Senior Secured Term Loan&nbsp;B due 2007 pursuant
    to debt covenants governing asset sales of natural gas reserves</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>9/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>100.0&nbsp;million</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Mandatory paydown of
    5<FONT style="font-size: 70%"><SUP>5</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%
    First Priority Letter of Credit Facility pursuant to covenants
    governing asset sales of natural gas reserves</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>276.0&nbsp;million</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Redeem outstanding
    5<FONT style="font-size: 70%"><SUP>3</SUP></FONT>/<FONT style="font-size: 60%">4</FONT>%
    HIGH TIDES I preferred securities</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>360.0&nbsp;million</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Redeem outstanding
    5<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT>%
    HIGH TIDES&nbsp;II preferred securities</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4/04-7/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>95.0&nbsp;million</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Exchange&nbsp;24.3&nbsp;million Calpine common shares in
    privately negotiated transactions for approximately
    $40.0&nbsp;million par value of HIGH TIDES I and approximately
    $75.0&nbsp;million par value of HIGH TIDES&nbsp;II</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>1/04-12/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>658.7&nbsp;million</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Repurchase $658.7&nbsp;million in principal amount of
    outstanding 2006 Convertible Senior Notes for
    $657.7&nbsp;million in cash</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>1/04-12/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>$743.4&nbsp; million</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Repurchase $743.4&nbsp;million in principal of amount various
    Senior Notes issuances for $559.3&nbsp;million in cash</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">43
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Asset Sales and Other:</I></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Date</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>1/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Complete sale of 50% interest in Lost Pines 1 Power Project for
    a cash payment of $148.6&nbsp;million</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Close on the sale of natural gas properties to CNGT for a net
    cash payment of Cdn$33.8&nbsp;million (US$29.2&nbsp;million)</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Enter into a one-year agreement with Cleco Power LLC to supply
    up to 500 MW of electricity</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Enter into five power sales contracts to supply approximately
    350 MW of electricity to five New England- based electric
    distribution companies for delivery in 2004</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Enter into a 20-year purchase power agreement to provide 365 MW
    of electricity to Northern States Power</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Acquire the remaining 50% interest in the Aries Power Plant from
    Aquila, Inc.</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Complete the acquisition of the remaining 20% interest in
    Calpine Cogeneration Company for approximately $2.5&nbsp;million</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Enter into a three-year power sales agreement with Safeway Inc.
    to supply up to 200 MW of electricity to Safeway facilities
    throughout California</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Close on the purchase of Brazos Valley Power Plant for
    approximately $181.1&nbsp;million in a tax deferred like-kind
    exchange under IRS Section&nbsp;1031, largely with the proceeds
    of the Lost Pines I Power Project sale</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>5/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Restructure King City lease</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>5/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Sign a 25-year agreement to sell up to 200 MW of electricity and
    1&nbsp;million pounds per hour of steam to The Dow Chemical
    Company</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>5/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Existing JCPL tolling arrangements with the Newark and Parlin
    Power Plants are terminated, resulting in a gain of
    $100.6&nbsp;million before transaction costs</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>5/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Sell Utility Contract Funding&nbsp;II, a wholly-owned subsidiary
    of CES, which had entered into a long-term power purchase
    agreement related to Newark and Parlin Power Plants, for a
    pre-tax gain of $85.4&nbsp;million before transaction costs</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Receive approval from the CPUC for a tolling agreement with
    San&nbsp;Diego Gas and Electric Company that provides for the
    delivery of up to 615 MW of capacity for ten years beginning in
    2008</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Partially terminate the gas contract between Citrus Trading
    Corp. and the Auburndale facility for a net gain of
    $11.7&nbsp;million</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>7/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Enter into a five and a half year agreement with Snapping Shoals
    EMC for 200 MW of capacity and electricity</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>7/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Announce the amendment of an eleven-year tolling agreement with
    Wisconsin Public Service for up to 500 MW of capacity,
    electricity and ancillary services, subject to approval by the
    Public Service Commission of Wisconsin</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>9/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Complete sale of natural gas reserves in Colorado Piceance Basin
    and New Mexico San&nbsp;Juan Basin for net cash payments of
    approximately $218.7&nbsp;million</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>9/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Complete sale of all Canadian natural gas reserves and petroleum
    assets and interest in CNGT for cash payments of approximately
    Cdn$808.1&nbsp;million (US$626.4&nbsp;million)</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Announce energy service agreement with Newmarket Services
    Company, LLC</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>11/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Sign a letter of intent with GE Energy for joint construction of
    the world&#146;s first power plant based on the 60-hertz version
    of GE&#146;s most advanced gas turbine technology, the <I>H
    System</I><SUP style="font-size: 85%; vertical-align: text-top"><FONT style="font-variant:SMALL-CAPS">tm</FONT></SUP></TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>11/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Announce CPSI awarded contract to operate and maintain two
    Hoosier Energy natural gas-fired power plants</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>12/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Announce two-year power sales contract with National Aeronautics
    and Space Administration Johnson Space Center in Houston, Texas,
    for an estimated peak load of up to 23 MW a day of electricity</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">44
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Power Plant Development and Construction:</I></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Date</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Project</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Description</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>1/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Morgan Energy Center Expansion</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>Commercial operation</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>5/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Osprey Energy Center</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>Commercial operation</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>5/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Columbia Energy Center</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>Commercial operation</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>5/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Rocky Mountain Energy Center</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>Commercial operation</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>5/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Valladolid&nbsp;III IP</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>Construction began</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Riverside Energy Center</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>Commercial operation</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Deer Park Energy Center Expansion</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>Commercial operation</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>6/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Freeport Energy Center</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>Construction began</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>9/04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">
    Goldendale Energy Center</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>Commercial operation</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
See Item&nbsp;1. &#147;Business&nbsp;&#151; Recent
Developments&#148; for 2005 developments.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Annual Meeting of Stockholders on May&nbsp;26, 2004</I></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Stockholders&#146; Voting Results</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Election of Ann B. Curtis, Kenneth T. Derr and Gerald Greenwald
as Class&nbsp;II Directors for a three-year term expiring 2007
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Proposal to amend the Company&#146;s Amended and Restated
    Certificate of Incorporation to increase the number of
    authorized shares of Common Stock&nbsp;&#151; approved</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Proposal to amend the Company&#146;s 1996 Stock Incentive Plan
    to increase the number of shares of the Company&#146;s Common
    Stock available for grants of options and other stock-based
    awards under such plan&nbsp;&#151; approved</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Proposal to amend the Company&#146;s 2000 Employee Stock
    Purchase Plan to increase the number of shares of the
    Company&#146;s Common Stock available for grants of purchase
    rights under such plan&nbsp;&#151; approved</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Proposal that the Company cease and desist geothermal
    development activities in the Medicine Lake Highlands and
    requesting the Company to adopt an indigenous peoples
    policy&nbsp;&#151; rejected</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Proposal that the Company&#146;s Compensation Committee of its
    Board of Directors utilize performance and time-based restricted
    share programs in lieu of stock options in developing future
    senior executive equity compensation plans&nbsp;&#151; rejected</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Proposal requesting the Company&#146;s Board of Directors to
    study and report on the feasibility of enabling stockholders to
    imitate the voting decisions of an institutional
    investor&nbsp;&#151; rejected</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Ratification of the appointment of PricewaterhouseCoopers LLP as
    independent registered public accounting firm for the fiscal
    year ending December&nbsp;31, 2004&nbsp;&#151; approved</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The three-year terms of Class&nbsp;I and Class&nbsp;III
Directors continued after the Annual Meeting and will expire in
2006 and 2005, respectively. The Class&nbsp;I Directors are
Jeffrey E. Garten, George J. Stathakis and John O. Wilson. The
Class&nbsp;III Directors are Peter Cartwright, Susan C. Schwab
and Susan Wang.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NYSE CERTIFICATION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The annual certification of our Chief Executive Officer, Peter
Cartwright, required to be furnished to the New York Stock
Exchange pursuant to Section&nbsp;303A.12(a) of the NYSE Listed
Company Manual was previously filed with the New York Stock
Exchange in May 2004. The certification confirmed that he was
unaware of any violation by the Company of NYSE&#146;s corporate
governance listing standards.
</DIV>

<P align="center" style="font-size: 10pt;">45

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<A name='103'></A>
</DIV>

<!-- link1 "Item 2. Properties" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;2.</B></TD>
    <TD>
    <B><I>Properties</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our principal executive office located in San&nbsp;Jose,
California is held under leases that expire through 2014, and we
also lease offices, with leases expiring through 2014, in
Dublin, Sacramento and Folsom, California; Houston and Pasadena,
Texas; Boston, Massachusetts; Washington,&nbsp;D.C.; Calgary,
Alberta; and Tampa and Jupiter, Florida. We hold additional
leases for other satellite offices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We either lease or own the land upon which our power-generating
facilities are built. We believe that our properties are
adequate for our current operations. A description of our
power-generating facilities is included under Item&nbsp;1.
&#147;Business.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have leasehold interests in 105 leases comprising
25,944&nbsp;acres of federal, state and private geothermal
resource lands in The Geysers area in northern California. In
the Glass&nbsp;Mountain and Medicine Lake areas in northern
California, we hold leasehold interests in 41 leases comprising
approximately 46,400&nbsp;acres of federal geothermal resource
lands.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In general, under these leases, we have the exclusive right to
drill for, produce and sell geothermal resources from these
properties and the right to use the surface for all related
purposes. Each lease requires the payment of annual rent until
commercial quantities of geothermal resources are established.
After such time, the leases require the payment of minimum
advance royalties or other payments until production commences,
at which time production royalties are payable. Such royalties
and other payments are payable to landowners, state and federal
agencies and others, and vary widely as to the particular lease.
The leases are generally for initial terms varying from 10 to
20&nbsp;years or for so long as geothermal resources are
produced and sold. Certain of the leases contain drilling or
other exploratory work requirements. In certain cases, if a
requirement is not fulfilled, the lease may be terminated and in
other cases additional payments may be required. We believe that
our leases are valid and that we have complied with all the
requirements and conditions material to the continued
effectiveness of the leases. A number of our leases for
undeveloped properties may expire in any given year. Before
leases expire, we perform geological evaluations in an effort to
determine the resource potential of the underlying properties.
We can make no assurance that we will decide to renew any
expiring leases.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Based on independent petroleum engineering reports of
Netherland, Sewell&nbsp;&#38; Associates Inc., as of
December&nbsp;31, 2004, utilizing year end product prices and
costs held constant, our proved oil, natural gas, and natural
gas liquids (&#147;NGLs&#148;) reserve volumes, in millions of
barrels (&#147;MMBbls&#148;) and billions of cubic feet
(&#147;Bcf&#148;) are as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="65%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>As of December&nbsp;31, 2004</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Oil and NGLs</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(MMBbls)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Gas (Bcf)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>United States</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proved developed</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>255</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proved undeveloped</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>118</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.6</TD>
    <TD align="left" valign="bottom" nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>373</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    2.6&nbsp;MMBbls of oil is equivalent to 15.6&nbsp;Bcf of gas
    using a conversion factor of six thousand cubic feet of gas to
    one barrel of crude oil and natural gas liquids. On an
    equivalent basis, proved reserves at year-end totaled
    389&nbsp;Bcfe.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Proved oil and natural gas reserves are the estimated quantities
of crude oil, natural gas and natural gas liquids which
geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known
reservoirs under existing economic and operating conditions.
Estimated future development costs associated with proved
producing and non-producing plus proved undeveloped reserves as
of December&nbsp;31, 2004, totaled approximately
$189.4&nbsp;million. No estimates of total, proved net oil or
gas reserves were filed with or included in reports to any other
federal authority or agency (other than the SEC) since
January&nbsp;1, 2004.
</DIV>

<P align="center" style="font-size: 10pt;">46

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth our interest in undeveloped
acreage, developed acreage and productive wells in which we own
a working interest as of December&nbsp;31, 2004. Gross
represents the total number of acres or wells in which we own a
working interest. Net represents our proportionate working
interest resulting from our ownership in the gross acres or
wells. Productive wells are wells in which we have a working
interest and are capable of producing oil or natural gas.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="50%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Productive</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Undeveloped Acres</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Developed Acres</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Wells</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Gross</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Net</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Gross</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Net</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Gross</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Net</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>United States</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Arkansas</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,759</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,555</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    California</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,321</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,158</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>49,745</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40,495</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>167</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>139</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Colorado</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,193</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,665</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>640</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>640</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Kansas(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>94,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>93,809</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Louisiana</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,998</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>647</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,023</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,947</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Mississippi</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,645</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>874</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,842</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,416</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Missouri(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23,848</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,892</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Montana</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>37,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35,377</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>960</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>240</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Offshore</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23,260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,141</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oklahoma</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>185</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,321</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Texas</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,130</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>99,606</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>51,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>601</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>299</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Utah</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>315</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>315</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Wyoming</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50,430</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50,430</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total United States</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>296,641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>262,429</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>209,756</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>117,874</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>920</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>499</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Company has determined that it will not develop the acreage
    reflected and shall let such expire per lease terms. Acreage was
    fully impaired for accounting purposes.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table shows our interest in undeveloped acreage as
of December&nbsp;31, 2004 which is subject to expiration in
2005, 2006 and 2007.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="25%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>


<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2006</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2007</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Thereafter</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Gross</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Net</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Gross</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Net</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Gross</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Net</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Gross</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Net</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    United States</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36,921</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28,215</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,721</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,494</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>114,537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>111,695</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>115,462</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>95,025</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth the number of gross exploratory
and gross development wells drilled in which we participated
during the last three fiscal years. The number of wells drilled
refers to the number of wells commenced at any time during the
respective fiscal year. Productive wells are either producing
wells or wells capable of commercial production. At
December&nbsp;31, 2004, we were in the process of drilling
4&nbsp;wells (net 1.8).
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="43%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Exploratory</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Development</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Productive</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Dry</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Productive</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Dry</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>2004</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    United States</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Canada</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>2003</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    United States</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Canada</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>158</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>161</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>178</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>186</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>2002</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    United States</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Canada</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>87</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>95</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>140</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">47

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth, for each of the last three
fiscal years, the number of net exploratory and net development
wells, drilled by us based on our proportionate working interest
in such wells:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="43%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Exploratory</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Development</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Productive</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Dry</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Productive</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Dry</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>2004</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    United States</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23.1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Canada</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16.2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39.3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>2003</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    United States</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21.9</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Canada</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>43.5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>61.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>65.4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>2002</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    United States</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39.2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Canada</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>43.1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>82.3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table shows our annual average wellhead sales
prices and average production costs. The average sales prices
with hedges include realized gains and losses for derivative
contracts we enter into with non-affiliates to manage price risk
related to our sales volumes. During 2004, all Canadian
properties were divested and such operations were reclassed to
discontinued operation. Thus, the majority of the following
information primarily reflects United States activity.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>With Hedges</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Without Hedges</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>NORTH AMERICA</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales price</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Natural gas (per Mcf)(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.02</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2.78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.02</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2.82</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and condensate (per barrel)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>39.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>35.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>51.22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>39.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>35.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>50.98</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Lease operating cost (per Mcfe)(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.73</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.73</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Production taxes (per Mcfe)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.05</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total production cost (per Mcfe)(3)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1.14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1.14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.84</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.78</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Thousand cubic feet.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Includes lifting costs, treating and transportation and workover
    costs.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    Thousand cubic feet equivalent.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;">
<A name='104'></A>
</DIV>

<!-- link1 "Item 3. Legal Proceedings" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;3.</B></TD>
    <TD>
    <B><I>Legal Proceedings</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
See Note&nbsp;25 of the Notes to Consolidated Financial
Statements for a description of our legal proceedings.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='105'></A>
</DIV>

<!-- link1 "Item 4. Submission of Matters to a Vote of Security Holders" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;4.</B></TD>
    <TD>
    <B><I>Submission of Matters to a Vote of Security Holders</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
None.
</DIV>

<P align="center" style="font-size: 10pt;">48

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<A name='106'></A>
</DIV>

<!-- link1 "PART II" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PART&nbsp;II</B>
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='107'></A>
</DIV>

<!-- link1 "Item 5. Market for Registrant&#146;s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;5.</B></TD>
    <TD>
    <B><I>Market for Registrant&#146;s Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity
    Securities</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our common stock is traded on The New York Stock Exchange under
the symbol &#147;CPN.&#148; Public trading of our common stock
commenced on September&nbsp;20, 1996. Prior to that, there was
no public market for our common stock. The following table sets
forth, for the periods indicated, the high and low sale price
per share of our common stock on The New York Stock Exchange:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="81%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>High</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Low</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>2004</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    First Quarter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4.35</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Quarter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.04</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Third Quarter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.87</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fourth Quarter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.24</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>2003</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    First Quarter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2.51</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Quarter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.33</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Third Quarter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.76</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fourth Quarter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.28</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of March&nbsp;30, 2005, there were approximately 2,380
holders of record of our common stock. On March&nbsp;30, 2005,
the last sale price reported on The New York Stock Exchange for
our common stock was $2.64&nbsp;per share.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have not declared any cash dividends on our common stock
during the past two fiscal years. 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, to repay debt, and for general
corporate purposes. In addition, our ability to pay cash
dividends is restricted under certain of 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 financial condition, contractual
restrictions and such other factors as the board of directors
may deem relevant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Security Repurchases</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On October&nbsp;20, 2004, Calpine Capital Trust
(&#147;Trust&nbsp;I&#148;) and Calpine Capital Trust&nbsp;II
(&#147;Trust&nbsp;II&#148;), respectively, redeemed all of the
$636.0&nbsp;million in aggregate principal amount outstanding of
their HIGH TIDES I and HIGH TIDES&nbsp;II (which were
exchangeable for Calpine common stock), and $19.7&nbsp;million
of their mandatorily redeemable common securities, upon our
redemption of all of the related underlying debentures (which
were convertible into Calpine common stock), for a total of
$655.7&nbsp;million plus accrued interest of $8.1&nbsp;million;
such redemption payment was immediately applied to redeem the
HIGH TIDES I, HIGH TIDES&nbsp;II and common securities. In
addition, on December&nbsp;27, 2004, we repurchased
$70.8&nbsp;million in principle amount of our 2006 Convertible
Senior Notes for $70.8&nbsp;million plus accrued interest of
$1.4&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth the total units of HIGH TIDES and
2006 Convertible Senior Notes we purchased in the fourth quarter
of 2004.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="33%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Maximum</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>of Units/Notes</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Purchased as</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Units/Notes</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Part of Publicly</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>that may yet be</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Announced</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Purchased</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Units/Notes</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Price Paid per</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Plans or</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>under the Plans</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Period</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Purchased</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Unit/Note</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Programs</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>or Programs</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    10/1/04&nbsp;&#150; 10/31/04</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,112,660</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    11/1/04&nbsp;&#150; 11/30/04</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    12/1/04&nbsp;&#150; 12/31/04</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">49
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Total number of units purchased in October were comprised of
5,690,228&nbsp;units of HIGH&nbsp;TIDES&nbsp;I and
7,422,432&nbsp;units of HIGH&nbsp;TIDES&nbsp;II, and units
purchased in December are comprised of the 2006 Convertible
Senior Notes. In addition to par or face value purchased,
accrued interest paid was approximately $.63&nbsp;per share on
HIGH&nbsp;TIDES&nbsp;I, $.60&nbsp;per share on
HIGH&nbsp;TIDES&nbsp;II, and $20&nbsp;per note on the 2006
Convertible Senior Notes. 100% of the common securities issued
by Trust&nbsp;I and Trust&nbsp;II and a portion of the
HIGH&nbsp;TIDES&nbsp;I and II were owned by Calpine and,
accordingly, the cash paid to redeem such common securities and
HIGH&nbsp;TIDES was returned to Calpine.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='108'></A>
</DIV>

<!-- link1 "Item 6. Selected Financial Data" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;6.</B></TD>
    <TD>
    <B><I>Selected Financial Data</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Selected Consolidated Financial Data</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="37%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B>Years Ended December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2001</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2000</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B>(In thousands, except earnings per share)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Statement of Operations data:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9,229,888</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,871,033</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,349,753</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6,565,893</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,264,495</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income before discontinued operations and cumulative effect of a
    change in accounting principle</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(440,826</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>86,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>26,722</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>527,772</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>315,148</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>198,365</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,969</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>91,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>94,684</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>53,936</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative effect of a change in accounting principle</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>180,943</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,036</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(242,461</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>282,022</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>118,618</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>623,492</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>369,084</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Basic earnings per common share:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income before discontinued operations and cumulative effect of a
    change in accounting principle</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1.02</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1.74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1.12</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.19</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative effect of a change in accounting principle, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.56</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2.05</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1.31</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Diluted earnings per common share:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income before discontinued operations and cumulative effect of a
    change in accounting principle</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1.02</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1.54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1.02</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax provision</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.16</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative effect of a change in accounting principle, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.56</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1.80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1.18</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Balance Sheet data:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>27,216,088</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>27,303,932</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>23,226,992</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>21,937,227</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>10,610,232</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Short-term debt and capital lease obligations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,033,956</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>349,128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,651,448</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>903,307</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>64,525</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term debt and capital lease obligations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,940,809</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,328,181</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,462,290</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,490,175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,018,044</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Company-obligated mandatorily redeemable convertible preferred
    securities of subsidiary trusts(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,123,969</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,122,924</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,122,390</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Included in long-term debt as of December&nbsp;31, 2003 and
    2004. See Note&nbsp;12 of the Notes to Consolidated Financial
    Statements for more information.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">50
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="37%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B>Years Ended December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2001</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2000</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B>(In thousands)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Reconciliation of GAAP cash provided from operating
    activities to EBITDA, as adjusted(1):</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash provided by operating activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9,895</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>290,559</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,068,466</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>423,569</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>875,751</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Changes in operating assets and liabilities, excluding the
    effects of acquisitions(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(137,614</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(609,840</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>480,193</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(359,640</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>277,696</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Additional adjustments to reconcile net income to net cash
    provided by operating activities, net(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>389,970</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>618,377</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>469,655</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>159,717</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>228,971</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    GAAP net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(242,461</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>282,022</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>118,618</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>623,492</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>369,084</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Income) loss from unconsolidated investments in power projects
    and oil and gas properties</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,525</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(75,804</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,552</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,946</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28,796</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Distributions from unconsolidated investments in power projects
    and oil and gas properties</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,869</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>141,627</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,117</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,983</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,979</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Adjusted net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(199,067</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>347,845</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>116,183</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>612,529</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>370,267</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,140,802</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>706,307</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>402,677</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>190,971</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>78,373</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">3</FONT>
    of operating lease expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35,295</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>37,357</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>37,007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33,173</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,154</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Distributions on trust preferred securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>46,610</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>62,632</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>62,412</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45,076</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Provision (benefit) for income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(276,549</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,495</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,835</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>273,137</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>211,670</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Depreciation, depletion and amortization expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>840,916</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>568,204</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>423,102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>275,396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>169,278</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest expense, provision for income taxes and depreciation
    from discontinued operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>112,487</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>84,489</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>128,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>165,217</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>127,914</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>EBITDA, as adjusted(1)</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,653,885</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,799,307</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,181,336</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,612,835</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,023,732</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    This non-GAAP measure is presented not as a measure of operating
    results, but rather as a measure of our ability to service debt
    and to raise additional funds. It should not be construed as an
    alternative to either (i)&nbsp;income from operations or
    (ii)&nbsp;cash flows from operating activities. It is defined as
    net income less income from unconsolidated investments, plus
    cash received from unconsolidated investments, plus provision
    for tax, plus interest expense (including distributions on trust
    preferred securities and one-third of operating lease expense,
    which is management&#146;s estimate of the component of
    operating lease expense that constitutes interest expense,) plus
    depreciation, depletion and amortization. The interest, tax and
    depreciation and amortization components of discontinued
    operations are added back in calculating EBITDA, as adjusted.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
     For the year ended December&nbsp;31, 2004, EBITDA, as adjusted,
    includes a $246.9&nbsp;million gain from the repurchase of debt,
    offset by approximately $223.4&nbsp;million of certain charges,
    consisting primarily of foreign currency transaction losses,
    write-off of deferred financing costs not related to the bonds
    repurchased, equipment cancellation and impairment costs,
    certain mark-to-market activity, and minority interest expense,
    some of which required, or will require cash settlement.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
     For the year ended December&nbsp;31, 2003, EBITDA, as adjusted,
    includes a $180.9&nbsp;million (net of tax) gain from the
    cumulative effect of a change in accounting principle and a
    $278.6&nbsp;million gain from the repurchase of debt, offset by
    approximately $273.0&nbsp;million of certain charges, consisting
    primarily of foreign currency transaction losses, equipment
    cancellation and impairment costs, certain mark-to-</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">51

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    market activity, and minority interest expense, some of which
    required, or will require cash settlement. EBITDA, as adjusted
    for the year ended December&nbsp;31, 2002, includes a non-cash
    equipment cancellation charge of $404.7&nbsp;million, a
    $118.0&nbsp;million gain on the repurchase of debt, and
    approximately $55.0&nbsp;million of certain charges, some of
    which required, or will require cash settlement.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    See the Consolidated Statements of Cash Flows for further detail
    of these items.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Selected Operating Information</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="29%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B>Years Ended December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2001</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2000</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B>(Dollars in thousands, except production and pricing data)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Power Plants(1):</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Electricity and steam (&#147;E&#38;S&#148;) revenues:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Energy</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,224,463</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,361,095</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,273,524</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,701,533</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,220,684</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Capacity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>991,142</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>844,195</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>781,127</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>525,174</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>376,085</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Thermal and other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>467,458</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>475,107</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>182,859</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>158,617</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>99,297</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Subtotal</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5,683,063</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,680,397</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,237,510</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,385,324</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,696,066</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Spread on sales of purchased power(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>164,747</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24,118</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>527,546</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>345,834</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,262</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Adjusted E&#38;S revenues</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5,847,810</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,704,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,765,056</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,731,158</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,707,328</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    MWh produced</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>96,488,984</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>82,423,422</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>72,767,280</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42,393,726</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,749,588</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    All-in electricity price per MWh generated</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>60.61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>57.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>51.74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>64.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>75.05</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    From continuing operations only. Discontinued operations are
    excluded.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    From hedging, balancing and optimization activities related to
    our generating assets.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Set forth above is certain selected operating information for
our power plants for which results are consolidated in our
statements of operations. Electricity revenue is composed of
fixed capacity payments, which are not related to production,
and variable energy payments, which are related to production.
Capacity revenues include, besides traditional capacity
payments, other revenues such as Reliability Must Run and
Ancillary Service revenues. The information set forth under
thermal and other revenue consists of host steam sales and other
thermal revenue.
</DIV>

<P align="center" style="font-size: 10pt;">52
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Set forth below is a table summarizing the dollar amounts and
percentages of our total revenue for the years ended
December&nbsp;31, 2004, 2003, and 2002, that represent purchased
power and purchased gas sales for hedging and optimization and
the costs we incurred to purchase the power and gas that we
resold during these periods (in thousands, except percentage
data):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="59%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Year Ended December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9,229,888</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,871,033</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,349,753</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales of purchased power for hedging and optimization(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,651,767</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,714,187</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,145,991</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    As a percentage of total revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17.9</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30.6</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42.8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sale of purchased gas for hedging and optimization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,728,301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,320,902</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>870,466</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    As a percentage of total revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18.7</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14.9</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11.8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total cost of revenue (&#147;COR&#148;)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,874,795</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,106,796</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,388,269</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchased power expense for hedging and optimization(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,487,020</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,690,069</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,618,445</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    As a percentage of total COR</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16.8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33.2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>41.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchased gas expense for hedging and optimization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,716,714</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,279,568</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>821,065</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    As a percentage of total COR</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15.8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12.9</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    On October&nbsp;1, 2003, we adopted on a prospective basis EITF
    Issue No. 03-11 and netted purchases of power against sales of
    purchased power. See Note&nbsp;2 of the Notes to Consolidated
    Financial Statements for a discussion of our application of EITF
    Issue No.&nbsp;03-11.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The primary reasons for the significant levels of these sales
and costs of revenue items include: (a)&nbsp;significant levels
of hedging, balancing and optimization activities by our CES
risk management organization; (b)&nbsp;particularly volatile
markets for electricity and natural gas, which prompted us to
frequently adjust our hedge positions by buying power and gas
and reselling it; (c)&nbsp;the accounting requirements under
Staff Accounting Bulletin (&#147;SAB&#148;) No.&nbsp;101,
&#147;Revenue Recognition in Financial Statements,&#148; and
EITF Issue No.&nbsp;99-19, &#147;Reporting Revenue Gross as a
Principal versus Net as an Agent,&#148; under which we show most
of our hedging contracts on a gross basis (as opposed to netting
sales and cost of revenue); and (d)&nbsp;rules in effect
associated with the NEPOOL market in New England, which require
that all power generated in NEPOOL be sold directly to the ISO
in that market; we then buy from the ISO to serve our customer
contracts. GAAP required us to account for this activity, which
applies to three of our merchant generating facilities, as the
aggregate of two distinct sales and one purchase until our
prospective adoption of EITF Issue No.&nbsp;03-11 on
October&nbsp;1, 2003. This gross basis presentation increased
revenues but not gross profit. The table below details the
financial extent of our transactions with NEPOOL for financial
periods prior to the adoption of EITF Issue No.&nbsp;03-11. Our
entrance into the NEPOOL market began with our acquisition of
the Dighton, Tiverton and Rumford facilities on
December&nbsp;15, 2000.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="62%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Nine Months</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Ended</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Year Ended</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>September&nbsp;30,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(In thousands)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales to NEPOOL from power we generated</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>258,945</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>294,634</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales to NEPOOL from hedging and other activity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>117,345</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>106,861</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total sales to NEPOOL</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>376,290</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>401,495</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total purchases from NEPOOL</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>310,025</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>360,113</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(The statement of operations data information and the balance
sheet data information contained in the Selected Financial Data
is derived from the audited Consolidated Financial Statements of
Calpine Corporation and Subsidiaries. See the Notes to the
Consolidated Financial Statements and Item&nbsp;7.
&#147;Management&#146;s
</DIV>

<P align="center" style="font-size: 10pt;">53

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
Discussion and Analysis of Financial Condition and Results of
Operations&nbsp;&#151; Results of Operations&#148; for
additional information.)
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='109'></A>
</DIV>

<!-- link1 "Item 7. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;7.</B></TD>
    <TD>
    <B><I>Management&#146;s Discussion and Analysis of Financial
    Condition and Results of Operations</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Overview</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our core business and primary source of revenue is the
generation and delivery of electric power. We provide power to
our U.S., Canadian and U.K. customers through the integrated
development, construction or acquisition, and operation of
efficient and environmentally friendly electric power plants
fueled primarily by natural gas and, to a much lesser degree, by
geothermal resources. We own and produce natural gas and to a
lesser extent oil, which we use primarily to lower our costs of
power production and provide a natural hedge of fuel costs for a
portion of our electric power plants, but also to generate some
revenue through sales to third parties. We protect and enhance
the value of our electric and gas assets with a sophisticated
risk management organization. We also protect our power
generation assets and control certain of our costs by producing
certain of the combustion turbine replacement parts that we use
at our power plants, and we generate revenue by providing
combustion turbine parts to third parties. Finally, we offer
services to third parties to capture value in the skills we have
honed in building, commissioning, repairing and operating power
plants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our key opportunities and challenges include:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    preserving and enhancing our liquidity while spark spreads (the
    differential between power revenues and fuel costs) are
    depressed,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    selectively adding new load-serving entities and power users to
    our customer list as we increase our power contract portfolio,</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    continuing to add value through prudent risk management and
    optimization activities,&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    lowering our costs of production through various efficiency
    programs.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Since the latter half of 2001, there has been a significant
contraction in the availability of capital for participants in
the energy sector. This has been due to a range of factors,
including uncertainty arising from the collapse of Enron and a
near-term surplus supply of electric generating capacity in
certain market areas. These factors coupled with a three-year
period of decreased spark spreads have adversely impacted our
liquidity and earnings. While we have generally been able to
continue to access the capital and bank credit markets on terms
acceptable to us, we recognize that the terms of financing
available to us in the future may not be attractive. To protect
against this possibility and due to current market conditions,
we scaled back our capital expenditure program to enable us to
conserve our available capital resources. In 2004 we completed
several strategic financings including the refinancing of our
CalGen, formerly Calpine Construction Finance Company&nbsp;II,
LLC (&#147;CCFC&nbsp;II&#148;), revolving construction facility
indebtedness of approximately $2.5&nbsp;billion, and the
issuance of $785&nbsp;million of
9<FONT style="font-size: 70%"><SUP>5</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%
First Priority Senior Secured Notes Due 2014 and
$736&nbsp;million of Contingent Convertible Notes Due 2014
(&#147;2014 Convertible Notes&#148;), all of which are further
discussed in Note&nbsp;17 of the Notes to Consolidated Financial
Statements. Debt maturities are relatively modest in 2005 and
2006 as shown in Note&nbsp;11 of the Notes to Consolidated
Financial Statements, but we face several challenges over the
next two to three years as our cash requirements (including our
refinancing obligations) are expected to exceed our unrestricted
cash on hand and cash from operations. Accordingly, we have in
place a liquidity-enhancing program which includes possible
sales or monitizations of certain of our assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Set forth below are the Results of Operations for the years
ending December&nbsp;31, 2004, 2003, and 2002 (in millions,
except for unit pricing information, percentages and MW volumes;
in the comparative tables below, increases in revenue/income or
decreases in expense (favorable variances) are shown without
brackets. Decreases in revenue/income or increases in expense
(unfavorable variances) are shown with brackets). Prior year
amounts have been reclassified for discontinued operations.
</DIV>

<P align="center" style="font-size: 10pt;">54

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Results of Operations</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Year Ended December&nbsp;31, 2004, Compared to Year Ended
    December&nbsp;31, 2003</I></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Revenue</I></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="54%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9,230.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,871.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>359.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The increase in total revenue is explained by category below.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="51%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Electricity and steam revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5,683.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,680.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,002.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21.4</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Transmission sales revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30.7</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales of purchased power for hedging and optimization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,651.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,714.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,062.4</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(39.1</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total electric generation and marketing revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,354.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,409.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(55.0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Electricity and steam revenue increased as we completed
construction and brought into operation five new baseload power
plants and two project expansions in 2004. Average MW in
operation of our consolidated plants increased by 23% to
24,690&nbsp;MW while generation increased by 17%. The increase
in generation lagged behind the increase in average MW in
operation as our baseload capacity factor dropped to 50% in 2004
from 53% in 2003 primarily due to the increased occurrence of
unattractive off-peak market spark spreads in certain areas due
in part to mild weather, which caused us to cycle off certain of
our merchants plants without contracts in off peak hours, and
also due to oversupply conditions which are expected to
gradually work off over the next several years. Average realized
electricity prices, before the effects of hedging, balancing and
optimization, increased to $58.90/ MWh in 2004 from $56.79/ MWh
in 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Transmission sales revenue increased in 2004 due to the
increased emphasis in optimizing our portfolio through the
resale of our underutilized transmission positions in the short-
to mid-term markets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales of purchased power for hedging and optimization decreased
during 2004 due primarily to netting of approximately $1,676.0
of sales of purchased power with purchased power expense in 2004
compared to $256.6 in 2003 (netting in 2003 occurred only in the
fourth quarter) in connection with the adoption of EITF Issue
No.&nbsp;03-11 on a prospective basis in the fourth quarter of
2003, partly offset by higher volumes and higher realized prices
on hedging, balancing and optimization activities. Without this
netting, sales of purchased power would have increased by
$357.0, or 12.0%.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="51%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas sales</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>63.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>59.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6.8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales of purchased gas for hedging and optimization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,728.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,320.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>407.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30.8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total oil and gas production and marketing revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,791.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,380.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>411.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29.8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Oil and gas sales are net of internal consumption, which is
eliminated in consolidation. Internal consumption decreased from
$285.0 in 2003 to $208.2 in 2004 as a result of lower production
following asset sales of our Canadian natural gas reserves and
petroleum assets and our Rocky Mountain gas reserves. Before
intercompany eliminations, oil and gas sales decreased by $72.8
to $271.4 in 2004 from $344.2 in 2003 due primarily to a
reduction in production volumes.
</DIV>

<P align="center" style="font-size: 10pt;">55

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales of purchased gas for hedging and optimization increased
during 2004 due primarily to higher volumes and higher prices of
natural gas as compared to the same period in 2003.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="55%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Realized gain on power and gas mark-to-market transactions, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>48.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>24.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>23.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>98.4</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized (loss) on power and gas mark-to-market transactions,
    net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(34.7</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(50.7</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>31.6</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Mark-to-market activities, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>13.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(26.4</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>39.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>151.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Mark-to-market activities, which are shown on a net basis,
result from general market price movements against our open
commodity derivative positions, including positions accounted
for as trading under EITF Issue No.&nbsp;02-03 and other
mark-to-market activities. These commodity positions represent a
small portion of our overall commodity contract position.
Realized revenue represents the portion of contracts actually
settled and is offset by a corresponding change in unrealized
gains or losses as unrealized derivative values are converted
from unrealized forward positions to cash at settlement.
Unrealized gains and losses include the change in fair value of
open contracts as well as the ineffective portion of our cash
flow hedges.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2004, we recognized a net gain from mark-to-market
activities compared to net losses in 2003. In 2004 our exposure
to mark-to-market earnings volatility declined commensurate with
a corresponding decline in the volume of open commodity
positions underlying the exposure. As a result, the magnitude of
earnings volatility attributable to changes in prices declined.
We recorded a hedge ineffectiveness gain of approximately $7.6
in 2004 versus a hedge ineffectiveness loss of $1.8 for the
corresponding period in 2003. Additionally, during 2004 we
recorded gains of $9.2 on a mark-to-market derivative contract
that was terminated during 2004 versus a mark-to-market loss of
$15.5 on the same contract in 2003.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="59%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>70.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>107.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(37.4</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(34.8</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Other revenue decreased during 2004 primarily due to a one-time
pre-tax gain of $67.3 realized during 2003, in connection with
our settlement with Enron, principally related to the final
negotiated settlement of claims and amounts owed under
terminated commodity contracts. The decrease in 2004 was
partially offset by increases of $13.3 and $12.0 from combustion
turbine parts sales and repair and maintenance services
performed by TTS and construction management and operating
services performed by CPSI, respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Cost of Revenue</I></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="54%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cost of revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,874.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,106.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(768.0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(9.5</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The increase in total cost of revenue is explained by category
below.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="51%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Plant operating expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>796.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>663.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(133.0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(20.1</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Royalty expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3.8</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(15.3</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Transmission purchase expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>85.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>46.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(39.0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(83.9</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchased power expense for hedging and optimization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,487.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,690.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,203.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44.7</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total electric generation and marketing expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,397.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,424.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,027.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Plant operating expense increased as five new baseload power
plants and two expansion projects were completed during 2004,
and due to higher major maintenance expense on existing plants
as many of our newer power plants performed their initial major
maintenance work. In North America, 25 of our gas-fired plants
performed major maintenance work, an increase of 67% over the
number of plants that did so in 2003. In addition, during 2004
we incurred $54.3 for equipment failure costs compared to $11.0
in 2003.
</DIV>

<P align="center" style="font-size: 10pt;">56

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Transmission purchase expense increased primarily due to
additional power plants achieving commercial operation in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Approximately 76% of the royalty expense for 2004 vs. 78% for
2003 is attributable to royalties paid to geothermal property
owners at The Geysers, mostly as a percentage of geothermal
electricity revenues. The increase in royalty expense in 2004
was due primarily to a $2.5 increase in royalties at The
Geysers, and the remainder was due to an increase in the accrual
of contingent purchase price payments to the previous owners of
the Texas City and Clear Lake Power Plants based on a percentage
of gross revenues at these two plants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Purchased power expense for hedging and optimization decreased
during 2004 as compared to 2003 due primarily to netting of
approximately $1,676.0 of purchased power expense against sales
of purchased power in 2004 compared to $256.6 in 2003, in
connection with the adoption of EITF Issue No.&nbsp;03-11 in the
fourth quarter of 2003, partly offset by higher volumes and
higher realized prices on hedging, balancing and optimization
activities. Without this netting, purchased power expense would
have increased by $216.4 or 7.3%.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas production expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>48.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>56.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas exploration expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>58.9</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas operating expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>56.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>75.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24.8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchased gas expense for hedging and optimization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,716.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,279.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(437.1</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(34.2</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total oil and gas operating and marketing expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,773.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,355.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(418.4</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(30.9</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Oil and gas production expense decreased during 2004 as compared
to the same period in 2003 primarily due to lower lease
operating expense resulting from lower production volumes due to
the sales of oil and gas properties completed in the fourth
quarter of 2003 and third quarter of 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Oil and gas exploration expense decreased primarily as a result
of a decrease in dry hole costs resulting from declines in
capital expenditures driven by a lower operating base due to
sales of oil and gas properties completed in the fourth quarter
of 2003 and third quarter of 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Purchased gas expense for hedging and optimization increased
during 2004 due to higher volumes and higher prices for gas in
2004.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="51%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fuel expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cost of oil and gas burned by power plants</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,732.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,677.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1,055.4</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(39.4</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Recognized (gain)&nbsp;on gas hedges</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1.5</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11.6</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10.1</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(87.1</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total fuel expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,731.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,665.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1,065.5</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(40.0</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Cost of oil and gas burned by power plants increased during 2004
as compared to 2003 due to a 17.4% increase in gas consumption
as we increased our MW production and higher prices for gas
excluding the effects of hedging, balancing and optimization.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Depreciation, depletion and amortization expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>574.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>504.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(69.8</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(13.8</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Depreciation, depletion and amortization expense increased in
2004 primarily due to additional power plants achieving
commercial operation subsequent to 2003.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas impairment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>202.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(199.2</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6,869.0</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">57

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As a result of decreases in proved undeveloped reserves located
in South Texas and proved developed non-producing reserves in
Offshore Gulf of Mexico a non-cash impairment charge of
approximately $202.1 was recorded as of December&nbsp;31, 2004.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Operating lease expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>105.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>112.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Operating lease expense decreased during 2004 as compared to
2003 primarily because the King City lease terms were
restructured and the lease began to be accounted for as a
capital lease. As a result, we ceased incurring operating lease
expense on that lease and instead began to incur depreciation
and interest expense.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other cost of revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>90.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>42.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(48.4</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(114.4</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Other cost of revenue increased during 2004 as compared to 2003
primarily due to $29.0 of amortization expense in 2004 versus
$10.6 in 2003 incurred from the adoption of DIG Issue
No.&nbsp;C20. In the fourth quarter of 2003, we recorded a
pre-tax mark-to-market gain of $293.4 as a cumulative effect of
a change in accounting principle. This gain is amortized as
expense over the respective lives of the two power sales
contracts from which the mark-to-market gains arose. We also
incurred $11.3 of additional expense from TTS in 2004, as the
entity had a full year of activity (we acquired TTS in late
February of 2003). Additionally, CPSI cost of revenue increased
$10.8 in 2004 compared to 2003 due to an increase in services
contract activity.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>(Income)/ Expense</I></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="59%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Income) loss from unconsolidated investments in power projects
    and oil and gas properties</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>13.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(75.8</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(89.3</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(117.8</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The reduction in income was primarily due to a non-recurring
$52.8 gain in 2003, representing our 50% share, on the
termination of the tolling arrangement with Aquila Merchant
Services, Inc. (&#147;AMS&#148;) at the Acadia Energy Center and
a loss of $11.6 realized in 2004, representing our share of a
jury award to International Paper Company (&#147;IP&#148;) in a
litigation relating to Androscoggin Energy LLC
(&#147;AELLC&#148;) together with a $5 impairment charge
recorded when Androscoggin filed for bankruptcy protection in
the fourth quarter of 2004. Also, we did not have any income on
our Gordonsville investment in 2004, compared to $12.0 in 2003,
as we sold our interest in this facility in November 2003. For
further information, see Note&nbsp;7 of the Notes to
Consolidated Financial Statements.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Equipment cancellation and impairment cost</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>42.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>64.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>22.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34.2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2004, the pre-tax equipment cancellation and impairment
charge was primarily a result of charges of $33.7 related to
cancellation costs of six heat recovery steam generators
(&#147;HRSG&#148;) orders and HRSG component parts cancellations
and impairments. In 2003 the pre-tax equipment cancellation and
impairment charge was primarily a result of cancellation costs
related to three turbines and three HRSGs and impairment charges
related to four turbines.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term service agreement cancellation charge</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>11.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>16.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>31.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Long-term service agreement (&#147;LTSA&#148;) cancellation
charges decreased primarily due to $14.1 in cancellation costs
incurred in 2003 associated with LTSAs with General Electric
related to our Rumford, Tiverton and Westbrook facilities. In
2004 the decrease was offset by a $7.7 adjustment as a result of
settlement negotiations related to the cancellation of LTSAs
with Siemens-Westinghouse Power Corporation at our Hermiston,
Ontelaunee, South Point and Sutter facilities and a $3.8
adjustment as a result of LTSA
</DIV>

<P align="center" style="font-size: 10pt;">58
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
cancellation settlement negotiations with General Electric
regarding cancellation charges at our Los Medanos facility.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Project development expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>24.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>21.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(2.6</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11.9</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Project development expense increased during 2004 primarily due
to higher costs associated with cancelled projects, and due to
costs incurred in 2004 on oil and gas storage, pipeline and
liquid natural gas projects.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Research and development expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>10.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(7.8</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(73.6</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Research and development expense increased in 2004 as compared
to 2003 primarily due to increased personnel expense related to
gas turbine component research and development programs at our
PSM subsidiary.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales, general and administrative expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>239.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>216.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(22.8</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10.5</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales, general and administrative expense increased in 2004 due
primarily to an increase of $20.4 of Sarbanes-Oxley 404 internal
control project costs. Sales, general and administrative expense
expressed per MWh of generation decreased to $2.48/MWh in 2004
from $2.63/MWh in 2003, due to a 17% increase in MWh generated
as more plants entered commercial operation.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="56%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,140.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>706.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(434.5</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(61.5</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interest expense increased as a result of higher average debt
balances, higher average interest rates and lower capitalization
of interest expense. Interest capitalized decreased from $444.5
in 2003 to $376.1 in 2004 as a result of new plants that entered
commercial operations (at which point capitalization of interest
expense ceases). We expect that the amount of interest
capitalized will continue to decrease in future periods as our
plants in construction are completed. Additionally during 2004,
(i)&nbsp;interest expense related to our senior notes and term
loans increased $125.8; (ii)&nbsp;interest expense related to
our CalGen financing was responsible for an increase of $113.7;
(iii)&nbsp;interest expense related to our notes payable and
borrowings under lines of credit increased $40.0;
(iv)&nbsp;interest expense related to our CCFC I financing
increased $26.1; and (v)&nbsp;interest expense related to our
preferred interests increased $28.7. The majority of the
remaining increase relates to an increase in average
indebtedness due primarily to the deconsolidation of our three
Calpine Capital Trust subsidiaries (the &#147;Trusts&#148;)
which issued the HIGH TIDES&nbsp;I, II and III and recording of
debt to the Trusts due to the adoption of Financial Accounting
Standards Board (&#147;FASB&#148;) Interpretation No.
(&#147;FIN&#148;)&nbsp;46, &#147;Consolidation of Variable
Interest Entities, an interpretation of ARB 51&#148;
(&#147;FIN&nbsp;46&#148;) prospectively on October&nbsp;1, 2003
(see Note&nbsp;2 of the Notes to Consolidated Financial
Statements for a discussion of our adoption of FIN&nbsp;46).
Interest expense related to the notes payable to the Trusts
during 2004 was $58.6. The distributions were excluded from the
interest expense caption on our Consolidated Statements of
Operations through the nine months ended September&nbsp;30,
2003, while $15.1 of interest expense related to the Trusts was
recorded for the quarter ending December&nbsp;31, 2003. The HIGH
TIDES&nbsp;I and&nbsp;II and the related notes payable to the
Trusts were redeemed in October 2004.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Distributions on trust preferred securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>46.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>46.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(100</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As discussed above, as a result of the deconsolidation of the
Trusts upon adoption of FIN&nbsp;46 as of October&nbsp;1, 2003,
the distributions paid on the HIGH TIDES&nbsp;I, II and III
during 2004 were no longer recorded on our books and were
replaced prospectively by interest expense on our debt to the
Trusts.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest (income)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(56.4</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(39.7</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>16.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">59

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The increase in interest (income) in 2004 is due to an increase
in cash and cash equivalents and restricted cash balances during
the year. Additionally, we generated interest income on the
repurchases of our HIGH TIDES&nbsp;I, II and III. For further
information, see Note&nbsp;3 of the Notes to Consolidated
Financial Statements.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Minority interest expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>34.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>27.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(7.4</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(27.1</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Minority interest expense increased during 2004 as compared to
2003 due to our reduced ownership percentage in the Calpine
Power Limited Partnership (&#147;CPLP&#148;) following the sale
of our interest in the Calpine Power Income Fund
(&#147;CPIF&#148;) which owns 70% of CPLP. Our 30% interest is
subordinate to CPIF&#146;s interest.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="56%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Income) from the repurchase of various issuances of debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(246.9</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(278.6</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(31.7</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11.4</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Income from repurchases of various issuances of debt during 2004
decreased by $31.7 from the corresponding period primarily as a
result of lower face amounts of debt repurchased in open market
and privately negotiated transactions.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="57%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other (income), net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(149.1</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(46.1</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>103.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>223.4</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Other income increased in 2004 as compared to 2003 primarily due
to (a)&nbsp;pre-tax income in 2004 in the amount of $171.5
associated with the restructuring of power purchase agreements
for our Newark and Parlin power plants and the sale of Utility
Contract Funding&nbsp;II, LLC, net of transaction costs and the
write-off of unamortized deferred financing costs,
(b)&nbsp;$16.4 pre-tax gain from the restructuring of a
long-term gas supply contract net of transaction costs and
(c)&nbsp;$12.3 pre-tax gain from the King City restructuring
transaction related to the sale of our debt securities that had
served as collateral under the King City lease, net of
transaction costs. In addition, during 2004, foreign currency
transaction losses totaled $25.1, compared to losses of $33.3 in
the corresponding period in 2003. See further discussion of our
currency transaction losses under &#147;Financial Market
Risks&#148;.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2003, we recorded a gain of $62.2 on the sale of oil and gas
properties and a gain of $57.0 from a contract termination of
the RockGen facility.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Provision (benefit) for income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(276.5</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>285.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,352.9</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For 2004, the effective rate was 38.6% as compared to 9.0% for
2003. The variance in the effective rate is primarily due to the
sale of oil and gas assets in Canada, resulting in reclassifying
certain permanent difference deduction items primarily related
to cross border financings to discontinued operations.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>198.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>15.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(183.4</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,222.7</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The 2004 discontinued operations activity includes the effects
of the sale of our 50% interest in the Lost Pines 1 Power
Project, the sale of our oil and gas reserves in the Colorado
Piceance Basin and New Mexico San&nbsp;Juan Basin and the sale
of our Canadian natural gas reserves and petroleum assets, all
of which resulted in a gain on sale, pre-tax, of $239.6. The
2003 discontinued operations activity includes the operational
reclasses to discontinued operations related to Lost
Pines&nbsp;1 Power Project, the sale of our Alvin South Field
oil and gas assets, the sale of our oil and gas reserves in the
United States and Canada, and the sale of our specialty data
center engineering business. For more information about
discontinued operations, see Note&nbsp;10 of the Notes to
Consolidated Financial Statements.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="59%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative effect of a change in accounting principle, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>180.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(180.9</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(100.0</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">60

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The 2003 gain from the cumulative effect of a change in
accounting principle included three items: (1)&nbsp;a gain of
$181.9, net of tax effect, from the adoption of DIG Issue
No.&nbsp;C20; (2)&nbsp;a loss of $1.5 associated with the
adoption of FIN&nbsp;46, as revised (&#147;FIN&nbsp;46-R&#148;)
and the deconsolidation of the Trusts which issued the HIGH
TIDES. The loss of $1.5 represents the reversal of a gain, net
of tax effect, recognized prior to the adoption of FIN&nbsp;46-R
on our repurchase of $37.5 of the value of HIGH TIDES by issuing
shares of our common stock valued at $35.0; and (3)&nbsp;a gain
of $0.5, net of tax effect, from the adoption of
SFAS&nbsp;No.&nbsp;143 &#147;Accounting for Asset Retirement
Obligations&#148; (&#147;SFAS No.&nbsp;143&#148;).
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Net Income (Loss)</I></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="57%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(242.5</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>282.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(524.5</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(186.0</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Throughout 2004 we continued to focus on opportunities to add
value by adding to and increasing the performance of our power
plant portfolio. We added 3,655 MW to our fleet by completing
construction on five power plants and two expansion projects at
existing plants. Five of these seven facilities have much of
their output under long-term contracts. In March 2004 we
acquired the 570&nbsp;MW Brazos Valley Power Plant. Currently
our fleet includes 92 power plants in operation, totaling
26,649&nbsp;MW.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We generated 96.5&nbsp;million&nbsp;MWh in 2004, which equated
to a baseload capacity factor of 49.8%, and realized an average
spark spread of $21.24/MWh. In 2003 we generated
82.4&nbsp;million MWh, which equated to a capacity factor of
53.2%, and realized an average spark spread of $23.90/MWh.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Gross profit decreased by $409.1, or 54%, to $355.1 in 2004,
primarily due to: (i)&nbsp;$202.1 of impairment charges for
certain oil and gas reserves; (ii)&nbsp;non-recurring other
revenue of $67.3 recognized in 2003 from the settlement of
contract disputes with, and claims against, Enron; (iii) the
recording in 2004 of approximately $54.3 for equipment failure
costs within plant operating expense, compared to $11.0 in 2003;
(iv)&nbsp;the amortization of $29.0 in 2004 of the DIG Issue
No.&nbsp;C20 gain recorded in the fourth quarter of 2003 due to
the cumulative effect of a change in accounting principle; and
(v)&nbsp;soft market fundamentals, which caused total spark
spread, despite an increase of $79.2, or 4%, to not increase
commensurate with additional plant operating expense,
transmission purchase expense and depreciation costs associated
with new power plants coming on-line.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2004, financial results were also affected by a $387.9
increase in interest expense and distributions on our debt, as
compared to the same period in 2003. This occurred as a result
of higher debt balances, higher average interest rates and lower
capitalization of interest as new plants entered commercial
operation. Prior year results benefited from recording $52.8 (in
income from unconsolidated investments in power projects) due to
the termination of a power purchase agreement by the Acadia
joint venture.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Other income increased by $103.0 to $149.1 during 2004, as
compared to 2003, primarily due to: (i)&nbsp;pre-tax income in
the amount of $171.5, net of transaction costs and the write-off
of unamortized deferred financing costs, associated with the
restructuring of power purchase agreements for our Newark and
Parlin power plants and the sale of an entity holding a power
purchase agreement; (ii)&nbsp;a $16.4 pre-tax gain from the
restructuring of a long-term supply contract net of transaction
costs; and (iii)&nbsp;a $12.3 pre-tax gain from the King City
restructuring transaction related to the sale of our debt
securities that had served as collateral under the King City
lease, net of transaction costs. In 2003 we recorded a gain of
$62.2 on the sale of oil and gas properties and a gain of $57.0
from a contract termination at our RockGen facility. See further
discussion of our currency transaction losses under
&#147;Financial Market Risks.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2004, we recorded a charge of $42.4 for equipment
cancellation costs, primarily related to cancellation of HRSG
orders on two of our development projects. In 2003 there were
$64.4 in equipment cancellation charges. Also during 2004
foreign currency transaction losses were $25.1 compared to
losses of $33.3 in the corresponding period in 2003. We
recognized gains totaling $246.9 on repurchases of debt in 2004
compared to $278.6 in 2003 and loss before discontinued
operations and cumulative effect of a change in accounting
principle was $416.3 in 2004.
</DIV>

<P align="center" style="font-size: 10pt;">61

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Discontinued operations, net of tax increased by $183.4 in 2004,
compared to 2003, as a result of the sale of our Canadian, and
certain of our U.S.&nbsp;oil and gas assets during the third
quarter of 2004 and the sale of our interest in the Lost Pines
facility in the first quarter of 2004.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Year Ended December&nbsp;31, 2003, Compared to Year Ended
    December&nbsp;31, 2002</I></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Revenue</I></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="54%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,871.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,349.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,521.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20.7</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The increase in total revenue is explained by category below.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="51%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Electricity and steam revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,680.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,237.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,442.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44.6</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Transmission sale revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales of purchased power for hedging and optimization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,714.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,146.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(431.8</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(13.7</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total electric generation and marketing revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,409.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6,383.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,026.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Electricity and steam revenue increased as we completed
construction and brought into operation five new baseload power
plants, seven new peaker facilities and three project expansions
in 2003. Average MW in operation of our consolidated plants
increased by 40% to 20,092&nbsp;MW while generation increased by
13%. The increase in generation lagged behind the increase in
average MW in operation as our baseload capacity factor dropped
to 53% in 2003 from 65% in 2002 primarily due to the increased
occurrence of unattractive off-peak market spark spreads in
certain areas reflecting oversupply conditions which are
expected to gradually work off over the next several years (this
caused us to cycle off certain of our merchant plants without
contracts in off-peak hours) and to a lesser extent due to
unscheduled outages caused by equipment problems at certain of
our plants in the first half of 2003. Average realized
electricity prices, before the effects of hedging, balancing and
optimization, increased to $56.79/ MWh in 2003 from $44.49/ MWh
in 2002.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We generated transmission sales revenue in 2003 due to the
resale of some of our underutilized positions in the short- to
mid-term markets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales of purchased power for hedging and optimization decreased
during 2003, due primarily to adoption of EITF Issue
No.&nbsp;03-11 and lower realized prices on term power hedges.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="53%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas sales</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>59.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>63.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(4.3</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6.8</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales of purchased gas for hedging and optimization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,320.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>870.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>450.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>51.7</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total oil and gas production and marketing revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,380.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>934.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>446.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47.8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Oil and gas sales are net of internal consumption, which is
eliminated in consolidation. Internal consumption increased by
$143.7 to $285.0 in 2003. Before intercompany eliminations, oil
and gas sales increased by $139.4 to $344.2 in 2003 from $204.8
in 2002 due primarily to 68% higher average realized natural gas
pricing in 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales of purchased gas for hedging and optimization increased
during 2003 due to higher prices for natural gas.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="55%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Realized gain on power and gas transactions, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>24.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>26.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1.8</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6.9</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized loss on power and gas transactions, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(50.7</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4.6</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(46.1</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,002.2</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Mark-to-market activities, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(26.4</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>21.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(47.9</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(222.8</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">62

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Realized revenue on power and gas mark-to-market activity
represents the portion of mark-to-market contracts actually
settled.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Mark-to-market activities, which are shown on a net basis,
result from general market price movements against our open
commodity derivative positions, including positions accounted
for as trading under EITF Issue No.&nbsp;02-03, and other
mark-to-market activities. These commodity positions represent a
small portion of our overall commodity contract position.
Realized revenue represents the portion of contracts actually
settled, while unrealized revenue represents changes in the fair
value of open contracts, and the ineffective portion of cash
flow hedges. The decrease in mark-to-market activities revenue
in 2003 is due primarily to a $27.3 reduction in value of option
contracts associated with a spark spread protection arrangement
for the CCFC I financing and a decline in the value of a
long-term spark spread option contract accounted for on a
mark-to-market basis under SFAS&nbsp;No.&nbsp;133.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="59%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>107.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>10.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>96.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>895.4</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Other revenue increased during 2003 primarily due to $67.3
recorded in connection with our settlement with Enron, primarily
related to the termination of commodity contracts following the
Enron bankruptcy. We also realized $23.6 of revenue from TTS,
which we acquired in late February 2003. PSM revenues increased
$6.2 in 2003 as compared to 2002.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Cost of Revenue</I></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="54%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total cost of revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,106.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6,388.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1,718.5</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(26.9</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The increase in total cost of revenue is explained by category
below.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="51%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Plant operating expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>663.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>522.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(140.1</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(26.8</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Royalty expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7.3</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(41.5</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Transmission purchase expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>46.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(21.0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(82.4</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchased power expense for hedging and optimization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,690.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,618.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(71.7</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2.7</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total electric generation and marketing expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,424.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,184.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(240.1</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7.5</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Plant operating expense increased due to five new baseload power
plants, seven new peaker facilities and three expansion projects
completed during 2003. Additionally, we experienced higher
transmission expenses and higher maintenance expense as several
newer plants underwent their first scheduled hot gas path
overhauls which generally first occur after a plant has been in
operation for three years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Transmission purchase expense increased as additional plants
were brought on line in 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Royalty expense increased primarily due to the accrual of $5.3
in 2003 vs. $0 in 2002 for payments to the previous owner of the
Texas City and Clear Lake Power Plants based on a percentage of
gross revenues at these two natural gas-fired plants.
Additionally, royalties increased by $2.0 due to an increase in
electric revenues at The Geysers geothermal plants, where we pay
royalties to geothermal property owners, mostly as a percentage
of geothermal electricity revenues. Approximately 78% of the
royalty expense for 2003 is attributable to such geothermal
royalties.
</DIV>

<P align="center" style="font-size: 10pt;">63

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The increase in purchased power expense for hedging and
optimization was due primarily to increased spot market costs to
purchase power for hedging and optimization activities partially
offset by netting in the fourth quarter of 2003 due to the
adoption of EITF Issue No.&nbsp;03-11.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas production expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>56.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>56.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas exploration expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6.2</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(47.7</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas operating expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>75.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>69.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(5.7</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8.2</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchased gas expense for hedging and optimization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,279.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>821.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(458.5</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(55.8</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total oil and gas operating and marketing expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,355.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>890.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(464.2</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(52.1</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Oil and gas production expense was flat compared to 2002;
excluding the effects of discontinued operations (see
Note&nbsp;10 of the Notes to Consolidated Financial Statements
for further information), oil and gas production expense would
have increased primarily due to higher production taxes and
higher gas treating and transportation costs, which were
primarily the result of higher oil and gas prices plus an
increase in operating cost and an increase in the average
Canadian dollar foreign exchange rate in 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Oil and gas exploration expense increased primarily as a result
of $9.5 in dry hole drilling expenses in 2003 compared to $5.0
in 2002.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Purchased gas expense for hedging and optimization increased
during 2003 due to higher prices for gas in 2003.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="51%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fuel expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cost of oil and gas burned by power plants</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,677.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,659.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1,017.9</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(61.3</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Recognized (gain)&nbsp;loss on gas hedges</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11.6</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>133.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>144.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>108.7</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total fuel expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,665.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,792.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(873.3</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(48.7</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Fuel expense increased in 2003, due to a 15% increase in
gas-fired MWh generated and 33% higher prices excluding the
effects of hedging, balancing and optimization. This was
partially offset by an increased value of internally produced
gas, which is eliminated in consolidation.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Depreciation, depletion and amortization expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>504.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>398.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(105.5</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(26.4</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Depreciation, depletion and amortization expense increased in
2003 primarily due to additional power plants achieving
commercial operation subsequent to 2002.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas impairment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14.7</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2003, oil and gas impairment charges decreased slightly due
primarily to the fact that in 2002 we incurred higher
impairments on properties located throughout Texas and Oklahoma.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Operating lease expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>112.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>111.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1.1</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1.0</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Operating lease expense was flat as the number of operating
leases did not change in 2003 as compared to 2002.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other cost of revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>42.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(35.0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(479.5</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">64
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Approximately half of this increase is due to $17.3 of TTS
expense. TTS was acquired in late February 2003 so there is no
comparable expense in the prior period. Additionally, PSM
expense increased $9.0 in 2003 as compared to 2002 due primarily
to an increase in sales.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>(Income)/ Expenses</I></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Income) from unconsolidated investments in power projects and
    oil and gas properties</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(75.8</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(16.6</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>59.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>356.6</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The increase in income is primarily due to a $52.8 gain
recognized on the termination of the tolling agreement with AMS
on the Acadia Energy Center (see Note&nbsp;7 of the Notes to
Consolidated Financial Statements). Additionally, we realized a
pre-tax gain of $7.1 from the sale of our interest in the
Gordonsville Energy Center to Dominion Virginia Power.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="59%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Equipment cancellation and impairment cost</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>64.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>404.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>340.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>84.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2003, the pre-tax equipment cancellation and impairment
charge was primarily a result of cancellation costs related to
three turbines and three HRSGs and impairment charges related to
four turbines. The pre-tax charge of $404.7 in 2002 was the
result of turbine and other equipment order cancellation charges
and related write-offs as a result of our scale-back in
construction and development activities. For further
information, see Note&nbsp;25 of the Notes to Consolidated
Financial Statements.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term service agreement cancellation charges</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>16.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(16.4</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(100.0</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Of the $16.4 in charges incurred in 2003, $14.1 occurred as a
result of the cancellation of LTSAs with General Electric
related to our Rumford, Tiverton and Westbrook facilities. The
other $2.3 occurred as a result of the cancellation of LTSAs
with Siemens-Westinghouse Power Corporation related to our
Sutter, South Point, Hermiston and Ontelaunee facilities.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Project development expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>21.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>67.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>45.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>67.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Project development expense decreased as we placed certain
existing development projects on hold and scaled back new
development activity. Additionally, write-offs of terminated and
suspended development projects decreased to $3.7 in 2003 from
$34.8 in 2002.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Research and development expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>10.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>10.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.6</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6.0</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The modest increase in research and development is attributed to
increased personnel expenses related to research and development
programs at our PSM subsidiary.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales, general and administrative expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>216.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>186.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(30.4</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(16.3</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Sales, general and administrative expense increased due to $10.7
of stock-based compensation expense associated with our adoption
of SFAS&nbsp;No.&nbsp;123, &#147;Accounting for Stock-Based
Compensation,&#148; effective January&nbsp;1, 2003, on a
prospective basis while $7.1 of the increase is attributable to
the acquisition of TTS in late February 2003. Other increases
include $7.3 in insurance costs and a write-off of excess office
space. Sales, general and administrative expense expressed per
MWh of generation increased to $2.63/ MWh in 2003 from $2.56/
MWh in 2002, due to a lower average capacity factor in 2003.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>706.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>402.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(303.6</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(75.4</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">65
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interest expense increased primarily due to the new plants
entering commercial operations (at which point capitalization of
interest expense ceases). Interest capitalized decreased from
$575.5 for the year ended December&nbsp;31, 2002, to $444.5 for
the year ended December&nbsp;31, 2003. We expect that interest
expense will continue to increase and the amount of interest
capitalized will decrease in future periods as our plants in
construction are completed, and, to a lesser extent, as a result
of suspension of certain of our development projects and
suspension of capitalization of interest thereon. The remaining
increase relates to an increase in average indebtedness, an
increase in the amortization of terminated interest rate swaps
and the recording of interest expense on debt to the three
Trusts due to the adoption of FIN&nbsp;46-R prospectively on
October&nbsp;1, 2003. See Note&nbsp;2 of the Notes to
Consolidated Financial Statements for a discussion of our
adoption of FIN&nbsp;46-R.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Distributions on trust preferred securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>46.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>62.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(16.0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(25.6</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As a result of the deconsolidation of the Trusts upon adoption
of FIN&nbsp;46-R as of October&nbsp;1, 2003, the distributions
paid on the HIGH TIDES during the fourth quarter of 2003 were no
longer recorded on our books and were replaced by interest
expense on our debt to the Trusts, thus explaining the decrease
in distributions on the HIGH TIDES in 2003.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(39.7</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(43.1</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(3.4</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7.9</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The decrease is primarily due to lower cash balances and lower
interest rates in 2003.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Minority interest expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>27.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(24.6</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(911.1</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The increase is primarily due to an increase of $24.4 of
minority interest expense associated with CPIF, which had an
initial public offering in August 2002 to fund its interest in
CPLP. During 2003 as a result of a secondary offering of
Calpine&#146;s interests in CPIF, we decreased our ownership
interests in CPLP in February 2003 to 30%, thus increasing
minority interest expense. Additionally, prior to fourth quarter
of 2003, we presented minority interest expense related to CPIF
net of taxes, but we reclassed $13.4 of tax benefit from
minority interest expense to tax expense in the fourth quarter
of 2003, thus increasing minority interest expense by that
amount.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="56%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Income) from repurchase of various issuances of debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(278.6</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(118.0</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>160.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>136.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The 2003 pre-tax gain of $278.6 was recorded in connection with
the repurchase of various issuances of debt at a discount. In
2002 the primary contribution was a gain of $114.8 from the
receipt of Senior Notes, which were trading at a discount to
face value, as partial consideration for British Columbia oil
and gas asset sales.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other (income), net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(46.1</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(34.2</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>11.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34.8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Other income during 2003 is comprised primarily of gains of
$62.2 on the sale of oil and gas assets to the CNGT and $57.0
from the termination of a power contract at our RockGen Energy
Center. This income was offset primarily by $33.3 of foreign
exchange transaction losses and $12.5 of letter of credit fees.
The foreign exchange transaction losses recognized into income
were mainly due to a strong Canadian dollar during 2003. In 2002
the primary contribution to other income was a $41.5 gain on the
termination of a power sales agreement. See &#147;Financial
Market Risks&#148; for a further discussion of our currency
transaction losses.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Provision for income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>10.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2003, the effective tax rate decreased to 9.0% from 28.8%
in 2002. This effective rate variance is due to the inclusion of
significant permanent items in the calculation of the effective
rate, which are fixed in
</DIV>

<P align="center" style="font-size: 10pt;">66

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
amount and have a significant effect on the effective tax rates
as such items become more material to net income.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>15.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>91.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>76.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>83.7</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The 2003 discontinued operations activity included the effects
of our sales of the Lost Pines&nbsp;1 Power Project (in which we
held a 50% undivided interest), and the sales of our Rocky
Mountain gas reserves, Canadian natural gas reserves and
petroleum assets, Alvin South Field oil and gas assets and our
specialty data center engineering business. The sale of our
interest in the Lost Pines&nbsp;1 Power Project closed in
January of 2004, and both the Rocky Mountain gas reserves and
the Canadian natural gas reserves and petroleum assets closed in
September of 2004. The 2002 discontinued operations activity
included, in addition to all of the 2003 discontinued
operations, the sales of DePere Energy Center, Drakes Bay Field,
British Columbia and Medicine River oil and gas assets, all of
which were completed by December&nbsp;31, 2002; therefore, their
results are not included in the 2003 activity. For more
information about discontinued operations, see Note&nbsp;10 of
the Notes to Consolidated Financial Statements.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="59%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative effect of a change in accounting principle, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>180.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>180.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The gain from the cumulative effect of a change in accounting
principle includes three items: (1)&nbsp;a gain of $181.9, net
of tax effect, from the adoption of DIG Issue No.&nbsp;C20;
(2)&nbsp;a loss of $1.5 associated with the adoption of
FIN&nbsp;46-R and the deconsolidation of the three Trusts which
issued the HIGH TIDES. The loss of $1.5 represents the reversal
of a gain, net of tax effect, recognized prior to the adoption
of FIN&nbsp;46-R on our repurchase of $37.5 of the value of HIGH
TIDES by issuing shares of our common stock valued at $35.0; and
(3)&nbsp;a gain of $0.5, net of tax effect, from the adoption of
SFAS&nbsp;No.&nbsp;143.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Net Income</I></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>$ Change</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>% Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>282.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>118.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>163.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>137.8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our growing portfolio of operating power generation facilities
contributed to a 13% increase in electric generation production
for the year ended December&nbsp;31, 2003, compared to the same
period in 2002. Electric generation and marketing revenue
increased 16.1% for the year ended December&nbsp;31, 2003, as
electricity and steam revenue increased by $1,442.9 or 44.6%, as
a result of the higher production and higher electricity prices.
This was partially offset by a decline in sales of purchased
power for hedging and optimization. Operating results for the
year ended December&nbsp;31, 2003, reflect a decrease in average
spark spreads per MWh compared with the same period in 2002.
While we experienced an increase in realized electricity prices
in 2003, this was more than offset by higher fuel expense. At
the same time, higher realized oil and gas pricing resulted in
an increase in oil and gas production margins compared to the
prior period. In 2003 we recorded other revenue of $67.3 in
connection with our settlement with Enron, primarily related to
the termination of commodity contracts following the Enron
bankruptcy.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Plant operating expense, interest expense and depreciation were
higher due to the additional plants in operation. In 2003
generation did not increase commensurately with new average
capacity coming on line (lower baseload capacity factor).
Because of that and due to lower spark spreads per MWh, our
spark spread margins did not keep pace with the additional
operating and depreciation costs associated with the new
capacity, and gross profit for the year ended December&nbsp;31,
2003, decreased approximately 20.5%, compared to the same period
in 2002. During 2003 overall financial results significantly
benefited from $278.6 of net pre-tax gains recorded in
connection with the repurchase of various issuances of debt and
preferred securities at a discount, and a gain of $52.8 from the
termination of the AMS power contract at the Acadia Energy
Center, a gain of $57.0 from the termination of a power contract
at the RockGen Energy Center, a gain of $62.2 from the sale of
oil and gas assets to the CNGT and an after-tax gain of $180.9
due to the cumulative effect of changes in accounting principle.
</DIV>

<P align="center" style="font-size: 10pt;">67

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Liquidity and Capital Resources</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our business is capital intensive. Our ability to capitalize on
growth opportunities and to service the debt we incurred in
order to construct and operate our current fleet of power plants
is dependent on the continued availability of capital on
attractive terms. The availability of such capital in
today&#146;s environment is uncertain. To date, we have obtained
cash from our operations; borrowings under credit facilities;
issuances of debt, equity, trust preferred securities and
convertible debentures and contingent convertible notes;
proceeds from sale/leaseback transactions; sale or partial sale
of certain assets; contract monetizations and project
financings. We have utilized this cash to fund our operations,
service or prepay debt obligations, fund acquisitions, develop
and construct power generation facilities, finance capital
expenditures, support our hedging, balancing, optimization and
trading activities, and meet our other cash and liquidity needs.
We also reinvest our cash from operations into our business
development and construction program or use it to reduce debt,
rather than to pay cash dividends. As discussed below, we have a
liquidity-enhancing program underway for funding the completion
of, and in some cases extending the completion of, the projects
remaining in our current construction portfolio, for refinancing
and for general corporate purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In March 2004, we refinanced our $2.5&nbsp;billion secured
revolving construction financing facility through our CalGen
subsidiary (formerly CCFC&nbsp;II) which was scheduled to mature
in November 2004. CalGen completed a secured institutional term
loans, notes and revolving credit facility financing, which
replaced the old CCFC&nbsp;II facility. We realized total
proceeds from the financing in the amount of $2.6&nbsp;billion,
before transaction costs and fees. As of December&nbsp;31, 2004,
there was an aggregate principal amount outstanding of
$2.6&nbsp;billion on the secured institutional term loans, notes
and revolving credit facility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2003 and 2004, we repurchased $1.2&nbsp;billion of the
outstanding principal amount of 2006 Convertible Senior Notes,
with proceeds of financings we consummated in July 2003, through
equity swaps and with the proceeds of our offering of
4.75%&nbsp;Contingent Convertible Senior Notes due 2023
(&#147;2023 Convertible Senior Notes&#148;) in November 2003 and
January 2004. The repurchases were made in open market and
privately negotiated transactions and, in February 2004, we
initiated a cash tender offer for all of the outstanding 2006
Convertible Senior Notes for a price of par plus accrued
interest. Approximately $409.4&nbsp;million aggregate principal
amount of the 2006 Convertible Senior Notes were tendered
pursuant to the tender offer, for which we paid a total of
$412.8&nbsp;million (including accrued interest of
$3.4&nbsp;million). On December&nbsp;27, 2004, we repurchased
$70.8&nbsp;million of the remaining outstanding 2006 Convertible
Senior Notes for par plus accrued interest in connection with
the holders&#146; exercise of their right to require us to
repurchase their notes. At December&nbsp;31, 2004, only
$1.3&nbsp;million in aggregate principal amount of 2006
Convertible Senior Notes remains outstanding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In October 2004, all of our outstanding HIGH TIDES I and HIGH
TIDES&nbsp;II were redeemed. At December&nbsp;31, 2004,
$517.5&nbsp;million of principal amount of HIGH TIDES&nbsp;III
remained outstanding, including $115.0&nbsp;million held by
Calpine. The HIGH TIDES&nbsp;III are scheduled to be remarketed
no later than August&nbsp;1, 2005. In the event of a failed
remarketing, the relevant HIGH TIDES&nbsp;III will remain
outstanding as convertible securities at a term rate equal to
the treasury rate plus 6%&nbsp;per annum and with a term
conversion price equal to 105% of the average closing price of
our common stock for the five consecutive trading days after the
applicable final failed remarketing termination date. While a
failed remarketing of our HIGH TIDES&nbsp;III would not have a
material effect on our liquidity position, it would impact our
calculation of diluted earnings per share (&#147;EPS&#148;) and
increase our interest expense. Even with a successful
remarketing, we would expect to have an increased dilutive
impact on our EPS based on a revised conversion ratio. See
Note&nbsp;12 of the Notes to Consolidated Financial Statements
for a summary of HIGH TIDES repurchased or redeemed by the
Company through December&nbsp;31, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
See Note&nbsp;12 of the Notes to Consolidated Condensed
Financial Statement for more information related to other
financings and repurchases of various issuances of debt in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We expect to have sufficient liquidity from cash flow from
operations, borrowings available under lines of credit, access
to sale/leaseback and project financing markets, sale or
monetization of certain assets and cash balances to satisfy all
obligations under our outstanding indebtedness, and to fund
anticipated capital
</DIV>

<P align="center" style="font-size: 10pt;">68

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<DIV align="left" style="font-size: 10pt;">
expenditures and working capital requirements for the next
twelve months, but, as described above, we face several
challenges over the next two to three years as our cash
requirements (including our refinancing obligations) are
expected to exceed our unrestricted cash on hand and cash from
operations. Accordingly, we have in place a liquidity-enhancing
program which includes possible sales or monitizations of
certain of our assets, and whether we will have sufficient
liquidity will depend, to a certain extent, on the success of
that program. On December&nbsp;31, 2004, our liquidity totaled
approximately $1.6&nbsp;billion. This includes cash and cash
equivalents on hand of $0.8&nbsp;billion, current portion of
restricted cash of approximately $0.6&nbsp;billion and
approximately $0.2&nbsp;billion of borrowing capacity under our
various credit facilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Factors that could affect our liquidity and capital resources
are also discussed below in &#147;Capital Spending&#148; and
above in Item&nbsp;1. &#147;Business&nbsp;&#151; Risk
Factors.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Cash Flow Activities</I>&nbsp;&#151; The following table
summarizes our cash flow activities for the periods indicated:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="53%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Years Ended December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(In thousands)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Beginning cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>991,806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>579,486</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,594,144</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash provided by:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Operating activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9,895</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>290,559</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,068,466</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Investing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(401,426</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,515,365</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,837,827</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Financing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>167,052</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,623,986</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,757,396</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Effect of exchange rates changes on cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,140</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,693</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net increase (decrease) in cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(208,378</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>412,320</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1,014,658</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ending cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>783,428</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>991,806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>579,486</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Operating activities for the year ended December&nbsp;31, 2004,
provided net cash of $9.9&nbsp;million, compared to
$290.6&nbsp;million for the same period in 2003. Operating cash
flows in 2004 benefited from the receipt of $100.6&nbsp;million
from the termination of power purchase agreements for two of our
New Jersey power plants and $16.4&nbsp;million from the
restructuring of a long-term gas supply contract. During the
year ended December&nbsp;31, 2004, operating assets and
liabilities used approximately $137.6&nbsp;million, as compared
to having used $609.8&nbsp;million in the same period in 2003.
Uses of funds included accounts receivable, which increased by
$99.4&nbsp;million as our total revenues in 2004 (after the
netting of approximately $1.7&nbsp;billion of purchase power
expense with sales of purchased power pursuant to EITF Issue
No.&nbsp;03-11) increased by approximately $358.9&nbsp;million.
Also, cash operating lease payments exceeded recognized expense
by $83.7&nbsp;million and accrued liabilities were reduced,
through payments, for sales and property taxes and net margin
deposits posted to support CES trading activity increased by
$60.9&nbsp;million. These uses of funds were partially offset by
an increase of $231.8&nbsp;million in accounts payable and
accrued expense (including an increase in interest expense
payable of $64.5&nbsp;million). The increase in such deposits,
which serve as collateral for certain of our commodity
transactions that have a net exposure to a counterparty on a
mark-to-market basis, is reflective of movements in commodity
prices and a higher mix of margin deposits posted relative to
letters of credit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Investing activities for the year ended December&nbsp;31, 2004,
consumed net cash of $401.4&nbsp;million, as compared to
$2,515.4&nbsp;million in the same period of 2003. Capital
expenditures for the completion of our power facilities
decreased in 2004, as there were fewer projects under
construction. Investing activities in 2004 reflect the receipt
of $148.6&nbsp;million from the sale of our 50% interest in the
Lost Pines I Power Plant, $626.6&nbsp;million from the sale of
our Canadian oil and gas reserves, $218.7&nbsp;million from the
sale of our Rocky Mountain oil and gas reserves, plus
$85.4&nbsp;million of proceeds from the sale of a subsidiary
holding power purchase agreements for two of our New Jersey
power plants. We also reported a $181.0&nbsp;million increase in
cash used for acquisitions in 2004 compared to 2003, as we used
the proceeds from the Lost Pines sale and cash to purchase the
Los Brazos Power Plant, and we used cash on hand to purchase the
remaining 50% interest in the Aries
</DIV>

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<DIV align="left" style="font-size: 10pt;">
Power Plant and the remaining 20% interest in Calpine
Cogeneration Corporation. Also, we used $110.6&nbsp;million to
purchase a portion of HIGH TIDES&nbsp;III outstanding and
provided $210.8&nbsp;million by decreasing restricted cash
during 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Financing activities for the year ended December&nbsp;31, 2004,
provided net cash of $167.1&nbsp;million, compared to
$2,624.0&nbsp;million in the prior year. We continued our
refinancing program in 2004 by raising $2.6&nbsp;billion to
refinance $2.5&nbsp;billion of CalGen project financing before
payment for fees and expenses of the refinancing. In 2004 we
also raised $250&nbsp;million from the issuance of the 2023
Convertible Senior Notes pursuant to an option exercise by one
of the initial purchasers and $617.5 from the issuance of the
2014 Convertible Notes. We raised $878.8&nbsp;million from the
issuance of Senior Notes, $360.0&nbsp;million from a preferred
security offering and $1,179.4&nbsp;million from various project
financings. Also, we repaid $635.4&nbsp;million in project
financing debt, and we used $657.7&nbsp;million to repurchase
the outstanding 2006 Convertible Senior Notes that could be put
to us in December 2004. We used $177.0&nbsp;million to
repurchase a portion of the 2023 Convertible Senior Notes,
$871.3&nbsp;million to repay and repurchase various Senior Notes
and $483.5&nbsp;million to redeem the remainder of HIGH TIDES I
and II. In 2003, cash inflows primarily included
$3.9&nbsp;billion from the issuance of senior secured notes and
institutional term loans, $802.2&nbsp;million from the PCF
financing transaction, $785.5&nbsp;million from the refinancing
of our CCFC I credit facility, $301.7&nbsp;million from the
issuance of secured notes by our wholly owned subsidiary Gilroy
Energy Center, LLC (&#147;GEC&#148;), $159.7&nbsp;million from
secondary trust unit offerings from our CPIF, $82.8&nbsp;million
from the monetization of one of our PSAs, $244.0&nbsp;million
from the sales of preferred interests in the cash flows from
certain of our facilities and additional borrowings under our
revolvers. This was partially offset by financing costs and
$5.0&nbsp;billion in debt repayments and repurchases.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Liquidity and Finance Program Update</I>&nbsp;&#151;
Enhancing liquidity, reducing corporate debt and addressing
near-term debt maturities continued to drive our financing
program in 2004. During the year, we successfully enhanced our
financial position through a significant number of transactions:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Refinanced CCFC&nbsp;II project debt through the issuance of
    $2.6&nbsp;billion of Calpine Generating Company secured
    institutional term loans, notes and revolving credit facility;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Completed approximately $2.1&nbsp;billion of liquidity
    transactions including the sale of our Canadian and certain
    U.S.&nbsp;natural gas reserves for $870.1&nbsp;million;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Redeemed in full $598.5&nbsp;million of HIGH TIDES I and II, and
    purchased a portion of HIGH TIDES&nbsp;III, totaling
    $115.0&nbsp;million;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Repurchased approximately $1.8&nbsp;billion of existing
    corporate debt, resulting in a net gain of $246.9&nbsp;million
    after the write-off of unamortized discounts and deferred
    financing costs.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Also, in early 2005, we:
</DIV>

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<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Obtained a $100&nbsp;million, non-recourse credit facility to
    complete construction of the Metcalf Energy Center in
    San&nbsp;Jose, California. This was the first single-asset,
    merchant project financing in California since the 2000-2001
    energy crisis;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Received funding on Calpine European Funding (Jersey)
    Limited&#146;s $260&nbsp;million offering of Redeemable
    Preferred Shares due on July&nbsp;30, 2005. The net proceeds
    from this offering will ultimately be used as permitted by our
    existing bond indentures;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Completed a $400&nbsp;million, 25-year, non-recourse
    sale/leaseback transaction for the 560-MW Fox Energy Center
    under construction in Kaukauna, Wisconsin;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Completed a $195&nbsp;million, non-recourse project financing
    for construction of the 525-MW Valladolid&nbsp;III Energy Center
    in Valladolid, Mexico.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our liquidity constraints have delayed the pace at which we have
developed our oil and gas proved undeveloped
(&#147;PUD&#148;)&nbsp;reserves from what we would otherwise
have preferred; however, given the current demand for low risk
PUD&nbsp;drilling opportunities, we expect the Company to be
able to secure third-party funding of capital expenditures
through farm-outs, joint ventures and similar arrangements in
amounts sufficient to develop our PUD&nbsp;properties in a
manner that preserves their projected value. As part of any such
</DIV>

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<DIV align="left" style="font-size: 10pt;">
farm-out, joint venture or similar arrangement, we would
typically be required to convey a portion of our interest in the
relevant properties to the third party in exchange for the third
party&#146;s commitment to fund capital expenditures. These
conveyances to third parties will reduce the amount of PUDs and
other undeveloped assets owned by us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
So long as we are successful in obtaining such third-party
funding at levels projected, we expect to have sufficient
capital resources available to preserve, protect and enhance the
value of our existing PUD&nbsp;reserves, subject to any
reduction in our interests due to conveyances as part of the
third-party funding arrangements described above. Taking into
account the funding we expect to obtain through farm-outs, joint
ventures and similar arrangements, we believe that capital
expenditures will be consistent with the levels and development
schedule we have disclosed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Counterparties and Customers</I>&nbsp;&#151; Our customer and
supplier base is concentrated within the energy industry.
Additionally, we have exposure to trends within the energy
industry, including declines in the creditworthiness of our
marketing counterparties. Currently, multiple companies within
the energy industry are in bankruptcy or have below investment
grade credit ratings. However, we do not currently have any
significant exposures to counterparties that are not paying on a
current basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Letter of Credit Facilities</I>&nbsp;&#151; At
December&nbsp;31, 2004 and 2003, we had approximately
$586.5&nbsp;million and $410.8&nbsp;million, respectively, in
letters of credit outstanding under various credit facilities to
support our risk management and other operational and
construction activities. Of the total letters of credit
outstanding, $233.3&nbsp;million and $272.1&nbsp;million,
respectively, were in aggregate issued under the cash
collateralized letter of credit facility and the corporate
revolving credit facility at December&nbsp;31, 2004 and 2003,
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Commodity Margin Deposits and Other Credit
Support</I>&nbsp;&#151; As of December&nbsp;31, 2004 and 2003,
to support commodity transactions we had deposited net amounts
of $248.9&nbsp;million and $188.0&nbsp;million, respectively, in
cash as margin deposits with third parties, and we made gas and
power prepayments of $78.0&nbsp;million, and $60.6&nbsp;million,
respectively, and had letters of credit outstanding of
$115.9&nbsp;million and $14.5&nbsp;million, respectively. We use
margin deposits, prepayments and letters of credit as credit
support for commodity procurement and risk management
activities. Future cash collateral requirements may increase
based on the extent of our involvement in standard contracts and
movements in commodity prices and also based on our credit
ratings and general perception of creditworthiness in this
market. While we believe that we have adequate liquidity to
support our operations at this time, it is difficult to predict
future developments and the amount of credit support that we may
need to provide as part of our business operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Revised Capital Expenditure Program</I>&nbsp;&#151; Following
a comprehensive review of our power plant development program,
we announced in January 2002 the adoption of a revised capital
expenditure program which contemplated the completion of 27
power projects (representing 15,200&nbsp;MW) then under
construction. As of December&nbsp;31, 2004, 24 of these
facilities have subsequently achieved full or partial commercial
operation. Construction of advanced stage development projects
is expected to proceed only when there is an established market
need through power purchase agreements for additional generating
resources at prices that will allow us to meet our investment
criteria, and when capital is available to us on attractive
terms. Our entire development and construction program is
flexible and subject to continuing review and revision based
upon such criteria. Since the adoption of the revised capital
expenditure program, we have added several projects now in
development and construction and, currently, work on three
construction projects, Hillabee, Washington Parish and Fremont,
has been largely postponed until market conditions improve in
the Southeast and Midwest market areas. See &#147;Capital
Spending&nbsp;&#151; Development and Construction&#148; below
for more information on our capital expenditure program.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Asset Sales</I>&nbsp;&#151; As a result of the significant
contraction in the availability of capital for participants in
the energy sector, we have adopted a strategy of conserving our
core strategic assets and disposing of certain less
strategically important assets, which serves primarily to
strengthen our balance sheet through repayment of debt. Set
forth below are the completed asset disposals:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On January&nbsp;15, 2004, we completed the sale of our
50-percent undivided interest in the 545-megawatt Lost Pines 1
Power Project to GenTex Power Corporation, an affiliate of the
Lower Colorado River Authority.
</DIV>

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Under the terms of the agreement, we received a cash payment of
$148.6&nbsp;million and recorded a pre-tax gain of
$35.3&nbsp;million. We subsequently closed on the purchase of
the Brazos Valley Power Plant for approximately
$181.1&nbsp;million in a tax deferred like-kind exchange under
IRS Section&nbsp;1031, largely with the proceeds of the Lost
Pines I Power Project sale.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On February&nbsp;18, 2004, one of our wholly owned subsidiaries
closed on the sale of natural gas properties to CNGT. We
received net consideration of Cdn$38.8&nbsp;million
($29.2&nbsp;million) and recorded a pre-tax gain of
approximately $6.8&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On September&nbsp;1, 2004, in combination with CNGLP, a Delaware
limited partnership, we completed the sale of our Rocky Mountain
gas reserves that were primarily concentrated in two geographic
areas: the Colorado Piceance Basin and the New Mexico
San&nbsp;Juan Basin. Together, these assets represent
approximately 120&nbsp;Bcfe of proved gas reserves, producing
approximately 16.3&nbsp;Mmcfe per day of gas. Under the terms of
the agreement we received net cash payments of approximately
$218.7&nbsp;million, and recorded a pre-tax gain of
approximately $103.7&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On September&nbsp;2, 2004, we completed the sale of our Canadian
natural gas reserves and petroleum assets. These Canadian assets
represented approximately 221&nbsp;Bcfe of proved reserves,
producing approximately 61&nbsp;Mmcfe per day. Included in this
sale was our 25% interest in approximately 80&nbsp;Bcfe of
proved reserves (net of royalties) and 32&nbsp;Mmcfe per day of
production owned by CNGT. Under the terms of the agreement, we
received cash payments of approximately Cdn$802.9&nbsp;million,
or approximately $622.2&nbsp;million. We recorded a pre-tax gain
of approximately $100.6&nbsp;million on the sale of our Canadian
assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We are also evaluating the potential sale of our Saltend Energy
Centre. We acquired the 1,200-MW power plant, located in Hull,
England, in August 2001 for approximately $800&nbsp;million. Net
proceeds from any sale of the facility would be used to redeem
the existing $360&nbsp;million Two-Year Redeemable Preferred
Shares and then to redeem the $260&nbsp;million Redeemable
Preferred Shares Due July&nbsp;30, 2005. Any remaining proceeds
would be used in accordance with the asset sale provisions of
our existing bond indentures.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We believe that our completion of the financing and liquidity
transactions described above in the current difficult conditions
affecting capital availability in the market, and our sector in
particular, demonstrate our probable ability to raise capital on
acceptable terms in the future, although availability of capital
has tightened significantly throughout the power generation
industry and, therefore, there can be no assurance that we will
have access to capital in the future as and when we may desire.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Credit Considerations</I>&nbsp;&#151; On September&nbsp;23,
2004, S&#38;P assigned our first priority senior secured debt a
rating of B+ and reaffirmed their ratings on our second priority
senior secured debt at B, our corporate rating at B (with
outlook negative), our senior unsecured debt rating at CCC+, and
our preferred stock rating at CCC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On October&nbsp;4, 2004, Fitch, Inc. assigned our first priority
senior secured debt a rating of BB-. At that time, Fitch also
downgraded our second priority senior secured debt from BB- to
B+, downgraded our senior unsecured debt rating from B- to CCC+,
and reconfirmed our preferred stock rating at CCC. Fitch&#146;s
rating outlook for the Company is stable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Moody&#146;s Investors Service currently has a senior implied
rating on the Company of B2 (with a stable outlook), and they
rate our senior unsecured debt at Caa1, and our preferred stock
at Caa3.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Many other issuers in the power generation sector have also been
downgraded by one or more of the ratings agencies during this
period. Such downgrades can have a negative impact on our
liquidity by reducing attractive financing opportunities and
increasing the amount of collateral required by trading
counterparties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Performance Indicators</I>&nbsp;&#151; We believe the
following factors are important in assessing our ability to
continue to fund our growth in the capital markets: (a)&nbsp;our
debt-to-capital ratio; (b)&nbsp;various interest coverage
ratios; (c)&nbsp;our credit and debt ratings by the rating
agencies; (d)&nbsp;the trading prices of our senior notes in the
capital markets; (e)&nbsp;the price of our common stock on The
New York Stock Exchange; (f)&nbsp;our anticipated capital
requirements over the coming quarters and years; (g)&nbsp;the
profitability of our operations; (h)&nbsp;the non-GAAP financial
measures and other performance metrics discussed in
&#147;Performance Metrics&#148; below; (i)&nbsp;our
</DIV>

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<DIV align="left" style="font-size: 10pt;">
cash balances and remaining capacity under existing revolving
credit construction and general purpose credit facilities;
(j)&nbsp;compliance with covenants in existing debt facilities;
(k)&nbsp;progress in raising new or replacement capital; and
(l)&nbsp;the stability of future contractual cash flows.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Off-Balance Sheet Commitments</I>&nbsp;&#151; In accordance
with SFAS&nbsp;No.&nbsp;13 and SFAS&nbsp;No.&nbsp;98,
&#147;Accounting for Leases&#148; our operating leases, which
include certain sale/leaseback transactions, are not reflected
on our balance sheet. All counterparties in these transactions
are third parties that are unrelated to us except as disclosed
for Acadia in Note&nbsp;7 of the Notes to Consolidated Financial
Statements. The sale/leaseback transactions utilize
special-purpose entities formed by the equity investors with the
sole purpose of owning a power generation facility. Some of our
operating leases contain customary restrictions on dividends,
additional debt and further encumbrances similar to those
typically found in project finance debt instruments. We
guarantee $&nbsp;billion of the total future minimum lease
payments of our consolidated subsidiaries related to our
operating leases. We have no ownership or other interest in any
of these special-purpose entities. See Note&nbsp;22 of the Notes
to Consolidated Financial Statements for the future minimum
lease payments under our power plant operating leases.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In accordance with Accounting Principles Board (&#147;APB&#148;)
Opinion No.&nbsp;18, &#147;The Equity Method of Accounting For
Investments in Common Stock&#148; and FIN&nbsp;35,
&#147;Criteria for Applying the Equity Method of Accounting for
Investments in Common Stock (An Interpretation of APB Opinion
No.&nbsp;18),&#148; the debt on the books of our unconsolidated
investments in power projects is not reflected on our balance
sheet (see Note&nbsp;7 of the Notes to Consolidated Financial
Statements). At December&nbsp;31, 2004, investee debt was
approximately $126.3&nbsp;million. Of the $126.3&nbsp;million,
$60.3&nbsp;million related to our investment in AELLC, for which
we used the cost method of accounting as of December&nbsp;31,
2004. Based on our pro rata ownership share of each of the
investments, our share would be approximately
$43.3&nbsp;million, which includes our share for AELLC of
$19.5&nbsp;million. Please see Note&nbsp;7 of the Notes to
Consolidated Financial Statements for more information on the
cost method of accounting used for AELLC. However, all such debt
is non-recourse to us. For the Aries Power Plant construction
debt, Aquila Inc. and Calpine provided support arrangements
until construction was completed to cover any cost overruns. See
Note&nbsp;7 of the Notes to Consolidated Financial Statements
for additional information on our equity method and cost method
unconsolidated investments in power projects and oil and gas
properties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Commercial Commitments</I>&nbsp;&#151; Our primary commercial
obligations as of December&nbsp;31, 2004, are as follows (in
thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="29%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap><B>Amounts of Commitment Expiration per Period</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="26" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="23">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Amounts</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="left" nowrap><B>Commercial Commitments</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2007</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2008</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2009</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Thereafter</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Committed</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Guarantee of subsidiary debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>16,284</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18,798</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,930,657</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>19,848</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,133,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,137,817</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Standby letters of credit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>579,607</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,802</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>586,450</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Surety bonds</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,531</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,531</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Guarantee of subsidiary operating lease payments</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>83,169</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>81,772</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>82,487</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>115,604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>113,977</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,163,783</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,640,792</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>681,109</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>101,697</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>104,087</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,046,661</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>133,825</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,310,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5,377,589</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our commercial commitments primarily include guarantees of
subsidiary debt, standby letters of credit and surety bonds to
third parties and guarantees of subsidiary operating lease
payments. The debt guarantees consist of parent guarantees for
the finance subsidiaries and project financing for the Broad
River Energy Center and the Pasadena Power Plant. The debt
guarantees and operating lease payments are also included in the
contractual obligations table above. We also issue guarantees
for normal course of business activities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have guaranteed the principal payment of
$2,139.7&nbsp;million and $2,448.6&nbsp;million, respectively,
of senior notes as of December&nbsp;31, 2004 and 2003, for two
wholly owned finance subsidiaries of Calpine, Calpine Canada
Energy Finance ULC and Calpine Canada Energy Finance&nbsp;II
ULC. As of December&nbsp;31, 2004, we have guaranteed
$275.1&nbsp;million and $72.4&nbsp;million, respectively, of
project financing for the Broad River
</DIV>

<P align="center" style="font-size: 10pt;">73

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
Energy Center and Pasadena Power Plant and $291.6&nbsp;million
and $71.8&nbsp;million, respectively, as of December&nbsp;31,
2003, for these power plants. In 2004 and 2003 we have debenture
obligations in the amount of $517.5&nbsp;million and
$1,153.5&nbsp;million, respectively, the payment of which will
fund the obligations of the Trusts (see Note&nbsp;12 for more
information). We agreed to indemnify Duke Capital Corporation
$101.4&nbsp;million and $101.7&nbsp;million as of
December&nbsp;31, 2004 and 2003, respectively, in the event Duke
Capital Corporation is required to make any payments under its
guarantee of the lease of the Hidalgo Energy Center. As of
December&nbsp;31, 2004 and 2003, we have also guaranteed
$31.7&nbsp;million and $35.6&nbsp;million, respectively, of
other miscellaneous debt. All of the guaranteed debt is recorded
on our Consolidated Balance Sheet.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Contractual Obligations</I>&nbsp;&#151; Our contractual
obligations as of December&nbsp;31, 2004, are as follows
(in&nbsp;thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2007</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2008</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2009</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Thereafter</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Other Contractual Obligations</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>60,418</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,995</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,089</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,096</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>85,408</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>160,506</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Total operating lease obligations(1)</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>266,399</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>252,511</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>252,849</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>250,238</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>244,601</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,321,106</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,588,199</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Debt:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unsecured Senior Notes(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>705,949</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>264,258</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>360,878</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,968,660</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>221,539</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,273,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,794,617</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Priority Senior Secured Notes(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,209,375</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,443,150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,677,525</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    First Priority Senior Secured Notes(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>778,971</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>778,971</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total Senior Notes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>718,449</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>276,758</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,570,253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,968,660</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>221,539</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,495,454</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9,251,113</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    CCFC 1(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,208</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,208</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,208</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,208</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>365,349</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>408,569</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>786,750</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    CALGEN(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,174</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,050</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>829,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,549,233</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,395,332</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Convertible Senior Notes Due 2006, 2014 and 2023(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,326</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,253,972</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,255,298</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Notes payable and borrowings under lines of credit(4)(5)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>197,016</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>188,756</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>143,962</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>104,555</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>106,221</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>108,277</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>848,787</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Notes payable to Calpine Capital Trusts(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>517,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>517,500</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Preferred interests(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>369,480</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,990</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,236</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,228</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>90,962</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>506,537</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Capital lease obligation(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,490</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,538</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,428</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,765</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,925</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>248,773</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>288,919</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Construction/project financing(4)(6)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>93,393</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>89,355</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>103,423</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100,340</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>105,299</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,507,241</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,999,051</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Total debt(5)(9)(3)</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,026,197</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>935,421</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,841,438</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,210,814</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,655,436</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>10,179,981</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>17,849,287</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest payments on debt obligations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,473,629</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,462,291</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,356,035</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,130,214</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,003,534</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,422,874</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9,848,577</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest rate swap agreement payments</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,964</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,945</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,770</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,051</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,036</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>79,868</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchase obligations:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Turbine commitments</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,463</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,862</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>977</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33,302</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Commodity purchase obligations(7)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,659,425</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,071,778</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>965,222</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>805,946</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>680,345</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,003,102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,185,818</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Land leases</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,592</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,786</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,967</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,504</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,998</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>375,114</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>400,961</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term service agreements</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>73,541</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>93,675</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>120,385</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>74,448</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70,544</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>710,137</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,142,730</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Costs to complete construction projects</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>699,174</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>449,312</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>189,806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,338,292</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other purchase obligations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55,202</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26,853</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25,481</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25,172</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24,985</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>470,524</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>628,217</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Total purchase obligations(8)</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,469,397</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,651,266</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,306,838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>911,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>781,872</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,558,877</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9,729,320</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Included in the total are future minimum payments for power
    plant operating leases, office and equipment leases and two
    tolling agreements with Acadia Energy Center accounted for as
    leases (See Note&nbsp;7 of the Notes to Consolidated Financial
    Statements for more information).</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    An obligation of or with recourse to Calpine Corporation.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">74

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    The table above does not reflect the repurchases of
    $80.6&nbsp;million convertible Senior Notes and Senior Notes
    subsequent to December&nbsp;31, 2004.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    Structured as an obligation(s) of certain subsidiaries of
    Calpine Corporation without recourse to Calpine Corporation.
    However, default on these instruments could potentially trigger
    cross-default provisions in certain other debt instruments.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(5)&nbsp;</TD>
    <TD align="left">
    A note payable totaling $125.5&nbsp;million associated with the
    sale of the PG&#38;E note receivable to a third party is
    excluded from notes payable and borrowings under lines of credit
    for this purpose as it is a noncash liability. If the
    $125.5&nbsp;million is summed with the $848.8 (total notes
    payable and borrowings under lines of credit)&nbsp;million from
    the table above, the total notes payable and borrowings under
    lines of credit would be $974.3&nbsp;million, which agrees to
    the Consolidated Balance Sheet sum of the current and long-term
    notes payable and borrowings under lines of credit balances on
    the Consolidated Balance Sheet. See Note&nbsp;8 of the Notes to
    Consolidated Financial Statements for more information
    concerning this note. Total debt of $17,849.3&nbsp;million from
    the table above summed with the $125.5&nbsp;million totals
    $17,974.8&nbsp;million, which agrees to the total debt amount in
    Note&nbsp;11 of the Notes to Consolidated Financial Statements.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(6)&nbsp;</TD>
    <TD align="left">
    Included in the total are guaranteed amounts of
    $275.1&nbsp;million and $282.9&nbsp;million, respectively, of
    project financing for the Broad River Energy Center and Pasadena
    Power Plant.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(7)&nbsp;</TD>
    <TD align="left">
    The amounts presented here include contracts for the purchase,
    transportation, or storage of commodities accounted for as
    executory contracts or normal purchase and sales and, therefore,
    not recognized as liabilities on our Consolidated Balance Sheet.
    See &#147;Financial Market Risks&#148; for a discussion of our
    commodity derivative contracts recorded at fair value on our
    Consolidated Balance Sheet.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(8)&nbsp;</TD>
    <TD align="left">
    The amounts included above for purchase obligations include the
    minimum requirements under contract. Also included in purchase
    obligations are employee agreements. Agreements that we can
    cancel without significant cancellation fees are excluded.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(9)&nbsp;</TD>
    <TD align="left">
    See Item&nbsp;1. &#147;Business&nbsp;&#151; Risk Factors&#148;
    for a discussion of the estimated amount of debt that must be
    repurchased pursuant to our indentures.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>(10)&nbsp;</TD>
    <TD align="left">
    Interest payments on debt obligations have not been decreased
    for the requirement to repurchase or redeem approximately
    $520&nbsp;million of indebtedness, per current estimates,
    pursuant to our indentures, as the specific debt instruments are
    not known. However, the $520&nbsp;million of indebtedness is
    reflected in this table as due in 2005.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Debt securities repurchased by Calpine during 2004 and 2003
totaled $1,668.3&nbsp;million and $1,853.4&nbsp;million,
respectively, in aggregate outstanding principal amount for a
repurchase price of $1,394.0&nbsp;million and
$1,575.3&nbsp;million, respectively, plus accrued interest. In
2004 we recorded a pre-tax gain on these transactions in the
amount of $274.4&nbsp;million which was $254.8&nbsp;million, net
of write-offs of $19.1&nbsp;million of unamortized deferred
financing costs and $0.5&nbsp;million of unamortized premiums or
discounts. In 2003 we recorded a pre-tax gain on these
transactions in the amount of $278.1&nbsp;million, which was
$256.9&nbsp;million, net of write-offs of $18.9&nbsp;million of
unamortized deferred financing costs and $2.3&nbsp;million of
unamortized premiums or discounts. HIGH TIDES&nbsp;III
repurchased by Calpine during 2004 totaled $115.0&nbsp;million
in aggregate outstanding principle amount at a repurchase price
of $111.6&nbsp;million plus accrued interest. These exchanged
HIGH TIDES&nbsp;III are reflected on the balance sheets as an
asset, versus being netted against the balance outstanding,
</DIV>

<P align="center" style="font-size: 10pt;">75

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
due to the deconsolidation of the Calpine Capital Trusts, which
issued the HIGH TIDES&nbsp;III, upon the adoption of
FIN&nbsp;46-R. The following table summarizes the total debt
securities repurchased (in millions):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="46%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Principal</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Amount</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Principal</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Amount</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Debt Security and HIGH TIDES</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Amount</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Paid</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Amount</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Paid</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2006 Convertible Senior Notes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>658.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>657.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>474.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>458.8</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2023 Convertible Senior Notes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>266.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>177.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    8<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">4</FONT>%&nbsp;Senior
    Notes Due 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24.5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    10<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT>%&nbsp;Senior
    Notes Due 2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    7<FONT style="font-size: 70%"><SUP>5</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%&nbsp;Senior
    Notes Due 2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>103.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>96.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32.5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    8<FONT style="font-size: 70%"><SUP>3</SUP></FONT>/<FONT style="font-size: 60%">4</FONT>%&nbsp;Senior
    Notes Due 2007</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    7<FONT style="font-size: 70%"><SUP>7</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%&nbsp;Senior
    Notes Due 2008</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>78.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>74.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>58.3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    8<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT>%&nbsp;Senior
    Notes Due 2008</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>344.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>249.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42.3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    8<FONT style="font-size: 70%"><SUP>3</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%&nbsp;Senior
    Notes Due 2008</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>59.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>46.6</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    7<FONT style="font-size: 70%"><SUP>3</SUP></FONT>/<FONT style="font-size: 60%">4</FONT>%&nbsp;Senior
    Notes Due 2009</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>97.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75.9</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    8<FONT style="font-size: 70%"><SUP>5</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%&nbsp;Senior
    Notes Due 2010</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>210.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>170.7</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    8<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT>%&nbsp;Senior
    Notes Due 2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>116.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>73.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>648.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>521.3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    8<FONT style="font-size: 70%"><SUP>7</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%&nbsp;Senior
    Notes Due 2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>125.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>94.3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    HIGH TIDES III</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>115.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>111.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,783.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,505.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,853.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,575.3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2004 we exchanged 24.3&nbsp;million shares of Calpine
common stock in privately negotiated transactions for
approximately $115.0&nbsp;million par value of HIGH TIDES&nbsp;I
and HIGH TIDES&nbsp;II. During 2003, debt securities, exchanged
for 23.5&nbsp;million shares of Calpine common stock in
privately negotiated transactions, totaled $145.0&nbsp;million
in aggregate outstanding principal amount plus accrued interest.
We recorded a pre-tax gain on these transactions in the amount
of $20.2&nbsp;million, net of write-offs of unamortized deferred
financing costs and the unamortized premiums or discounts.
Additionally, during 2003, we exchanged 6.5&nbsp;million shares
of Calpine common stock in privately negotiated transactions for
approximately $37.5&nbsp;million par value of HIGH TIDES I.
These repurchased HIGH TIDES I were reflected on the balance
sheet as an asset, versus being netted against the balance
outstanding, due to the deconsolidation of the Trusts, which
issued the HIGH TIDES, upon the adoption of FIN&nbsp;46-R.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On October&nbsp;20, 2004, the Company repaid $636&nbsp;million
of convertible subordinate debentures held by Calpine Capital
Trusts which used those proceeds to redeem its outstanding HIGH
TIDES&nbsp;I and HIGH TIDES&nbsp;II. The redemption of the HIGH
TIDES I and HIGH TIDES&nbsp;II included securities previously
purchased and held by the Company and resulted in a realized
gain of approximately $6.1&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table summarizes the total debt securities and
HIGH TIDES exchanged for common stock (in millions):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="54%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Common</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Common</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Principal</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Principal</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Stock</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Debt Securities and HIGH TIDES</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Amount</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Issued</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Amount</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Issued</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2006 Convertible Senior Notes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>65.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    8<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT>%&nbsp;Senior
    Notes Due 2008</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    8<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT>%&nbsp;Senior
    Notes Due 2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    HIGH TIDES I</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>37.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6.5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    HIGH TIDES II</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>115.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>182.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">76

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<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Debt Covenant and Indenture Compliance</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our senior notes indentures and our credit facilities contain
financial and other restrictive covenants that limit or prohibit
our ability to incur indebtedness, make prepayments on or
purchase indebtedness in whole or in part, pay dividends, make
investments, lease properties, engage in transactions with
affiliates, create liens, consolidate or merge with another
entity or allow one of our subsidiaries to do so, sell assets,
and acquire facilities or other businesses. We are currently in
compliance with all of such financial and other restrictive
covenants, except as discussed below. Any failure to comply
could give holders of debt under the relevant instrument the
right to accelerate the maturity of all debt outstanding
thereunder if the default was not cured or waived. In addition,
holders of debt under other instruments typically would have
cross-acceleration provisions, which would permit them also to
elect to accelerate the maturity of their debt if another debt
instrument was accelerated upon the occurrence of such an
uncured event of default.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Indenture Compliance</I>&nbsp;&#151; Our various indentures
place conditions on our ability to issue indebtedness, including
further limitations on the issuance of additional debt if our
interest coverage ratio (as defined in the various indentures)
is below 2:1. Currently, our interest coverage ratio (as so
defined) is below 2:1 and, consequently, our indentures
generally would not allow us to issue new debt, except for
(i)&nbsp;certain types of new indebtedness that refinances or
replaces existing indebtedness, and (ii)&nbsp;non-recourse debt
and preferred equity interests issued by our subsidiaries for
purposes of financing certain types of capital expenditures,
including plant development, construction and acquisition
expenses. In addition, if and so long as our interest coverage
ratio is below 2:1, our indentures will limit our ability to
invest in unrestricted subsidiaries and non-subsidiary
affiliates and make certain other types of restricted payments.
Moreover, certain of our indentures will prohibit any further
investments in non-subsidiary affiliates if and for so long as
our interest coverage ratio (as defined therein) is below 1.75:1
and, as of December&nbsp;31, 2004, such interest coverage ratio
had fallen below 1.75:1.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In September 2004, we resolved a dispute with Credit Suisse
First Boston (&#147;CSFB&#148;), by amending and restating a
Letter of Credit and Reimbursement Agreement pursuant to which
CSFB issues a letter of credit with a maximum face amount of
$78.3&nbsp;million for our account. CSFB had previously advised
us that it believed that we may have failed to comply with
certain covenants under the Letter of Credit and Reimbursement
Agreement related to our ability to incur indebtedness and grant
liens.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Calpine has guaranteed the payment of a portion of the rents due
under the lease of the Greenleaf generating facilities in
California, which lease is between an owner trustee acting on
behalf of Union Bank of California, as lessor, and a Calpine
subsidiary, Calpine Greenleaf, Inc., as lessee. Calpine does not
currently meet the requirements of a financial covenant
contained in the guarantee agreement. The lessor has waived this
non-compliance through April&nbsp;30, 2005, and Calpine is
currently in discussions with the lessor concerning the
possibility of modifying the lease and/or Calpine&#146;s
guarantee thereof so as to eliminate or modify the covenant in
question. In the event the lessor&#146;s waiver were to expire
prior to completion of this amendment, the lessor could at that
time elect to accelerate the payment of certain amounts owing
under the lease, totaling approximately $15.9&nbsp;million. In
the event the lessor were to elect to require Calpine to make
this payment, the lessor&#146;s remedy under the guarantee and
the lease would be limited to taking steps to collect damages
from Calpine; the lessor would not be entitled to terminate or
exercise other remedies under the Greenleaf lease.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with several of our subsidiaries&#146; lease
financing transactions (Greenleaf, Pasadena, Broad River,
RockGen and South Point) the insurance policies we have in place
do not comply in every respect with the insurance requirements
set forth in the financing documents. We have requested from the
relevant financing parties, and are expecting to receive,
waivers of this noncompliance. While failure to have the
required insurance in place is listed in the financing documents
as an event of default, the financing parties may not
unreasonably withhold their approval of our waiver request so
long as the required insurance coverage is not reasonably
available or commercially feasible and we deliver a report from
our insurance consultant to that effect. We have delivered the
required insurance consultant reports to the relevant financing
parties and therefore anticipate that the necessary waivers will
be executed shortly.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We own a 32.3% interest in AELLC. AELLC owns the 136&nbsp;MW
Androscoggin Energy Center located in Maine and is a joint
venture between us, and affiliates of Wisvest Corporation and
IP. AELLC had
</DIV>

<P align="center" style="font-size: 10pt;">77

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<DIV align="left" style="font-size: 10pt;">
construction debt of $60.3&nbsp;million outstanding as of
December&nbsp;31, 2004. The debt is non-recourse to Calpine
Corporation (the &#147;AELLC Non-Recourse Financing&#148;). On
November&nbsp;3, 2004, a jury verdict was rendered against AELLC
in a breach of contract dispute with IP. See Note&nbsp;25 of the
Notes to Consolidated Financial Statements for more information
about this legal proceeding. We recorded our $11.6&nbsp;million
share of the award amount in the third quarter of 2004. On
November&nbsp;26, 2004, AELLC filed a voluntary petition for
relief under Chapter&nbsp;11 of the U.S.&nbsp;Bankruptcy Code.
As a result of the bankruptcy, we lost significant influence and
control of the project and have adopted the cost method of
accounting for our investment in Androscoggin. Also, in December
2004, we determined that our investment in Androscoggin was
impaired and recorded a $5.0&nbsp;million impairment charge.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Unrestricted Subsidiaries</I>&nbsp;&#151; The information in
this paragraph is required to be provided under the terms of the
indentures and credit agreement governing the various tranches
of our second-priority secured indebtedness (collectively, the
&#147;Second Priority Secured Debt Instruments&#148;). We have
designated certain of our subsidiaries as &#147;unrestricted
subsidiaries&#148; under the Second Priority Secured Debt
Instruments. A subsidiary with &#147;unrestricted&#148; status
thereunder generally is not required to comply with the
covenants contained therein that are applicable to
&#147;restricted subsidiaries.&#148; The Company has designated
Calpine Gilroy&nbsp;1, Inc., Calpine Gilroy&nbsp;2, Inc. and
Calpine Gilroy Cogen, L.P. as &#147;unrestricted
subsidiaries&#148; for purposes of the Second Priority Secured
Debt Instruments. The following table sets forth selected
balance sheet information of Calpine Corporation and restricted
subsidiaries and of such unrestricted subsidiaries at
December&nbsp;31, 2004, and selected income statement
information for the year ended December&nbsp;31, 2004 (in
thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="41%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Calpine</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Corporation</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>and Restricted</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Unrestricted</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Subsidiaries</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Subsidiaries</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Eliminations</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>27,020,662</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>438,955</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(224,385</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>27,235,232</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>22,000,516</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>253,598</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>22,254,114</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9,225,922</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>19,213</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(15,247</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9,229,888</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total cost of revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8,867,987</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(23,927</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,119</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8,874,795</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45,760</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25,824</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(15,172</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56,412</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,127,009</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(13,793</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,140,802</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>490,224</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,388</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>486,836</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(233,090</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,929</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(13,300</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(242,461</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Bankruptcy-Remote Subsidiaries</I>&nbsp;&#151; Pursuant to
applicable transaction agreements, we have established certain
of our entities separate from Calpine and our other
subsidiaries. At December&nbsp;31, 2004, these entities
included: Rocky Mountain Energy Center, LLC, Riverside Energy
Center, LLC, Calpine Riverside Holdings, LLC, Calpine Energy
Management, L.P., CES GP, LLC, Power Contract Financing, LLC,
Power Contract Financing&nbsp;III, LLC, Calpine Northbrook
Energy Marketing, LLC, Calpine Northbrook Energy Marketing
Holdings, LLC, Gilroy Energy Center, LLC, Calpine Gilroy Cogen,
L.P., Calpine Gilroy&nbsp;1, Inc., Calpine King City Cogen, LLC,
Calpine Securities Company, L.P. (a parent company of Calpine
King City Cogen, LLC), Calpine King City, LLC (an indirect
parent company of Calpine Securities Company, L.P.), Calpine Fox
Holdings, LLC and Calpine Fox LLC. The following disclosures are
required under certain applicable agreements and pertain to some
of these entities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On May&nbsp;15, 2003, our wholly owned indirect subsidiary,
Calpine Northbrook Energy Marketing, LLC (&#147;CNEM&#148;),
completed an offering of $82.8&nbsp;million secured by an
existing power sales agreement with the Bonneville Power
Administration (&#147;BPA&#148;). CNEM borrowed
$82.8&nbsp;million secured by the BPA contract, a spot market
power purchase agreement, a fixed price swap agreement and the
equity interest in CNEM. The $82.8&nbsp;million loan is recourse
only to CNEM&#146;s assets and the equity interest in CNEM and
is not guaranteed by us. CNEM was determined to be a Variable
Interest Entity (&#147;VIE&#148;) in which we were the primary
beneficiary. Accordingly, the entity&#146;s assets and
liabilities are consolidated into our accounts.
</DIV>

<P align="center" style="font-size: 10pt;">78
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the applicable transaction agreements, each of CNEM
and its parent, CNEM Holdings, LLC, has been established as an
entity with its existence separate from Calpine and our other
subsidiaries. In accordance with FIN&nbsp;46-R, we consolidate
these entities. See Note&nbsp;2 of the Notes to Consolidated
Financial Statements for more information on FIN&nbsp;46-R. The
power sales agreement with BPA has been acquired by CNEM from
CES and the spot market power purchase agreement with a third
party and the swap agreement have been entered into by CNEM and,
together with the $82.8&nbsp;million loan, are assets and
liabilities of CNEM, separate from the assets and liabilities of
Calpine and our other subsidiaries. The only significant asset
of CNEM Holdings, LLC is its equity interest in CNEM. The
proceeds of the $82.8&nbsp;million loan were primarily used by
CNEM to purchase the power sales agreement with BPA.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth selected financial information of
CNEM as of and for the year ended December&nbsp;31, 2004 (in
thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="85%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>72,367</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>56,222</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total revenue(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>667</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total cost of revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,378</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(56,167</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    CNEM&#146;s contracts are derivatives and are recorded on a net
    mark-to-market basis on our financial statements under
    SFAS&nbsp;No.&nbsp;133, notwithstanding that economically they
    are fully hedged.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
See Note&nbsp;12 of the Notes to Consolidated Financial
Statements for further information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On June&nbsp;13, 2003, PCF, a wholly owned stand-alone
subsidiary of CES, completed an offering of two tranches of
Senior Secured Notes due 2006 and 2010 (collectively called the
&#147;PCF Notes&#148;), totaling $802.2&nbsp;million. PCF&#146;s
assets and liabilities consist of cash, certain transferred
power purchase and sales agreements and the PCF Notes. PCF was
determined to be a VIE in which we were the primary beneficiary.
Accordingly, the entity&#146;s assets and liabilities were
consolidated into our accounts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the applicable transaction agreements, PCF has been
established as an entity with its existence separate from
Calpine and our other subsidiaries. In accordance with
FIN&nbsp;46-R, we consolidate this entity. See Note&nbsp;2 of
the Notes to Consolidated Financial Statements for more
information on FIN&nbsp;46-R. The above mentioned power purchase
and sales agreements, which were acquired by PCF from CES, and
the PCF Notes are assets and liabilities of PCF, separate from
the assets and liabilities of Calpine and our other
subsidiaries. The proceeds of the PCF Notes were primarily used
by PCF to purchase the power purchase and sales agreements. The
following table sets forth selected financial information of PCF
as of and for the year ended December&nbsp;31, 2004 (in
thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="84%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,109,825</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,245,538</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>513,832</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total cost of revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>469,632</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>66,116</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(21,188</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
See Note&nbsp;12 of the Notes to Consolidated Financial
Statements for further information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On September&nbsp;30, 2003, GEC, a wholly owned subsidiary of
our indirect subsidiary GEC Holdings, LLC, completed an offering
of $301.7&nbsp;million of 4%&nbsp;Senior Secured Notes Due 2011
(the &#147;GEC Notes&#148;). See Note&nbsp;18 of the Notes to
Consolidated Financial Statements for more information on this
secured financing. In connection with the offering of the GEC
Notes, we received funding on a third party preferred equity
</DIV>

<P align="center" style="font-size: 10pt;">79
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
investment in GEC Holdings, LLC totaling $74.0&nbsp;million.
This preferred interest meets the criteria of a mandatorily
redeemable financial instrument and has been classified as debt
under the guidance of SFAS&nbsp;No.&nbsp;150, &#147;Accounting
for Certain Financial Instruments with Characteristics of both
Liabilities and Equity,&#148; due to certain preferential
distributions to the third party. The preferential distributions
are due semi-annually beginning in March 2004 through September
2011 and total approximately $113.3&nbsp;million over the
eight-year period. As of December&nbsp;31, 2004 and 2003, there
was $67.4 and $74.0&nbsp;million, respectively, outstanding
under the preferred interest.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the applicable transaction agreements, GEC has been
established as an entity with its existence separate from
Calpine and our other subsidiaries. We consolidate these
entities. One of our long-term power sales agreements with CDWR
has been acquired by GEC by means of a series of capital
contributions by CES and certain of its affiliates and is an
asset of GEC, and the GEC Notes and the preferred interest are
liabilities of GEC, separate from the assets and liabilities of
Calpine and our other subsidiaries. In addition to seven peaker
power plants owned directly by GEC and the power sales
agreement, GEC&#146;s assets include cash and a 100% equity
interest in each of Creed Energy Center, LLC (&#147;Creed&#148;)
and Goose Haven Energy Center, LLC (&#147;Goose Haven&#148;)
each of which is a wholly owned subsidiary of GEC. Each of Creed
and Goose Haven has been established as an entity with its
existence separate from Calpine and our other subsidiaries of
the Company. GEC consolidates these entities. Creed and Goose
Haven each have assets consisting of various power plants and
other assets. The following table sets forth selected financial
information of GEC as of and for the year ended
December&nbsp;31, 2004 (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="86%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>624,132</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>285,604</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>110,532</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total cost of revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>54,214</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>20,567</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>36,864</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
See Note&nbsp;12 of the Notes to Consolidated Financial
Statements for further information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On April&nbsp;29, 2003, we sold a preferred interest in a
subsidiary that leases and operates the 120&nbsp;MW King City
Power Plant to GE Structured Finance for $82.0&nbsp;million. The
preferred interest holder will receive approximately 60% of
future cash flow distributions based on current projections. We
will continue to provide O&#38;M services. As of
December&nbsp;31, 2003, there was $82.0&nbsp;million outstanding
under the preferred interest.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the applicable transaction agreements, each of
Calpine King City Cogen, LLC, Calpine Securities Company, L.P.
(a parent company of Calpine King City Cogen, LLC), and Calpine
King City, LLC (an indirect parent company of Calpine Securities
Company, L.P.), has been established as an entity with its
existence separate from Calpine and our other subsidiaries. We
consolidate these entities. The following table sets forth
certain financial information relating to these three entities
as of December&nbsp;31, 2004 (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="86%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>481,482</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>102,742</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
See Note&nbsp;12 of the Notes to Consolidated Financial
Statements for further information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On December&nbsp;4, 2003, we announced that we had sold to a
group of institutional investors our right to receive payments
from PG&#38;E under the Agreement between PG&#38;E and Calpine
Gilroy Cogen, L.P. (&#147;Gilroy&#148;), a California Limited
Partnership (PG&#38;E Log No.&nbsp;08C002) For Termination and
Buy-Out of Standard Offer 4 Power Purchase Agreement, executed
by PG&#38;E on July&nbsp;1, 1999 (the &#147;Gilroy
Receivable&#148;) for $133.4&nbsp;million in cash. Because the
transaction did not satisfy the criteria for sales treatment
under SFAS&nbsp;No.&nbsp;140, &#147;Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of
</DIV>

<P align="center" style="font-size: 10pt;">80
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<DIV align="left" style="font-size: 10pt;">
Liabilities&nbsp;&#151; a Replacement of FASB Statement
No.&nbsp;125,&#148; it is reflected in the Consolidated
Financial Statements as a secured financing, with a note payable
of $133.4&nbsp;million. The receivable balance and note payable
balance are both reduced as PG&#38;E makes payments to the buyer
of the Gilroy Receivable. The $24.1&nbsp;million difference
between the $157.5&nbsp;million book value of the Gilroy
Receivable at the transaction date and the cash received will be
recognized as additional interest expense over the repayment
term. We will continue to book interest income over the
repayment term and interest expense will be accreted on the
amortizing note payable balance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the applicable transaction agreements, each of
Gilroy and Calpine Gilroy&nbsp;1, Inc. (the general partner of
Gilroy), has been established as an entity with its existence
separate from Calpine and our other subsidiaries. We consolidate
these entities. The following table sets forth the assets and
liabilities of Gilroy as of December&nbsp;31, 2004 (in
thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="86%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>438,955</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>253,598</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
See Note&nbsp;8 of the Notes to Consolidated Financial
Statements for further information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On June&nbsp;2, 2004, our wholly-owned indirect subsidiary,
Power Contract Financing&nbsp;III, LLC
(&#147;PCF&nbsp;III&#148;), issued $85.0&nbsp;million of zero
coupon notes collateralized by PCF&nbsp;III&#146;s ownership of
PCF. PCF&nbsp;III owns all of the equity interests in PCF, which
holds the CDWR contract monetized in June 2003 and maintains a
debt reserve fund, which had a balance of approximately
$94.4&nbsp;million at December&nbsp;31, 2004. We received cash
proceeds of approximately $49.8&nbsp;million from the issuance
of the zero coupon notes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the applicable transaction agreements, PCF&nbsp;III
has been established as an entity with its existence separate
from Calpine and our other subsidiaries. We consolidate this
entity. The following table sets forth the assets and
liabilities of PCF&nbsp;III as of December&nbsp;31, 2004, which
does not include the balances of PCF&nbsp;III&#146;s subsidiary,
PCF (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="86%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,701</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>52,388</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On August&nbsp;5, 2004, our wholly-owned indirect subsidiary,
Calpine Energy Management, L.P. (&#147;CEM&#148;), entered into
a $250.0&nbsp;million letter of credit facility with Deutsche
Bank whereby Deutsche Bank will support CEM&#146;s power and gas
obligations by issuing letters of credit. The facility expires
in October 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the applicable transaction agreements, CEM has been
established as an entity with its existence separate from
Calpine and our other subsidiaries. We consolidate this entity.
The following table sets forth the assets and liabilities of CEM
as of December&nbsp;31, 2004 (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="87%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>35,851</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>34,816</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On June&nbsp;29, 2004, Rocky Mountain Energy Center, LLC and
Riverside Energy Center, LLC, wholly owned stand-alone
subsidiaries of the Company&#146;s Calpine Riverside Holdings,
LLC subsidiary, received funding in the aggregate amount of
$661.5&nbsp;million comprising $633.4&nbsp;million of First
Priority Secured Floating Rate Term Loans Due 2011 and a
$28.1&nbsp;million letter of credit-linked deposit facility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the applicable transaction agreements, each of Rocky
Mountain Energy Center, LLC, Riverside Energy Center, LLC, and
Calpine Riverside Holdings, LLC has been established as an
entity with
</DIV>

<P align="center" style="font-size: 10pt;">81
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<DIV align="left" style="font-size: 10pt;">
its existence separate from Calpine and our other subsidiaries.
We consolidate these entities. The following tables set forth
the assets and liabilities of these entities as of
December&nbsp;31, 2004 (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="78%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Rocky Mountain</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>416,662</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>277,157</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="79%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Riverside</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>909,687</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>431,700</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="75%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Calpine Riverside</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Holdings, LLC</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>241,893</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On November&nbsp;19, 2004, our wholly-owned indirect
subsidiaries, Calpine Fox LLC and its immediate parent company,
Calpine Fox Holdings, LLC, entered into a $400&nbsp;million,
25-year, non-recourse sale/ leaseback transaction with
affiliates of GE Commercial Finance Energy Financial Services
(&#147;GECF&#148;) for the 560-megawatt Fox Energy Center under
construction in Wisconsin. Due to significant continuing
involvement, as defined in SFAS&nbsp;No.&nbsp;98,
&#147;Accounting for Leases,&#148; the transaction does not
currently qualify for sale/ leaseback accounting under that
statement and has been accounted for as a financing. The
proceeds received from GECF are recorded as debt in our
consolidated balance sheet. The power plant assets will be
depreciated over their estimated useful life and the lease
payments will be applied to principal and interest expense using
the effective interest method until such time as our continuing
involvement is removed, expires or is otherwise eliminated. Once
we no longer have significant continuing involvement in the
power plant assets, the legal sale will be recognized for
accounting purposes and the underlying lease will be evaluated
and classified in accordance with SFAS No.&nbsp;13,
&#147;Accounting for Leases.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the applicable transaction agreements, each of
Calpine Fox, LLC and Calpine Fox Holdings, LLC, has been
established as an entity with its existence separate from
Calpine and our other subsidiaries. We consolidate these
entities. The following tables set forth the assets and
liabilities of Calpine Fox, LLC and Calpine Fox Holdings, LLC,
respectively, as of December&nbsp;31, 2004 (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="76%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Calpine Fox, LLC</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>480,685</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>274,724</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="77%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Calpine Fox</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Holdings, LLC</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>102,980</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">82

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Capital Spending&nbsp;&#151; Development and Construction</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Construction and development costs in process consisted of the
following at December&nbsp;31, 2004 (dollars in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="34%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Equipment</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Project</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B># of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Included in</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Development</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Unassigned</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Projects</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>CIP(1)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>CIP</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Costs</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Equipment</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Projects in construction(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,194,530</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,094,490</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Projects in advanced development</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>670,806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>520,036</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>102,829</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Projects in suspended development</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>421,547</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>168,985</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38,398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Projects in early development</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,952</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other capital projects</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>NA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35,094</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unassigned equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>NA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>66,073</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total construction and development costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,321,977</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,783,511</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>150,179</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>66,073</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Construction in Progress (&#147;CIP&#148;).</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    We have a total of 11 projects in construction. This includes
    the 10 projects above that are recorded in CIP and 1 project
    that is recorded in investments in power projects. Work and the
    capitalization of interest on one of the construction projects
    has been suspended or delayed due to current market conditions.
    The CIP balance on this project was $461.5&nbsp;million as of
    December&nbsp;31, 2004. Subsequent to December&nbsp;31, 2004,
    work and the capitalization of interest on two additional
    construction projects was suspended or delayed. Total CIP on
    these two projects was $683.0&nbsp;million as of
    December&nbsp;31, 2004.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Projects in Construction</I>&nbsp;&#151; The ten projects in
construction are projected to come on line from March 2005 to
November 2007 or later. These projects will bring on line
approximately 4,656&nbsp;MW of base load capacity (5,264&nbsp;MW
with peaking capacity). Interest and other costs related to the
construction activities necessary to bring these projects to
their intended use are being capitalized, unless work has been
suspended, in which case capitalization of interest expense is
suspended until active construction resumes. At
December&nbsp;31, 2004, the estimated funding requirements to
complete these projects, net of expected project financing
proceeds, is approximately $84.6&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Projects in Advanced Development</I>&nbsp;&#151; There are an
additional ten projects in advanced development. These projects
will bring on line approximately 5,307&nbsp;MW of base load
capacity (6,095&nbsp;MW with peaking capacity). Interest and
other costs related to the development activities necessary to
bring these projects to their intended use are being
capitalized. However, the capitalization of interest has been
suspended on 2&nbsp;projects for which development activities
are substantially complete but construction will not commence
until a power purchase agreement and financing are obtained. The
estimated cost to complete the 10 projects in advanced
development is approximately $3.0&nbsp;billion. Our current plan
is to project finance these costs as power purchase agreements
are arranged.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Suspended Development Projects</I>&nbsp;&#151; Due to current
electric market conditions, we have ceased capitalization of
additional development costs and interest expense on certain
development projects on which work has been suspended.
Capitalization of costs may recommence as work on these projects
resumes, if certain milestones and criteria are met indicating
that it is again highly probable that the costs will be
recovered through future operations. As is true for all
projects, the suspended projects are reviewed for impairment
whenever there is an indication of potential reduction in a
project&#146;s fair value. Further, if it is determined that it
is no longer probable that the projects will be completed and
all capitalized costs recovered through future operations, the
carrying values of the projects would be written down to the
recoverable value. These projects would bring on line
approximately 2,956&nbsp;MW of base load capacity (3,409&nbsp;MW
with peaking capacity). The estimated cost to complete these
projects is approximately $1.8&nbsp;billion.
</DIV>

<P align="center" style="font-size: 10pt;">83

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Projects in Early Development</I>&nbsp;&#151; Costs for
projects that are in early stages of development are capitalized
only when it is highly probable that such costs are ultimately
recoverable and significant project milestones are achieved.
Until then, all costs, including interest costs, are expensed.
The projects in early development with capitalized costs relate
to two projects and include geothermal drilling costs and
equipment purchases.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Other Capital Projects</I>&nbsp;&#151; Other capital projects
primarily consist of enhancements to operating power plants, oil
and gas and geothermal resource and facilities development as
well as software developed for internal use.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Unassigned Equipment</I>&nbsp;&#151; As of December&nbsp;31,
2004, we had made progress payments on four turbines and other
equipment with an aggregate carrying value of
$66.1&nbsp;million. This unassigned equipment is classified on
the balance sheet as other assets, because it is not assigned to
specific development and construction projects. We are holding
this equipment for potential use on future projects. It is
possible that some of this unassigned equipment may eventually
be sold, potentially in combination with our engineering and
construction services. For equipment that is not assigned to
advanced development or construction projects, interest is not
capitalized.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Impairment Evaluation</I>&nbsp;&#151; All construction and
development projects and unassigned turbines are reviewed for
impairment whenever there is an indication of potential
reduction in fair value. Equipment assigned to such projects is
not evaluated for impairment separately, as it is integral to
the assumed future operations of the project to which it is
assigned. If it is determined that it is no longer probable that
the projects will be completed and all capitalized costs
recovered through future operations, the carrying values of the
projects would be written down to the recoverable value in
accordance with the provisions of SFAS&nbsp;No.&nbsp;144
&#147;Accounting for Impairment or Disposal of Long-Lived
Assets&#148; (&#147;SFAS No.&nbsp;144&#148;). We review our
unassigned equipment for potential impairment based on
probability-weighted alternatives of utilizing it for future
projects versus selling it. Utilizing this methodology, we do
not believe that the equipment not committed to sale is
impaired. However, during the year ended December&nbsp;31, 2004,
we recorded to the &#147;Equipment cancellation and impairment
cost&#148; line of the Consolidated Statement of Operations
$3.2&nbsp;million in net losses in connection with equipment
sales. During the year ended December&nbsp;31, 2003, we recorded
to the same line $29.4&nbsp;million in losses in connection with
the sale of four turbines, and we may incur further losses
should we decide to sell more unassigned equipment in the future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Performance Metrics</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In understanding our business, we believe that certain non-GAAP
operating performance metrics are particularly important. These
are described below:
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Total deliveries of power.</I> We both generate power that we
    sell to third parties and purchase power for sale to third
    parties in hedging, balancing and optimization (&#147;HBO&#148;)
    transactions. The former sales are recorded as electricity and
    steam revenue and the latter sales are recorded as sales of
    purchased power for hedging and optimization. The volumes in MWh
    for each are key indicators of our respective levels of
    generation and HBO activity and the sum of the two, our total
    deliveries of power, is relevant because there are occasions
    where we can either generate or purchase power to fulfill
    contractual sales commitments. Prospectively beginning
    October&nbsp;1, 2003, in accordance with EITF Issue
    No.&nbsp;03-11, certain sales of purchased power for hedging and
    optimization are shown net of purchased power expense for
    hedging and optimization in our consolidated statement of
    operations. Accordingly, we have also netted HBO volumes on the
    same basis as of October&nbsp;1, 2003, in the table below.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Average availability and average baseload capacity
    factor.</I> Availability represents the percent of total hours
    during the period that our plants were available to run after
    taking into account the downtime associated with both scheduled
    and unscheduled outages. The baseload capacity factor is
    calculated by dividing (a)&nbsp;total MWh generated by our power
    plants (excluding peakers) by the product of multiplying
    (b)&nbsp;the weighted average MW in operation during the period
    by (c)&nbsp;the total hours in the period. The average baseload
    capacity factor is thus a measure of total actual generation as
    a percent of total potential generation. If we elect not to
    generate during periods when electricity pricing is too low</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">84

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    or gas prices too high to operate profitably, the baseload
    capacity factor will reflect that decision as well as both
    scheduled and unscheduled outages due to maintenance and repair
    requirements.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Average heat rate for gas-fired fleet of power plants
    expressed in Btu&#146;s of fuel consumed per kilowatt hour
    (&#147;KWh&#148;) generated.</I> We calculate the average heat
    rate for our gas-fired power plants (excluding peakers) by
    dividing (a)&nbsp;fuel consumed in Btu&#146;s by (b)&nbsp;KWh
    generated. The resultant heat rate is a measure of fuel
    efficiency, so the lower the heat rate, the better. We also
    calculate a &#147;steam-adjusted&#148; heat rate, in which we
    adjust the fuel consumption in Btu&#146;s down by the equivalent
    heat content in steam or other thermal energy exported to a
    third party, such as to steam hosts for our cogeneration
    facilities. Our goal is to have the lowest average heat rate in
    the industry.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Average all-in realized electric price expressed in dollars
    per MWh generated.</I> Our risk management and optimization
    activities are integral to our power generation business and
    directly impact our total realized revenues from generation.
    Accordingly, we calculate the all-in realized electric price per
    MWh generated by dividing (a)&nbsp;adjusted electricity and
    steam revenue, which includes capacity revenues, energy
    revenues, thermal revenues and the spread on sales of purchased
    electricity for hedging, balancing, and optimization activity,
    by (b)&nbsp;total generated MWh in the period.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Average cost of natural gas expressed in dollars per millions
    of Btu&#146;s of fuel consumed.</I> Our risk management and
    optimization activities related to fuel procurement directly
    impact our total fuel expense. The fuel costs for our gas-fired
    power plants are a function of the price we pay for fuel
    purchased and the results of the fuel hedging, balancing, and
    optimization activities by CES. Accordingly, we calculate the
    cost of natural gas per millions of Btu&#146;s of fuel consumed
    in our power plants by dividing (a)&nbsp;adjusted fuel expense
    which includes the cost of fuel consumed by our plants (adding
    back cost of inter-company &#147;equity&#148; gas from Calpine
    Natural Gas, which is eliminated in consolidation), and the
    spread on sales of purchased gas for hedging, balancing, and
    optimization activity by (b)&nbsp;the heat content in millions
    of Btu&#146;s of the fuel we consumed in our power plants for
    the period.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Average spark spread expressed in dollars per MWh
    generated.</I> Our risk management activities focus on managing
    the spark spread for our portfolio of power plants, the spread
    between the sales price for electricity generated and the cost
    of fuel. We calculate the spark spread per MWh generated by
    subtracting (a)&nbsp;adjusted fuel expense from
    (b)&nbsp;adjusted E&#38;S revenue and dividing the difference by
    (c)&nbsp;total generated MWh in the period.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Average plant operating expense per normalized MWh.</I> To
    assess trends in electric power plant operating expense
    (&#147;POX&#148;) per MWh, we normalize the results from period
    to period by assuming a constant 70% total company-wide capacity
    factor (including both baseload and peaker capacity) in deriving
    normalized MWh. By normalizing the cost per MWh with a constant
    capacity factor, we can better analyze trends and the results of
    our program to realize economies of scale, cost reductions and
    efficiencies at our electric generating plants. For comparison
    purposes we also include POX per actual MWh.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">85

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The table below shows the operating performance metrics
discussed above.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="52%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 7pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Years Ended December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 7pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(In thousands)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Operating Performance Metrics;</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>Total deliveries of power:</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    MWh generated</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>96,489</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>82,423</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>72,767</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    HBO and trading MWh sold</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>51,175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>77,232</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75,740</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    MWh delivered</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>147,664</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>159,655</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>148,507</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>Average availability</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>92.6</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>91.2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>91.8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>Average baseload capacity factor:</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Average total MW in operation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24,690</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,092</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,346</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Average MW of pure peakers</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,951</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,672</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,708</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Average baseload MW in operation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,739</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,420</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,638</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Hours in the period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,784</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,760</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,760</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Potential baseload generation (MWh)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>190,955</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>152,599</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>110,709</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Actual total generation (MWh)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>96,489</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>82,423</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>72,767</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Actual pure peakers&#146; generation (MWh)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,453</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,290</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>979</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Actual baseload generation (MWh)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>95,036</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>81,133</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>71,788</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Average baseload capacity factor</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>49.8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>53.2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>64.8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>Average heat rate for gas-fired power plants (excluding
    peakers) (Btu&#146;s/ KWh):</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Not steam adjusted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,193</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,928</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Steam adjusted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,239</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>Average all-in realized electric price:</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Electricity and steam revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5,683,063</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,680,397</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,237,510</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Spread on sales of purchased power for hedging and optimization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>164,747</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24,118</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>527,546</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Adjusted electricity and steam revenue (in thousands)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5,847,810</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,704,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,765,056</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    MWh generated (in thousands)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>96,489</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>82,423</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>72,767</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Average all-in realized electric price per MWh</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>60.61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>57.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>51.74</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>Average cost of natural gas:</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fuel expense (in thousands)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,731,108</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,665,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,792,323</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fuel cost elimination</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>208,170</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>284,951</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>141,263</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Spread on sales of purchased gas for hedging and optimization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,587</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(41,334</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(49,401</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Adjusted fuel expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,927,691</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,909,237</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,884,185</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Million Btu&#146;s (&#147;MMBtu&#148;) of fuel consumed by
    generating plants (in thousands)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>657,762</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>560,508</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>511,354</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Average cost of natural gas per MMBtu</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.97</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3.68</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    MWh generated (in thousands)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>96,489</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>82,423</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>72,767</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Average cost of adjusted fuel expense per MWh</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>40.71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>35.30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25.89</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>Average spark spread:</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Adjusted electricity and steam revenue (in thousands)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5,847,810</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,704,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,765,056</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Adjusted fuel expense (in thousands)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,927,691</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,909,237</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,884,185</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Spark spread (in thousands)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,920,119</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,795,278</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,880,871</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    MWh generated (in thousands)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>96,489</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>82,423</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>72,767</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Average spark spread per MWh</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>19.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>21.78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25.85</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Add: Equity gas contribution(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>129,255</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>174,922</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>42,769</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Spark spread with equity gas benefits (in thousands)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,049,374</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,970,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,923,640</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Average spark spread with equity gas benefits per MWh</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>21.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>23.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>26.44</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <I>Average plant operating expense (&#147;POX&#148;) per
    normalized MWh (for comparison purposes we also include POX per
    actual MWh):</I></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Average total consolidated MW in operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24,690</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,092</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,346</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Hours per year</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,784</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,760</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,760</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total potential MWh</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>216,877</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>176,006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>125,671</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Normalized MWh (at 70% capacity factor)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>151,814</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>123,204</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>87,970</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Plant operating expense (POX)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>795,975</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>663,045</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>522,906</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    POX per normalized MWh</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.94</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    POX per actual MWh</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.19</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Equity gas contribution margin from continuing operations:</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">86

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="62%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Years Ended December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(In thousands)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas sales</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>63,153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>59,156</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>63,514</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Add: Fuel cost eliminated in consolidation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>208,170</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>284,951</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>141,263</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Subtotal</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>271,323</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>344,107</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>204,777</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Oil and gas operating expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56,843</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75,453</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>69,840</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Depletion, depreciation and amortization(a)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>85,225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>93,732</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>92,168</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Equity gas contribution margin</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>129,255</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>174,922</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>42,769</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    MWh generated (in thousands)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>96,489</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>82,423</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>72,767</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Equity gas contribution margin per MWh</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1.34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2.12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.59</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(a)&nbsp;</TD>
    <TD align="left">
    Excludes oil and gas impairment of $202.1&nbsp;million,
    $2.9&nbsp;million and $3.4&nbsp;million, respectively.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The table below provides additional detail of total
mark-to-market activity. For the years ended December&nbsp;31,
2004, 2003 and 2002, mark-to-market activity, net consisted of
(dollars in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="57%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Years Ended December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(In thousands)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Realized:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Power activity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#147;Trading Activity&#148; as defined in EITF Issue
    No.&nbsp;02-03</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>52,390</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>52,559</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>12,175</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other mark-to-market activity(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12,158</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(26,059</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total realized power activity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>40,232</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>26,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>12,175</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gas activity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#147;Trading Activity&#148; as defined in EITF Issue
    No.&nbsp;02-03</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,025</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(2,166</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>13,915</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other mark-to-market activity(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total realized gas activity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,025</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(2,166</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>13,915</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total realized activity:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#147;Trading Activity&#148; as defined in EITF Issue
    No.&nbsp;02-03</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>60,415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>50,393</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>26,090</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other mark-to-market activity(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12,158</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(26,059</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total realized activity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>48,257</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>24,334</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>26,090</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unrealized:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Power activity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#147;Trading Activity&#148; as defined in EITF Issue
    No.&nbsp;02-03</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(18,075</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(55,450</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>12,974</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ineffectiveness related to cash flow hedges</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,814</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5,001</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,934</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other mark-to-market activity(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(13,591</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,243</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total unrealized power activity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(29,852</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(61,694</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,040</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gas activity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#147;Trading Activity&#148; as defined in EITF Issue
    No.&nbsp;02-03</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(10,700</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,768</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(14,792</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ineffectiveness related to cash flow hedges</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,827</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,147</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other mark-to-market activity(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total unrealized gas activity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(4,873</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>10,921</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(12,645</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total unrealized activity:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#147;Trading Activity&#148; as defined in EITF Issue
    No.&nbsp;02-03</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(28,775</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(47,682</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1,818</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ineffectiveness related to cash flow hedges</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,848</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,787</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other mark-to-market activity(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(13,591</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,243</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total unrealized activity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(34,725</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(50,773</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(4,605</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">87

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="61%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Years Ended December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(In thousands)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total mark-to-market activity:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &#147;Trading Activity&#148; as defined in EITF Issue
    No.&nbsp;02-03</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>31,640</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,711</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>24,272</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Ineffectiveness related to cash flow hedges</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,848</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,787</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other mark-to-market activity(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(25,749</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(27,302</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total mark-to-market activity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>13,532</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(26,439</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>21,485</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Activity related to our assets but does not qualify for hedge
    accounting.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Strategy</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For a discussion of our strategy and management&#146;s outlook,
see &#147;Item&nbsp;1&nbsp;&#151; Business&nbsp;&#151;
Strategy.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Financial Market Risks</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As we are primarily focused on generation of electricity using
gas-fired turbines, our natural physical commodity position is
&#147;short&#148; fuel (i.e., natural gas consumer) and
&#147;long&#148; power (i.e., electricity seller). To manage
forward exposure to price fluctuation in these and (to a lesser
extent) other commodities, we enter into derivative commodity
instruments as discussed in Item&nbsp;6.
&#147;Business&nbsp;&#151; Marketing, Hedging, Optimization and
Trading Activities.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The change in fair value of outstanding commodity derivative
instruments from January&nbsp;1, 2004, through December&nbsp;31,
2004, is summarized in the table below (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="83%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fair value of contracts outstanding at January&nbsp;1, 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>76,541</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash losses recognized or otherwise settled during the period(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30,569</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Non-cash losses recognized or otherwise settled during the
    period(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(34,394</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Changes in fair value attributable to new contracts</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(28,896</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Changes in fair value attributable to price movements</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(25,260</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fair value of contracts outstanding at December&nbsp;31, 2004(3)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18,560</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Realized cash flow from fair value hedges(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>171,096</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Recognized (losses) from commodity cash flow hedges of
    $(89.2)&nbsp;million (represents realized value of cash flow
    hedge activity of $(70.2)&nbsp;million as disclosed in
    Note&nbsp;23 of the Notes to Consolidated Financial Statements,
    net of non-cash other comprehensive income (&#147;OCI&#148;)
    items relating to terminated derivatives of $8.1&nbsp;million
    and equity method hedges of $10.9&nbsp;million) and realized
    gains of $58.6&nbsp;million on mark-to-market activity,
    (represents realized value of mark-to-market activity of
    $48.3&nbsp;million, as reported in the Consolidated Statements
    of Operations under mark-to-market activities, net of
    $(10.3)&nbsp;million of non-cash realized mark-to-market
    activity).</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    This represents the non-cash amortization of deferred items
    embedded in our derivative assets and liabilities.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    Net commodity derivative assets reported in Note 23 of the Notes
    to Consolidated Financial Statements.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    Not included as part of the roll-forward of net derivative
    assets and liabilities because changes in the hedge instrument
    and hedged item move in equal and offsetting directions to the
    extent the fair value hedges are perfectly effective.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">88
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The fair value of outstanding derivative commodity instruments
at December&nbsp;31, 2004, based on price source and the period
during which the instruments will mature, are summarized in the
table below (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="38%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Fair Value Source</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006-2007</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2008-2009</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>After 2009</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Prices actively quoted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>34,636</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>57,175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>91,811</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Prices provided by other external sources</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(55,308</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(18,845</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,678</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(30,666</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(90,141</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Prices based on models and other valuation methods</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,090</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,890</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total fair value</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(20,672</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>46,130</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>23,768</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(30,666</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18,560</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our risk managers maintain fair value price information derived
from various sources in our risk management systems. The
propriety of that information is validated by our Risk Control
group. Prices actively quoted include validation with prices
sourced from commodities exchanges (e.g., New York Mercantile
Exchange). Prices provided by other external sources include
quotes from commodity brokers and electronic trading platforms.
Prices based on models and other valuation methods are validated
using quantitative methods. See &#147;Critical Accounting
Policies&#148; for a discussion of valuation estimates used
where external prices are unavailable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The counterparty credit quality associated with the fair value
of outstanding derivative commodity instruments at
December&nbsp;31, 2004, and the period during which the
instruments will mature are summarized in the table below (in
thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="48%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Credit Quality (Based on Standard&nbsp;&#38; Poor&#146;s Ratings</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B>as of December&nbsp;31, 2004)</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006-2007</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2008-2009</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>After 2009</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Investment grade</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(30,186</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>46,357</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>23,768</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(30,666</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9,273</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Non-investment grade</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,676</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>632</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,308</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    No external ratings</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(859</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(21</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total fair value</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(20,672</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>46,130</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>23,768</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(30,666</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18,560</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The fair value of outstanding derivative commodity instruments
and the fair value that would be expected after a ten percent
adverse price change are shown in the table below (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Fair Value After</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>10% Adverse</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Fair Value</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Price Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    At December&nbsp;31, 2004:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Electricity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(70,457</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(227,624</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Natural gas</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>89,017</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,505</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18,560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(223,119</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Derivative commodity instruments included in the table are those
included in Note&nbsp;23 of the Notes to Consolidated Financial
Statements. The fair value of derivative commodity instruments
included in the table is based on present value adjusted quoted
market prices of comparable contracts. The fair value of
electricity derivative commodity instruments after a 10% adverse
price change includes the effect of increased power prices
versus our derivative forward commitments. Conversely, the fair
value of the natural gas derivatives after a 10% adverse price
change reflects a general decline in gas prices versus our
derivative forward commitments. Derivative commodity instruments
offset the price risk exposure of our physical assets. None of
the offsetting physical positions are included in the table
above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Price changes were calculated by assuming an across-the-board
ten percent adverse price change regardless of term or
historical relationship between the contract price of an
instrument and the underlying commodity price. In the event of
an actual ten percent change in prices, the fair value of our
derivative
</DIV>

<P align="center" style="font-size: 10pt;">89

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
portfolio would typically change by more than ten percent for
earlier forward months and less than ten percent for later
forward months because of the higher volatilities in the near
term and the effects of discounting expected future cash flows.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The primary factors affecting the fair value of our derivatives
at any point in time are (1)&nbsp;the volume of open derivative
positions (MMBtu and MWh), and (2)&nbsp;changing commodity
market prices, principally for electricity and natural gas. The
total volume of open gas derivative positions increased 185%
from December&nbsp;31, 2003, to December&nbsp;31, 2004, and the
total volume of open power derivative positions increased 147%
for the same period. In that prices for electricity and natural
gas are among the most volatile of all commodity prices, there
may be material changes in the fair value of our derivatives
over time, driven both by price volatility and the changes in
volume of open derivative transactions. Under
SFAS&nbsp;No.&nbsp;133, the change since the last balance sheet
date in the total value of the derivatives (both assets and
liabilities) is reflected either in OCI, net of tax, or in the
statement of operations as an item (gain or loss) of current
earnings. As of December&nbsp;31, 2004, a significant component
of the balance in accumulated OCI represented the unrealized net
loss associated with commodity cash flow hedging transactions.
As noted above, there is a substantial amount of volatility
inherent in accounting for the fair value of these derivatives,
and our results during the year ended December&nbsp;31, 2004,
have reflected this. See Notes 21 and 23 of the Notes to
Consolidated Financial Statements for additional information on
derivative activity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Interest Rate Swaps</I>&nbsp;&#151; From time to time, we use
interest rate swap agreements to mitigate our exposure to
interest rate fluctuations associated with certain of our debt
instruments and to adjust the mix between fixed and floating
rate debt in our capital structure to desired levels. We do not
use interest rate swap agreements for speculative or trading
purposes. The following tables summarize the fair market values
of our existing interest rate swap agreements as of
December&nbsp;31, 2004 (dollars in thousands):
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Variable to Fixed Swaps</I></B></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="24%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted Average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted Average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Notional</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Interest Rate</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Interest Rate</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Fair Market</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="left" nowrap><B>Maturity Date</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Principal Amount</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Pay)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Receive)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Value</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>58,178</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">3-month US$</TD>
    <TD align="right" valign="bottom" nowrap>LIBOR</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1,734</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>291,897</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">3-month US$</TD>
    <TD align="right" valign="bottom" nowrap>LIBOR</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8,753</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>209,833</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.4</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">3-month US$</TD>
    <TD align="right" valign="bottom" nowrap>LIBOR</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,916</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>41,822</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.4</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">3-month US$</TD>
    <TD align="right" valign="bottom" nowrap>LIBOR</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(980</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38,479</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6.9</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">3-month US$</TD>
    <TD align="right" valign="bottom" nowrap>LIBOR</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,089</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2012</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>105,840</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">3-month US$</TD>
    <TD align="right" valign="bottom" nowrap>LIBOR</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,680</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2016</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">3-month US$</TD>
    <TD align="right" valign="bottom" nowrap>LIBOR</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,654</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2016</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,080</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">3-month US$</TD>
    <TD align="right" valign="bottom" nowrap>LIBOR</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,436</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2016</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42,240</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">3-month US$</TD>
    <TD align="right" valign="bottom" nowrap>LIBOR</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,308</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2016</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28,160</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">3-month US$</TD>
    <TD align="right" valign="bottom" nowrap>LIBOR</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,872</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2016</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">3-month US$</TD>
    <TD align="right" valign="bottom" nowrap>LIBOR</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6,092</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>886,849</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(56,514</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">90
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Fixed to Variable Swaps</I></B></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="24%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted Average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted Average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Notional</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Interest Rate</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Interest Rate</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Fair Market</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="left" nowrap><B>Maturity Date</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Principal Amount</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Pay)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Receive)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Value</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">6-month US$</TD>
    <TD align="right" valign="bottom" nowrap>LIBOR</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(5,406</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">6-month US$</TD>
    <TD align="right" valign="bottom" nowrap>LIBOR</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,699</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>200,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">6-month US$</TD>
    <TD align="right" valign="bottom" nowrap>LIBOR</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,740</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">6-month US$</TD>
    <TD align="right" valign="bottom" nowrap>LIBOR</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6,508</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(23,353</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The fair value of outstanding interest rate swaps and the fair
value that would be expected after a one percent (100&nbsp;basis
points) adverse interest rate change are shown in the table
below (in thousands). Given our net variable to fixed portfolio
position, a 100&nbsp;basis point decrease would adversely impact
our portfolio as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Fair Value After a 1.0%</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(100&nbsp;Basis Points) Adverse</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Net Fair Value as of December&nbsp;31, 2004</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Interest Rate Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $(79,867)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(97,567</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Currency Exposure</I>&nbsp;&#151; We own subsidiary entities
in several countries. These entities generally have functional
currencies other than the U.S.&nbsp;dollar. In most cases, the
functional currency is consistent with the local currency of the
host country where the particular entity is located. In certain
cases, we and our foreign subsidiary entities hold monetary
assets and/or liabilities that are not denominated in the
functional currencies referred to above. In such instances, we
apply the provisions of SFAS&nbsp;No.&nbsp;52, &#147;Foreign
Currency Translation,&#148; (&#147;SFAS No.&nbsp;52&#148;) to
account for the monthly re-measurement gains and losses of these
assets and liabilities into the functional currencies for each
entity. In some cases we can reduce our potential exposures to
net income by designating liabilities denominated in
non-functional currencies as hedges of our net investment in a
foreign subsidiary or by entering into derivative instruments
and designating them in hedging relationships against a foreign
exchange exposure. Based on our unhedged exposures at
December&nbsp;31, 2004, the impact to our pre-tax earnings that
would be expected after a 10% adverse change in exchange rates
is shown in the table below (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="66%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Impact to Pre-Tax Net Income</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>After 10% Adverse Exchange</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Currency Exposure</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Rate Change</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    GBP-Euro</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(15,982</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    GBP-$US</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10,781</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $Cdn-$US</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(72,294</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,241</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Significant changes in exchange rates will also impact our
Cumulative Translation Adjustment (&#147;CTA&#148;) balance when
translating the financial statements of our foreign operations
from their respective functional currencies into our reporting
currency, the U.S.&nbsp;dollar. An example of the impact that
significant exchange rate movements can have on our Balance
Sheet position occurred in 2004. During 2004 our CTA increased
by approximately $62&nbsp;million primarily due to a
strengthening of the Canadian dollar and GBP against the
U.S.&nbsp;dollar by approximately 7% each.
</DIV>

<P align="center" style="font-size: 10pt;">91
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<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Foreign Currency Transaction Gain (Loss)</B>
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Year Ended December&nbsp;31, 2004, Compared to Year Ended
    December&nbsp;31, 2003:</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The major components of our foreign currency transaction losses
from continuing operations of $25.1&nbsp;million and
$33.3&nbsp;million, respectively, in 2004 and 2003,
respectively, are as follows (amounts in millions):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="78%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gain (Loss) from $Cdn-$US fluctuations:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(42.8</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(22.6</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gain (Loss) from GBP-Euro fluctuations:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12.2</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gain (Loss) from GBP-$US fluctuations:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gain (Loss) from other currency fluctuations:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.5</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The $Cdn-$US loss for 2004 was driven by two primary factors.
First, as a result of the sale of our Canadian gas assets, we
recognized remeasurement losses due to the fact that the sales
proceeds were converted into U.S.&nbsp;dollars through a series
of forward foreign exchange contracts but during September,
October and November, a portion of these converted proceeds were
retained by the $Cdn-denominated entity that sold the assets.
During these months, the Canadian dollar strengthened
considerably against the U.S.&nbsp;dollar, creating large
remeasurement losses which did not cease until the balance of
the proceeds were distributed back to the U.S.&nbsp;parent
company. Second, also in conjunction with the sale of our
Canadian gas assets, we recognized remeasurement losses during
the third and fourth quarter of 2004 when the Canadian dollar
strengthened after the sale and subsequent repatriation of the
proceeds to the U.S.&nbsp;parent company. The sale and
repatriation of funds substantially reduced the degree to which
we could designate our $Cdn-denominated liabilities as hedges
against our investment in Canadian dollar denominated
subsidiaries, triggering significant remeasurement losses as the
Canadian dollar strengthened against the U.S.&nbsp;dollar. This
loss was partially offset by remeasurement gains recognized on
the translation of the interest receivable associated with our
large intercompany loan that has been deemed a permanent
investment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The $Cdn-$US loss for 2003 was driven primarily by a significant
strengthening of the Canadian dollar against the
U.S.&nbsp;dollar during the first six months of 2003, at a time
when the majority of our $Cdn-$US payable exposures were not
designated as hedges of the net investment in our Canadian
operations. The majority of these payable exposures were created
by transactions that occurred during the fourth quarter of 2002
and the first quarter of 2003. The losses on these loans were
partially offset by remeasurement gains recognized on the
translation of the interest receivable associated with our large
intercompany loan that has been deemed a permanent investment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2004, the Euro weakened slightly against the GBP,
triggering re-measurement gains associated with our
Euro-denominated
8<FONT style="font-size: 70%"><SUP>3</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%&nbsp;Senior
Notes Due 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2003, the Euro strengthened considerably against the GBP,
triggering re-measurement losses associated with these Senior
Notes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The GBP-$US gain for 2004 relates to re-measurement gains
associated with our US$360&nbsp;million Two-Year Redeemable
Preferred Shares issued by our indirect, wholly owned
subsidiary, Calpine (Jersey) Limited. The offering closed on
October&nbsp;26, 2004 and the remeasurement gains recognized
were driven by a significant strengthening of the GBP against
the U.S.&nbsp;dollar during November and December. There is no
comparable amount for 2003 as no such exposure existed prior to
the closing of this offering.
</DIV>

<P align="center" style="font-size: 10pt;">92

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<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Year Ended December&nbsp;31, 2003, Compared to Year Ended
    December&nbsp;31, 2002:</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The major components of our foreign currency transaction losses
of $33.3&nbsp;million and $1.0&nbsp;million, respectively, in
2003 and 2002, respectively, are as follows (amounts in
millions):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="79%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gain (Loss) from $Cdn-$US fluctuations:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(22.6</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1.3</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gain (Loss) from GBP-Euro fluctuations:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12.2</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gain (Loss) from other currency fluctuations:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The $Cdn-$US loss for 2003 was driven primarily by a significant
strengthening of the Canadian dollar against the
U.S.&nbsp;dollar during the first six months of 2003, at a time
when the majority of our $Cdn-$US payable exposures were not
designated as hedges of the net investment in our Canadian
operations. The majority of these payable exposures were created
by transactions that occurred during the fourth quarter of 2002
and the first quarter of 2003. The losses on these loans were
partially offset by remeasurement gains recognized on the
translation of the interest receivable associated with our large
intercompany loan that has been deemed a permanent investment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The $Cdn-$US loss for 2002 was significantly smaller than the
loss incurred during 2003, primarily due to a very limited
number of $Cdn-$US payable exposures during the majority of the
year. Prior to the fourth quarter of 2002, we had very few
$Cdn-$US transactions subject to re-measurement gains and losses
under the guidance of SFAS&nbsp;No.&nbsp;52 and as a result of
this low transaction volume, our foreign currency transaction
activity was minimal. Additionally, the $Cdn-$US exchange rate
was fairly static during the balance of 2002; the Canadian
dollar strengthened very slightly against the U.S.&nbsp;dollar.
The low volume of transactions combined with very mild exchange
rate volatility resulted in a small financial impact to our
Consolidated Statement of Operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2003, the Euro strengthened considerably against the GBP,
triggering re-measurement losses associated with our
Euro-denominated
8<FONT style="font-size: 70%"><SUP>3</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%&nbsp;Senior
Notes Due 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2002, the Euro likewise strengthened considerably against
the GBP; however, we effectively mitigated our exposure to the
majority of this exchange rate volatility through a Euro-GBP
cross currency swap that was designated as an effective cash
flow hedge against the anticipated Euro-denominated future cash
flows of these Senior Notes in accordance with
SFAS&nbsp;No.&nbsp;133, as amended. The currency swap was
entered into during 2001 in conjunction with the initial
offering of these Senior Notes and was in place for the full
balance of 2002. The swap was subsequently terminated in
February, 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Debt Financing</I>&nbsp;&#151; Because of the significant
capital requirements within our industry, debt financing is
often needed to fund our growth. Certain debt instruments may
affect us adversely because of changes in market conditions. We
have used two primary forms of debt which are subject to market
risk: (1)&nbsp;Variable rate construction/project financing and
(2)&nbsp;Other variable-rate instruments. Significant LIBOR
increases could have a negative impact on our future interest
expense. Our variable-rate construction/project financing is
primarily through the CalGen floating rate notes, institutional
term loans and revolving credit facility. New borrowings under
our $200&nbsp;million CalGen revolving credit agreement are used
exclusively to fund the construction costs of CalGen power
plants (of which only the Pastoria Energy Center was still in
active construction at December&nbsp;31, 2004). Other
variable-rate instruments consist primarily of our revolving
credit and term loan facilities, which are used for general
corporate purposes. Both our variable-rate construction/project
financing and other variable-rate instruments are indexed to
base rates, generally LIBOR, as shown below.
</DIV>

<P align="center" style="font-size: 10pt;">93

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table summarizes our variable-rate debt, by
repayment year, exposed to interest rate risk as of
December&nbsp;31, 2004. All outstanding balances and fair market
values are shown net of applicable premium or discount, if any
(dollars in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2007</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2008</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    3-month US&nbsp;$LIBOR weighted average interest rate basis(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    MEP Pleasant Hill Term Loan, Tranche&nbsp;A</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,482</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9,271</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Saltend preferred interest</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>360,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total of 3-month US&nbsp;$LIBOR rate debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>367,482</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,271</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1-month EURLIBOR weighted average interest rate basis(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Thomassen revolving line of credit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,332</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total of 1-month EURLIBOR rate debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,332</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1-month US&nbsp;$LIBOR weighted average interest rate basis(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    First Priority Secured Floating Rate Notes Due 2009 (CalGen)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,350</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total of 1-month US&nbsp;$LIBOR rate debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,350</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    6-month US&nbsp;$LIBOR weighted average interest rate basis(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Third Priority Secured Floating Rate Notes Due 2011 (CalGen)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total of 6-month US&nbsp;$LIBOR rate debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    5-month US&nbsp;$LIBOR weighted average interest rate basis(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Riverside Energy Center project financing</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,685</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,685</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,685</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,685</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Rocky Mountain Energy Center project financing</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,642</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,649</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,649</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,649</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total of 6-month US&nbsp;$LIBOR rate debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,327</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,334</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,334</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,334</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (1)(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    First Priority Secured Institutional Term Loan&nbsp;Due 2009
    (CCFC I)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,208</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,208</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,208</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,208</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Priority Senior Secured Floating Rate Notes Due 2011
    (CCFC I)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total of variable rate debt as defined at(1)&nbsp;below</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,208</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,208</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,208</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,208</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (2)(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Priority Senior Secured Term Loan&nbsp;B Notes Due 2007</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>725,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total of variable rate debt as defined at(2)&nbsp;below</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>725,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (3)(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Priority Senior Secured Floating Due 2007</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>483,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Blue Spruce Energy Center project financing</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,750</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total of variable rate debt as defined at(3)&nbsp;below</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>487,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,750</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (5)(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    First Priority Secured Term Loans Due 2009 (CalGen)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Priority Secured Floating Rate Notes Due 2010 (CalGen)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,200</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Priority Secured Term Loans Due 2010 (CalGen)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>500</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total of variable rate debt as defined at(5)&nbsp;below</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,700</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (6)(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Island Cogen</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,954</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total of variable rate debt as defined at(6)&nbsp;below</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,954</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (6)(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Contra Costa</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>168</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>182</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>190</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total of variable rate debt as defined at(6)&nbsp;below</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>168</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>182</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>190</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Grand total variable-rate debt instruments</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>44,064</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>393,449</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,235,156</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>34,803</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">94

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="51%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Fair Value</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2009</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Thereafter</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004(7)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    3-month US&nbsp;$LIBOR weighted average interest rate basis(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    MEP Pleasant Hill Term Loan, Tranche&nbsp;A</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9,433</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>85,802</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>126,820</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Saltend preferred interest</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>360,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total of 3-month US&nbsp;$LIBOR rate debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,433</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>85,802</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>486,820</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1-month EURLIBOR weighted average interest rate basis(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Thomassen revolving line of credit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,332</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total of 1-month EURLIBOR rate debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,332</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    1-month US&nbsp;$LIBOR weighted average interest rate basis(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    First Priority Secured Floating Rate Notes Due 2009 (CalGen)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>231,475</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>235,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total of 1-month US&nbsp;$LIBOR rate debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>231,475</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>235,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    6-month US&nbsp;$LIBOR weighted average interest rate basis(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Third Priority Secured Floating Rate Notes Due 2011 (CalGen)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>680,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>680,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total of 6-month US&nbsp;$LIBOR rate debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>680,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>680,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    5-month US&nbsp;$LIBOR weighted average interest rate basis(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Riverside Energy Center project financing</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,685</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>350,075</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>368,500</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Rocky Mountain Energy Center project financing</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,649</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>251,662</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>264,900</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total of 6-month US&nbsp;$LIBOR rate debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,334</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>601,737</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>633,400</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (1)(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    First Priority Secured Institutional Term Loan&nbsp;Due 2009
    (CCFC I)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>365,350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>378,182</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Priority Senior Secured Floating Rate Notes Due 2011
    (CCFC I)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>408,568</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>408,568</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total of variable rate debt as defined at(1)&nbsp;below</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>365,350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>408,568</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>786,750</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (2)(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Priority Senior Secured Term Loan&nbsp;B Notes Due 2007</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>677,672</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total of variable rate debt as defined at(2)&nbsp;below</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>677,672</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (3)(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Priority Senior Secured Floating Due 2007</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>449,313</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Blue Spruce Energy Center project financing</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>81,397</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>98,272</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total of variable rate debt as defined at(3)&nbsp;below</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>81,397</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>547,585</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (5)(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    First Priority Secured Term Loans Due 2009 (CalGen)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>591,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>600,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Priority Secured Floating Rate Notes Due 2010 (CalGen)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>622,039</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>631,639</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Priority Secured Term Loans Due 2010 (CalGen)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>97,194</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>98,694</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total of variable rate debt as defined at(5)&nbsp;below</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>598,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>719,233</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,330,333</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (6)(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Island Cogen</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,954</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total of variable rate debt as defined at(6)&nbsp;below</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,954</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (6)(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Contra Costa</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>197</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,364</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,276</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total of variable rate debt as defined at(6)&nbsp;below</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>197</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,364</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,276</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Grand total variable-rate debt instruments</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,214,939</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,578,101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5,393,122</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    British Bankers Association LIBOR Rate for deposit in US dollars
    for a period of six months.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    U.S.&nbsp;prime rate in combination with the Federal Funds
    Effective Rate.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    British Bankers Association LIBOR Rate for deposit in US dollars
    for a period of three months.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    Actual interest rates include a spread over the basis amount.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">95

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(5)&nbsp;</TD>
    <TD align="left">
    Choice of 1-month US&nbsp;$LIBOR, 2-month US&nbsp;$LIBOR,
    3-month US&nbsp;$LIBOR, 6-month US&nbsp;$LIBOR, 12-month
    US&nbsp;$LIBOR or a base rate.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(6)&nbsp;</TD>
    <TD align="left">
    Bankers Acceptance Rate.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(7)&nbsp;</TD>
    <TD align="left">
    Fair value equals carrying value, with the exception of the
    Second-Priority Senior Secured Term B&nbsp;Loans Due 2007 and
    Second-Priority Senior Secured Floating Rate Notes Due 2007
    which are shown at quoted trading values as of December&nbsp;31,
    2004.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Construction/ Project Financing Facilities</I>&nbsp;&#151;
See Note&nbsp;16 of the Notes to Consolidated Financial
Statements for information on our construction/project financing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Application of Critical Accounting Policies</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our financial statements reflect the selection and application
of accounting policies which require management to make
significant estimates and judgments. See Note&nbsp;2 of the
Notes to Consolidated Financial Statements, &#147;Summary of
Significant Accounting Policies.&#148; We believe that the
following reflect the more critical accounting policies that
currently affect our financial condition and results of
operations.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Fair Value of Energy Marketing and Risk Management
    Contracts and Derivatives</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Accounting for derivatives at fair value requires us to make
estimates about future prices during periods for which price
quotes are not available from sources external to us. As a
result, we are required to rely on internally developed price
estimates when external quotes are unavailable. We derive our
future price estimates, during periods, where external price
quotes are unavailable, based on extrapolation of prices from
prior periods where external price quotes are available. We
perform this extrapolation using liquid and observable market
prices and extending those prices to an internally generated
long-term price forecast based on a generalized equilibrium
model.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Credit Reserves</I></TD>
</TR>

</TABLE>

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In estimating the fair value of our derivatives, we must take
into account the credit risk that our counterparties will not
have the financial wherewithal to honor their contract
commitments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In establishing credit risk reserves we take into account
historical default rate data published by the rating agencies
based on the credit rating of each counterparty where we have
realization exposure, as well as other published data and
information.
</DIV>

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    <TD width="3%"></TD>
    <TD width="97%"></TD>
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<TR valign="top">
    <TD></TD>
    <TD>
    <I>Liquidity Reserves</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We value our forward positions at the mid-market price, or the
price in the middle of the bid-ask spread. This creates a risk
that the value reported by us as the fair value of our
derivative positions will not represent the realizable value or
probable loss exposure of our derivative positions if we are
unable to liquidate those positions at the mid-market price.
Adjusting for this liquidity risk states our derivative assets
and liabilities at their most probable value. We use a two-step
quantitative and qualitative analysis to determine our liquidity
reserve.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the first step we quantitatively derive an initial liquidity
reserve assessment applying the following assumptions in
calculating the initial liquidity reserve assessment:
(1)&nbsp;where we have the capability to cover physical
positions with our own assets, we assume no liquidity reserve is
necessary because we will not have to cross the bid-ask spread
in covering the position; (2)&nbsp;we record no reserve against
our hedge positions because a high likelihood exists that we
will hold our hedge positions to maturity or cover them with our
own assets; and (3)&nbsp;where reserves are necessary, we base
the reserves on the spreads observed using broker quotes as a
starting point.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Using these assumptions, we calculate the net notional volume
exposure at each location by commodity and multiply the result
by one half of the bid-ask spread.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The second step involves a qualitative analysis where the
initial assessment may be adjusted for qualitative factors such
as liquidity spreads observed through recent trading activity,
strategies for liquidating open positions, and imprecision in or
unavailability of broker quotes due to market illiquidity. Using
this quantitative and qualitative information, we estimate the
amount of probable liquidity risk exposure to us and we record
this estimate as a liquidity reserve.
</DIV>

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    <TD>
    <B><I>Accounting for Commodity Contracts</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Commodity contracts are evaluated to determine whether the
contract is (1)&nbsp;accounted for as a lease (2)&nbsp;accounted
for as a derivative (3)&nbsp;or accounted for as an executory
contract and additionally whether the financial statement
presentation is gross or net.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Accounting for Leases&nbsp;&#151; We account for commodity
contracts as leases per SFAS&nbsp;No.&nbsp;13 , &#147;Accounting
for Leases,&#148; (&#147;SFAS&nbsp;No.&nbsp;13&#148;) and EITF
Issue No.&nbsp;01-08, &#147;Determining Whether an Arrangement
Contains a Lease,&#148; (&#147;EITF Issue No.&nbsp;01-08&#148;).
EITF Issue No.&nbsp;01-08 clarifies the requirements of
identifying whether an arrangement should be accounted for as a
lease at its inception. The guidance in the consensus is
designed to broaden the scope of arrangements, such as power
purchase agreements, accounted for as leases. EITF Issue
No.&nbsp;01-08 requires both parties to an arrangement to
determine whether a service contract or similar arrangement is,
or includes, a lease within the scope of SFAS&nbsp;No.&nbsp;13.
The consensus is being applied prospectively to arrangements
agreed to, modified, or acquired in business combinations on or
after July&nbsp;1, 2003. Prior to adopting EITF Issue
No.&nbsp;01-08, we had accounted for certain contractual
arrangements as leases under existing industry practices, and
the adoption of EITF Issue No.&nbsp;01-08 did not materially
change our accounting for leases. Per SFAS&nbsp;No.&nbsp;13,
operating leases with minimum lease rentals which vary over time
must be levelized over the term of the contract. We levelize
these contracts on a straight-line basis. See Note&nbsp;25 for
additional information on our operating leases. For income
statement presentation purposes, income from arrangements
accounted for as leases is classified within electricity and
steam revenue in our consolidated statements of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Accounting for Derivatives&nbsp;&#151; On January&nbsp;1, 2001,
we adopted SFAS&nbsp;No.&nbsp;133, &#147;Accounting for
Derivative Instruments and Hedging Activities,&#148; as amended
by SFAS&nbsp;No.&nbsp;137, &#147;Accounting for Derivative
Instruments and Hedging Activities&nbsp;&#151; Deferral of the
Effective Date of FASB Statement No.&nbsp;133&nbsp;&#151; an
Amendment of FASB Statement No.&nbsp;133,&#148;
SFAS&nbsp;No.&nbsp;138, &#147;Accounting for Certain Derivative
Instruments and Certain Hedging Activities&nbsp;&#151; an
Amendment of FASB Statement No.&nbsp;133,&#148; and
SFAS&nbsp;No.&nbsp;149, &#147;Amendment of Statement&nbsp;133 on
Derivative Instruments and Hedging Activities.&#148; We
currently hold six classes of derivative instruments that are
impacted by the new pronouncement&nbsp;&#151; foreign currency
swaps, interest rate swaps, forward interest rate agreements,
commodity financial instruments, commodity contracts, and
physical options.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Consistent with the requirements of SFAS&nbsp;No.&nbsp;133, we
evaluate all of our contracts to determine whether or not they
qualify as derivatives under the accounting pronouncements. For
a given contract, there are typically three steps we use to
determine its proper accounting treatment. First, based on the
terms and conditions of the contract, as well as the applicable
guidelines established by SFAS&nbsp;No.&nbsp;133, we identify
the contract as being either a derivative or non-derivative
contract. Second, if the contract is not a derivative, we
account for it as an executory contract. Alternatively, if the
contract does qualify as a derivative under the guidance of
SFAS&nbsp;No.&nbsp;133, we evaluate whether or not it qualifies
for the &#147;normal&#148; purchases and sales exception (as
described below). If the contract qualifies for the exception,
we may elect to apply the normal exception and account for as an
executory contract. Finally, if the contract is a derivative, we
apply the accounting treatment required by
SFAS&nbsp;No.&nbsp;133, which is outlined below in further
detail.
</DIV>

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    <TD></TD>
    <TD>
    <I>Normal Purchases and Sales</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
When we elect normal purchases and sales treatment, as defined
by paragraph&nbsp;10b. of SFAS&nbsp;No.&nbsp;133 and amended by
SFAS&nbsp;No.&nbsp;138 and SFAS&nbsp;No.&nbsp;149, the normal
contracts are exempt from SFAS&nbsp;No.&nbsp;133 accounting
treatment. As a result, these contracts are not required to be
recorded on the balance sheet at their fair values and any
fluctuations in these values are not required to be reported
within earnings. Probability of
</DIV>

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<DIV align="left" style="font-size: 10pt;">
physical delivery from our generation plants, in the case of
electricity sales, and to our generation plants, in the case of
natural gas contracts, is required over the life of the contract
within reasonable tolerances.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Two of our contracts that had been accounted for as normal
contracts were subject to the special transition adjustment for
their estimated future economic benefits upon adoption of DIG
Issue No.&nbsp;C20, and we amortize the corresponding asset
recorded upon adoption of DIG Issue No.&nbsp;C20 through a
charge to earnings. Accordingly on October&nbsp;1, 2003, the
date we adopted DIG Issue No.&nbsp;C20, we recorded other
current assets and other assets of approximately
$33.5&nbsp;million and $259.9&nbsp;million, respectively, and a
cumulative effect of a change in accounting principle of
approximately $181.9&nbsp;million, net of $111.5&nbsp;million of
tax. For periods subsequent to October&nbsp;1, 2003, we again
account for these two contracts as normal purchases and sales
under the provisions of DIG Issue No.&nbsp;C20.
</DIV>

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    <TD width="3%"></TD>
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</TR>

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    <TD></TD>
    <TD>
    <I>Fair Value Hedges</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As further defined in SFAS&nbsp;No.&nbsp;133, fair value hedge
transactions hedge the exposure to changes in the fair value of
either all or a specific portion of a recognized asset or
liability or of an unrecognized firm commitment. The accounting
treatment for fair value hedges requires reporting both the
changes in fair values of a <I>hedged </I>item (the underlying
risk) and the <I>hedging</I> instrument (the derivative
designated to offset the underlying risk) on both the balance
sheet and the income statement. On that basis, when a firm
commitment is associated with a hedge instrument that attains
100% effectiveness (under the effectiveness criteria outlined in
SFAS&nbsp;No.&nbsp;133), there is no net earnings impact because
the earnings caused by the changes in fair value of the hedged
item will move in an equal, but opposite, amount as the earnings
caused by the changes in fair value of the hedging instrument.
In other words, the earnings volatility caused by the underlying
risk factor will be neutralized because of the hedge. For
example, if we want to manage the price-induced fair value risk
(i.e. the risk that market electric rates will rise, making a
fixed price contract less valuable) associated with all or a
portion of a fixed price power sale that has been identified as
a &#147;normal&#148; transaction (as described above), we might
create a fair value hedge by purchasing fixed price power. From
that date and time forward until delivery, the change in fair
value of the hedged item and hedge instrument will be reported
in earnings with asset/liability offsets on the balance sheet.
If there is 100% effectiveness, there is no net earnings impact.
If there is less than 100% effectiveness, the fair value change
of the hedged item (the underlying risk) and the hedging
instrument (the derivative) will likely be different and the
&#147;ineffectiveness&#148; will result in a net earnings impact.
</DIV>

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    <TD width="3%"></TD>
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</TR>

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    <TD></TD>
    <TD>
    <I>Cash Flow Hedges</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As further defined in SFAS&nbsp;No.&nbsp;133, cash flow hedge
transactions hedge the exposure to variability in expected
future cash flows (i.e., in our case, the price variability of
forecasted purchases of gas and sales of power, as well as
interest rate and foreign exchange rate exposure). In the case
of cash flow hedges, the hedged item (the underlying risk) is
generally unrecognized (i.e., not recorded on the balance sheet
prior to delivery), and any changes in this fair value,
therefore, will not be recorded within earnings. Conceptually,
if a cash flow hedge is effective, this means that a variable,
such as movement in power prices, has been effectively fixed, so
that any fluctuations will have no net result on either cash
flows or earnings. Therefore, if the changes in fair value of
the hedged item are not recorded in earnings, then the changes
in fair value of the hedging instrument (the derivative) must
also be excluded from the income statement, or else a one-sided
net impact on earnings will be reported, despite the fact that
the establishment of the effective hedge results in no net
economic impact. To prevent such a scenario from occurring,
SFAS&nbsp;No.&nbsp;133 requires that the fair value of a
derivative instrument designated as a cash flow hedge be
recorded as an asset or liability on the balance sheet, but with
the offset reported as part of other comprehensive income, to
the extent that the hedge is effective. Similar to fair value
hedges, any ineffectiveness portion will be reflected in
earnings.
</DIV>

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</TR>

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    <TD></TD>
    <TD>
    <I>Undesignated Derivatives</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The fair values and changes in fair values of undesignated
derivatives are recorded in earnings, with the corresponding
offsets recorded as derivative assets or liabilities on the
balance sheet. We have the following types of undesignated
transactions:
</DIV>

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    <TD width="1%"></TD>
    <TD width="96%"></TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    transactions executed at a location where we do not have an
    associated natural long (generation capacity) or short (fuel
    consumption requirements) position of sufficient quantity for
    the entire term of the transaction (e.g., power sales where we
    do not own generating assets or intend to acquire transmission
    rights for delivery from other assets for any portion of the
    contract term),&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    transactions executed with the intent to profit from short-term
    price movements,&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    discontinuance (de-designation) of hedge treatment prospectively
    consistent with paragraphs&nbsp;25 and 32 of
    SFAS&nbsp;No.&nbsp;133. In circumstances where we believe the
    hedge relationship is no longer necessary, we will remove the
    hedge designation and close out the hedge positions by entering
    into an equal and offsetting derivative position. Prospectively,
    the two derivative positions should generally have no net
    earnings impact because the changes in their fair values are
    offsetting.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    any other transactions that do not qualify for hedge accounting</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our Mark-to-Market Activity includes realized settlements of and
unrealized mark-to-market gains and losses on both power and gas
derivative instruments not designated as cash flow hedges,
including those held for trading purposes. Our gains and losses
due to ineffectiveness on hedging instruments are also included
in unrealized mark-to-market gains and losses. We present
trading activity net in accordance with EITF Issue
No.&nbsp;02-03.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Accounting for Executory Contracts&nbsp;&#151; Where commodity
contracts do not qualify as leases or derivatives, the contracts
are classified as executory contracts. These contracts apply
traditional accrual accounting treatment unless the revenue must
be levelized per EITF Issue No.&nbsp;91-06, &#147;Revenue
Recognition of Long Term Power Sales Contracts.&#148; We
currently account for one commodity contract under
EITF&nbsp;91-06 which is levelized over the term of the
agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Accounting for Financial Statement Presentation&nbsp;&#151;
Where our derivative instruments are subject to a netting
agreement and the criteria of FIN&nbsp;39 &#147;Offsetting of
Amounts Related to Certain Contracts (An Interpretation of APB
Opinion No.&nbsp;10 and SFAS&nbsp;No.&nbsp;105)&#148; are met,
we present the derivative assets and liabilities on a net basis
in our balance sheet. We chose this method of presentation
because it is consistent with the way related mark-to-market
gains and losses on derivatives are recorded in Consolidated
Statements of Operations and within Other Comprehensive Income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We account for certain of our power sales and purchases on a net
basis under EITF Issue No.&nbsp;03-11 &#147;Reporting Realized
Gains and Losses on Derivative Instruments That Are Subject to
SFAS&nbsp;No.&nbsp;133 and Not &#147;Held for Trading
Purposes&#146; As Defined in EITF Issue No.&nbsp;02-03:
&#147;Issues Involved in Accounting for Derivative Contracts
Held for Trading Purposes and Contracts Involved in Energy
Trading and Risk Management Activities&#146; (&#147;EITF Issue
No.&nbsp;03-11&#148;), which we adopted on a prospective basis
on October&nbsp;1, 2003. Transactions with either of the
following characteristics are presented net in our Consolidated
Condensed Financial Statements: (1)&nbsp;transactions executed
in a back-to-back buy and sale pair, primarily because of market
protocols; and (2)&nbsp;physical power purchase and sale
transactions where our power schedulers net the physical flow of
the power purchase against the physical flow of the power sale
(or &#147;book out&#148; the physical power flows) as a matter
of scheduling convenience to eliminate the need for actual power
delivery. These book out transactions may occur with the same
counterparty or between different counterparties where we have
equal but offsetting physical purchase and delivery commitments.
</DIV>

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    <TD></TD>
    <TD>
    <B><I>Accounting for Long-Lived Assets</I></B></TD>
</TR>

</TABLE>

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    <TD></TD>
    <TD>
    <I>Plant Useful Lives</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Property, plant and equipment is stated at cost. The cost of
renewals and betterments that extend the useful life of
property, plant and equipment are also capitalized. Depreciation
is recorded utilizing the straight line method over the
estimated original composite useful life, generally
35&nbsp;years for baseload power plants and 40&nbsp;years for
peaking facilities, exclusive of the estimated salvage value,
typically 10%.
</DIV>

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    <TD width="3%"></TD>
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</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Impairment of Long-Lived Assets, Including Intangibles</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We evaluate long-lived assets, such as property, plant and
equipment, equity method investments, patents, and specifically
identifiable intangibles, when events or changes in
circumstances indicate that the carrying value of such assets
may not be recoverable. Discussion of the impairment of oil and
gas assets is covered under &#147;Oil and Gas Property
Valuations&#148; below. Factors which could trigger an
impairment include determination that a suspended project is not
completed, significant underperformance relative to historical
or projected future operating results, significant changes in
the manner of our use of the acquired assets or the strategy for
our overall business and significant negative industry or
economic trends. Certain of our generating assets are located in
regions with depressed demand and market spark spreads. Our
forecasts assume that spark spreads will increase in future
years in these regions as the supply and demand relationships
improve.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The determination of whether an impairment of a power plant has
occurred is based on an estimate of undiscounted cash flows
attributable to the assets, as compared to the carrying value of
the assets. The significant assumptions that we use in our
undiscounted future cash flow estimates include the probability
of completion of assets in development or construction the
future supply and demand relationships for electricity and
natural gas, and the expected pricing for those commodities and
the resultant spark spreads in the various regions where we
generate. If an impairment has occurred, the amount of the
impairment loss recognized would be determined by estimating the
fair value of the assets and recording a loss if the fair value
was less than the book value. For equity method investments and
assets identified as held for sale, the book value is compared
to the estimated fair value to determine if an impairment loss
is required. For equity method investments, we would record a
loss when the decline in value is other than temporary.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our assessment regarding the existence of impairment factors is
based on market conditions, operational performance and legal
factors of our businesses. Our review of factors present and the
resulting appropriate carrying value of our intangibles, and
other long-lived assets are subject to judgments and estimates
that management is required to make. Future events could cause
us to conclude that impairment indicators exist and that our
intangibles, and other long-lived assets might be impaired.
</DIV>

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    <TD width="3%"></TD>
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    <TD>
    <I>Turbine Impairment Charges</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A significant portion of our overall cost of constructing a
power plant is the cost of the gas turbine-generators, steam
turbine-generators and related equipment (collectively the
&#147;turbines&#148;). The turbines are ordered primarily from
three large manufacturers under long-term, build to order
contracts. Payments are generally made over a two to four year
period for each turbine. The turbine prepayments are included as
a component of construction-in-progress if the turbines are
assigned to specific projects probable of being built, and
interest is capitalized on such costs. Turbines assigned to
specific projects are not evaluated for impairment separately
from the project as a whole. Prepayments for turbines that are
not assigned to specific projects that are probable of being
built are carried in other assets, and interest is not
capitalized on such costs. Additionally, our commitments
relating to future turbine payments are discussed in
Note&nbsp;25 of the Notes to Consolidated Financial Statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
To the extent that there are more turbines on order than are
allocated to specific construction projects, we determine the
probability that new projects will be initiated to utilize the
turbines or that the turbines will be resold to third parties.
The completion of in progress projects and the initiation of new
projects are dependent on our overall liquidity and the
availability of funds for capital expenditures.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In assessing the impairment of turbines, we must determine both
the realizability of the progress payments to date that have
been capitalized, as well as the probability that at future
decision dates, we will cancel the turbines and apply the
prepayments to the cancellation charge, or will proceed and pay
the remaining progress payments in accordance with the original
payment schedule.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We apply SFAS&nbsp;No.&nbsp;5, &#147;Accounting for
Contingencies&#148; to evaluate potential future cancellation
obligations. We apply SFAS&nbsp;No.&nbsp;144 to evaluate turbine
progress payments made to date for, and the carrying value of,
delivered turbines not assigned to projects. At the reporting
date, if we believe that it is probable that we will elect the
cancellation provisions on future decision dates, then the
expected future termination payment is also expensed.
</DIV>

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    <TD>
    <I>Oil and Gas Property Valuations</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Successful Efforts Method of Accounting.</I> We follow the
successful efforts method of accounting for oil and natural gas
activities. Under the successful efforts method, lease
acquisition costs and all development costs are capitalized.
Exploratory drilling costs are capitalized until the results are
determined. If proved reserves are not discovered, the
exploratory drilling costs are expensed. Other exploratory costs
are expensed as incurred. Interest costs related to financing
major oil and gas projects in progress are capitalized until the
projects are evaluated, or until the projects are substantially
complete and ready for their intended use if the projects are
evaluated as successful.
</DIV>

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The successful efforts method of accounting relies on
management&#146;s judgment in the designation of wells as either
exploratory or developmental, which determines the proper
accounting treatment of costs incurred. During 2004 we drilled
75 (net 39.3) development wells and 24 (net 14.5) exploratory
wells, of which 71 (net 35.8) development and 21 (net 13.0)
exploration were successful. Our operational results may be
significantly impacted if we decide to drill in a new
exploratory area, which will result in increased seismic costs
and potentially increased dry hole costs if the wells are
determined to be not successful.
</DIV>

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<I>Successful Efforts Method of Accounting&nbsp;v. Full Cost
Method of Accounting.</I> Under the successful efforts method,
unsuccessful exploration well cost, geological and geophysical
costs, delay rentals, and general and administrative expenses
directly allocable to acquisition, exploration, and development
activities are charged to exploration expense as incurred;
whereas, under the full cost method these costs are capitalized
and amortized over the life of the reserves.
</DIV>

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A significant sale (usually multiple fields) would have to occur
before a gain or loss would be recognized under the full cost
method. However, under the successful efforts method, when only
an entire cost center (generally a field) is sold, a gain or
loss is recognized.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For impairment evaluation purposes, successful efforts requires
that individual assets are grouped for impairment purposes at
the lowest level for which there are identifiable cash flows,
which is generally on a field-by-field basis. Under full cost
impairment review, all properties in the depreciation, depletion
and amortization pools based on geography are assessed against a
ceiling based on discounted cash flows, with certain adjustments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Though successful efforts and full cost methods are both
acceptable under GAAP, successful efforts is used by most major
companies due to such method being more reflective of current
operating results due to the expensing of certain exploration
activities.
</DIV>

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<I>Oil and Gas Reserves.</I> The process of estimating
quantities of proved developed and proved undeveloped crude oil
and natural gas reserves is very complex, requiring significant
subjective decisions in the evaluation of all available
geological, engineering and economic data for each reservoir.
Estimates of economically recoverable oil and gas reserves and
future net cash flows depend upon a number of variable factors
and assumptions, such as historical production from the area
compared with production from other producing areas, the assumed
effect of governmental regulations, operating and workover
costs, severance taxes and development costs, all of which may
vary considerably from actual results. Any significant variance
in the assumptions could materially affect the estimated
quantity and value of the reserves, which could affect the
carrying value of our oil and gas properties and/or the rate of
depletion of such properties.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We based our estimates of proved developed and proved
undeveloped reserves as of December&nbsp;31, 2004, 2003 and
2002, on estimates made by Netherland, Sewell&nbsp;&#38;
Associates, Inc. for reserves in the United States, and by
Gilbert Laustsen Jung Associates Ltd. for 2003 and 2002 reserves
in Canada, both independent petroleum engineering firms.
</DIV>

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<I>Impairment of Oil and Gas Properties.</I> We review our oil
and gas properties periodically (at least annually) to determine
if impairment of such properties is necessary. Property
impairments may occur if a field discovers lower than
anticipated reserves, reservoirs produce below original
estimates or if commodity prices fall below a level that
significantly affects anticipated future cash flows on the
property. Proved oil and gas property values are reviewed when
circumstances suggest the need for such a review and, if
required, the proved properties are written down to their
estimated fair value based on proved reserves and other market
factors. Unproved properties are reviewed quarterly to determine
if there has been impairment of the carrying value, with any
such impairment charged to expense in the current period. During
the year ended December&nbsp;31, 2004, we recorded
$202.1&nbsp;million in impairment charges related to reduced
proved reserve projections based on the year end independent
engineers report. These impairments are discussed further in
Note&nbsp;4 of the Notes to Consolidated Financial Statements.
</DIV>

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    <TD>
    <B><I>Capitalized Interest</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>We capitalize interest using two methods:</I>
(1)&nbsp;capitalized interest on funds borrowed for specific
construction projects and (2)&nbsp;capitalized interest on
general corporate funds. For capitalization of interest on
specific funds, we capitalize the interest cost incurred related
to debt entered into for specific projects under construction or
in the advanced stage of development. The methodology for
capitalizing interest on general funds, consistent with
paragraphs&nbsp;13 and 14 of SFAS&nbsp;No.&nbsp;34,
&#147;Capitalization of Interest Cost,&#148; begins with a
determination of the borrowings applicable to our qualifying
assets. The basis of this approach is the assumption that the
portion of the interest costs that are capitalized on
expenditures during an asset&#146;s acquisition period could
have been avoided if the expenditures had not been made. This
methodology takes the view that if funds are not required for
construction then they would have been used to pay off other
debt. We use our best judgment in determining which borrowings
represent the cost of financing the acquisition of the assets.
The primary debt instruments included in the rate calculation of
interest incurred on general corporate funds have been our
Senior Notes, our term loan facilities and our secured working
capital revolving credit facility with adjustments made as debt
is retired or new debt is issued. The interest rate is derived
by dividing the total interest cost by the average borrowings.
This weighted average interest rate is applied to our average
qualifying assets in excess of specific debt on which interest
is capitalized. To qualify for interest capitalization, we must
continue to make significant progress on the construction of the
assets. See Note&nbsp;4 of the Notes to Consolidated Financial
Statements for additional information about the capitalization
of interest expense.
</DIV>

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    <TD></TD>
    <TD>
    <B><I>Accounting for Income and Other Taxes</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
To arrive at our worldwide income tax provision and other tax
balances, significant judgment is required. In the ordinary
course of a global business, there are many transactions and
calculations where the ultimate tax outcome is uncertain. Some
of these uncertainties arise as a consequence of the treatment
of capital assets, financing transactions, multistate taxation
of operations and segregation of foreign and domestic income and
expense to avoid double taxation. Although we believe that our
estimates are reasonable, no assurance can be given that the
final tax outcome of these matters will not be different than
that which is reflected in our historical tax provisions and
accruals. Such differences could have a material impact on our
income tax provision, other tax accounts and net income in the
period in which such determination is made.
</DIV>

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We record a valuation allowance to reduce our deferred tax
assets to the amount of future tax benefit that is more likely
than not to be realized. While we have considered future taxable
income and ongoing prudent and feasible tax planning strategies
in assessing the need for the valuation allowance, there is no
assurance that the valuation allowance would not need to be
increased to cover additional deferred tax assets that may not
be realizable. Any increase in the valuation allowance could
have a material adverse impact on our income tax provision and
net income in the period in which such determination is made.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We provide for United States income taxes on the earnings of
foreign subsidiaries unless they are considered permanently
invested outside the United States. At December&nbsp;31, 2004,
we had no cumulative undistributed earnings of foreign
subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our effective income tax rates for continuing operations were
(38.6)%, 9.0% and 28.8% in fiscal 2004, 2003 and 2002,
respectively. The effective tax rate in all periods is the
result of profits Calpine Corporation and its subsidiaries
earned in various tax jurisdictions, both foreign and domestic,
that apply a broad range of income tax rates. The provision for
income taxes differs from the tax computed at the federal
statutory income tax rate due primarily to state taxes, tax
credits, other permanent differences and earnings considered as
permanently reinvested in foreign operations and the effect of
the treatment by foreign jurisdictions of cross border
financings. Future effective tax rates could be adversely
affected if earnings are lower than anticipated in countries
where we have lower statutory rates, if unfavorable changes in
tax laws and regulations occur, or if we experience future
adverse determinations by taxing authorities after any related
litigation. Our foreign taxes at rates other than statutory
include the benefit of cross border financings as well as
withholding taxes and foreign valuation allowance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under SFAS&nbsp;No.&nbsp;109, &#147;Accounting for Income
Taxes,&#148; deferred tax assets and liabilities are determined
based on differences between the financial reporting and tax
basis of assets and liabilities, and are measured using enacted
tax rates and laws that will be in effect when the differences
are expected to reverse. SFAS&nbsp;No.&nbsp;109 provides for the
recognition of deferred tax assets if realization of such assets
is more likely than not. Based on the weight of available
evidence, we have provided a valuation allowance against certain
deferred tax assets. The valuation allowance was based on the
historical earnings patterns within individual tax jurisdictions
that make it uncertain that we will have sufficient income in
the appropriate jurisdictions to realize the full value of the
assets. We will continue to evaluate the realizability of the
deferred tax assets on a quarterly basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At December&nbsp;31, 2004, we had credit carryforwards of
$50.4&nbsp;million. These credits relate to Energy Credits,
Research and Development Credits, Alternative Minimum Tax
Credits and other miscellaneous state credits. The net operating
loss carryforward consists of federal and state carryforwards of
approximately $2.3&nbsp;billion which expire between 2017 and
2019. The federal and state net operating loss carryforwards
available are subject to limitations on their annual usage. We
also have loss carryforwards in certain foreign subsidiaries,
resulting in tax benefits of approximately $152&nbsp;million,
the majority of which expire by 2008. We provided a valuation
allowance on certain state and foreign tax jurisdiction deferred
tax assets to reduce the gross amount of these assets to the
extent necessary to result in an amount that is more likely than
not of being realized. Realization of the deferred tax assets
and net operating loss carryforwards is dependent, in part, on
generating sufficient taxable income prior to expiration of the
loss carryforwards. The amount of the deferred tax asset
considered realizable, however, could be reduced in the near
term if estimates of future taxable income during the
carryforward period are reduced.
</DIV>

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    <TD>
    <B><I>Variable Interest Entities and Primary Beneficiary</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In determining whether an entity is a variable interest entity
(&#147;VIE&#148;) and whether or not we are the Primary
Beneficiary, we use significant judgment regarding the adequacy
of an entity&#146;s equity relative to maximum expected losses,
amounts and timing of estimated cash flows, discount rates and
the probability of achieving a specific expected future cash
flow outcome for various cash flow scenarios. Due to the
long-term nature of our investment in a VIE and its underlying
assets, our estimates of the probability-weighted future
expected cash flow outcomes are complex and subjective, and are
based, in part, on our assessment of future commodity prices
based on long-term supply and demand forecasts for electricity
and natural gas, operational performance of the underlying
assets, legal and regulatory factors affecting our industry,
long-term interest rates and our current credit profile and cost
of capital. As a result of applying the complex guidance
outlined in FIN&nbsp;46-R, we may be required to consolidate
assets we do not legally own and liabilities that we are not
legally obligated to satisfy. Also, future changes in a
VIE&#146;s legal or capital structure may cause us to reassess
whether or not we are the Primary Beneficiary and may result in
our consolidation or deconsolidation of that entity.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We adopted FIN&nbsp;46-R for our equity method joint ventures
and operating lease arrangements containing fixed price purchase
options, our wholly owned subsidiaries that are subject to
long-term power purchase agreements and tolling arrangements and
our wholly owned subsidiaries that have issued mandatorily
redeemable non-controlling preferred interests as of
March&nbsp;31, 2004, and for our investments in SPEs as of
December&nbsp;31, 2003.
</DIV>

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    <TD></TD>
    <TD>
    <I>Joint Venture Investments and Operating Leases with Fixed
    Price Options</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On application of FIN&nbsp;46-R, we evaluated our investments in
joint venture investments and operating lease arrangements
containing fixed price purchase options and concluded that, in
some instances, these entities were VIEs. However, in these
instances, we were not the Primary Beneficiary, as we would not
absorb a majority of these entities&#146; expected variability.
An enterprise that holds a significant variable interest in a
VIE is required to make certain disclosures regarding the nature
and timing of its involvement with the VIE and the nature,
purpose, size and activities of the VIE. The fixed price
purchase options under our operating lease arrangements were not
considered significant variable interests. However, the joint
ventures in which we invested, and which did not qualify for the
definition of a business scope exception outlined in
paragraph&nbsp;4(h) of FIN&nbsp;46-R, were considered
significant variable interests and the required disclosures have
been made in Note&nbsp;7 of the Notes to Consolidated Financial
Statements for these joint venture investments.
</DIV>

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    <TD></TD>
    <TD>
    <I>Significant Long-Term Power Sales and Tolling Agreements</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
An analysis was performed for our wholly owned subsidiaries with
significant long-term power sales or tolling agreements. Certain
of our 100% owned subsidiaries were deemed to be VIEs by virtue
of the power sales and tolling agreements which meet the
definition of a variable interest under FIN&nbsp;46-R. However,
in all cases, we absorbed a majority of the entity&#146;s
variability and continue to consolidate our wholly owned
subsidiaries. As part of our quantitative assessment, a fair
value methodology was used to determine whether we or the power
purchaser absorbed the majority of the subsidiary&#146;s
variability. As part of our analysis, we qualitatively
determined that power sales or tolling agreements with a term
for less than one-third of the facility&#146;s remaining useful
life or for less than 50% of the entity&#146;s capacity would
not cause the power purchaser to be the Primary Beneficiary, due
to the length of the economic life of the underlying assets.
Also, power sales and tolling agreements meeting the definition
of a lease under EITF Issue No. 01-08, &#147;Determining Whether
an Arrangement Contains a Lease,&#148; were not considered
variable interests, since lease payments create rather than
absorb variability, and therefore, do not meet the definition of
a variable interest.
</DIV>

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    <TD></TD>
    <TD>
    <I>Preferred Interests issued from Wholly-Owned Subsidiaries</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A similar analysis was performed for our wholly owned
subsidiaries that have issued mandatorily redeemable
non-controlling preferred interests. These entities were
determined to be VIEs in which we absorb the majority of the
variability, primarily due to the debt characteristics of the
preferred interest, which are classified as debt in accordance
with SFAS&nbsp;No.&nbsp;150, &#147;Accounting for Certain
Financial Instruments with Characteristics of both Liabilities
and Equity&#148; in our Consolidated Condensed Balance Sheets.
As a result, we continue to consolidate these wholly owned
subsidiaries.
</DIV>

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    <TD>
    <I>Investments in Special Purpose Entities</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Significant judgment was required in making an assessment of
whether or not a VIE was an SPE for purposes of adopting and
applying FIN&nbsp;46, as originally issued at December&nbsp;31,
2003. Since the current accounting literature does not provide a
definition of an SPE, our assessment was primarily based on the
degree to which the VIE aligned with the definition of a
business outlined in FIN&nbsp;46-R. Entities that meet the
definition of a business outlined in FIN&nbsp;46-R and that
satisfy other formation and involvement criteria are not subject
to the FIN&nbsp;46-R consolidation guidelines. The definitional
characteristics of a business include having: inputs such as
long-lived assets; the ability to obtain access to necessary
materials and employees; processes such as strategic management,
operations and resource management; and the ability to obtain
access to the customers that purchase the outputs of the entity.
Based on this assessment, we determined that six VIE
</DIV>

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<DIV align="left" style="font-size: 10pt;">
investments were in SPEs requiring further evaluation and were
subject to the application of FIN&nbsp;46, as originally issued,
as of October&nbsp;1, 2003: CNEM, PCF, PCF&nbsp;III and the
Trusts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On May&nbsp;15, 2003, our wholly owned subsidiary, CNEM,
completed the $82.8&nbsp;million monetization of an existing
power sales agreement with BPA. CNEM borrowed $82.8&nbsp;million
secured by the spread between the BPA contract and certain fixed
power purchase contracts. CNEM was established as a
bankruptcy-remote entity and the $82.8&nbsp;million loan is
recourse only to CNEM&#146;s assets and is not guaranteed by us.
CNEM was determined to be a VIE in which we were the Primary
Beneficiary. Accordingly, the entity&#146;s assets and
liabilities were consolidated into our accounts as of
June&nbsp;30, 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On June&nbsp;13, 2003, PCF, a wholly-owned stand-alone
subsidiary of CES, completed the offering of the PCF Notes,
totaling $802.2&nbsp;million. To facilitate the transaction, we
formed PCF as a wholly owned, bankruptcy remote entity with
assets and liabilities consisting of certain transferred power
purchase and sales contracts, which serve as collateral for the
PCF Notes. The PCF Notes are non-recourse to our other
consolidated subsidiaries. PCF was originally determined to be a
VIE in which we were the Primary Beneficiary. Accordingly, the
entity&#146;s assets and liabilities were consolidated into our
accounts as of June&nbsp;30, 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As a result of the debt reserve monetization consummated on
June&nbsp;2, 2004, we were required to evaluate our new
investment in PCF&nbsp;III and to reevaluate our investment in
PCF under FIN&nbsp;46-R (effective March&nbsp;31, 2004). We
determined that the entities were VIEs but we were not the
Primary Beneficiary and, therefore, were required to
deconsolidate the entities as of June&nbsp;30, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Upon the application of FIN&nbsp;46, as originally issued at
December&nbsp;31, 2003, for our investments in SPEs, we
determined that our equity investment in the Trusts was not
considered at-risk as defined in FIN&nbsp;46 and that we did not
have a significant variable interest in the Trusts.
Consequently, we deconsolidated the Trusts as of
December&nbsp;31, 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We created CNEM, PCF, PCF&nbsp;III and the Trusts to facilitate
capital transactions. However, in cases such as these where we
have a continuing involvement with the assets held by the
deconsolidated SPE, we account for the capital transaction with
the SPE as a financing rather than a sale under EITF Issue
No.&nbsp;88-18, &#147;Sales of Future Revenue&#148; (&#147;EITF
Issue No.&nbsp;88-18&#148;) or Statement of Financial Accounting
Standard No.&nbsp;140, &#147;Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of
Liabilities&nbsp;&#151; a Replacement of FASB Statement
No.&nbsp;125&#148; (&#147;SFAS&nbsp;No.&nbsp;140&#148;), as
appropriate. When EITF Issue No.&nbsp;88-18 and
SFAS&nbsp;No.&nbsp;140 require us to account for a transaction
as a financing, derecognition of the assets underlying the
financing is prohibited, and the proceeds received from the
transaction must be recorded as debt. Accordingly, in situations
where we account for transactions as financings under EITF Issue
No.&nbsp;88-18 or SFAS&nbsp;No.&nbsp;140, we continue to
recognize the assets and the debt of the deconsolidated SPE on
our balance sheet. See Note&nbsp;2 of the Notes to Consolidated
Financial Statements for a summary on how we account for our
SPEs when we have continuing involvement under EITF Issue
No.&nbsp;88-18 or SFAS&nbsp;No.&nbsp;140.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Stock Based Compensation</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prior to 2003, we accounted for qualified stock compensation
under APB Opinion No.&nbsp;25, &#147;Accounting for Stock Issued
to Employees&#148; (&#147;APB&nbsp;25&#148;). Under APB&nbsp;25,
we were required to recognize stock compensation as expense only
to the extent that there is a difference in value between the
market price of the stock being offered to employees and the
price those employees must pay to acquire the stock. The expense
measurement methodology provided by APB&nbsp;25 is commonly
referred to as the &#147;intrinsic value based method.&#148; To
date, our stock compensation program has been based primarily on
stock options whose exercise prices are equal to the market
price of Calpine stock on the date of the stock option grant;
consequently, under APB&nbsp;25 we had historically incurred
minimal stock compensation expense. On January&nbsp;1, 2003, we
prospectively adopted the fair value method of accounting for
stock-based employee compensation pursuant to
SFAS&nbsp;No.&nbsp;123, &#147;Accounting for Stock-Based
Compensation&#148; (&#147;SFAS&nbsp;No.&nbsp;123&#148;) as
amended by SFAS&nbsp;No.&nbsp;148, &#147;Accounting for
Stock-Based Compensation&nbsp;&#151; Transition and
Disclosure&#148; (&#147;SFAS&nbsp;No.&nbsp;148&#148;).
SFAS&nbsp;No.&nbsp;148 amends SFAS&nbsp;No.&nbsp;123 to provide
alternative methods of transition for companies that voluntarily
change their accounting for stock-based compensation from the
less preferred
</DIV>

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<DIV align="left" style="font-size: 10pt;">
intrinsic value based method to the more preferred fair value
based method. Prior to its amendment, SFAS&nbsp;No.&nbsp;123
required that companies enacting a voluntary change in
accounting principle from the intrinsic value methodology
provided by APB&nbsp;25 could only do so on a prospective basis;
no adoption or transition provisions were established to allow
for a restatement of prior period financial statements.
SFAS&nbsp;No.&nbsp;148 provides two additional transition
options to report the change in accounting principle&nbsp;&#151;
the modified prospective method and the retroactive restatement
method. Additionally, SFAS&nbsp;No.&nbsp;148 amends the
disclosure requirements of SFAS&nbsp;No.&nbsp;123 to require
prominent disclosures in both annual and interim financial
statements about the method of accounting for stock-based
employee compensation and the effect of the method used on
reported results. We elected to adopt the provisions of
SFAS&nbsp;No.&nbsp;123 on a prospective basis; consequently, we
are required to provide a pro-forma disclosure of net income and
earnings per share as if SFAS&nbsp;No.&nbsp;123 accounting had
been applied to all prior periods presented within our financial
statements. In December 2004 the FASB issued Statement of
Financial Accounting Standards No.&nbsp;123 (revised 2004)
(&#147;SFAS&nbsp;No.&nbsp;123-R&#148;), <I>Share Based
Payments.</I> This Statement revises SFAS&nbsp;No.&nbsp;123,
<I>Accounting for Stock-Based Compensation </I>and supersedes
APB&nbsp;25, <I>Accounting for Stock Issued to Employees,
</I>and its related implementation guidance. This statement
requires a public entity to measure the cost of employee
services received in exchange for an award of equity instruments
based on the grant-date fair value of the award (with limited
exceptions), which must be recognized over the period during
which an employee is required to provide service in exchange for
the award&nbsp;&#151; the requisite service period (usually the
vesting period). Adoption of SFAS&nbsp;No.&nbsp;123-R is not
expected to materially impact our operating results, cash flows
or financial position, due to the aforementioned discussion
surrounding our prior adoption of SFAS&nbsp;No.&nbsp;123 as
amended by SFAS&nbsp;No.&nbsp;148.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under SFAS&nbsp;No.&nbsp;123, the fair value of a stock option
or its equivalent is estimated on the date of grant by using an
option-pricing model, such as the Black-Scholes model or a
binomial model. The option-pricing model selected should take
into account, as of the stock option&#146;s grant date, the
exercise price and expected life of the stock option, the
current price of the underlying stock and its expected
volatility, expected dividends on the stock, and the risk-free
interest rate for the expected term of the stock option.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The fair value calculated by this model is then recognized as
compensation expense over the period in which the related
employee services are rendered. Unless specifically defined
within the provisions of the stock option granted, the service
period is presumed to begin on the grant date and end when the
stock option is fully vested. Depending on the vesting structure
of the stock option and other variables that are built into the
option-pricing model, the fair value of the stock option is
recognized over the service period using either a straight-line
method (the single option approach) or a more conservative,
accelerated method (the multiple option approach). For
consistency, we have chosen the multiple option approach, which
we have used historically for pro-forma disclosure purposes. The
multiple option approach views one four-year option grant as
four separate sub-grants, each representing 25% of the total
number of stock options granted. The first sub-grant vests over
one year, the second sub-grant vests over two years, the third
sub-grant vests over three years, and the fourth sub-grant vests
over four years. Under this scenario, over 50% of the total fair
value of the stock option grant is recognized during the first
year of the vesting period, and nearly 80% of the total fair
value of the stock option grant is recognized by the end of the
second year of the vesting period. By contrast, if we were to
apply the single option approach, only 25% and 50% of the total
fair value of the stock option grant would be recognized as
compensation expense by the end of the first and second years of
the vesting period, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have selected the Black-Scholes model, primarily because it
has been the most commonly recognized options-pricing model
among U.S.-based corporations. Nonetheless, we believe this
model tends to overstate the true fair value of our employee
stock options in that our options cannot be freely traded, have
vesting requirements, and are subject to blackout periods during
which, even if vested, they cannot be traded. We will monitor
valuation trends and techniques as more companies adopt
SFAS&nbsp;No.&nbsp;123-R and as additional guidance is provided
by FASB and the SEC and review our choices as appropriate in the
future. The key assumption in our Black-Scholes model is the
expected life of the stock option, because it is this figure
that drives our expected volatility calculation, as well as our
risk-free interest rate. The expected life of the option relies
on two factors&nbsp;&#151; the option&#146;s vesting period and
the expected term that an employee holds the option once it has
vested. There is no single method described by
SFAS&nbsp;No.&nbsp;123 for predicting future events such as
</DIV>

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<DIV align="left" style="font-size: 10pt;">
how long an employee holds on to an option or what the expected
volatility of a company&#146;s stock price will be; the facts
and circumstances are unique to different companies and depend
on factors such as historical employee stock option exercise
patterns, significant changes in the market place that could
create a material impact on a company&#146;s stock price in the
future, and changes in a company&#146;s stock-based compensation
structure.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We base our expected option terms on historical employee
exercise patterns. We have segregated our employees into four
different categories based on the fact that different groups of
employees within our company have exhibited different stock
exercise patterns in the past, usually based on employee rank
and income levels. Therefore, we have concluded that we will
perform separate Black-Scholes calculations for four employee
groups&nbsp;&#151; executive officers, senior vice presidents,
vice presidents, and all other employees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We compute our expected stock price volatility based on our
stock&#146;s historical movements. For each employee group, we
measure the volatility of our stock over a period that equals
the expected term of the option. In the case of our executive
officers, this means we measure our stock price volatility
dating back to our public inception in 1996, because these
employees are expected to hold their options for over
7&nbsp;years after the options have fully vested. In the case of
other employees, volatility is only measured dating back
4&nbsp;years. In the short run, this causes other employees to
generate a higher volatility figure than the other company
employee groups because our stock price has fluctuated
significantly in the past four years. As of December&nbsp;31,
2004, the volatility for our employee groups ranged from 69%-98%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
See Note&nbsp;21 of the Notes to Consolidated Financial
Statements for additional information related to the
January&nbsp;1, 2003, adoption of SFAS&nbsp;Nos. 123 and 148 and
the pro-forma impact that they would have had on our net income
for the years ended December&nbsp;31, 2004, 2003 and 2002.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Initial Adoption of New Accounting Standards in 2004</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
See &#147;Application of Critical Accounting Policies&#148;
above for our adoption of FIN&nbsp;46-R relating to variable
interest entities and primary beneficiary.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>EITF Issue No.&nbsp;04-08</I>&nbsp;&#151; On
September&nbsp;30, 2004, the EITF reached a final consensus on
EITF Issue No.&nbsp;04-08: &#147;The Effect of Contingently
Convertible Debt on Diluted Earnings per Share&#148; (&#147;EITF
Issue No.&nbsp;04-08&#148;). The guidance in EITF Issue
No.&nbsp;04-08 is effective for periods ending after
December&nbsp;15, 2004, and must be applied by retroactively
restating previously reported earnings per share results. The
consensus requires companies that have issued contingently
convertible instruments with a market price trigger to include
the effects of the conversion in diluted earnings per share (if
dilutive), regardless of whether the price trigger had been met.
Prior to this consensus, contingently convertible instruments
were not included in diluted earnings per share if the price
trigger had not been met. Typically, the affected instruments
are convertible into common stock of the issuer after the
issuer&#146;s common stock price has exceeded a predetermined
threshold for a specified time period. Calpine&#146;s
$634&nbsp;million of 2023 Convertible Senior Notes and
$736&nbsp;million aggregate principal amount at maturity of 2014
Convertible Notes outstanding at December&nbsp;31, 2004, are
affected by the new guidance. Depending on the closing price of
the Company&#146;s common stock at the end of each reporting
period, the conversion provisions in these Contingent
Convertible Notes may significantly impact the reported diluted
earnings per share amounts in future periods.
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the twelve months ended December&nbsp;31, 2004,
approximately 8.6 million weighted common shares potentially
issuable under the Company&#146;s outstanding 2014 Convertible
Notes were excluded from the diluted earnings per share
calculations as the inclusion of such shares would have been
antidilutive because of the Company&#146;s net loss. The 2023
Convertible Senior Notes would not have impacted the diluted EPS
calculation for any reporting period since issuance in November
2003, because the Company&#146;s closing stock price at each
period end was below the conversion price.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Summary of Dilution Potential of Our Contingent Convertible
Notes: 2023 Convertible Senior Notes and 2014 Convertible
Notes</I>&nbsp;&#151; The table below assumes normal conversion
for the 2014 Convertible Notes and the 2023 Convertible Senior
Notes in which the principal amount is paid in cash, and the
excess up to the conversion value is paid in shares of Calpine
common stock. The table shows only the potential impact of our
two contingent convertible notes issuances and does not include
the potential dilutive effect of HIGH TIDES&nbsp;III, the
remaining 2006 Convertible Senior Notes or employee stock
options. Additionally, we are still assessing the potential
impact of the SFAS&nbsp;No.&nbsp;128-R exposure draft on our
convertible issues. See Note&nbsp;2 of the Notes to Consolidated
Condensed Financial Statements for more information.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="68%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2014</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2023</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Convertible</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Convertible</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Notes</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Senior Notes</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Size of issuance</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>736,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>633,775,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Conversion price per share</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3.85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.50</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Conversion rate</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>259.7403</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>153.8462</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Trigger price (20% over conversion price)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4.62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.80</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Additional Shares</I></B></TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="35%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2014</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2023</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Convertible</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Convertible</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Share</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Dilution in</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Future Calpine Common Stock Price</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Notes*</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Senior Notes</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Subtotal</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Share Increase</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>EPS</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $5.00</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>43,968,831</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>43,968,831</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9.8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.9</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $7.50</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>93,035,498</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,000,542</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>106,036,040</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23.7</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19.2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $10.00</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>117,568,831</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,126,375</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>151,695,207</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33.9</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $20.00</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>154,368,831</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>65,815,125</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>220,183,957</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>49.2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $40.00</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>172,768,831</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>81,659,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>254,428,332</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56.9</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36.2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $100.00</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>183,808,831</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>91,166,125</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>274,974,957</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>61.4</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Basic earnings per share base at December&nbsp;31, 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>447,509,231</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD>*&nbsp;</TD>
    <TD align="left">
    In the case of the 2014 Convertible Notes, since the conversion
    value is set for any given common stock price, more shares would
    be issued when the accreted value is less than $1,000 than in
    the table above since the accreted value (initially
    $839&nbsp;per bond) is paid in cash, and the balance of the
    conversion value is paid in shares. The incremental shares
    assuming conversion when the accreted value is only
    $839&nbsp;per bond are shown in the table below:</TD>
</TR>

</TABLE>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="81%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Incremental</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Future Calpine Common Stock Price</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $5.00</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23,699,200</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $7.50</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,799,467</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $10.00</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,849,600</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $20.00</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,924,800</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $40.00</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,962,400</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $100.00</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,184,960</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">108

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
<A name='110'></A>
</DIV>

<!-- link1 "Item 7A. Quantitative and Qualitative Disclosures About Market Risk" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;7A.</B></TD>
    <TD>
    <B><I>Quantitative and Qualitative Disclosures About Market
    Risk</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The information required hereunder is set forth under
&#147;Management&#146;s Discussion and Analysis of Financial
Condition and Results of Operations&nbsp;&#151; Financial Market
Risks.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='111'></A>
</DIV>

<!-- link1 "Item 8. Financial Statements and Supplementary Data" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;8.</B></TD>
    <TD>
    <B><I>Financial Statements and Supplementary Data</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The information required hereunder is set forth under
&#147;Reports of Independent Registered Public Accounting
Firms,&#148; &#147;Consolidated Balance Sheets,&#148;
&#147;Consolidated Statements of Operations,&#148;
&#147;Consolidated Statements of Stockholders&#146;
Equity,&#148; &#147;Consolidated Statements of Cash Flows,&#148;
and &#147;Notes to Consolidated Financial Statements&#148;
included in the Consolidated Financial Statements that are a
part of this report. Other financial information and schedules
are included in the Consolidated Financial Statements that are a
part of this report.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='112'></A>
</DIV>

<!-- link1 "Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;9.</B></TD>
    <TD>
    <B><I>Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
None.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='113'></A>
</DIV>

<!-- link1 "Item 9A. Controls and Procedures" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;9A.</B></TD>
    <TD>
    <B><I>Controls and Procedures</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Disclosure Controls and Procedures</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Calpine Corporation (the &#147;Company&#148;) maintains
disclosure controls and procedures that are designed to ensure
that information required to be disclosed in the Company&#146;s
Securities Exchange Act reports is recorded, processed,
summarized, and reported within the time periods specified in
the SEC&#146;s rules and forms, and that such information is
accumulated and communicated to the Company&#146;s management,
including its Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding
required financial disclosure.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of the end of the period covered by this report, the Company
carried out an evaluation, under the supervision and with the
participation of the Company&#146;s Disclosure Committee and
management, including the Chief Executive Officer and the Chief
Financial Officer, of the effectiveness of the design and
operation of its disclosure controls and procedures pursuant to
Exchange Act Rule&nbsp;13a-15. Based upon, and as of the date
of, this evaluation, the Chief Executive Officer and the Chief
Financial Officer concluded that the Company&#146;s disclosure
controls and procedures were not effective, because of the
material weakness discussed below. In light of this material
weakness, the Company performed additional analysis and
post-closing procedures to ensure its consolidated financial
statements are prepared in accordance with generally accepted
accounting principles (&#147;GAAP&#148;). Accordingly,
management believes that the financial statements included in
this report fairly present in all material respects the
Company&#146;s financial condition, results of operations and
cash flows for the periods presented.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Management&#146;s Report on Internal Control over Financial
Reporting</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The management of Calpine Corporation is responsible for
establishing and maintaining adequate internal control over
financial reporting. The Company&#146;s internal control over
financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in
accordance with GAAP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Management has assessed the effectiveness of the Company&#146;s
internal control over financial reporting as of
December&nbsp;31, 2004. In making its assessment of internal
control over financial reporting, management used the criteria
described in <I>Internal Control&nbsp;&#151; Integrated
Framework </I>issued by the Committee of Sponsoring
Organizations of the Treadway Commission.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A material weakness is a control deficiency, or combination of
control deficiencies, that results in more than a remote
likelihood that a material misstatement of the annual or interim
financial statements will not be prevented or detected. As of
December&nbsp;31, 2004, the Company did not maintain effective
controls over the accounting for income taxes and the
determination of current income taxes payable, deferred income
tax
</DIV>

<P align="center" style="font-size: 10pt;">109
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
assets and liabilities and the related income tax provision
(benefit) for continuing and discontinued operations.
Specifically, the Company did not have effective controls in
place to (i)&nbsp;identify and evaluate in a timely manner the
tax implications of the repatriation of funds from Canada
(ii)&nbsp;appropriately determine the allocation of the tax
provision between continuing and discontinued operations
(iii)&nbsp;ensure there was adequate communication from the tax
department to the accounting departments relating to the
preparation of the tax provision (iv)&nbsp;ensure all elements
of the income tax provision were mathematically correct and
(v)&nbsp;ensure the rationale for certain tax positions was
adequately documented. This control deficiency resulted in the
restatement of the Company&#146;s consolidated financial
statements for the three and nine months ended
September&nbsp;30, 2004, as well as income tax related audit
adjustments to the fourth quarter 2004 consolidated financial
statements. Additionally, this control deficiency could result
in a misstatement of current income taxes payable, deferred
income tax assets and liabilities and the related income tax
provision (benefit) for continuing and discontinued operations
that would result in a material misstatement to annual or
interim financial statements that would not be prevented or
detected. Accordingly, management determined that this control
deficiency constitutes a material weakness. Because of this
material weakness, we have concluded that the Company did not
maintain effective internal control over financial reporting as
of December&nbsp;31, 2004, based on criteria in <I>Internal
Control&nbsp;&#151; Integrated Framework.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Management&#146;s assessment of the effectiveness of the
Company&#146;s internal control over financial reporting as of
December&nbsp;31, 2004 has been audited by
PricewaterhouseCoopers LLP, an independent registered public
accounting firm, as stated in their report which appears herein.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Remediation of Material Weakness</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As discussed in Management&#146;s Report on Internal Control
over Financial Reporting, as of December&nbsp;31, 2004, there
was a material weakness in the Company&#146;s internal control
over financial reporting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prior to the fourth quarter of 2004, we identified certain
deficiencies in our tax accounting processes, procedures and
controls. Although we had processes and systems in place
relating to the preparation and review of the interim and annual
income tax provisions, we subsequently determined that these
controls were not adequate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2005, the Company is taking the following steps to improve
its internal controls relating to the preparation and review of
interim and annual income tax provisions, including the
accounting for current income taxes payable, deferred income tax
assets and liabilities and the related income tax provision:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Complete the implementation of the CorpTax computer application
    to automate more of the tax analysis and provision processes and
    improve clarity of supporting documentation and reports;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Will add resources in the tax and accounting departments as well
    as additional tax accounting training for key personnel and will
    continue to monitor staffing levels in the future; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Engage third party tax experts to review the details of the
    income tax calculations.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company believes it is taking steps necessary to remediate
this material weakness and will continue to monitor the
effectiveness of these procedures and will continue to make any
changes that management deems appropriate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Changes in Internal Control Over Financial Reporting</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Calpine continuously seeks to improve the efficiency and
effectiveness of our internal controls. This results in
refinements to processes throughout the Company. However, there
was no change in our internal control over financial reporting
that occurred during the last fiscal quarter of 2004 that has
materially affected, or is reasonably likely to materially
affect, Calpine&#146;s internal control over financial reporting.
</DIV>

<P align="center" style="font-size: 10pt;">110
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<DIV align="left" style="font-size: 10pt;">
<A name='114'></A>
</DIV>

<!-- link1 "Item 9B. Other Information" -->

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;9B.</B></TD>
    <TD>
    <B><I>Other Information</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Consulting Agreement with George J. Stathakis</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Effective January&nbsp;1, 2005, we entered into a consulting
agreement with George J. Stathakis, a member of our Board of
Directors, pursuant to which Mr.&nbsp;Stathakis will provide
advice and guidance on various management issues to our
President and members of the President&#146;s senior staff. The
consulting agreement is filed as Exhibit&nbsp;10.3.6.1 to this
Report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The term of the consulting agreement is one year (until
December&nbsp;31, 2005) and may be extended upon the mutual
agreement of the parties. We or Mr.&nbsp;Stathakis may terminate
the consulting agreement at any time by giving thirty days&#146;
written notice to the other.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Mr.&nbsp;Stathakis will receive a monthly retainer fee of
$5,000. Mr.&nbsp;Stathakis was also granted an option to
purchase&nbsp;10,000&nbsp;shares of common stock pursuant to the
Discretionary Option Grant Program of our 1996 Stock Incentive
Plan, as amended. The exercise price of the option is
$3.80&nbsp;per share (representing the closing price of Calpine
common stock on January&nbsp;3, 2005). The option has a ten-year
term and will vest in twelve monthly installments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Management Incentive Plan</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On December&nbsp;14, 2004, the Executive Committee of the Board
of Directors of Calpine Corporation approved corporate and
executive corporate performance goals under its Management
Incentive Plan (&#147;MIP&#148;) for the year ending
December&nbsp;31, 2005. The MIP provides employees a cash bonus
based on the achievement of annual corporate goals and
objectives and individual performance. The purpose of the MIP is
to assist us in attracting and retaining desired talent,
building team effort, recognizing achievement of predetermined
business objectives, and providing increased performance
motivation. Calpine North American employees, other than the
operations and maintenance hourly employees, are eligible to
participate in the MIP in 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Among the goals adopted under the MIP were numerous financial
goals relating to liquidity, operating and other expense
reduction and earnings. Non-financial goals relating to safety
and workforce diversity, among other areas, were adopted. In
2006, the Compensation Committee of our Board of Directors will
evaluate our progress in achieving the adopted goals, both
financial and other, in determining the level of funding for
bonuses under the MIP. The MIP is filed as Exhibit&nbsp;10.3.13
to this Report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='115'></A>
</DIV>

<!-- link1 "PART III" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PART&nbsp;III</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='116'></A>
</DIV>

<!-- link1 "Item 10. Directors and Executive Officers of the Registrant" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;10.</B></TD>
    <TD>
    <B><I>Directors and Executive Officers of the Registrant</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Incorporated by reference to Proxy Statement relating to the
2005 Annual Meeting of Stockholders to be filed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='117'></A>
</DIV>

<!-- link1 "Item 11. Executive Compensation" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;11.</B></TD>
    <TD>
    <B><I>Executive Compensation</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Incorporated by reference to Proxy Statement relating to the
2005 Annual Meeting of Stockholders to be filed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='118'></A>
</DIV>

<!-- link1 "Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;12.</B></TD>
    <TD>
    <B><I>Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Incorporated by reference to Proxy Statement relating to the
2005 Annual Meeting of Stockholders to be filed.
</DIV>

<P align="center" style="font-size: 10pt;">111

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Equity Compensation Plan Information</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table provides certain information, as of
December&nbsp;31, 2004, concerning certain compensation plans
under which our equity securities are authorized for issuance.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="32%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of Securities</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Remaining Available</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>for Future Issuance</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of Securities</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Under Equity</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>to be Issued Upon</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted Average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Compensation Plans</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Exercise of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Exercise Price of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Excluding</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Outstanding Options,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Outstanding Options,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Securities Reflected</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3" align="center" nowrap><B>Plan Category</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Warrants, and Rights</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Warrants and Rights</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>in Column(a))</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Equity compensation plans approved by security holders</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Calpine Corporation 1992 Stock Incentive Plan(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,752,590</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1.070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Encal Energy Ltd. Stock Option Plan(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>87,274</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>35.692</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Calpine Corporation 1996 Stock Incentive Plan</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32,937,993</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,205,905</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Calpine Corporation 2000 Employee Stock Purchase Plan</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,859,702</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Equity compensation plans not approved by security holders</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,777,857</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38,065,607</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    The Calpine Corporation 1992 Stock Incentive Plan was approved
    in 1992 by the Company&#146;s sole security holder at the time,
    Electrowatt Ltd.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    In connection with the merger with Encal Energy Ltd., which
    closed in 2001, we assumed the Encal Energy Fifth Amended and
    Restated Stock Option Plan. 87,274&nbsp;shares of our common
    stock are subject to issuance upon exercise of options granted
    pursuant to this plan at a weighted average exercise price of
    $35.692. Other than the shares reserved for future issuance upon
    the exercise of these options, there are no securities available
    for future issuance under this Plan.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt;">
<A name='119'></A>
</DIV>

<!-- link1 "Item 13. Certain Relationships and Related Transactions" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;13.</B></TD>
    <TD>
    <B><I>Certain Relationships and Related Transactions</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Incorporated by reference to Proxy Statement relating to the
2005 Annual Meeting of Stockholders to be filed.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='120'></A>
</DIV>

<!-- link1 "Item 14. Principal Accounting Fees and Services" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;14.</B></TD>
    <TD>
    <B><I>Principal Accounting Fees and Services</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Incorporated by reference to Proxy Statement relating to the
2005 Annual Meeting of Stockholders to be filed.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='121'></A>
</DIV>

<!-- link1 "PART IV" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PART&nbsp;IV</B>
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='122'></A>
</DIV>

<!-- link1 "Item 15. Exhibits, Financial Statement Schedules" -->

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="9%"></TD>
    <TD width="91%"></TD>
</TR>

<TR valign="top">
    <TD><B>Item&nbsp;15.</B></TD>
    <TD>
    <B><I>Exhibits, Financial Statement Schedules</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)-1.&nbsp;<I>Financial Statements and Other Information</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following items appear in Appendix&nbsp;F of this report:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Reports of Independent Registered Public Accounting Firms</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Consolidated Balance Sheets December&nbsp;31, 2004 and 2003</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Consolidated Statements of Operations for the Years Ended
    December&nbsp;31, 2004, 2003, and 2002</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">112
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Consolidated Statements of Stockholders&#146; Equity for the
    Years Ended December&nbsp;31, 2004, 2003, and 2002</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Consolidated Statements of Cash Flows for the Years Ended
    December&nbsp;31, 2004, 2003, and 2002</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Notes to Consolidated Financial Statements for the Years Ended
    December&nbsp;31, 2004, 2003, and 2002</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    Supplemental Oil and Gas Disclosures</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(a)-2.&nbsp;<I>Financial Statement Schedules</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Schedule&nbsp;II&nbsp;&#151; Valuation and Qualifying Accounts
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(b)&nbsp;<I>Exhibits</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following exhibits are filed herewith unless otherwise
indicated:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3" align="center" nowrap><B>Exhibit</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3" align="center" nowrap><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Purchase and Sale Agreement, dated July&nbsp;1, 2004, among
    Calpine Corporation (the &#147;Company&#148;), Calpine Natural
    Gas L.P. and Pogo Producing Company.(a)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2</TD>
    <TD align="left" valign="top" nowrap>.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Purchase and Sale Agreement, dated July&nbsp;1, 2004, among the
    Company, Calpine Natural Gas L.P. and Bill Barrett
    Corporation.(a)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2</TD>
    <TD align="left" valign="top" nowrap>.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Asset and Trust&nbsp;Unit Purchase and Sale Agreement, dated
    July&nbsp;1, 2004, among the Company, Calpine Canada Natural Gas
    Partnership, Calpine Energy Holdings Limited, PrimeWest Gas
    Corp. and PrimeWest Energy Trust.(a)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amended and Restated Certificate of Incorporation of the
    Company, as amended through June&nbsp;2, 2004.(b)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3</TD>
    <TD align="left" valign="top" nowrap>.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amended and Restated By-laws of the Company.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.1.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture dated as of May&nbsp;16, 1996, between the Company and
    U.S.&nbsp;Bank (as successor trustee to Fleet National Bank), as
    Trustee, including form of Notes.(d)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.1.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    First Supplemental Indenture dated as of August&nbsp;1, 2000,
    between the Company and U.S.&nbsp;Bank (as successor trustee to
    Fleet National Bank), as Trustee.(e)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.1.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Second Supplemental Indenture dated as of April&nbsp;26, 2004,
    between the Company and U.S.&nbsp;Bank (as successor trustee to
    Fleet National Bank), as Trustee.(f)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.2.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture dated as of July&nbsp;8, 1997, between the Company and
    The Bank of New York, as Trustee, including form of Notes.(g)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.2.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Supplemental Indenture dated as of September&nbsp;10, 1997,
    between the Company and The Bank of New York, as Trustee.(h)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.2.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Second Supplemental Indenture dated as of July&nbsp;31, 2000,
    between the Company and The Bank of New York, as Trustee.(e)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.2.4</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Third Supplemental Indenture dated as of April&nbsp;26, 2004,
    between the Company and The Bank of New York, as Trustee.(f)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.3.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture dated as of March&nbsp;31, 1998, between the Company
    and The Bank of New York, as Trustee, including form of Notes.(i)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.3.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Supplemental Indenture dated as of July&nbsp;24, 1998, between
    the Company and The Bank of New&nbsp;York, as Trustee.(i)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.3.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Second Supplemental Indenture dated as of July&nbsp;31, 2000,
    between the Company and The Bank of New York, as Trustee.(e)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.3.4</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Third Supplemental Indenture dated as of April&nbsp;26, 2004,
    between the Company and The Bank of New York, as Trustee.(f)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.4.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture dated as of March&nbsp;29, 1999, between the Company
    and The Bank of New York, as Trustee, including form of Notes.(j)</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">113

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Exhibit</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.4.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    First Supplemental Indenture dated as of July&nbsp;31, 2000,
    between the Company and The Bank of New York, as Trustee.(e)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.4.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Second Supplemental Indenture dated as of April&nbsp;26, 2004,
    between the Company and The Bank of New York, as Trustee.(f)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.5.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture dated as of March&nbsp;29, 1999, between the Company
    and The Bank of New York, as Trustee, including form of Notes.(j)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.5.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    First Supplemental Indenture dated as of July&nbsp;31, 2000,
    between the Company and The Bank of New York, as Trustee.(e)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.5.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Second Supplemental Indenture dated as of April&nbsp;26, 2004,
    between the Company and The Bank of New York, as Trustee.(f)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.6.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture dated as of August&nbsp;10, 2000, between the Company
    and Wilmington Trust Company, as Trustee.(k)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.6.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    First Supplemental Indenture dated as of September&nbsp;28,
    2000, between the Company and Wilmington Trust Company, as
    Trustee.(e)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.6.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Second Supplemental Indenture dated as of September&nbsp;30,
    2004, between the Company and Wilmington Trust Company, as
    Trustee.(l)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.7.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amended and Restated Indenture dated as of October&nbsp;16,
    2001, between Calpine Canada Energy Finance ULC and Wilmington
    Trust Company, as Trustee.(m)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.7.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Guarantee Agreement dated as of April&nbsp;25, 2001, between the
    Company and Wilmington Trust Company, as Trustee.(n)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.7.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    First Amendment, dated as of October&nbsp;16, 2001, to Guarantee
    Agreement dated as of April&nbsp;25, 2001, between the Company
    and Wilmington Trust Company, as Trustee.(m)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.8.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture dated as of October&nbsp;18, 2001, between Calpine
    Canada Energy Finance&nbsp;II ULC and Wilmington Trust Company,
    as Trustee.(m)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.8.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    First Supplemental Indenture, dated as of October&nbsp;18, 2001,
    between Calpine Canada Energy Finance&nbsp;II ULC and Wilmington
    Trust Company, as Trustee.(m)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.8.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Guarantee Agreement dated as of October&nbsp;18, 2001, between
    the Company and Wilmington Trust Company, as Trustee.(m)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.8.4</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    First Amendment, dated as of October&nbsp;18, 2001, to Guarantee
    Agreement dated as of October&nbsp;18, 2001, between the Company
    and Wilmington Trust Company, as Trustee.(m)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.9</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture, dated as of June&nbsp;13, 2003, between Power
    Contract Financing, L.L.C. and Wilmington Trust Company, as
    Trustee, Accounts&nbsp;Agent, Paying Agent and Registrar,
    including form of Notes.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.10</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture, dated as of July&nbsp;16, 2003, between the Company
    and Wilmington Trust Company, as Trustee, including form of
    Notes.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.11</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture, dated as of July&nbsp;16, 2003, between the Company
    and Wilmington Trust Company, as Trustee, including form of
    Notes.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.12</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture, dated as of July&nbsp;16, 2003, between the Company
    and Wilmington Trust Company, as Trustee, including form of
    Notes.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.13.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture, dated as of August&nbsp;14, 2003, among Calpine
    Construction Finance Company, L.P., CCFC Finance Corp., each of
    Calpine Hermiston, LLC, CPN Hermiston, LLC and Hermiston Power
    Partnership, as Guarantors, and Wilmington Trust Company, as
    Trustee, including form of Notes.(p)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.13.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Supplemental Indenture, dated as of September&nbsp;18, 2003,
    among Calpine Construction Finance Company, L.P., CCFC Finance
    Corp., each of Calpine Hermiston, LLC, CPN Hermiston, LLC and
    Hermiston Power Partnership, as Guarantors, and Wilmington Trust
    Company, as Trustee.(p)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.13.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Second Supplemental Indenture, dated as of January&nbsp;14,
    2004, among Calpine Construction Finance Company, L.P., CCFC
    Finance Corp., each of Calpine Hermiston, LLC, CPN Hermiston,
    LLC and Hermiston Power Partnership, as Guarantors, and
    Wilmington Trust Company, as Trustee.(q)</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">114

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Exhibit</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.13.4</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Third Supplemental Indenture, dated as of March&nbsp;5, 2004,
    among Calpine Construction Finance Company, L.P., CCFC Finance
    Corp., each of Calpine Hermiston, LLC, CPN Hermiston, LLC and
    Hermiston Power Partnership, as Guarantors, and Wilmington Trust
    Company, as Trustee.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.14</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture, dated as of September&nbsp;30, 2003, among Gilroy
    Energy Center, LLC, each of Creed Energy Center, LLC and Goose
    Haven Energy Center, as Guarantors, and Wilmington Trust
    Company, as Trustee and Collateral Agent, including form of
    Notes.(p)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.15</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture, dated as of November&nbsp;18, 2003, between the
    Company and Wilmington Trust Company, as Trustee, including form
    of Notes.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.16.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amended and Restated Indenture, dated as of March&nbsp;12, 2004,
    between the Company and Wilmington Trust Company, including form
    of Notes.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.16.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Registration Rights Agreement, dated as of November&nbsp;14,
    2003, between the Company and Deutsche Bank Securities, Inc., as
    Representative of the Initial Purchasers.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.17.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    First Priority Indenture, dated as of March&nbsp;23, 2004, among
    Calpine Generating Company, LLC, CalGen Finance Corp. and
    Wilmington Trust&nbsp;FSB, as Trustee, including form of
    Notes.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.17.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Second Priority Indenture, dated as of March&nbsp;23, 2004,
    among Calpine Generating Company, LLC, CalGen Finance Corp. and
    Wilmington Trust&nbsp;FSB, as Trustee, including form of
    Notes.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.17.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Third Priority Indenture, dated as of March&nbsp;23, 2004, among
    Calpine Generating Company, LLC, CalGen Finance Corp. and
    Wilmington Trust&nbsp;FSB, as Trustee, including form of
    Notes.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.18</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture, dated as of June&nbsp;2, 2004, between Power Contract
    Financing&nbsp;III, LLC and Wilmington Trust Company, as
    Trustee, Accounts&nbsp;Agent, Paying Agent and Registrar,
    including form of Notes.(b)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.19</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture, dated as of September&nbsp;30, 2004, between the
    Company and Wilmington Trust Company, as Trustee, including form
    of Notes.(r)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.20.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amended and Restated Rights Agreement, dated as of
    September&nbsp;19, 2001, between Calpine Corporation and
    Equiserve Trust Company, N.A., as Rights Agent.(s)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.20.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amendment No.&nbsp;1 to Rights Agreement, dated as of
    September&nbsp;28, 2004, between Calpine Corporation and
    Equiserve Trust Company, N.A., as Rights Agent.(l)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.20.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amendment No.&nbsp;2 to Rights Agreement, dated as of
    March&nbsp;18, 2005, between Calpine Corporation and Equiserve
    Trust Company, N.A., as Rights Agent.(bb)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.21</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Memorandum and Articles of Association of Calpine (Jersey)
    Limited.(t)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.22</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Memorandum and Articles of Association of Calpine European
    Funding (Jersey) Limited.(t)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.23</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    High Tides&nbsp;III</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.23.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amended and Restated Certificate of Trust of Calpine Capital
    Trust&nbsp;III, a Delaware statutory trust, filed July&nbsp;19,
    2000.(u)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.23.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Declaration of Trust of Calpine Capital Trust&nbsp;III dated
    June&nbsp;28, 2000, among the Company, as Depositor and
    Debenture Issuer, The Bank of New York (Delaware), as Delaware
    Trustee, The Bank of New York, as Property Trustee and the
    Administrative Trustees named therein.(u)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.23.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amendment No.&nbsp;1 to the Declaration of Trust of Calpine
    Capital Trust&nbsp;III dated July&nbsp;19, 2000, among the
    Company, as Depositor and Debenture Issuer, Wilmington Trust
    Company, as Delaware Trustee, Wilmington Trust Company, as
    Property Trustee, and the Administrative Trustees named
    therein.(u)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.23.4</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture dated as of August&nbsp;9, 2000, between the Company
    and Wilmington Trust Company, as Trustee.(u)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.23.5</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Remarketing Agreement dated as of August&nbsp;9, 2000, among the
    Company, Calpine Capital Trust&nbsp;III, Wilmington Trust
    Company, as Tender Agent, and Credit Suisse First Boston
    Corporation, as Remarketing Agent.(u)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.23.6</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Registration Rights Agreement dated as August&nbsp;9, 2000,
    between the Company, Calpine Capital Trust&nbsp;III, Credit
    Suisse First Boston Corporation, ING Barings LLC and CIBC World
    Markets Corp.(u)</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">115

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Exhibit</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.23.7</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amended and Restated Declaration of Trust of Calpine Capital
    Trust&nbsp;III dated as of August&nbsp;9, 2000, the Company, as
    Depositor and Debenture Issuer, Wilmington Trust Company, as
    Delaware Trustee, Wilmington Trust Company, as Property Trustee,
    and the Administrative Trustees named therein, including the
    form of Preferred Security and form of Common Security.(u)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.23.8</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Preferred Securities Guarantee Agreement dated as of
    August&nbsp;9, 2000, between the Company, as Guarantor, and
    Wilmington Trust Company, as Guarantee Trustee.(u)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.24</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Pass Through Certificates (Tiverton and Rumford)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.24.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Pass Through Trust&nbsp;Agreement dated as of December&nbsp;19,
    2000, among Tiverton Power Associates Limited Partnership,
    Rumford Power Associates Limited Partnership and State Street
    Bank and Trust Company of Connecticut, National Association, as
    Pass Through Trustee, including the form of Certificate.(e)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.24.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Participation Agreement dated as of December&nbsp;19, 2000,
    among the Company, Tiverton Power Associates Limited
    Partnership, Rumford Power Associates Limited Partnership, PMCC
    Calpine New England Investment LLC, PMCC Calpine NEIM LLC, State
    Street Bank and Trust Company of Connecticut, National
    Association, as Indenture Trustee, and State Street Bank and
    Trust Company of Connecticut, National Association, as Pass
    Through Trustee.(e)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.24.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
    Interpretation.(e)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.24.4</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Trust, Mortgage and Security Agreement, dated as of
    December&nbsp;19, 2000, between PMCC Calpine New England
    Investment LLC and State Street Bank and Trust Company of
    Connecticut, National Association, as Indenture Trustee,
    including the forms of Lessor Notes.(e)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.24.5</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (Tiverton) dated as of
    December&nbsp;19, 2000, by the Company, as Guarantor, to PMCC
    Calpine New England Investment LLC, PMCC Calpine NEIM LLC, State
    Street Bank and Trust Company of Connecticut, as Indenture
    Trustee, and State Street Bank and Trust Company of Connecticut,
    as Pass Through Trustee.(e)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.24.6</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (Rumford) dated as of
    December&nbsp;19, 2000, by the Company, as Guarantor, to PMCC
    Calpine New England Investment LLC, PMCC Calpine NEIM LLC, State
    Street Bank and Trust Company of Connecticut, as Indenture
    Trustee, and State Street Bank and Trust Company of Connecticut,
    as Pass Through Trustee.(e)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Pass Through Certificates (South Point, Broad River and RockGen)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Pass Through Trust&nbsp;Agreement A dated as of October&nbsp;18,
    2001, among South Point Energy Center, LLC, Broad River Energy
    LLC, RockGen Energy LLC and State Street Bank and Trust Company
    of Connecticut, National Association, as Pass Through Trustee,
    including the form of 8.400% Pass Through Certificate,
    Series&nbsp;A.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Pass Through Trust&nbsp;Agreement B dated as of October&nbsp;18,
    2001, among South Point Energy Center, LLC, Broad River Energy
    LLC, RockGen Energy LLC and State Street Bank and Trust Company
    of Connecticut, National Association, as Pass Through Trustee,
    including the form of 9.825% Pass Through Certificate,
    Series&nbsp;B.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Participation Agreement (SP-1) dated as of October&nbsp;18,
    2001, among the Company, South Point Energy Center, LLC, South
    Point OL-1, LLC, Wells Fargo Bank Northwest, National
    Association, as Lessor Manager, SBR OP-1, LLC, State Street Bank
    and Trust Company of Connecticut, National Association, as
    Indenture Trustee, and State Street Bank and Trust Company of
    Connecticut, National Association, as Pass Through Trustee,
    including Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
    Interpretation.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.4</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Participation Agreement (SP-2) dated as of October&nbsp;18,
    2001, among the Company, South Point Energy Center, LLC, South
    Point OL-2, LLC, Wells Fargo Bank Northwest, National
    Association, as Lessor Manager, SBR OP-2, LLC, State Street Bank
    and Trust Company of Connecticut, National Association, as
    Indenture Trustee, and State Street Bank and Trust Company of
    Connecticut, National Association, as Pass Through Trustee,
    including Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
    Interpretation.(c)</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">116

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Exhibit</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.5</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Participation Agreement (SP-3) dated as of October&nbsp;18,
    2001, among the Company, South Point Energy Center, LLC, South
    Point OL-3, LLC, Wells Fargo Bank Northwest, National
    Association, as Lessor Manager, SBR OP-3, LLC, State Street Bank
    and Trust Company of Connecticut, National Association, as
    Indenture Trustee, and State Street Bank and Trust Company of
    Connecticut, National Association, as Pass Through Trustee,
    including Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
    Interpretation.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.6</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Participation Agreement (SP-4) dated as of October&nbsp;18,
    2001, among the Company, South Point Energy Center, LLC, South
    Point OL-4, LLC, Wells Fargo Bank Northwest, National
    Association, as Lessor Manager, SBR OP-4, LLC, State Street Bank
    and Trust Company of Connecticut, National Association, as
    Indenture Trustee, and State Street Bank and Trust Company of
    Connecticut, National Association, as Pass Through Trustee,
    including Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
    Interpretation.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.7</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Participation Agreement (BR-1) dated as of October&nbsp;18,
    2001, among the Company, Broad River Energy LLC, Broad River
    OL-1, LLC, Wells Fargo Bank Northwest, National Association, as
    Lessor Manager, SBR OP-1, LLC, State Street Bank and Trust
    Company of Connecticut, National Association, as Indenture
    Trustee, and State Street Bank and Trust Company of Connecticut,
    National Association, as Pass Through Trustee, including
    Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
    Interpretation.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.8</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Participation Agreement (BR-2) dated as of October&nbsp;18,
    2001, among the Company, Broad River Energy LLC, Broad River
    OL-2, LLC, Wells Fargo Bank Northwest, National Association, as
    Lessor Manager, SBR OP-2, LLC, State Street Bank and Trust
    Company of Connecticut, National Association, as Indenture
    Trustee, and State Street Bank and Trust Company of Connecticut,
    National Association, as Pass Through Trustee, including
    Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
    Interpretation.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.9</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Participation Agreement (BR-3) dated as of October&nbsp;18,
    2001, among the Company, Broad River Energy LLC, Broad River
    OL-3, LLC, Wells Fargo Bank Northwest, National Association, as
    Lessor Manager, SBR OP-3, LLC, State Street Bank and Trust
    Company of Connecticut, National Association, as Indenture
    Trustee, and State Street Bank and Trust Company of Connecticut,
    National Association, as Pass Through Trustee, including
    Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
    Interpretation.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.10</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Participation Agreement (BR-4) dated as of October&nbsp;18,
    2001, among the Company, Broad River Energy LLC, Broad River
    OL-4, LLC, Wells Fargo Bank Northwest, National Association, as
    Lessor Manager, SBR OP-4, LLC, State Street Bank and Trust
    Company of Connecticut, National Association, as Indenture
    Trustee, and State Street Bank and Trust Company of Connecticut,
    National Association, as Pass Through Trustee, including
    Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
    Interpretation.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.11</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Participation Agreement (RG-1) dated as of October&nbsp;18,
    2001, among the Company, RockGen Energy LLC, RockGen OL-1, LLC,
    Wells Fargo Bank Northwest, National Association, as Lessor
    Manager, SBR OP-1, LLC, State Street Bank and Trust Company of
    Connecticut, National Association, as Indenture Trustee, and
    State Street Bank and Trust Company of Connecticut, National
    Association, as Pass Through Trustee, including
    Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
    Interpretation.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.12</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Participation Agreement (RG-2) dated as of October&nbsp;18,
    2001, among the Company, RockGen Energy LLC, RockGen OL-2, LLC,
    Wells Fargo Bank Northwest, National Association, as Lessor
    Manager, SBR OP-2, LLC, State Street Bank and Trust Company of
    Connecticut, National Association, as Indenture Trustee, and
    State Street Bank and Trust Company of Connecticut, National
    Association, as Pass Through Trustee, including
    Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
    Interpretation.(c)</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">117

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Exhibit</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.13</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Participation Agreement (RG-3) dated as of October&nbsp;18,
    2001, among the Company, RockGen Energy LLC, RockGen OL-3, LLC,
    Wells Fargo Bank Northwest, National Association, as Lessor
    Manager, SBR OP-3, LLC, State Street Bank and Trust Company of
    Connecticut, National Association, as Indenture Trustee, and
    State Street Bank and Trust Company of Connecticut, National
    Association, as Pass Through Trustee, including
    Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
    Interpretation.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.14</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Participation Agreement (RG-4) dated as of October&nbsp;18,
    2001, among the Company, RockGen Energy LLC, RockGen OL-4, LLC,
    Wells Fargo Bank Northwest, National Association, as Lessor
    Manager, SBR OP-4, LLC, State Street Bank and Trust Company of
    Connecticut, National Association, as Indenture Trustee, and
    State Street Bank and Trust Company of Connecticut, National
    Association, as Pass Through Trustee, including
    Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
    Interpretation.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.15</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Trust, Deed of Trust, Assignment of Rents and
    Leases, Security Agreement and Financing Statement, dated as of
    October&nbsp;18, 2001, between South Point OL-1, LLC and State
    Street Bank and Trust Company of Connecticut, National
    Association, as Indenture Trustee and Account&nbsp;Bank,
    including the form of South Point Lessor Notes.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.16</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Trust, Deed of Trust, Assignment of Rents and
    Leases, Security Agreement and Financing Statement, dated as of
    October&nbsp;18, 2001, between South Point OL-2, LLC and State
    Street Bank and Trust Company of Connecticut, National
    Association, as Indenture Trustee and Account&nbsp;Bank,
    including the form of South Point Lessor Notes.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.17</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Trust, Deed of Trust, Assignment of Rents and
    Leases, Security Agreement and Financing Statement, dated as of
    October&nbsp;18, 2001, between South Point OL-3, LLC and State
    Street Bank and Trust Company of Connecticut, National
    Association, as Indenture Trustee and Account&nbsp;Bank,
    including the form of South Point Lessor Notes.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.18</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Trust, Deed of Trust, Assignment of Rents and
    Leases, Security Agreement and Financing Statement, dated as of
    October&nbsp;18, 2001, between South Point OL-4, LLC and State
    Street Bank and Trust Company of Connecticut, National
    Association, as Indenture Trustee and Account&nbsp;Bank,
    including the form of South Point Lessor Notes.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.19</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Trust, Mortgage, Security Agreement and Fixture
    Filing, dated as of October&nbsp;18, 2001, between Broad River
    OL-1, LLC and State Street Bank and Trust Company of
    Connecticut, National Association, as Indenture Trustee,
    Mortgagee and Account&nbsp;Bank, including the form of Broad
    River Lessor Notes.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.20</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Trust, Mortgage, Security Agreement and Fixture
    Filing, dated as of October&nbsp;18, 2001, between Broad River
    OL-2, LLC and State Street Bank and Trust Company of
    Connecticut, National Association, as Indenture Trustee,
    Mortgagee and Account&nbsp;Bank, including the form of Broad
    River Lessor Notes.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.21</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Trust, Mortgage, Security Agreement and Fixture
    Filing, dated as of October&nbsp;18, 2001, between Broad River
    OL-3, LLC and State Street Bank and Trust Company of
    Connecticut, National Association, as Indenture Trustee,
    Mortgagee and Account&nbsp;Bank, including the form of Broad
    River Lessor Notes.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.22</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Trust, Mortgage, Security Agreement and Fixture
    Filing, dated as of October&nbsp;18, 2001, between Broad River
    OL-4, LLC and State Street Bank and Trust Company of
    Connecticut, National Association, as Indenture Trustee,
    Mortgagee and Account&nbsp;Bank, including the form of Broad
    River Lessor Notes.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.23</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Trust, Mortgage and Security Agreement, dated as of
    October&nbsp;18, 2001, between RockGen OL-1, LLC and State
    Street Bank and Trust Company of Connecticut, National
    Association, as Indenture Trustee and Account&nbsp;Bank,
    including the form of RockGen Lessor Notes.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.24</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Trust, Mortgage and Security Agreement, dated as of
    October&nbsp;18, 2001, between RockGen OL-2, LLC and State
    Street Bank and Trust Company of Connecticut, National
    Association, as Indenture Trustee and Account&nbsp;Bank,
    including the form of RockGen Lessor Notes.(c)</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">118

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Exhibit</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.25</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Trust, Mortgage and Security Agreement, dated as of
    October&nbsp;18, 2001, between RockGen OL-3, LLC and State
    Street Bank and Trust Company of Connecticut, National
    Association, as Indenture Trustee and Account&nbsp;Bank,
    including the form of RockGen Lessor Notes.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.26</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Trust, Mortgage and Security Agreement, dated as of
    October&nbsp;18, 2001, between RockGen OL-4, LLC and State
    Street Bank and Trust Company of Connecticut, National
    Association, as Indenture Trustee and Account&nbsp;Bank,
    including the form of RockGen Lessor Notes.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.27</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (South Point SP-1) dated
    as of October&nbsp;18, 2001, by Calpine, as Guarantor, to South
    Point OL-1, LLC, SBR OP-1, LLC, State Street Bank and Trust
    Company of Connecticut, as Indenture Trustee, and State Street
    Bank and Trust Company of Connecticut, as Pass Through
    Trustee.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.28</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (South Point SP-2) dated
    as of October&nbsp;18, 2001, by Calpine, as Guarantor, to South
    Point OL-2, LLC, SBR OP-2, LLC, State Street Bank and Trust
    Company of Connecticut, as Indenture Trustee, and State Street
    Bank and Trust Company of Connecticut, as Pass Through
    Trustee.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.29</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (South Point SP-3) dated
    as of October&nbsp;18, 2001, by Calpine, as Guarantor, to South
    Point OL-3, LLC, SBR OP-3, LLC, State Street Bank and Trust
    Company of Connecticut, as Indenture Trustee, and State Street
    Bank and Trust Company of Connecticut, as Pass Through
    Trustee.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.30</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (South Point SP-4) dated
    as of October&nbsp;18, 2001, by Calpine, as Guarantor, to South
    Point OL-4, LLC, SBR OP-4, LLC, State Street Bank and Trust
    Company of Connecticut, as Indenture Trustee, and State Street
    Bank and Trust Company of Connecticut, as Pass Through
    Trustee.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.31</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (Broad River BR-1) dated
    as of October&nbsp;18, 2001, by Calpine, as Guarantor, to Broad
    River OL-1, LLC, SBR OP-1, LLC, State Street Bank and Trust
    Company of Connecticut, as Indenture Trustee, and State Street
    Bank and Trust Company of Connecticut, as Pass Through
    Trustee.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.32</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (Broad River BR-2) dated
    as of October&nbsp;18, 2001, by Calpine, as Guarantor, to Broad
    River OL-2, LLC, SBR OP-2, LLC, State Street Bank and Trust
    Company of Connecticut, as Indenture Trustee, and State Street
    Bank and Trust Company of Connecticut, as Pass Through
    Trustee.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.33</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (Broad River BR-3) dated
    as of October&nbsp;18, 2001, by Calpine, as Guarantor, to Broad
    River OL-3, LLC, SBR OP-3, LLC, State Street Bank and Trust
    Company of Connecticut, as Indenture Trustee, and State Street
    Bank and Trust Company of Connecticut, as Pass Through
    Trustee.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.34</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (Broad River BR-4) dated
    as of October&nbsp;18, 2001, by Calpine, as Guarantor, to Broad
    River OL-4, LLC, SBR OP-4, LLC, State Street Bank and Trust
    Company of Connecticut, as Indenture Trustee, and State Street
    Bank and Trust Company of Connecticut, as Pass Through
    Trustee.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.35</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (RockGen RG-1) dated as
    of October&nbsp;18, 2001, by Calpine, as Guarantor, to RockGen
    OL-1, LLC, SBR OP-1, LLC, State Street Bank and Trust Company of
    Connecticut, as Indenture Trustee, and State Street Bank and
    Trust Company of Connecticut, as Pass Through Trustee.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.36</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (RockGen RG-2) dated as
    of October&nbsp;18, 2001, by Calpine, as Guarantor, to RockGen
    OL-2, LLC, SBR OP-2, LLC, State Street Bank and Trust Company of
    Connecticut, as Indenture Trustee, and State Street Bank and
    Trust Company of Connecticut, as Pass Through Trustee.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.37</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (RockGen RG-3) dated as
    of October&nbsp;18, 2001, by Calpine, as Guarantor, to RockGen
    OL-3, LLC, SBR OP-3, LLC, State Street Bank and Trust Company of
    Connecticut, as Indenture Trustee, and State Street Bank and
    Trust Company of Connecticut, as Pass Through Trustee.(c)</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">119

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Exhibit</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.38</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (RockGen RG-4) dated as
    of October&nbsp;18, 2001, by Calpine, as Guarantor, to RockGen
    OL-4, LLC, SBR OP-4, LLC, State Street Bank and Trust Company of
    Connecticut, as Indenture Trustee, and State Street Bank and
    Trust Company of Connecticut, as Pass Through Trustee.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Financing and Term Loan Agreements</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Share Lending Agreement, dated as of September&nbsp;28, 2004,
    among the Company, as Lender, Deutsche Bank AG London, as
    Borrower, through Deutsche Bank Securities Inc., as agent for
    the Borrower, and Deutsche Bank Securities Inc., in its capacity
    as Collateral Agent and Securities Intermediary.(l)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amended and Restated Credit Agreement, dated as of
    March&nbsp;23, 2004, among Calpine Generating Company, LLC, the
    Guarantors named therein, the Lenders named therein, The Bank of
    Nova Scotia, as Administrative Agent, LC Bank, Lead Arranger and
    Sole Bookrunner, Bayerische Landesbank Cayman Islands Branch, as
    Arranger and Co-Syndication Agent, Credit Lyonnais New York
    Branch, as Arranger and Co-Syndication Agent, ING Capital LLC,
    as Arranger and Co-Syndication Agent, Toronto-Dominion (Texas)
    Inc., as Arranger and Co-Syndication Agent, and Union Bank of
    California, N.A., as Arranger and Co-Syndication Agent.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.3.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Letter of Credit Agreement, dated as of July&nbsp;16, 2003,
    among the Company, the Lenders named therein, and The Bank of
    Nova Scotia, as Administrative Agent.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.3.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amendment to Letter of Credit Agreement, dated as of
    September&nbsp;30, 2004, between the Company and The Bank of
    Nova Scotia, as Administrative Agent.(v)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.4</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Letter of Credit Agreement, dated as of September&nbsp;30, 2004,
    between the Company and Bayerische Landesbank, acting through
    its Cayman Islands Branch, as the Issuer.(v)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.5</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Credit Agreement, dated as of July&nbsp;16, 2003, among the
    Company, the Lenders named therein, Goldman Sachs Credit
    Partners L.P., as Sole Lead Arranger, Sole Bookrunner and
    Administrative Agent, The Bank of Nova Scotia, as Arranger and
    Syndication Agent, TD Securities (USA)&nbsp;Inc., ING (U.S.)
    Capital LLC and Landesbank Hessen-Thuringen, as Co-Arrangers,
    and Credit Lyonnais New York Branch and Union Bank of
    California, N.A., as Managing Agents.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.6.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Credit and Guarantee Agreement, dated as of August&nbsp;14,
    2003, among Calpine Construction Finance Company, L.P., each of
    Calpine Hermiston, LLC, CPN Hermiston, LLC and Hermiston Power
    Partnership, as Guarantors, the Lenders named therein, and
    Goldman Sachs Credit Partners L.P., as Administrative Agent and
    Sole Lead Arranger.(p)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.6.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amendment No.&nbsp;1 to the Credit and Guarantee Agreement,
    dated as of September&nbsp;12, 2003, among Calpine Construction
    Finance Company, L.P., each of Calpine Hermiston, LLC, CPN
    Hermiston, LLC and Hermiston Power Partnership, as Guarantors,
    the Lenders named therein, and Goldman Sachs Credit Partners
    L.P., as Administrative Agent and Sole Lead Arranger.(p)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.6.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amendment No.&nbsp;2 to the Credit and Guarantee Agreement,
    dated as of January&nbsp;13, 2004, among Calpine Construction
    Finance Company, L.P., each of Calpine Hermiston, LLC, CPN
    Hermiston, LLC and Hermiston Power Partnership, as Guarantors,
    the Lenders named therein, and Goldman Sachs Credit Partners
    L.P., as Administrative Agent and Sole Lead Arranger.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.6.4</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amendment No.&nbsp;3 to the Credit and Guarantee Agreement,
    dated as of March&nbsp;5, 2004, among Calpine Construction
    Finance Company, L.P., each of Calpine Hermiston, LLC, CPN
    Hermiston, LLC and Hermiston Power Partnership, as Guarantors,
    the Lenders named therein, and Goldman Sachs Credit Partners
    L.P., as Administrative Agent and Sole Lead Arranger.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.7</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Credit and Guarantee Agreement, dated as of March&nbsp;23, 2004,
    among Calpine Generating Company, LLC, the Guarantors named
    therein, the Lenders named therein, Morgan Stanley Senior
    Funding, Inc., as Administrative Agent, and Morgan Stanley
    Senior Funding, Inc., as Sole Lead Arranger and Sole
    Bookrunner.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.8</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Credit and Guarantee Agreement, dated as of March&nbsp;23, 2004,
    among Calpine Generating Company, LLC, the Guarantors named
    therein, the Lenders named therein, Morgan Stanley Senior
    Funding, Inc., as Administrative Agent, and Morgan Stanley
    Senior Funding, Inc., as Sole Lead Arranger and Sole
    Bookrunner.(q)</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">120
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Exhibit</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.9</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Credit Agreement, dated as of June&nbsp;24, 2004, among
    Riverside Energy Center, LLC, the Lenders named therein, Union
    Bank of California, N.A., as the Issuing Bank, Credit Suisse
    First Boston, acting through its Cayman Islands Branch, as Lead
    Arranger, Book Runner, Administrative Agent and Collateral
    Agent, and CoBank, ACB, as Syndication Agent.(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.10</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Credit Agreement, dated as of June&nbsp;24, 2004, among Rocky
    Mountain Energy Center, LLC, the Lenders named therein, Union
    Bank of California, N.A., as the Issuing Bank, Credit Suisse
    First Boston, acting through its Cayman Islands Branch, as Lead
    Arranger, Book Runner, Administrative Agent and Collateral
    Agent, and CoBank, ACB, as Syndication Agent.(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.11</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Credit Agreement, dated as of February 25, 2005, among Calpine
    Steamboat Holdings, LLC, the Lenders named therein, Calyon New
    York Branch, as a Lead Arranger, Underwriter, Co-Book Runner,
    Administrative Agent, Collateral Agent and LC Issuer, CoBank,
    ACB, as a Lead Arranger, Underwriter, Co-Syndication Agent and
    Co-Book Runner, HSH Nordbank AG, as a Lead Arranger, Underwriter
    and Co-documentation Agent, UFJ Bank Limited, as a Lead
    Arranger, Underwriter and Co-Documentation Agent, and Bayerische
    Hypo-Und Vereinsbank AG, New York Branch, as a Lead Arranger,
    Underwriter and Co-Syndication Agent.(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Security Agreements</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Guarantee and Collateral Agreement, dated as of July&nbsp;16,
    2003, made by the Company, JOQ Canada, Inc., Quintana Minerals
    (USA)&nbsp;Inc., and Quintana Canada Holdings LLC, in favor of
    The Bank of New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    First Amendment Pledge Agreement, dated as of July&nbsp;16,
    2003, made by JOQ Canada, Inc., Quintana Minerals
    (USA)&nbsp;Inc., and Quintana Canada Holdings LLC in favor of
    The Bank of New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    First Amendment Assignment and Security Agreement, dated as of
    July&nbsp;16, 2003, made by the Company in favor of The Bank of
    New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.4.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Second Amendment Pledge Agreement (Stock Interests), dated as of
    July&nbsp;16, 2003, made by the Company in favor of The Bank of
    New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.4.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amendment No.&nbsp;1 to the Second Amendment Pledge Agreement
    (Stock Interests), dated as of November&nbsp;18, 2003, made by
    the Company in favor of The Bank of New York, as Collateral
    Trustee.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.5.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Second Amendment Pledge Agreement (Membership Interests), dated
    as of July&nbsp;16, 2003, made by the Company in favor of The
    Bank of New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.5.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amendment No.&nbsp;1 to the Second Amendment Pledge Agreement
    (Membership Interests), dated as of November&nbsp;18, 2003, made
    by the Company in favor of The Bank of New York, as Collateral
    Trustee.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.6</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    First Amendment Note&nbsp;Pledge Agreement, dated as of
    July&nbsp;16, 2003, made by the Company in favor of The Bank of
    New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.7.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Collateral Trust&nbsp;Agreement, dated as of July&nbsp;16, 2003,
    among the Company, JOQ Canada, Inc., Quintana Minerals
    (USA)&nbsp;Inc., Quintana Canada Holdings LLC, Wilmington Trust
    Company, as Trustee, The Bank of Nova Scotia, as Agent, Goldman
    Sachs Credit Partners L.P., as Administrative Agent, and The
    Bank of New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.7.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    First Amendment to the Collateral Trust&nbsp;Agreement, dated as
    of November&nbsp;18, 2003, among the Company, JOQ Canada, Inc.,
    Quintana Minerals (USA)&nbsp;Inc., Quintana Canada Holdings LLC,
    Wilmington Trust Company, as Trustee, The Bank of Nova Scotia,
    as Agent, Goldman Sachs Credit Partners L.P., as Administrative
    Agent, and The Bank of New York, as Collateral Trustee.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.8</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Amended and Restated Mortgage, Deed of Trust,
    Assignment, Security Agreement, Financing Statement and Fixture
    Filing (Multistate), dated as of July&nbsp;16, 2003, from the
    Company to Messrs.&nbsp;Denis O&#146;Meara and James Trimble, as
    Trustees, and The Bank of New York, as Collateral Trustee.(o)</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">121

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Exhibit</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.9</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Amended and Restated Mortgage, Deed of Trust,
    Assignment, Security Agreement, Financing Statement and Fixture
    Filing (Multistate), dated as of July&nbsp;16, 2003, from the
    Company to Messrs.&nbsp;Kemp Leonard and John Quick, as
    Trustees, and The Bank of New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.10</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Amended and Restated Mortgage, Deed of Trust,
    Assignment, Security Agreement, Financing Statement and Fixture
    Filing (Colorado), dated as of July&nbsp;16, 2003, from the
    Company to Messrs.&nbsp;Kemp Leonard and John Quick, as
    Trustees, and The Bank of New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.11</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Amended and Restated Mortgage, Deed of Trust,
    Assignment, Security Agreement, Financing Statement and Fixture
    Filing (New Mexico), dated as of July&nbsp;16, 2003, from the
    Company to Messrs.&nbsp;Kemp Leonard and John Quick, as
    Trustees, and The Bank of New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.12</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Amended and Restated Mortgage, Assignment, Security
    Agreement and Financing Statement (Louisiana), dated as of
    July&nbsp;16, 2003, from the Company to The Bank of New York, as
    Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.13</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Amended and Restated Deed of Trust with Power of Sale,
    Assignment of Production, Security Agreement, Financing
    Statement and Fixture Filings (California), dated as of
    July&nbsp;16, 2003, from the Company to Chicago
    Title&nbsp;Insurance Company, as Trustee, and The Bank of New
    York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.14</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Deed to Secure Debt, Assignment of Rents and Security
    Agreement (Georgia), dated as of July&nbsp;16, 2003, from the
    Company to The Bank of New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.15</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Mortgage, Assignment of Rents and Security Agreement
    (Florida), dated as of July&nbsp;16, 2003, from the Company to
    The Bank of New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.16</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Deed of Trust, Assignment of Rents and Security
    Agreement and Fixture Filing (Texas), dated as of July&nbsp;16,
    2003, from the Company to Malcolm S. Morris, as Trustee, in
    favor of The Bank of New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.17</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Deed of Trust, Assignment of Rents and Security
    Agreement (Washington), dated as of July&nbsp;16, 2003, from the
    Company to Chicago Title&nbsp;Insurance Company, in favor of The
    Bank of New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.18</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Deed of Trust, Assignment of Rents, and Security
    Agreement (California), dated as of July&nbsp;16, 2003, from the
    Company to Chicago Title&nbsp;Insurance Company, in favor of The
    Bank of New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.19</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Mortgage, Collateral Assignment of Leases and Rents,
    Security Agreement and Financing Statement (Louisiana), dated as
    of July&nbsp;16, 2003, from the Company to The Bank of New York,
    as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.20</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amended and Restated Hazardous Materials Undertaking and
    Indemnity (Multistate), dated as of July&nbsp;16, 2003, by the
    Company in favor of The Bank of New York, as Collateral
    Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.21</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amended and Restated Hazardous Materials Undertaking and
    Indemnity (California), dated as of July&nbsp;16, 2003, by the
    Company in favor of The Bank of New York, as Collateral
    Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.22</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Designated Asset Sale Proceeds Account&nbsp;Control Agreement,
    dated as of July&nbsp;16, 2003, among the Company, Union Bank of
    California, N.A., and The Bank of New York, as Collateral
    Agent.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Management Contracts or Compensatory Plans or Arrangements.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.1.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Employment Agreement, dated as of January&nbsp;1, 2005, between
    the Company and Mr.&nbsp;Peter Cartwright.(w)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.1.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Employment Agreement, dated as of January&nbsp;1, 2000, between
    the Company and Mr.&nbsp;Peter Cartwright.(y)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Employment Agreement, dated as of January&nbsp;1, 2000, between
    the Company and Ms.&nbsp;Ann B. Curtis.(c)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Employment Agreement, dated as of January&nbsp;1, 2000, between
    the Company and Mr.&nbsp;Ron A. Walter.(c)(x)</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">122

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Exhibit</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.4</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Employment Agreement, dated as of January&nbsp;1, 2000, between
    the Company and Mr.&nbsp;Robert D. Kelly.(c)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.5</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Employment Agreement, dated as of January&nbsp;1, 2000, between
    the Company and Mr.&nbsp;Thomas R. Mason.(c)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.6.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Consulting Contract, dated as of January&nbsp;1, 2005, between
    the Company and Mr.&nbsp;George J. Stathakis.(*)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.6.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Consulting Contract, dated as of January&nbsp;1, 2004, between
    the Company and Mr.&nbsp;George J. Stathakis.(q)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.7</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Indemnification Agreement for directors and
    officers.(z)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.8</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Indemnification Agreement for directors and
    officers.(c)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.9</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Corporation 1996 Stock Incentive Plan and forms of
    agreements there under.(q)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.10</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Base Salary, Bonus, Stock Option Grant and Restricted Stock
    Summary Sheet.(w)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.11</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Stock Option Agreement.(w)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.12</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Restricted Stock Agreement.(w)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.13</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Corporation 2003 Management Incentive Plan.(*)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.14</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    2000 Employee Stock Purchase Plan.(aa)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>12</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Statement on Computation of Ratio of Earnings to Fixed
    Charges.(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>21</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Subsidiaries of the Company.(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>23</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Consent of Deloitte&nbsp;&#38; Touche LLP, Independent
    Registered Public Accounting Firm.(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>23</TD>
    <TD align="left" valign="top" nowrap>.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Consent of PricewaterhouseCoopers LLP, Independent Registered
    Public Accounting Firm.(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>23</TD>
    <TD align="left" valign="top" nowrap>.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Consent of Netherland, Sewell&nbsp;&#38; Associates, Inc.,
    independent engineer.(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>23</TD>
    <TD align="left" valign="top" nowrap>.4</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Consent of Gilbert Laustsen Jung Associates Ltd., independent
    engineer.(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>24</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Power of Attorney of Officers and Directors of Calpine
    Corporation (set forth on the signature pages of this report).(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>31</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Certification of the Chairman, President and Chief Executive
    Officer Pursuant to Rule&nbsp;13a-14(a) or Rule&nbsp;15d-14(a)
    under the Securities Exchange Act of 1934, as Adopted Pursuant
    to Section&nbsp;302 of the Sarbanes-Oxley Act of 2002.(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>31</TD>
    <TD align="left" valign="top" nowrap>.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Certification of the Executive Vice President and Chief
    Financial Officer Pursuant to Rule&nbsp;13a-14(a) or
    Rule&nbsp;15d-14(a) under the Securities Exchange Act of 1934,
    as Adopted Pursuant to Section&nbsp;302 of the Sarbanes-Oxley
    Act of 2002.(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>32</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Certification of Chief Executive Officer and Chief Financial
    Officer Pursuant to 18&nbsp;U.S.C. Section&nbsp;1350, as Adopted
    Pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of
    2002.(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>99</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Acadia Power Partners, LLC and Subsidiary, Consolidated
    Financial Statements, December&nbsp;31, 2003, 2002 and 2001.(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>99</TD>
    <TD align="left" valign="top" nowrap>.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Consent of PricewaterhouseCoopers LLP, Independent Registered
    Public Accounting Firm.(*)</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    (*)</TD>
    <TD></TD>
    <TD valign="top">
    Filed herewith.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (a)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s Current
    Report on Form&nbsp;8-K/ A filed with the SEC on
    September&nbsp;14, 2004.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (b)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Quarterly Report on Form&nbsp;10-Q dated June&nbsp;30, 2004,
    filed with the SEC on August&nbsp;9, 2004.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (c)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s Annual
    Report on Form&nbsp;10-K dated December&nbsp;31, 2001, filed
    with the SEC on March&nbsp;29, 2002.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (d)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Registration Statement on Form&nbsp;S-4 (Registration Statement
    No.&nbsp;333-06259) filed with the SEC on June&nbsp;19, 1996.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (e)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s Annual
    Report on Form&nbsp;10-K for the year ended December&nbsp;31,
    2000, filed with the SEC on March&nbsp;15, 2001.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">123
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<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    (f)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Quarterly Report on Form&nbsp;10-Q dated March&nbsp;31, 2004,
    filed with the SEC on May&nbsp;10, 2004.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (g)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Quarterly Report on Form&nbsp;10-Q dated June&nbsp;30, 1997,
    filed with the SEC on August&nbsp;14, 1997.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (h)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Registration Statement on Form&nbsp;S-4 (Registration Statement
    No.&nbsp;333-41261) filed with the SEC on November&nbsp;28, 1997.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (i)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Registration Statement on Form&nbsp;S-4 (Registration Statement
    No.&nbsp;333-61047) filed with the SEC on August&nbsp;10, 1998.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (j)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Registration Statement on Form&nbsp;S-3/ A (Registration
    Statement No.&nbsp;333-72583) filed with the SEC on
    March&nbsp;8, 1999.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (k)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Registration Statement on Form&nbsp;S-3 (Registration
    No.&nbsp;333-76880) filed with the SEC on January&nbsp;17, 2002.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (l)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s Current
    Report on Form&nbsp;8-K filed with the SEC on September&nbsp;30,
    2004.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (m)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s Current
    Report on Form&nbsp;8-K dated October&nbsp;16, 2001, filed with
    the SEC on November&nbsp;13, 2001.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (n)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Registration Statement on Form&nbsp;S-3/ A (Registration
    No.&nbsp;333-57338) filed with the SEC on April&nbsp;19, 2001.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (o)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Quarterly Report on Form&nbsp;10-Q dated June&nbsp;30, 2003,
    filed with the SEC on August&nbsp;14, 2003.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (p)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Quarterly Report on Form&nbsp;10-Q dated September&nbsp;30,
    2003, filed with the SEC on November&nbsp;13, 2003.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (q)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s Annual
    Report on Form&nbsp;10-K for the year ended December&nbsp;31,
    2003, filed with the SEC on March&nbsp;25, 2004.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (r)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s Current
    Report on Form&nbsp;8-K filed with the SEC on October&nbsp;6,
    2004.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (s)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Registration Statement on Form&nbsp;8-A/ A (Registration
    No.&nbsp;001-12079) filed with the SEC on September&nbsp;28,
    2001.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (t)</TD>
    <TD></TD>
    <TD valign="top">
    This document has been omitted in reliance on
    Item&nbsp;601(b)(4)(iii) of Regulation&nbsp;S-K. Calpine
    Corporation agrees to furnish a copy of such document to the SEC
    upon request.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (u)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Registration Statement on Form&nbsp;S-3 (Registration Statement
    No.&nbsp;333-47068) filed with the SEC on September&nbsp;29,
    2000.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (v)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Quarterly Report on Form&nbsp;10-Q dated September&nbsp;30,
    2004, filed with the SEC on November&nbsp;9, 2004.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (w)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s Current
    Report on Form&nbsp;8-K filed with the SEC on March&nbsp;17,
    2005.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (x)</TD>
    <TD></TD>
    <TD valign="top">
    Management contract or compensatory plan or arrangement.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (y)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s Annual
    Report on Form&nbsp;10-K for the year ended December&nbsp;31,
    1999, filed with the SEC on February&nbsp;29, 2000.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (z)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Registration Statement on Form&nbsp;S-1/ A (Registration
    Statement No.&nbsp;333-07497) filed with the SEC on
    August&nbsp;22, 1996.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (aa)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Definitive Proxy Statement on Schedule&nbsp;14A dated
    April&nbsp;13, 2000, filed with the SEC on April&nbsp;13, 2000.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (bb)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s Current
    Report on Form&nbsp;8-K filed with the SEC on March&nbsp;23,
    2005.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">124

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<DIV align="left" style="font-size: 10pt;">
<A name='123'></A>
</DIV>

<!-- link1 "SIGNATURES" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>SIGNATURES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the requirements of Section&nbsp;13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    CALPINE CORPORATION</TD>
</TR>

</TABLE>

<DIV style="margin-top: 48pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="2%"></TD>
    <TD width="58%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>By:&nbsp;</TD>
    <TD align="center">
    /s/ ROBERT D. KELLY</TD>
</TR>

</TABLE>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 3pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt" align="left">&nbsp;</DIV></TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="center">
    Robert D. Kelly</TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="center">
    <I>Executive Vice President and</I></TD>
</TR>

<TR valign="top"  style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD align="center">
    <I>Chief Financial Officer</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Date: March&nbsp;31, 2005
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>POWER OF ATTORNEY</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
KNOW ALL PERSONS BY THESE PRESENT: That the undersigned officers
and directors of Calpine Corporation do hereby constitute and
appoint Peter Cartwright and Ann B. Curtis, and each of them,
the lawful attorney and agent or attorneys and agents with power
and authority to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, or
either of them, determine may be necessary or advisable or
required to enable Calpine Corporation to comply with the
Securities and Exchange Act of 1934, as amended, and any rules
or regulations or requirements of the Securities and Exchange
Commission in connection with this Form&nbsp;10-K Annual Report.
Without limiting the generality of the foregoing power and
authority, the powers granted include the power and authority to
sign the names of the undersigned officers and directors in the
capacities indicated below to this Form&nbsp;10-K Annual Report
or amendments or supplements thereto, and each of the
undersigned hereby ratifies and confirms all that said attorneys
and agents, or either of them, shall do or cause to be done by
virtue hereof. This Power of Attorney may be signed in several
counterparts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
IN WITNESS WHEREOF, each of the undersigned has executed this
Power of Attorney as of the date indicated opposite the name.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the registrant and in the capacities and on the
dates indicated.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="41%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="3" align="center" nowrap><B>Signature</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Title</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Date</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    /s/ PETER CARTWRIGHT<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV>Peter
    Cartwright</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Chairman, President, Chief Executive and Director<BR>
    (Principal Executive Officer)</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    March&nbsp;31, 2005</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    /s/ <FONT style="font-variant:SMALL-CAPS">ANN B. CURTIS<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV></FONT>Ann
    B. Curtis</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Executive Vice President, Vice Chairman and Director</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    March&nbsp;31, 2005</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    /s/ ROBERT D. KELLY<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV>Robert
    D. Kelly</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Executive Vice President and Chief Financial Officer<BR>
    (Principal Financial Officer)</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    March&nbsp;31, 2005</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    /s/ CHARLES B. CLARK,&nbsp;JR.<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV>Charles
    B. Clark,&nbsp;Jr.&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Senior Vice President and Corporate Controller<BR>
    (Principal Accounting Officer)</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    March&nbsp;31, 2005</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">125

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<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="41%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="3" align="center" nowrap><B>Signature</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Title</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Date</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV>Kenneth
    T. Derr</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Director</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    <BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV>Jeffrey
    E. Garten</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Director</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    /s/ GERALD GREENWALD<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV>Gerald
    Greenwald</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Director</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    March&nbsp;31, 2005</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    /s/ SUSAN C. SCHWAB<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV>Susan
    C. Schwab</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Director</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    March&nbsp;31, 2005</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    /s/ GEORGE J. STATHAKIS<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV>George
    J. Stathakis</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Director</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    March&nbsp;31, 2005</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    /s/ SUSAN WANG<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV>Susan
    Wang</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Director</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    March&nbsp;31, 2005</TD>
</TR>

<TR>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="center" valign="top">
    /s/ JOHN O. WILSON<BR>
    <DIV style="border-top: 1pt solid #000000; font-size: 1pt; margin-top: 2pt;">&nbsp;</DIV>John
    O. Wilson</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    Director</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">
    March&nbsp;31, 2005</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">126
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<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='124'></A>
</DIV>

<!-- link1 "INDEX TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2004" -->

<DIV align="center" style="font-size: 10pt;">
<B>INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>December&nbsp;31, 2004</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="75%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Page</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#300'>Reports of Independent Registered Public
    Accounting Firms</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#301'>Consolidated Balance Sheets
    December&nbsp;31, 2004 and 2003</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#302'>Consolidated Statements of Operations for
    the Years Ended December&nbsp;31, 2004, 2003, and 2002</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-6</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#303'>Consolidated Statements of
    Stockholders&#146; Equity for the Years Ended December&nbsp;31,
    2004, 2003, and 2002</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-7</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#304'>Consolidated Statements of Cash Flows for
    the Years Ended December&nbsp;31, 2004, 2003, and 2002</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-8</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    &nbsp;<A HREF='#305'>Notes to Consolidated Financial Statements
    for the Years Ended December&nbsp;31, 2004, 2003, and 2002</A></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>F-9</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">F-1

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<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Report of Independent Registered Public Accounting Firm</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
To the Board of Directors
</DIV>

<DIV align="left" style="font-size: 10pt;">
And Stockholders of Calpine Corporation
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have audited the consolidated statements of operations,
stockholders&#146; equity, and cash flows for the year ended
December&nbsp;31, 2002 of Calpine Corporation and subsidiaries
(the &#147;Company&#148;). Our audit also included the 2002
consolidated financial statement schedules listed in the Index
at Item&nbsp;15. These financial statements and financial
statement schedules are the responsibility of the Company&#146;s
management. Our responsibility is to express an opinion on these
financial statements and financial statement schedules based on
our audit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We conducted our audit in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain
reasonable assurance about 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. We believe that our audit provides a
reasonable basis for our opinion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In our opinion, based on our audit, such consolidated financial
statements present fairly, in all material respects, the
consolidated results of operations and of cash flows for the
year ended 2002 of Calpine Corporation and subsidiaries, in
conformity with accounting principles generally accepted in the
United States of America. Also, in our opinion, such 2002
consolidated financial statement schedules, when considered in
relation to the basic consolidated financial statements taken as
a whole, present fairly in all material respects the information
set forth therein.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As discussed in Note&nbsp;2 of the Notes to the Consolidated
Financial Statements, effective January&nbsp;1, 2002, the
Company adopted a new accounting standard to account for the
impairment of long-lived assets and discontinued operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As discussed in Note&nbsp;10 of the Notes to the Consolidated
Financial Statements, in June 2003, the Company approved the
divestiture of its specialty data center engineering business;
in November 2003, the Company completed the divestiture of
certain oil and gas assets; in December 2003, the Company
committed to the divestiture of its fifty percent ownership
interest in a power project; in September 2004, the Company
completed the divestiture of certain oil and gas assets.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="40%"></TD>
    <TD width="60%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    /s/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;DELOITTE&nbsp;&#38; TOUCHE LLP</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
San Jose, California
</DIV>

<DIV align="left" style="font-size: 10pt;">
March&nbsp;10, 2003
</DIV>

<DIV align="left" style="font-size: 10pt;">
(October&nbsp;21, 2003 as to paragraph two of Note&nbsp;10,
</DIV>

<DIV align="left" style="font-size: 10pt;">
March&nbsp;22, 2004 as to paragraphs six and thirteen of
Note&nbsp;10, and
</DIV>

<DIV align="left" style="font-size: 10pt;">
March&nbsp;31, 2005 as to paragraphs seven and eight of
Note&nbsp;10)
</DIV>

<P align="center" style="font-size: 10pt;">F-2
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<DIV align="left" style="font-size: 10pt;">
<A name='300'></A>
</DIV>

<!-- link1 "Report Of Independent Registered Public Accounting Firm" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Report Of Independent Registered Public Accounting Firm</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
To the Board of Directors
</DIV>

<DIV align="left" style="font-size: 10pt;">
and Stockholders of Calpine Corporation:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have completed an integrated audit of Calpine
Corporation&#146;s 2004 consolidated financial statements and of
its internal control over financial reporting as of
December&nbsp;31, 2004 and an audit of its 2003 consolidated
financial statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Our
opinions, based on our audits, are presented below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Consolidated financial statements and financial statement
schedule</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In our opinion, the consolidated financial statements listed in
the index appearing under Item&nbsp;15(a) (1)&nbsp;present
fairly, in all material respects, the financial position of
Calpine Corporation and its subsidiaries at December&nbsp;31,
2004 and 2003, and the results of their operations and their
cash flows for each of the two years in the period ended
December&nbsp;31, 2004 in conformity with accounting principles
generally accepted in the United States of America. In addition,
in our opinion, the financial statement schedule listed in the
index appearing under Item&nbsp;15 (a) (2)&nbsp;presents fairly,
in all material respects, the information set forth therein when
read in conjunction with the related consolidated financial
statements. These financial statements and financial statement
schedule are the responsibility of the Company&#146;s
management. Our responsibility is to express an opinion on these
financial statements and financial statement schedule based on
our audits. We conducted our audits of these statements in
accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit of financial statements includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As discussed in Note&nbsp;2 to the consolidated financial
statements, the Company changed the manner in which they
calculate diluted earnings per share in 2004, changed the manner
in which they account for asset retirement costs and stock based
compensation as of January&nbsp;1, 2003, changed the manner in
which they account for certain financial instruments with
characteristics of both liabilities and equity effective
July&nbsp;1, 2003, changed the manner in which they report gains
and losses on certain derivative instruments not held for
trading purposes and account for certain derivative contracts
with a price adjustment feature effective October&nbsp;1, 2003,
adopted provisions of Financial Accounting Standards Board
Interpretation No.&nbsp;46-R (&#147;FIN-46R&#148;),
&#147;Consolidation of Variable Interest Entities&nbsp;&#151; an
interpretation of ARB 51 (revised December 2003),&#148; for
Special-Purpose-Entities as of December&nbsp;31, 2003, and
adopted FIN-46R for all non-Special-Purpose-Entities on
March&nbsp;31, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Internal control over financial reporting</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Also, we have audited management&#146;s assessment, included in
Management&#146;s Report on Internal Control over Financial
Reporting appearing under Item&nbsp;9A, that Calpine Corporation
did not maintain effective internal control over financial
reporting as of December&nbsp;31, 2004, because the Company did
not maintain effective controls over the accounting for income
taxes and the determination of current income taxes payable,
deferred income tax assets and liabilities and the related
income tax provision (benefit)&nbsp;for continuing and
discontinued operations, based on criteria established in
<I>Internal Control&nbsp;&#151; Integrated Framework </I>issued
by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). The Company&#146;s management is responsible
for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of
internal control over financial reporting. Our responsibility is
to express opinions on management&#146;s assessment and on the
effectiveness of the Company&#146;s internal control over
financial reporting based on our audit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We conducted our audit of internal control over financial
reporting in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether effective internal control over financial
</DIV>

<P align="center" style="font-size: 10pt;">F-3

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
reporting was maintained in all material respects. An audit of
internal control over financial reporting includes obtaining an
understanding of internal control over financial reporting,
evaluating management&#146;s assessment, testing and evaluating
the design and operating effectiveness of internal control, and
performing such other procedures as we consider necessary in the
circumstances. We believe that our audit provides a reasonable
basis for our opinions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A company&#146;s internal control over financial reporting is a
process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with
generally accepted accounting principles. A company&#146;s
internal control over financial reporting includes those
policies and procedures that (i)&nbsp;pertain to the maintenance
of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
company; (ii)&nbsp;provide reasonable assurance that
transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of
management and directors of the company; and (iii)&nbsp;provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the
company&#146;s assets that could have a material effect on the
financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate. A
material weakness is a control deficiency, or combination of
control deficiencies, that results in more than a remote
likelihood that a material misstatement of the annual or interim
financial statements will not be prevented or detected. The
following material weakness has been identified and included in
management&#146;s assessment. As of December&nbsp;31, 2004, the
Company did not maintain effective controls over the accounting
for income taxes and the determination of current income taxes
payable, deferred income tax assets and liabilities and the
related income tax provision (benefit)&nbsp;for continuing and
discontinued operations. Specifically, the Company did not have
effective controls in place to (i)&nbsp;identify and evaluate in
a timely manner the tax implications of the repatriation of
funds from Canada (ii)&nbsp;appropriately determine the
allocation of the tax provision between continuing and
discontinued operations (iii)&nbsp;ensure there was adequate
communication from the tax department to the accounting
department relating to the preparation of the tax provision
(iv)&nbsp;ensure all elements of the income tax provision were
mathematically correct and (v)&nbsp;ensure the rationale for
certain tax positions was adequately documented. This control
deficiency resulted in the restatement of the Company&#146;s
consolidated financial statements for the three and nine months
ended September&nbsp;30, 2004 as well as income tax related
audit adjustments to the fourth quarter 2004 consolidated
financial statements. Additionally, this control deficiency
could result in a misstatement of current income taxes payable,
deferred income tax assets and liabilities and the related
income tax provision (benefit)&nbsp;for continuing and
discontinued operations that would result in a material
misstatement to annual or interim financial statements that
would not be prevented or detected. Accordingly, management
determined that this control deficiency constitutes a material
weakness. This material weakness was considered in determining
the nature, timing, and extent of audit tests applied in our
audit of the 2004 consolidated financial statements, and our
opinion regarding the effectiveness of the Company&#146;s
internal control over financial reporting does not affect our
opinion on those consolidated financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In our opinion, management&#146;s assessment that Calpine
Corporation did not maintain effective internal control over
financial reporting as of December&nbsp;31, 2004, is fairly
stated, in all material respects, based on criteria established
in <I>Internal Control&nbsp;&#151; Integrated Framework
</I>issued by the COSO. Also, in our opinion, because of the
effect of the material weakness described above on the
achievement of the objectives of the control criteria, Calpine
Corporation has not maintained effective internal control over
financial reporting as of December&nbsp;31, 2004, based on
criteria established in <I>Internal Control&nbsp;&#151;
Integrated Framework </I>issued by the COSO.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
/s/ PricewaterhouseCoopers LLP
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Los Angeles, CA
</DIV>

<DIV align="left" style="font-size: 10pt;">
March&nbsp;31, 2005
</DIV>

<P align="center" style="font-size: 10pt;">F-4
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='301'></A>
</DIV>

<!-- link1 "CONSOLIDATED BALANCE SHEETS December 31, 2004 and 2003" -->

<DIV align="center" style="font-size: 10pt;">
<B>CONSOLIDATED BALANCE SHEETS</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>December&nbsp;31, 2004 and 2003</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 6pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="63%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 7pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(In thousands, except</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>share and per</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>share amounts)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="11" align="center" valign="top">
    <B>ASSETS</B></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current assets:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>783,428</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>991,806</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounts receivable, net of allowance of $8,679 and $7,614</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,097,157</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>988,947</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Margin deposits and other prepaid expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>452,432</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>385,348</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Inventories</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>179,395</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>137,740</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Restricted cash</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>593,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>383,788</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current derivative assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>324,206</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>496,967</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current assets held for sale</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,565</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other current assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>133,643</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>89,593</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total current assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,563,565</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,476,754</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Restricted cash, net of current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>157,868</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>575,027</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Notes receivable, net of current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>203,680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>213,629</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Project development costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>150,179</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>139,953</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Investments in power projects and oil and gas properties</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>374,032</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>444,150</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred financing costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>422,606</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>400,732</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Prepaid lease, net of current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>424,586</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>414,058</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Property, plant and equipment, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,636,394</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,478,650</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Goodwill</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45,160</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45,160</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other intangible assets, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>73,190</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>89,924</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term derivative assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>506,050</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>673,979</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term assets held for sale</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>743,149</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>658,778</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>608,767</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>27,216,088</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>27,303,932</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="11">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="11" align="center" valign="top">
    <B>LIABILITIES&nbsp;&#38; STOCKHOLDERS&#146; EQUITY</B></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current liabilities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounts payable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,014,350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>938,644</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accrued payroll and related expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>88,719</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>96,693</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accrued interest payable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>385,794</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>321,176</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income taxes payable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>82,958</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,026</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Notes payable and borrowings under lines of credit, current
    portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>204,775</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>254,292</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Preferred interests, current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,220</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    CCFC I financing, current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,208</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,208</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Capital lease obligation, current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,490</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,008</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Construction/project financing, current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>93,393</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>61,900</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Senior notes and term loans, current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>718,449</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,500</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current derivative liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>364,965</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>456,688</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current liabilities held for sale</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>221</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other current liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>314,650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>334,827</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total current liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,285,392</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,515,403</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Notes payable and borrowings under lines of credit, net of
    current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>769,490</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>873,571</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Notes payable to Calpine Capital Trusts</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>517,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,153,500</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Preferred interests, net of current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>497,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>232,412</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Capital lease obligation, net of current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>283,429</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>193,741</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    CCFC I financing, net of current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>783,542</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>785,781</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    CalGen/ CCFC&nbsp;II financing</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,395,332</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,200,358</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Construction/project financing, net of current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,905,658</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,209,506</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Convertible Senior Notes Due 2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,326</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>660,059</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Convertible Senior Notes Due 2014</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>620,197</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Convertible Senior Notes Due 2023</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>633,775</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>650,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Senior notes, net of current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,532,664</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,369,253</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred income taxes, net of current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,021,739</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,310,335</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred lease incentive</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50,228</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>114,202</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>116,001</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term derivative liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>526,598</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>692,088</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term liabilities held for sale</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,828</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>346,230</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>241,723</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,234,970</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,271,787</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Commitments and contingencies (see Note&nbsp;25)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Minority interests</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>393,445</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>410,892</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Stockholders&#146; equity:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Preferred stock, $.001&nbsp;par value per share; authorized
    10,000,000&nbsp;shares; none issued and outstanding in 2004 and
    2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Common stock, $.001&nbsp;par value per share; authorized
    2,000,000,000&nbsp;shares in 2003; issued and outstanding
    536,509,231&nbsp;shares in 2004 and 415,010,125&nbsp;shares in
    2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>415</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Additional paid-in capital</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,151,577</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,995,735</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Additional paid-in capital, loaned shares</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>258,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Additional paid-in capital, returnable shares</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(258,100</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Retained earnings</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,326,048</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,568,509</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accumulated other comprehensive income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>109,511</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56,594</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total stockholders&#146; equity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,587,673</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,621,253</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total liabilities and stockholders&#146; equity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>27,216,088</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>27,303,932</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="center" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The accompanying notes are an integral part of these
consolidated financial statements.
</DIV>

<P align="center" style="font-size: 10pt;">F-5

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='302'></A>
</DIV>

<!-- link1 "CONSOLIDATED STATEMENTS OF OPERATIONS" -->

<DIV align="center" style="font-size: 10pt;">
<B>CONSOLIDATED STATEMENTS OF OPERATIONS</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 6pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="49%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 7pt;">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>For the Years Ended</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 7pt;">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(In thousands, except per</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>share amounts)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revenue:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Electric generation and marketing revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Electricity and steam revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5,683,063</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,680,397</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,237,510</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Transmission sales revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,347</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales of purchased power for hedging and optimization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,651,767</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,714,187</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,145,991</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total electric generation and marketing revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,354,833</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,409,931</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,383,501</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas production and marketing revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas sales</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>63,153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>59,156</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>63,514</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales of purchased gas for hedging and optimization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,728,301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,320,902</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>870,466</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total oil and gas production and marketing revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,791,454</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,380,058</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>933,980</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Mark-to-market activities, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,532</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(26,439</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,485</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70,069</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>107,483</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,787</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,229,888</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,871,033</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,349,753</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cost of revenue:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Electric generation and marketing expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Plant operating expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>795,975</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>663,045</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>522,906</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Royalty expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28,673</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24,932</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,615</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Transmission purchase expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>85,514</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>46,455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25,486</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchased power expense for hedging and optimization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,487,020</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,690,069</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,618,445</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total electric generation and marketing expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,397,182</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,424,501</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,184,452</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas operating and marketing expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas operating expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56,843</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75,453</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>69,840</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchased gas expense for hedging and optimization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,716,714</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,279,568</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>821,065</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total oil and gas operating and marketing expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,773,557</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,355,021</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>890,905</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fuel expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,731,108</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,665,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,792,323</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Depreciation, depletion and amortization expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>574,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>504,383</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>398,889</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas impairment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>202,120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,931</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,399</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Operating lease expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>105,886</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>112,070</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>111,022</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other cost of revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>90,742</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42,270</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,279</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total cost of revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,874,795</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,106,796</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,388,269</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gross profit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>355,093</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>764,237</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>961,484</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Income) loss from unconsolidated investments in power projects
    and oil and gas properties</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,525</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(75,804</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(16,552</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Equipment cancellation and impairment cost</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42,374</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>64,384</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>404,737</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term service agreement cancellation charge</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,334</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,355</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Project development expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24,409</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,803</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>66,981</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Research and development expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,630</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,986</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales, general and administrative expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>239,347</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>216,471</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>186,056</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income from operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,708</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>510,398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>310,276</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,140,802</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>706,307</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>402,677</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Distributions on trust preferred securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>46,610</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>62,632</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest (income)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(56,412</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(39,716</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(43,086</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Minority interest expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,735</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,330</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,716</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Income) from repurchase of various issuances of debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(246,949</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(278,612</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(118,020</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other (income), net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(149,093</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(46,126</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(34,200</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before provision (benefit) for income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(717,375</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>94,605</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>37,557</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Provision (benefit) for income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(276,549</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,495</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,835</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before discontinued operations and cumulative
    effect of a change in accounting principle</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(440,826</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>86,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26,722</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax provision (benefit) of
    $50,095, $(14,416) and $17,104</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>198,365</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,969</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>91,896</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative effect of a change in accounting principle, net of
    tax provision of $&nbsp;&#151; , $110,913, and $&nbsp;&#151;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>180,943</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(242,461</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>282,022</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>118,618</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Basic earnings per common share:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Weighted average shares of common stock outstanding</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>430,775</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>390,772</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>354,822</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before discontinued operations and cumulative
    effect of a change in accounting principle</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1.02</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.07</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.26</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative effect of a change in accounting principle, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.56</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.33</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Diluted earnings per common share:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Weighted average shares of common stock outstanding before
    dilutive effect of certain convertible securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>430,775</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>396,219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>362,533</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before dilutive effect of certain convertible
    securities, discontinued operations and cumulative effect of a
    change in accounting principle</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1.02</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.07</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Dilutive effect of certain convertible securities(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before discontinued operations and cumulative
    effect of a change in accounting principle</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1.02</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.07</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.26</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative effect of a change in accounting principle, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income(loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.56</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.33</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    See Note&nbsp;24 of the Notes to Consolidated Financial
    Statements for further information.</TD>
</TR>

</TABLE>

<DIV align="center" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The accompanying notes are an integral part of these
consolidated financial statements.
</DIV>

<P align="center" style="font-size: 10pt;">F-6

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='303'></A>
</DIV>

<!-- link1 "CONSOLIDATED STATEMENTS OF STOCKHOLDERS&#146; EQUITY For the Years Ended December 31, 2004, 2003, and 2002" -->

<DIV align="center" style="font-size: 10pt;">
<B>CONSOLIDATED STATEMENTS OF STOCKHOLDERS&#146; EQUITY</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>For the Years Ended December&nbsp;31, 2004, 2003, and 2002</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="36%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Accumulated</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Other</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Additional</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Comprehensive</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Comprehensive</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Common</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Paid-In</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Retained</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Income</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Stockholders&#146;</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Income</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Stock</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Capital</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Earnings</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Loss)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Equity</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(Loss)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B>(In thousands, except share amounts)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance, January&nbsp;1, 2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>307</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,040,833</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,167,869</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(240,880</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,968,129</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Issuance of 73,757,381&nbsp;shares of common stock, net of
    issuance costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>751,721</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>751,795</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Tax benefit from stock options exercised and other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,949</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,949</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Comprehensive income:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>118,618</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>118,618</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>118,618</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other comprehensive income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,423</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,423</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,423</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total comprehensive income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>122,041</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance, December&nbsp;31, 2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>381</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,802,503</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,286,487</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(237,457</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,851,914</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Issuance of 34,194,063&nbsp;shares of common stock, net of
    issuance costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>175,063</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>175,097</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Tax benefit from stock options exercised and other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,097</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,097</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Stock compensation expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,072</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,072</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Comprehensive income:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>282,022</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>282,022</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>282,022</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other comprehensive income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>294,051</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>294,051</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>294,051</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total comprehensive income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>576,073</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance, December&nbsp;31, 2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,995,735</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,568,509</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>56,594</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,621,253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Issuance of 32,499,106&nbsp;shares of common stock, net of
    issuance costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>130,141</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>130,174</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Issuance of 89,000,000&nbsp;shares of loaned common stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>258,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>258,189</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Returnable shares</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(258,100</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(258,100</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Tax benefit from stock options exercised and other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,773</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,773</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Stock compensation expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,928</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,928</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Comprehensive loss:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(242,461</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(242,461</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(242,461</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other comprehensive income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52,917</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52,917</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52,917</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total comprehensive loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(189,544</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance, December&nbsp;31, 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,151,577</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,326,048</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>109,511</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,587,673</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="center" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The accompanying notes are an integral part of these
consolidated financial statements.
</DIV>

<P align="center" style="font-size: 10pt;">F-7

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 4pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='304'></A>
</DIV>

<!-- link1 "CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2004, 2003, and 2002" -->

<DIV align="center" style="font-size: 10pt;">
<B>CONSOLIDATED STATEMENTS OF CASH FLOWS</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>For the Years Ended December&nbsp;31, 2004, 2003, and 2002</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 6pt; margin-top: 8pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="49%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 7pt;">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>(In thousands)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash flows from operating activities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(242,461</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>282,022</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>118,618</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Adjustments to reconcile net income to net cash provided by
    operating activities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Depreciation, depletion and amortization(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>833,375</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>732,410</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>538,777</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas impairment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>202,120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,931</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,399</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Equipment cancellation and asset impairment cost</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42,374</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>53,058</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>404,737</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Development cost write off</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56,427</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred income taxes, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(226,454</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>150,323</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23,206</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gain on sale of assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(349,611</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(65,351</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(97,377</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign currency transaction loss (gain)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25,122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33,346</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(986</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative change in accounting principle</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(180,943</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income from repurchase of various issuances of debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(246,949</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(278,612</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(118,020</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Minority interests</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,735</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,330</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,716</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Change in net derivative liability</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,743</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>59,490</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(340,851</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Income) loss from unconsolidated investments in power projects
    and oil and gas properties</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,717</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(76,704</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(16,490</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Distributions from unconsolidated investments in power projects
    and oil and gas properties</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,869</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>141,627</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,117</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Stock compensation expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,929</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,072</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Change in operating assets and liabilities, net of effects of
    acquisitions:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounts receivable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(99,447</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(221,243</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>229,187</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other current assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(118,790</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(160,672</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>405,515</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(95,699</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(143,654</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(305,908</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounts payable and accrued expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>231,827</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(111,901</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(48,804</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(55,505</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,630</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>200,203</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash provided by operating activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,895</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>290,559</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,068,466</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash flows from investing activities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchases of property, plant and equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,545,480</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,886,013</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,036,254</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Disposals of property, plant and equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,066,481</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>206,804</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>400,349</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Disposal of subsidiary</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>85,412</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Acquisitions, net of cash acquired</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(187,786</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6,818</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Advances to joint ventures</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8,788</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(54,024</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(68,088</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sale of collateral securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>93,963</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Project development costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(29,308</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(35,778</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(105,182</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Redemption of HIGH TIDES</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(110,592</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash flows from derivatives not designated as hedges</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,499</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42,342</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26,091</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Increase) decrease in restricted cash</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>210,762</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(766,841</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(73,848</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Increase) decrease in notes receivable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,235</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(21,135</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,926</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,824</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,098</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,179</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash used in investing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(401,426</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,515,365</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,837,827</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash flows from financing activities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Repurchase of Zero-Coupon Convertible Debentures Due 2021</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(869,736</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Borrowings from notes payable and lines of credit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>101,781</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,672,871</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,348,798</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Repayments of notes payable and lines of credit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(353,236</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,769,072</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(126,404</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Borrowings from project financing</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,743,930</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,548,601</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>725,111</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Repayments of project financing</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,006,374</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,638,519</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(286,293</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proceeds from issuance of Convertible Senior Notes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>867,504</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>650,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Repurchases of Convertible Senior Notes Due 2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(834,765</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(455,447</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Repurchases of senior notes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(871,309</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,139,812</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proceeds from issuance of senior notes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>878,814</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,892,040</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proceeds from preferred interests</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>360,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Repayment of HIGH TIDES</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(483,500</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proceeds from issuance of common stock</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,951</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>751,795</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proceeds from income trust offerings</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>159,727</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>169,677</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Financing costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(204,139</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(323,167</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(42,783</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(31,752</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12,769</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net cash provided by financing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>167,052</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,623,986</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,757,396</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Effect of exchange rate changes on cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,140</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,693</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net increase (decrease) in cash and cash equivalents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(208,378</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>412,320</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,014,658</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents, beginning of period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>991,806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>579,486</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,594,144</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash and cash equivalents, end of period</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>783,428</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>991,806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>579,486</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash paid during the period for:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest, net of amounts capitalized</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>939,243</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>462,714</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>325,334</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>22,877</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18,415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>15,451</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 6pt;">

<TR>
    <TD width="2%"></TD>
    <TD width="98%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Includes depreciation and amortization that is also recorded in
    sales, general and administrative expense and interest expense.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 6pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;
Schedule of non cash investing and financing activities:
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 6pt;">

<TR>
    <TD width="2%"></TD>
    <TD width="1%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    2004 issuance of 24.3&nbsp;million shares of common stock in
    exchange for $40.0&nbsp;million par value of HIGH TIDES I and
    $75.0&nbsp;million par value of HIGH TIDES&nbsp;II</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    2004 capital lease entered into for the King City facility for
    an initial asset balance of $114.9&nbsp;million</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    2004 issuance of 89&nbsp;million shares of Calpine common stock
    pursuant to a Share Lending Agreement. See Note&nbsp;17 for more
    information regarding the 89&nbsp;million shares issued</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    2004 acquired the remaining 50% interest in the Aries Power
    Plant for $3.7&nbsp;million cash and $220.0&nbsp;million of
    assumed liabilities, including debt of $173.2&nbsp;million</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    2003 issuance of 30&nbsp;million shares of common stock in
    exchange for $182.5&nbsp;million of debt, convertible debt and
    preferred securities</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    2002 non-cash consideration of $88.4&nbsp;million in tendered
    Company debt received upon the sale of its British Columbia oil
    and gas properties</TD>
</TR>

</TABLE>

<DIV align="center" style="font-size: 9pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The accompanying notes are an integral part of these
consolidated financial statements.
</DIV>

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<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<A name='305'></A>
</DIV>

<!-- link1 "NOTES TO CONSOLIDATED FINANCIAL STATEMENTS" -->

<DIV align="center" style="font-size: 10pt;">
<B>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>For the Years Ended December&nbsp;31, 2004, 2003, and 2002</B>
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>1.</B></TD>
    <TD>
    <B>Organization and Operations of the Company</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Calpine Corporation, a Delaware corporation, and subsidiaries
(collectively, &#147;Calpine&#148; or the &#147;Company&#148;)
are engaged in the generation of electricity in the United
States of America, Canada, and the United Kingdom. The Company
is involved in the development, construction, ownership and
operation of power generation facilities and the sale of
electricity and its by-product, thermal energy, primarily in the
form of steam. The Company has ownership interests in, and
operates, gas-fired power generation and cogeneration
facilities, gas fields, gathering systems and gas pipelines,
geothermal steam fields and geothermal power generation
facilities in the United States of America. In Canada, the
Company has ownership interests in, and operates, gas-fired
power generation facilities. In Mexico, Calpine is a joint
venture participant in a gas-fired power generation facility
under construction. In the United Kingdom, the Company owns and
operates a gas-fired power cogeneration facility. The Company
markets electricity produced by its generating facilities to
utilities and other third party purchasers. Thermal energy
produced by the gas-fired power cogeneration facilities is
primarily sold to industrial users. Gas produced, and not
physically delivered to the Company&#146;s generating plants, is
sold to third parties. The Company offers to third parties
energy procurement, liquidation and risk management services,
combustion turbine component parts and repair and maintenance
services world-wide. The Company also provides engineering,
procurement, construction management, commissioning and
operations and maintenance (&#147;O&#38;M&#148;) services.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>2.</B></TD>
    <TD>
    <B>Summary of Significant Accounting Policies</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Principles of Consolidation</I>&nbsp;&#151; The accompanying
consolidated financial statements include accounts of the
Company and its wholly owned and majority-owned subsidiaries.
The Company adopted Financial Accounting Standards Board
(&#147;FASB&#148;) Interpretation
No.&nbsp;(&#147;FIN&#148;)&nbsp;46, &#147;Consolidation of
Variable Interest Entities, an interpretation of ARB 51&#148;
(&#147;FIN&nbsp;46&#148;) for its investments in special purpose
entities as of December&nbsp;31, 2003. These consolidated
financial statements as of December&nbsp;31, 2004 and 2003, and
for the twelve months ended December&nbsp;31, 2004, also include
the accounts of those special purpose Variable Interest Entities
(&#147;VIE&#148;) for which the Company is the Primary
Beneficiary. The Company adopted FIN&nbsp;46, as revised
(&#147;FIN&nbsp;46-R&#148;) for its investments in non-special
purpose VIEs on March&nbsp;31, 2004. These consolidated
financial statements as of December&nbsp;31, 2004 and for the
nine months ended December&nbsp;31, 2004 include the accounts of
non-special purpose VIEs for which the Company is the Primary
Beneficiary. Certain less-than-majority-owned subsidiaries are
accounted for using the equity method or cost method. For equity
method investments, the Company&#146;s share of income is
calculated according to the Company&#146;s equity ownership or
according to the terms of the appropriate partnership agreement
(see Note&nbsp;7). For cost method investments, income is
recognized when equity distributions are received. All
intercompany accounts and transactions are eliminated in
consolidation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Unrestricted Subsidiaries</I>&nbsp;&#151; The information in
this paragraph is required to be provided under the terms of the
indentures and credit agreement governing the various tranches
of the Company&#146;s second-priority secured indebtedness
(collectively, the &#147;Second Priority Secured Debt
Instruments&#148;). The Company has designated certain of its
subsidiaries as &#147;unrestricted subsidiaries&#148; under the
Second Priority Secured Debt Instruments. A subsidiary with
&#147;unrestricted&#148; status thereunder generally is not
required to comply with the covenants contained therein that are
applicable to &#147;restricted subsidiaries.&#148; The Company
has designated Calpine Gilroy&nbsp;1, Inc., Calpine
Gilroy&nbsp;2, Inc. and Calpine Gilroy Cogen, L.P. as
&#147;unrestricted subsidiaries&#148; for purposes of the Second
Priority Secured Debt Instruments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Reclassifications</I>&nbsp;&#151; Certain prior years&#146;
amounts in the consolidated financial statements have been
reclassified to conform to the 2004 presentation. These include
a reclassification between sales, general and administrative
expense (&#147;SG&#38;A&#148;) and plant operating expense for
information technology and stock compensation costs and
reclassifications to begin separately disclosing:
(1)&nbsp;research and development expense
</DIV>

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<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
(formerly in SG&#38;A), (2)&nbsp;transmission sales revenue
(formerly in electricity and steam revenue), (3)&nbsp;oil and
gas impairment (formerly in depreciation, depletion and
amortization expense) and (4)&nbsp;transmission purchase expense
(formerly in plant operating expense).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As a result of current year dispositions, certain prior year
amounts have been reclassified to conform with discontinued
operations presentation. See Note&nbsp;10.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Use of Estimates in Preparation of Financial
Statements</I>&nbsp;&#151; The preparation of financial
statements in conformity with generally accepted accounting
principles in the United States of America requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities, and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenue and expense during the
reporting period. Actual results could differ from those
estimates. The most significant estimates with regard to these
financial statements relate to useful lives and carrying values
of assets (including the carrying value of projects in
development, construction, and operation), provision for income
taxes, fair value calculations of derivative instruments and
associated reserves, capitalization of interest, primary
beneficiary determination for the Company&#146;s investments in
VIEs, the outcome of pending litigation and estimates of oil and
gas reserve quantities used to calculate depletion, depreciation
and impairment of oil and gas property and equipment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Foreign Currency Translation</I>&nbsp;&#151; Through its
international operations, the Company owns subsidiary entities
in several countries. These entities generally have functional
currencies other than the U.S.&nbsp;dollar; in most cases, the
functional currency is consistent with the local currency of the
host country where the particular entity is located. In
accordance with FASB Statement of Financial Accounting Standards
(&#147;SFAS&#148;) No.&nbsp;52, &#147;Foreign Currency
Translation,&#148; (&#147;SFAS&nbsp;No.&nbsp;52&#148;) the
Company translates the financial statements of its foreign
subsidiaries from their respective functional currencies into
the U.S.&nbsp;dollar, which represents the Company&#146;s
reporting currency.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Assets and liabilities held by the foreign subsidiaries are
translated into U.S.&nbsp;dollars using exchange rates in effect
at the balance sheet date. Certain long-term assets (such as the
investment in a subsidiary company) as well as equity accounts
are translated into U.S.&nbsp;dollars using historical exchange
rates at the date the specific transaction occurred which
created the asset or equity balance (such as the date of the
initial investment in the subsidiary). Income and expense
accounts are translated into U.S.&nbsp;dollars using average
exchange rates during the reporting period. All translation
gains and losses that result from translating the financial
statements of the Company&#146;s foreign subsidiaries from their
respective functional currencies into the U.S.&nbsp;dollar
reporting currency are recognized within the Cumulative
Translation Adjustment (&#147;CTA&#148;) account, which is a
component of Other Comprehensive Income (&#147;OCI&#148;) within
Stockholders&#146; Equity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In certain cases, the Company and its foreign subsidiary
entities hold monetary assets and/or liabilities that are not
denominated in the functional currencies referred to above. In
such instances, the Company applies the provisions of
SFAS&nbsp;No.&nbsp;52 to account for the monthly re-measurement
gains and losses of these assets and liabilities into the
functional currencies for each entity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For foreign currency transactions designated as economic hedges
of a net investment in a foreign entity and for intercompany
foreign currency transactions which are of a long-term
investment nature, the Company records the re-measurement gains
and losses through the CTA account, in accordance with
Paragraph&nbsp;20 of SFAS&nbsp;No.&nbsp;52.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All other foreign currency transactions that do not qualify for
the Paragraph&nbsp;20 exclusion are re-measured at the end of
each month into the proper functional currency, and the gains
and losses resulting from such re-measurement are recorded
within net income, in accordance with Paragraph&nbsp;15 of
SFAS&nbsp;No.&nbsp;52.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the years ended December&nbsp;31, 2004, 2003 and 2002, the
Company recognized foreign currency transaction losses from
continuing operations of $25.1&nbsp;million, $33.3&nbsp;million
and $1.0&nbsp;million, respectively,
</DIV>

<P align="center" style="font-size: 10pt;">F-10

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<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
which were recorded within Other Income on the Company&#146;s
Consolidated Statements of Operations. Additionally, the Company
settled a series of forward foreign exchange contracts
associated with the sale of its Canadian oil and gas assets in
2004. See Note&nbsp;10 for further discussion or the settlement
of these contracts within discontinued operations. Subsequent to
December&nbsp;31, 2004, the Company was exposed to significant
exchange rate movements between the Canadian dollar and the
U.S.&nbsp;dollar due to several large intercompany transactions
between Calpine&#146;s U.S. and Canadian subsidiaries.
Subsequent to December&nbsp;31, 2004, the U.S.&nbsp;dollar
strengthened considerably against the Canadian dollar and the
Company recognized re-measurement gains on these transactions of
approximately $24.0&nbsp;million; however, these gains could
reverse based on future exchange rate movements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Fair Value of Financial Instruments</I>&nbsp;&#151; The
carrying value of accounts receivable, marketable securities,
accounts payable and other payables approximate their respective
fair values due to their short maturities. See Note&nbsp;18 for
disclosures regarding the fair value of the senior notes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Cash and Cash Equivalents</I>&nbsp;&#151; The Company
considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. The
carrying amount of these instruments approximates fair value
because of their short maturity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company has certain project debt and lease agreements that
establish working capital accounts which limit the use of
certain cash balances to the operations of the respective
plants. At December&nbsp;31, 2004 and 2003, $284.4&nbsp;million
and $392.3&nbsp;million, respectively, of the cash and cash
equivalents balance was subject to such project debt and lease
agreements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Accounts Receivable and Accounts Payable</I>&nbsp;&#151;
Accounts receivable and payable represent amounts due from
customers and owed to vendors. Accounts receivable are recorded
at invoiced amounts, net of reserves and allowances and do not
bear interest. Reserve and allowance accounts represent the
Company&#146;s best estimate of the amount of probable credit
losses in the Company&#146;s existing accounts receivable. The
Company reviews the financial condition of customers prior to
granting credit. The Company determines the allowance based on a
variety of factors, including the length of time receivables are
past due, economic trends and conditions affecting its customer
base, significant one-time events and historical write off
experience. Also, specific provisions are recorded for
individual receivables when the Company becomes aware of a
customer&#146;s inability to meet its financial obligations,
such as in the case of bankruptcy filings or deterioration in
the customer&#146;s operating results or financial position. The
Company reviews the adequacy of its reserves and allowances
quarterly. Generally, past due balances over 90&nbsp;days and
over a specified amount are individually reviewed for
collectibility. Account balances are charged off against the
allowance after all means of collection have been exhausted and
the potential for recovery is considered remote.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The accounts receivable and payable balances also include
settled but unpaid amounts relating to hedging, balancing,
optimization and trading activities of Calpine Energy Services,
L.P. (&#147;CES&#148;). Some of these receivables and payables
with individual counterparties are subject to master netting
agreements whereby the Company legally has a right of offset and
the Company settles the balances net. However, for balance sheet
presentation purposes and to be consistent with the way the
Company presents the majority of amounts related to hedging,
balancing and optimization activities in its consolidated
statements of operations under Staff Accounting Bulletin
(&#147;SAB&#148;) No.&nbsp;101 &#147;Revenue Recognition in
Financial Statements,&#148; as amended by SAB&nbsp;No.&nbsp;104
&#147;Revenue Recognition&#148; (collectively
&#147;SAB&nbsp;No.&nbsp;101&#148;), and Emerging Issues Task
Force (&#147;EITF&#148;) Issue No.&nbsp;99-19 &#147;Reporting
Revenue Gross as a Principal Versus Net as an Agent,&#148;
(&#147;EITF Issue No.&nbsp;99-19&#148;) the Company presents its
receivables and payables on a gross basis. CES receivable
balances (which comprise the majority of the accounts receivable
balance at December&nbsp;31, 2004) greater than 30&nbsp;days
past due are individually reviewed for collectibility, and if
deemed uncollectible, are charged off against the allowance
accounts or reversed out of revenue after all means of
collection have been exhausted and the potential for recovery is
considered remote. The Company does not have any
off-balance-sheet credit exposure related to its customers.
</DIV>

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<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Inventories</I>&nbsp;&#151; The Company&#146;s inventories
primarily include spare parts, stored gas and oil as well as
work-in-process. Inventories are valued at the lower of cost or
market. The cost for spare parts as well as stored gas and oil
is generally determined using the weighted average cost method.
Work-in-process is generally determined using the specific
identification method and represents the value of manufactured
goods during the manufacturing process. The inventory balance at
December&nbsp;31, 2004, was $179.4&nbsp;million. This balance is
comprised of $117.1&nbsp;million of spare parts,
$53.2&nbsp;million of stored gas and oil as well as
$9.1&nbsp;million of work-in-process. The inventory balance at
December&nbsp;31, 2003, was $137.7&nbsp;million. This balance is
comprised of $88.3&nbsp;million of spare parts,
$43.5&nbsp;million of stored gas and oil as well as
$5.9&nbsp;million of work-in-process.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Margin Deposits</I>&nbsp;&#151; As of December&nbsp;31, 2004
and 2003, as credit support for the gas and power procurement
and risk management activities conducted on the Company&#146;s
behalf, CES had deposited net amounts of $248.9&nbsp;million and
$188.0&nbsp;million, respectively, in cash as margin deposits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Available-for-Sale Debt Securities</I>&nbsp;&#151; See
Note&nbsp;3 for a discussion of the Company&#146;s accounting
policy for its available-for-sale debt securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Property, Plant and Equipment, Net</I>&nbsp;&#151; See
Note&nbsp;4 for a discussion of the Company&#146;s accounting
policies for its property, plant and equipment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Project Development Costs</I>&nbsp;&#151; The Company
capitalizes project development costs once it is determined that
it is highly probable that such costs will be realized through
the ultimate construction of a power plant. These costs include
professional services, salaries, permits, capitalized interest,
and other costs directly related to the development of a new
project. Upon commencement of construction, these costs are
transferred to construction in progress (&#147;CIP&#148;), a
component of property, plant and equipment. Upon the start-up of
plant operations, these construction costs are reclassified as
buildings, machinery and equipment, also a component of
property, plant and equipment, and are depreciated as a
component of the total cost of the plant over its estimated
useful life. Capitalized project costs are charged to expense if
the Company determines that the project is no longer probable or
to the extent it is impaired. Outside services and other third
party costs are capitalized for acquisition projects.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Investments in Power Projects and Oil and Gas
Properties</I>&nbsp;&#151; See Note&nbsp;7 for a discussion of
the Company&#146;s accounting policies for its investments in
power projects and oil and gas properties. In November 2004 one
of the Company&#146;s equity method investees filed for
protection under Chapter&nbsp;11 of the U.S.&nbsp;Bankruptcy
code. As a result of this legal proceeding, the Company has lost
significant influence and control of the project. Consequently,
as of December&nbsp;31, 2004, the Company no longer accounts for
this investment using the equity method but instead uses the
cost method. See Note&nbsp;7 for a discussion of this event.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Restricted Cash</I>&nbsp;&#151; The Company is required to
maintain cash balances that are restricted by provisions of its
debt agreements, lease agreements and regulatory agencies. These
amounts are held by depository banks in order to comply with the
contractual provisions requiring reserves for payments such as
for debt service, rent service, major maintenance and debt
repurchases. Funds that can be used to satisfy obligations due
during the next twelve months are classified as current
restricted cash, with the remainder classified as non-current
restricted cash. Restricted cash is generally invested in
accounts earning market rates; therefore the carrying value
approximates fair value. Such cash is excluded from cash and
cash equivalents in the consolidated statements of cash flows.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As part of a prior business acquisition which included certain
facilities subject to a pre-existing operating lease, the
Company acquired certain restricted cash balances comprised of a
portfolio of debt securities. This portfolio is classified as
held-to-maturity because the Company has the intent and ability
to hold the securities to maturity. The securities are held in
escrow accounts to support operating activities of the leased
facilities and consist of a $17.0&nbsp;million debt security
maturing in 2015 and a $7.4&nbsp;million debt security maturing
in
</DIV>

<P align="center" style="font-size: 10pt;">F-12

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
2023. This portfolio is stated at amortized cost, adjusted for
amortization of premiums and accretion discounts to maturity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Of the Company&#146;s restricted cash at December&nbsp;31, 2004,
$276.0&nbsp;million relates to the assets of the following
entities, each an entity with its existence separate from the
Company and other subsidiaries of the Company.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="89%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Bankruptcy-Remote Subsidiary</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Power Contracting Finance, LLC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>175.6</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gilroy Energy Center, LLC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>53.5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Rocky Mountain Energy Center, LLC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18.1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Riverside Energy Center, LLC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Calpine Energy Management, L.P.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6.9</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Calpine King City Cogen, LLC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6.7</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Calpine Northbrook Energy Marketing, LLC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Power Contracting Finance&nbsp;III, LLC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Creed Energy Center, LLC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Goose Haven Energy Center, LLC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.3</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Notes&nbsp;Receivable</I>&nbsp;&#151; See Note&nbsp;8 for a
discussion of the Company&#146;s accounting policies for its
notes receivable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Preferred Interests</I>&nbsp;&#151; As outlined in
SFAS&nbsp;No.&nbsp;150, &#147;Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and
Equity,&#148; (&#147;SFAS&nbsp;No.&nbsp;150&#148;) the Company
classifies preferred interests that embody obligations to
transfer cash to the preferred interest holder, in short-term
and long-term debt. These instruments require the Company to
make priority distributions of available cash, as defined in
each preferred interest agreement, representing a return of the
preferred interest holder&#146;s investment over a fixed period
of time and at a specified rate of return in priority to certain
other distributions to equity holders. The return on investment
is recorded as interest expense under the interest method over
the term of the priority period. See Note&nbsp;12 for a further
discussion of the Company&#146;s accounting policies for its
preferred interests.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Deferred Financing Costs</I>&nbsp;&#151; See Note&nbsp;11 for
a discussion of the Company&#146;s accounting policies for
deferred financing costs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Goodwill and Other Intangible Assets</I>&nbsp;&#151; See
Note&nbsp;5 for a discussion of the Company&#146;s accounting
for goodwill and other intangible assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Long-Lived Assets</I>&nbsp;&#151; In accordance with SFAS
No.&nbsp;144, &#147;Accounting for the Impairment or Disposal of
Long-Lived Assets,&#148; (&#147;SFAS&nbsp;No.&nbsp;144&#148;)
the Company evaluates the impairment of long-lived assets,
including construction and development projects, based on the
projection of undiscounted pre-interest expense and pre-tax
expense cash flows whenever events or changes in circumstances
indicate that the carrying amounts of such assets may not be
recoverable. The significant assumptions that the Company uses
in its undiscounted future cash flow estimates include the
future supply and demand relationships for electricity and
natural gas, the expected pricing for those commodities and the
resultant spark spreads in the various regions where the Company
generates, and external oil and gas year-end reserve reports
prepared by licensed independent petroleum engineering firms. In
the event such cash flows are not expected to be sufficient to
recover the recorded value of the assets, the assets are written
down to their estimated fair values. See Note&nbsp;4 for more
information on the impairment charges recorded for oil and gas
properties. Certain of the Company&#146;s generating assets are
located in regions with depressed demands and market spark
spreads. The Company&#146;s forecasts assume that spark spreads
will increase in future years in these regions as the supply and
demand relationships improve.
</DIV>

<P align="center" style="font-size: 10pt;">F-13

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Concentrations of Credit Risk</I>&nbsp;&#151; Financial
instruments which potentially subject the Company to
concentrations of credit risk consist primarily of cash,
accounts receivable, notes receivable, and commodity contracts.
The Company&#146;s cash accounts are generally held in FDIC
insured banks. The Company&#146;s accounts and notes receivable
are concentrated within entities engaged in the energy industry,
mainly within the United States (see Notes&nbsp;8 and 22). The
Company generally does not require collateral for accounts
receivable from end-user customers, but evaluates the net
accounts receivable, accounts payable, and fair value of
commodity contracts with trading companies and may require
security deposits or letters of credit to be posted if exposure
reaches a certain level.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Deferred Revenue</I>&nbsp;&#151; The Company&#146;s deferred
revenue consists primarily of deferred gains related to certain
sale/leaseback transactions as well as deferred revenue for
long-term power supply contracts including contracts accounted
for as operating leases.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Trust&nbsp;Preferred Securities</I>&nbsp;&#151; Prior to the
adoption of FIN&nbsp;46, as originally issued, for special
purpose VIEs on October&nbsp;1, 2003, the Company&#146;s trust
preferred securities were accounted for as a minority interest
in the balance sheet and reflected as &#147;Company-obligated
mandatorily redeemable convertible preferred securities of
subsidiary trusts.&#148; The distributions were reflected in the
Consolidated Statements of Operations as &#147;distributions on
trust preferred securities&#148; through September&nbsp;30,
2003. Financing costs related to these issuances are netted with
the principal amounts and were accreted as minority interest
expense over the securities&#146; 30-year maturity using the
straight-line method which approximated the effective interest
rate method. Upon the adoption of FIN&nbsp;46, the Company
deconsolidated the Calpine Capital Trusts. Consequently, the
Trust&nbsp;Preferred Securities are no longer on the
Company&#146;s Consolidated Balance Sheet and were replaced with
the debentures issued by the Company to the Calpine Capital
Trusts. Due to the relationship with the Calpine Capital Trusts,
the Company considers Calpine Capital Trust
(&#147;Trust&nbsp;I&#148;), Calpine Capital Trust&nbsp;II
(&#147;Trust&nbsp;II&#148;) and Calpine Capital Trust&nbsp;III
(&#147;Trust&nbsp;III&#148;) to be related parties. The interest
payments on the debentures are now reflected in the Consolidated
Statements of Operations as &#147;interest expense.&#148; See
Note&nbsp;12 for further information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Revenue Recognition</I>&nbsp;&#151; The Company is primarily
an electric generation company with consolidated revenues being
earned from operating a portfolio of mostly wholly owned plants.
Equity investment income is also earned from plants in which our
ownership interest is 50% or less or the Company is not the
Primary Beneficiary under FIN&nbsp;46-R, and which are accounted
for under the equity method. In conjunction with its electric
generation business, the Company also produces, as a by-product,
thermal energy for sale to customers, principally steam hosts at
the Company&#146;s cogeneration sites. In addition, the Company
acquires and produces natural gas for its own consumption and
sells the balance and oil produced to third parties. Where
applicable, revenues are recognized under EITF Issue
No.&nbsp;91-06, &#147;Revenue Recognition of Long Term Power
Sales Contracts,&#148; (&#147;EITF Issue No.&nbsp;91-06&#148;)
ratably over the terms of the related contracts. To protect and
enhance the profit potential of its electric generation plants,
the Company, through its subsidiary, CES, enters into electric
and gas hedging, balancing, and optimization transactions,
subject to market conditions, and CES has also, from time to
time, entered into contracts considered energy trading contracts
under EITF Issue No.&nbsp;02-03, &#147;Issues Related to
Accounting for Contracts Involved in Energy Trading and Risk
Management&#148; (&#147;EITF Issue No.&nbsp;02-03&#148;). CES
executes these transactions primarily through the use of
physical forward commodity purchases and sales and financial
commodity swaps and options. With respect to its physical
forward contracts, CES generally acts as a principal, takes
title to the commodities, and assumes the risks and rewards of
ownership. Therefore, when CES does not hold these contracts for
trading purposes and, in accordance with SAB&nbsp;No.&nbsp;101,
and EITF Issue No.&nbsp;99-19, the Company records settlement of
the majority of its non-trading physical forward contracts on a
gross basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company, through its wholly owned subsidiary, Power Systems
MFG., LLC (&#147;PSM&#148;), designs and manufactures certain
spare parts for gas turbines. The Company in the past has also
generated revenue by occasionally loaning funds to power
projects, and currently provides O&#38;M services to third
parties and to
</DIV>

<P align="center" style="font-size: 10pt;">F-14

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<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
certain unconsolidated power projects. The Company also sells
engineering and construction services to third parties for power
projects. Further details of the Company&#146;s revenue
recognition policy for each type of revenue transaction are
provided below:
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Accounting for Commodity Contracts</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Commodity contracts are evaluated to determine whether the
contract is (1)&nbsp;accounted for as a lease (2)&nbsp;accounted
for as a derivative (3)&nbsp;or accounted for as an executory
contract and additionally whether the financial statement
presentation is gross or net.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Leases</I>&nbsp;&#151; Commodity contracts are evaluated for
lease accounting in accordance with SFAS&nbsp;No.&nbsp;13,
&#147;Accounting for Leases,&#148;
(&#147;SFAS&nbsp;No.&nbsp;13&#148;) and EITF Issue
No.&nbsp;01-08, &#147;Determining Whether an Arrangement
Contains a Lease,&#148; (EITF Issue No.&nbsp;01-08). EITF Issue
No.&nbsp;01-08 clarifies the requirements of identifying whether
an arrangement should be accounted for as a lease at its
inception. The guidance in the consensus is designed to broaden
the scope of arrangements, such as power purchase agreements
(&#147;PPA&#148;), accounted for as leases. EITF Issue
No.&nbsp;01-08 requires both parties to an arrangement to
determine whether a service contract or similar arrangement is,
or includes, a lease within the scope of SFAS&nbsp;No.&nbsp;13.
The consensus is being applied prospectively to arrangements
agreed to, modified, or acquired in business combinations on or
after July&nbsp;1, 2003. Prior to adopting EITF Issue
No.&nbsp;01-08, the Company had accounted for certain
contractual arrangements as leases under existing industry
practices, and the adoption of EITF Issue No.&nbsp;01-08 did not
materially change the Company&#146;s accounting for leases.
Under the guidance of SFAS&nbsp;No.&nbsp;13, operating leases
with minimum lease rentals which vary over time must be
levelized over the term of the contract. The Company currently
levelizes these contracts on a straight-line basis. See
Note&nbsp;22 for additional information on our operating leases.
For income statement presentation purposes, income from PPAs
accounted for as leases is classified within electricity and
steam revenue in the Company&#146;s consolidated statements of
operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Derivative Instruments</I>&nbsp;&#151; SFAS No.&nbsp;133,
&#147;Accounting for Derivative Instruments and Hedging
Activities&#148; (&#147;SFAS&nbsp;No.&nbsp;133&#148;) as amended
and interpreted by other related accounting literature,
establishes accounting and reporting standards for derivative
instruments (including certain derivative instruments embedded
in other contracts). SFAS&nbsp;No.&nbsp;133 requires companies
to record derivatives on their balance sheets as either assets
or liabilities measured at their fair value unless exempted from
derivative treatment as a normal purchase and sale. All changes
in the fair value of derivatives are recognized currently in
earnings unless specific hedge criteria are met, which requires
that a company must formally document, designate, and assess the
effectiveness of transactions that receive hedge accounting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Accounting for derivatives at fair value requires the Company to
make estimates about future prices during periods for which
price quotes are not available from sources external to the
Company. As a result, the Company is required to rely on
internally developed price estimates when external price quotes
are unavailable. The Company derives its future price estimates,
during periods where external price quotes are unavailable,
based on an extrapolation of prices from periods where external
price quotes are available. The Company performs this
extrapolation using liquid and observable market prices and
extending those prices to an internally generated long-term
price forecast based on a generalized equilibrium model.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
SFAS&nbsp;No.&nbsp;133 sets forth the accounting requirements
for cash flow and fair value hedges. SFAS&nbsp;No.&nbsp;133
provides that the effective portion of the gain or loss on a
derivative instrument designated and qualifying as a cash flow
hedging instrument be reported as a component of OCI and be
reclassified into earnings in the same period during which the
hedged forecasted transaction affects earnings. The remaining
gain or loss on the derivative instrument, if any, must be
recognized currently in earnings. SFAS&nbsp;No.&nbsp;133
provides that the changes in fair value of derivatives
designated as fair value hedges and the corresponding changes in
the fair value of the hedged risk attributable to a recognized
asset, liability, or unrecognized firm commitment be recorded in
earnings. If the fair value hedge is effective, the amounts
recorded will offset in earnings.
</DIV>

<P align="center" style="font-size: 10pt;">F-15

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
With respect to cash flow hedges, if the forecasted transaction
is no longer probable of occurring, the associated gain or loss
recorded in OCI is recognized currently. In the case of fair
value hedges, if the underlying asset, liability or firm
commitment being hedged is disposed of or otherwise terminated,
the gain or loss associated with the underlying hedged item is
recognized currently. If the hedging instrument is terminated
prior to the occurrence of the hedged forecasted transaction for
cash flow hedges, or prior to the settlement of the hedged
asset, liability or firm commitment for fair value hedges, the
gain or loss associated with the hedge instrument remains
deferred.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Where the Company&#146;s derivative instruments are subject to
the special transition adjustment for the estimated future
economic benefits of these contracts upon adoption of
Derivatives Implementation Group (&#147;DIG&#148;) Issue No.
C20, &#147;Scope Exceptions: Interpretation of the Meaning of
Not Clearly and Closely Related in Paragraph&nbsp;10(b)
regarding Contracts with a Price Adjustment Feature,&#148;
(&#147;DIG Issue No.&nbsp;C20&#148;) the Company will amortize
the corresponding asset recorded upon adoption of DIG Issue
No.&nbsp;C20 through a charge to earnings in future periods.
Accordingly on October&nbsp;1, 2003, the date the Company
adopted DIG Issue No.&nbsp;C20, the Company recorded other
current assets and other assets of approximately
$33.5&nbsp;million and $259.9&nbsp;million, respectively, and a
cumulative effect of a change in accounting principle of
approximately $181.9&nbsp;million, net of $111.5&nbsp;million of
tax. For all periods subsequent to October&nbsp;1, 2003, the
Company will account for the contracts as normal purchases and
sales under the provisions of DIG Issue No.&nbsp;C20.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Mark-to-Market, net activity includes realized settlements of
and unrealized mark-to-market gains and losses on both power and
gas derivative instruments not designated as cash flow hedges,
including those held for trading purposes. Gains and losses due
to ineffectiveness on hedging instruments are also included in
unrealized mark-to-market gains and losses. Trading activity is
presented net in accordance with EITF Issue No.&nbsp;02-03.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Executory Contracts</I>&nbsp;&#151; Where commodity contracts
do not qualify as leases or derivatives, the contracts are
classified as executory contracts. These contracts apply
traditional accrual accounting unless the revenue must be
levelized per EITF Issue No.&nbsp;91-06. The Company currently
accounts for one commodity contract under EITF Issue
No.&nbsp;91-06 which is levelized over the term of the agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Financial Statement Presentation</I>&nbsp;&#151; Where the
Company&#146;s derivative instruments are subject to a netting
agreement and the criteria of FIN&nbsp;39 &#147;Offsetting of
Amounts Related to Certain Contracts (An Interpretation of APB
Opinion No.&nbsp;10 and SFAS&nbsp;No.&nbsp;105)&#148;
(&#147;FIN&nbsp;39&#148;) are met, the Company presents its
derivative assets and liabilities on a net basis in its balance
sheet. The Company has chosen this method of presentation
because it is consistent with the way related mark-to-market
gains and losses on derivatives are recorded in its Consolidated
Statements of Operations and within OCI.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Presentation of revenue under EITF Issue No.&nbsp;03-11
&#147;Reporting Realized Gains and Losses on Derivative
Instruments That Are Subject to SFAS&nbsp;No.&nbsp;133 and Not
&#145;Held for Trading Purposes&#146; As Defined in EITF Issue
No.&nbsp;02-03: &#147;Issues Involved in Accounting for
Derivative Contracts Held for Trading Purposes and Contracts
Involved in Energy Trading and Risk Management Activities&#148;
(&#147;EITF Issue No.&nbsp;03-11&#148;)&nbsp;&#151; The Company
accounts for certain of its power sales and purchases on a net
basis under EITF Issue No.&nbsp;03-11, which the Company adopted
on a prospective basis on October&nbsp;1, 2003. Transactions
with either of the following characteristics are presented net
in the Company&#146;s Consolidated Financial Statements:
(1)&nbsp;transactions executed in a back-to-back buy and sale
pair, primarily because of market protocols; and
(2)&nbsp;physical power purchase and sale transactions where the
Company&#146;s power schedulers net the physical flow of the
power purchase against the physical flow of the power sale (or
&#147;book out&#148; the physical power flows) as a matter of
scheduling convenience to eliminate the need to schedule actual
power delivery. These book out transactions may occur with the
same counterparty or between different counterparties where the
</DIV>

<P align="center" style="font-size: 10pt;">F-16

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Company has equal but offsetting physical purchase and delivery
commitments. In accordance with EITF Issue No.&nbsp;03-11, the
Company netted the following amounts (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="69%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Year Ended December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales of purchased power for hedging and optimization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,676,003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>256,573</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchased power expense for hedging and optimization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,676,003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>265,573</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Electric Generation and Marketing Revenue</I>&nbsp;&#151;
This includes electricity and steam sales, transmission sales
revenue and sales of purchased power for hedging, balancing and
optimization. Subject to market and other conditions, the
Company manages the revenue stream for its portfolio of electric
generating facilities. The Company markets on a system basis
both power generated by its plants in excess of amounts under
direct contract between the plant and a third party, and power
purchased from third parties, through hedging, balancing and
optimization transactions. The Company also, from time-to-time,
sells excess transmission capacity. CES performs a market-based
allocation of electric generation and marketing revenue to
electricity and steam sales (based on electricity delivered by
the Company&#146;s electric generating facilities) and to sales
of purchased power.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Oil and Gas Production and Marketing Revenue</I>&nbsp;&#151;
This includes sales to third parties of oil, gas and related
products that are produced by the Company&#146;s Calpine Natural
Gas and Calpine Canada Natural Gas subsidiaries and, subject to
market and other conditions, sales of purchased gas arising from
hedging, balancing and optimization transactions. Oil and gas
sales for produced products are recognized pursuant to the sales
method, net of royalties. If the Company has recorded gas sales
on a particular well or field in excess of its share of
remaining estimated reserves, then the excessive gas sale
imbalance is recognized as a liability. If the Company is
under-produced on a particular well or field, and it is
determined that an over-produced partner&#146;s share of
remaining reserves is insufficient to settle the gas imbalance,
the Company will recognize a receivable, to the extent
collectible, from the over-produced partner.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Other Revenue</I>&nbsp;&#151; This includes O&#38;M contract
revenue, PSM and Thomassen Turbine Systems B.V.
(&#147;TTS&#148;) revenue from sales to third parties,
engineering and construction revenue and miscellaneous revenue.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Plant Operating Expense</I>&nbsp;&#151; This primarily
includes employee expenses, repairs and maintenance, insurance,
and property taxes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Purchased Power and Purchased Gas Expense</I>&nbsp;&#151; The
cost of power purchased from third parties for hedging,
balancing and optimization activities is recorded as purchased
power expense, a component of electric generation and marketing
expense. The Company records the cost of gas purchased from
third parties for the purposes of consumption in its power
plants as fuel expense, while gas purchased from third parties
for hedging, balancing, and optimization activities is recorded
as purchased gas expense for hedging and optimization, a
component of oil and gas production and marketing expense.
Certain hedging, balancing and optimization activity is
presented net in accordance with EITF Issue No.&nbsp;03-11. See
discussion above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Research and Development Expense</I>&nbsp;&#151; The Company
engages in research and development (&#147;R&#38;D&#148;)
activities through PSM. R&#38;D activities related to the design
and manufacturing of high performance combustion system and
turbine blade parts are accounted for in accordance with
SFAS&nbsp;No.&nbsp;2, &#147;Accounting for Research and
Development Costs.&#148; The Company&#146;s R&#38;D expense
includes costs incurred for conceptual formulation and design of
new vanes, blades, combustors and other replacement parts for
the industrial gas turbine industry.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Provision (Benefit) for Income Taxes</I>&nbsp;&#151; Deferred
income taxes are based on the differences between the financial
reporting and tax bases of assets and liabilities. The deferred
income tax provision represents the
</DIV>

<P align="center" style="font-size: 10pt;">F-17

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
changes during the reporting period in the deferred tax assets
and deferred tax liabilities, net of the effect of acquisitions
and dispositions. Deferred tax assets include tax losses and tax
credit carryforwards and are reduced by a valuation allowance
if, based on available evidence, it is more likely than not that
some portion or all of the deferred tax assets will not be
realized. Additionally, with respect to income taxes, the
Company assumes the deductibility of certain costs in its income
tax filings and estimates the future recovery of deferred tax
assets. For the twelve months ended December&nbsp;31, 2004, 2003
and 2002, the Company&#146;s effective tax (benefit) rate from
continuing operations was 39%, 9% and 29%, respectively. Also,
see Note&nbsp;19 concerning the impact of tax legislation passed
October&nbsp;22, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Insurance Program</I>&nbsp;&#151; CPN Insurance Corporation,
a wholly owned captive insurance subsidiary, charges the Company
premium rates to insure casualty lines (worker&#146;s
compensation, automobile liability, and general liability) as
well as all risk property insurance including business
interruption. Accruals for casualty claims under the captive
insurance program are recorded on a monthly basis, and are based
upon the estimate of the total cost of the claims incurred
during the policy period. Accruals for claims under the captive
insurance program pertaining to property, including business
interruption claims, are recorded on a claims-incurred basis. In
consolidation, claims are accrued on a gross basis before
deductibles. The captive provides insurance coverage with limits
up to $25&nbsp;million per occurrence for property claims,
including business interruption, and up to $500,000 per
occurrence for casualty claims. Intercompany transactions
between the captive insurance program and Calpine affiliates are
eliminated in consolidation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Stock-Based Compensation</I>&nbsp;&#151; See Note&nbsp;21 for
a discussion of the Company&#146;s accounting policies for
stock-based compensation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Operational Data</I>&nbsp;&#151; Operational data (including,
but not limited to, megawatts (&#147;MW&#148;), megawatt hours
(&#147;MWh&#148;), billions cubic feet equivalent
(&#147;Bcfe&#148;) and thousand barrels (&#147;MBbl&#148;)),
throughout this Form&nbsp;10-K is unaudited.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>New Accounting Pronouncements</I></B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>SFAS&nbsp;No. 144</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Effective January&nbsp;1, 2002, the Company adopted
SFAS&nbsp;No. 144 &#147;Accounting for the Impairment or
Disposal of Long-Lived Assets&#148;
(&#147;SFAS&nbsp;No.&nbsp;144&#148;), which changed the criteria
for determining when the disposal or sale of certain assets
meets the definition of &#147;discontinued operations.&#148;
Some of the Company&#146;s asset sales in 2002, 2003 and 2004
met the requirements of the new definition and accordingly, the
Company made reclassifications to current and prior period
financial statements to reflect the sale or designation as
&#147;held for sale&#148; of certain oil and gas and power plant
assets and liabilities and to separately classify the operating
results of the assets sold and gain on sale of those assets from
the operating results of continuing operations. See Note&nbsp;10
for further information.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>FIN&nbsp;46 and FIN&nbsp;46-R</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In January 2003, FASB issued FIN&nbsp;46. FIN&nbsp;46, as
originally issued, was effective immediately for VIEs created or
acquired after January&nbsp;31, 2003. FIN&nbsp;46 requires the
consolidation of an entity by an enterprise that absorbs a
majority of the entity&#146;s expected losses, receives a
majority of the entity&#146;s expected residual returns, or
both, as a result of ownership, contractual or other financial
interest in the entity. Historically, entities have generally
been consolidated by an enterprise when it has a controlling
financial interest through ownership of a majority voting
interest in the entity. The objectives of FIN&nbsp;46 are to
provide guidance on the identification of VIEs for which control
is achieved through means other than ownership of a majority of
the voting interest of the entity, and how to determine which
business enterprise (if any), as the Primary Beneficiary, should
consolidate the VIE. This model for consolidation applies to an
entity in which either (1)&nbsp;the at-risk equity is
insufficient to absorb expected losses without additional
subordinated financial support or (2)&nbsp;its at-risk equity
</DIV>

<P align="center" style="font-size: 10pt;">F-18

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
holders as a group are not able to make decisions that have a
significant impact on the success or failure of the
entity&#146;s ongoing activities. A variable interest in a VIE,
by definition, is an asset, liability, equity, contractual
arrangement or other economic interest that absorbs the
entity&#146;s variability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In December 2003, FASB modified FIN&nbsp;46 with FIN&nbsp;46-R
to make certain technical corrections and to address certain
implementation issues. FIN&nbsp;46-R delayed the effective date
of the interpretation to March&nbsp;31, 2004, (for calendar-year
enterprises), for all non-Special Purpose Entity
(&#147;SPE&#148;) VIEs. FIN&nbsp;46, as originally issued was
effective as of December&nbsp;31, 2003, for all investments in
SPEs. The Company has adopted FIN&nbsp;46-R for its equity
method joint ventures and operating lease arrangements
containing fixed price purchase options, its wholly owned
subsidiaries that are subject to long-term PPAs and tolling
arrangements and its wholly owned subsidiaries that have issued
mandatorily redeemable non-controlling preferred interests as of
March&nbsp;31, 2004, and for its investments in SPEs as of
December&nbsp;31, 2003.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Joint Venture Investments and Operating Leases with Fixed
    Price Options</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On application of FIN&nbsp;46-R, the Company evaluated its
economic interests in joint venture investments and operating
lease arrangements containing fixed price purchase options and
concluded that, in some instances, these entities were VIEs.
However, in these instances, the Company was not the Primary
Beneficiary, as the Company would not absorb a majority of these
entities&#146; expected variability. An enterprise that holds a
significant variable interest in a VIE is required to make
certain disclosures regarding the nature and timing of its
involvement with the VIE and the nature, purpose, size and
activities of the VIE. The fixed price purchase options under
the Company&#146;s operating lease arrangements were not
considered significant variable interests. However, the joint
ventures in which the Company has invested, and which did not
qualify for the definition of a business scope exception
outlined in paragraph&nbsp;4(h) of FIN&nbsp;46-R, were
considered significant variable interests and the required
disclosures have been made in Note&nbsp;7 for these joint
venture investments.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Significant Long-Term Power Sales and Tolling Agreements</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
An analysis was performed for the Company&#146;s wholly owned
subsidiaries with significant long-term power sales or tolling
agreements. Certain of these 100% Company-owned subsidiaries
were deemed to be VIEs by virtue of the power sales and tolling
agreements which met the definition of a variable interest under
FIN&nbsp;46-R. However, in all cases, the Company absorbed a
majority of the entity&#146;s variability and continues to
consolidate these wholly owned subsidiaries. As part of the
Company&#146;s quantitative assessment, a fair value methodology
was used to determine whether the Company or the power purchaser
absorbed the majority of the subsidiary&#146;s variability. As
part of the analysis, the Company qualitatively determined that
power sales or tolling agreements with a term for less than
one-third of the facility&#146;s remaining useful life or for
less than 50% of the entity&#146;s capacity would not cause the
power purchaser to be the Primary Beneficiary, due to the length
of the economic life of the underlying assets. Also, power sales
and tolling agreements meeting the definition of a lease under
EITF Issue No.&nbsp;01-08, &#147;Determining Whether an
Arrangement Contains a Lease,&#148; were not considered variable
interests, since lease payments create rather than absorb
variability, and therefore, do not meet the definition of a
variable interest.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Preferred Interests issued from Wholly-Owned Subsidiaries</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A similar analysis was performed for the Company&#146;s wholly
owned subsidiaries that have issued mandatorily redeemable
non-controlling preferred interests. These entities were
determined to be VIEs in which the Company absorbs the majority
of the variability, primarily due to the debt characteristics of
the preferred interest, which are classified as debt in
accordance with SFAS&nbsp;No.&nbsp;150, in the Company&#146;s
Consolidated Balance Sheets. As a result, the Company continues
to consolidate these wholly owned subsidiaries.
</DIV>

<P align="center" style="font-size: 10pt;">F-19

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Investments in Special Purpose Entities</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Significant judgment was required in making an assessment of
whether or not a VIE was an SPE for purposes of adopting and
applying FIN&nbsp;46, as originally issued at December&nbsp;31,
2003. Since the current accounting literature does not provide a
definition of an SPE, the Company&#146;s assessment was
primarily based on the degree to which the VIE aligned with the
definition of a business outlined in FIN&nbsp;46-R. Entities
that meet the definition of a business outlined in FIN&nbsp;46-R
and that satisfy other formation and involvement criteria are
not subject to the FIN&nbsp;46-R consolidation guidelines. The
definitional characteristics of a business include having:
inputs such as long-lived assets; the ability to obtain access
to necessary materials and employees; processes such as
strategic management, operations and resource management; and
the ability to obtain access to the customers that purchase the
outputs of the entity. Based on this assessment, the Company
determined that six VIE investments were in SPEs requiring
further evaluation and were subject to the application of
FIN&nbsp;46, as originally issued, as of December&nbsp;31, 2003:
Calpine Northbrook Energy Marketing, LLC (&#147;CNEM&#148;),
Power Contract Financing, L.L.C. (&#147;PCF&#148;), Power
Contract Financing III,&nbsp;LLC (&#147;PCF&nbsp;III&#148;) and
Trust&nbsp;I, Trust&nbsp;II and Trust&nbsp;III (collectively,
the &#147;Trusts&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On May&nbsp;15, 2003, the Company&#146;s wholly owned
subsidiary, CNEM, completed the $82.8&nbsp;million monetization
of an existing power sales agreement with the Bonneville Power
Administration (&#147;BPA&#148;). CNEM borrowed
$82.8&nbsp;million secured by the spread between the BPA
contract and certain fixed power purchase contracts. CNEM was
established as a bankruptcy-remote entity and the
$82.8&nbsp;million loan is recourse only to CNEM&#146;s assets
and is not guaranteed by the Company. CNEM was determined to be
a VIE in which the Company was the Primary Beneficiary.
Accordingly, the entity&#146;s assets and liabilities were
consolidated into the Company&#146;s accounts as of
June&nbsp;30, 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On June&nbsp;13, 2003, PCF, a wholly owned stand-alone
subsidiary of CES, completed an offering of two tranches of
Senior Secured Notes Due 2006 and 2010 (collectively called the
&#147;PCF Notes&#148;), totaling $802.2&nbsp;million. To
facilitate the transaction, the Company formed PCF as a wholly
owned, bankruptcy remote entity with assets and liabilities
consisting of certain transferred power purchase and sales
contracts, which serve as collateral for the PCF Notes. The PCF
Notes are non-recourse to the Company&#146;s other consolidated
subsidiaries. PCF was determined to be a VIE in which the
Company was the Primary Beneficiary. Accordingly, the
entity&#146;s assets and liabilities were consolidated into the
Company&#146;s accounts as of June&nbsp;30, 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Upon the application of FIN&nbsp;46, as originally issued at
December&nbsp;31, 2003, for the Company&#146;s investments in
SPEs, the Company determined that its equity investment in the
Trusts was not considered at-risk as defined in FIN&nbsp;46 and
that the Company did not have a significant variable interest in
the Trusts. Consequently, the Company deconsolidated the Trusts
as of December&nbsp;31, 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, as a result of the debt reserve monetization
consummated on June&nbsp;2, 2004, the Company was required to
evaluate its new investments in the PCF and PCF&nbsp;III
entities under FIN&nbsp;46-R (effective March&nbsp;31, 2004).
The Company determined that the entities were VIEs but the
Company was not the Primary Beneficiary and was, therefore,
required to deconsolidate the entities as of June&nbsp;30, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company created CNEM, PCF, PCF&nbsp;III and the Trusts to
facilitate capital transactions. However, in cases such as this
where the Company has continuing involvement with the assets
held by the deconsolidated SPE, the Company accounts for the
capital transaction with the SPE as a financing rather than a
sale under EITF Issue No.&nbsp;88-18, &#147;Sales of Future
Revenue&#148; (&#147;EITF Issue No.&nbsp;88-18&#148;) or SFAS
No.&nbsp;140, &#147;Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities&nbsp;&#151;
a Replacement of FASB Statement No.&nbsp;125&#148;
(&#147;SFAS&nbsp;No.&nbsp;140&#148;), as appropriate. When EITF
Issue No.&nbsp;88-18 and SFAS&nbsp;No.&nbsp;140 require the
Company to account for a transaction as a financing,
derecognition of the assets underlying the financing is
prohibited, and the proceeds received from the transaction must
be recorded as debt. Accordingly, in situations where the
Company accounts for transactions as financings under EITF
</DIV>

<P align="center" style="font-size: 10pt;">F-20

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Issue No.&nbsp;88-18 or SFAS&nbsp;No.&nbsp;140, the Company
continues to recognize the assets and the debt of the
deconsolidated SPE on its balance sheet. The table below
summarizes how the Company has accounted for its SPEs when it
has continuing involvement under EITF Issue No.&nbsp;88-18 or
SFAS&nbsp;No.&nbsp;140:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="69%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>FIN&nbsp;46-R</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Sale or</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Treatment</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Financing</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    CNEM</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>Consolidate</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>N/A</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    PCF</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>Deconsolidate</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>Financing</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    PCF&nbsp;III</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>Deconsolidate</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>Financing</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Trust&nbsp;I, Trust&nbsp;II and Trust&nbsp;III</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>Deconsolidate</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>Financing</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>EITF Issue No.&nbsp;04-07</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
An integral part of applying FIN&nbsp;46-R is determining which
economic interests are variable interests. In order for an
economic interest to be considered a variable interest, it must
&#147;absorb variability&#148; of changes in the fair value of
the VIE&#146;s underlying net assets. Questions have arisen
regarding (a)&nbsp;how to determine whether an interest absorbs
variability, and (b)&nbsp;whether the nature of how a long
position is created, either synthetically through derivative
transactions or through cash transactions, should affect the
assessment of whether an interest is a variable interest. EITF
Issue No.&nbsp;04-07, &#147;Determining Whether an Interest Is a
Variable Interest in a Potential Variable Interest Entity&#148;
(&#147;EITF Issue No.&nbsp;04-07&#148;) is still in the
discussion phase, but will eventually provide a model to assist
in determining whether an economic interest in a VIE is a
variable interest. The Task Force&#146;s discussions on this
Issue have centered on if the variability should be based on
whether (a)&nbsp;the interest absorbs fair value variability,
(b)&nbsp;the interest absorbs cash flow variability, or
(c)&nbsp;the interest absorbs both fair value and cash flow
variability. While a consensus has not been reached, a majority
of the Task Force members generally support an approach that
would determine predominant variability based on the nature of
the operations of the VIE. Under this view, for <I>financial
</I>VIEs a presumption would exist that only interests that
absorb <I>fair value </I>variability would be considered
variable interests. Conversely, for <I>non-financial </I>(or
operating) VIEs, a presumption would exist that only interests
that absorb <I>cash flow </I>variability would be considered
variable interests. The final conclusions reached on this issue
may impact the Company&#146;s methodology used in making
quantitative and/or qualitative assessments of the variability
absorbed by the different economic interests holders in the
VIE&#146;s in which the Company holds a variable interest.
However, until the EITF reaches a final consensus, the effects
of this issue on the Company&#146;s financial statements is
indeterminable.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>EITF Issue No.&nbsp;04-08</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On September&nbsp;30, 2004, the EITF reached a final consensus
on EITF Issue No.&nbsp;04-08, &#147;The Effect of Contingently
Convertible Debt on Diluted Earnings per Share&#148; (&#147;EITF
Issue No.&nbsp;04-08&#148;). The guidance in EITF Issue
No.&nbsp;04-08 is effective for periods ending after
December&nbsp;15, 2004, and must be applied by retroactively
restating previously reported earnings per share
(&#147;EPS&#148;) results. The consensus requires companies that
have issued contingently convertible instruments with a market
price trigger to include the effects of the conversion in
diluted EPS (if dilutive), regardless of whether the price
trigger had been met. Prior to this consensus, contingently
convertible instruments were not included in diluted EPS if the
price trigger had not been met. Typically, the affected
instruments are convertible into common stock of the issuer
after the issuer&#146;s common stock price has exceeded a
predetermined threshold for a specified time period.
Calpine&#146;s $634&nbsp;million of 4.75% Contingent Convertible
Senior Notes Due 2023 (&#147;2023 Convertible Senior
Notes&#148;) and $736&nbsp;million aggregate principal amount at
maturity of Contingent Convertible Notes Due 2014 (&#147;2014
Convertible Notes&#148;) outstanding at December&nbsp;31, 2004,
are affected by the new guidance. Depending on the closing price
of the Company&#146;s common stock at the end of each reporting
period, the conversion provisions in these Contingent
Convertible Notes may significantly impact the reported diluted
EPS amounts
</DIV>

<P align="center" style="font-size: 10pt;">F-21

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
in future periods.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the twelve months ended December&nbsp;31, 2004,
approximately 8.6&nbsp;million weighted common shares
potentially issuable under the Company&#146;s outstanding 2014
Contingent Convertible Notes were excluded from the diluted
earnings per share calculations as the inclusion of such shares
would have been antidilutive because of the Company&#146;s net
loss. The 2023 Convertible Senior Notes would not have impacted
the diluted EPS calculation for any reporting period since
issuance in November 2003, because the Company&#146;s closing
stock price at each period end was below the conversion price.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>SFAS&nbsp;No.&nbsp;128-R</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
FASB is expected to revise SFAS No.&nbsp;128, &#147;Earnings Per
Share&#148; (&#147;SFAS&nbsp;No.&nbsp;128&#148;) to make it
consistent with International Accounting Standard No.&nbsp;33,
&#147;Earnings Per Share,&#148; so that EPS computations will be
comparable on a global basis. This new guidance is expected to
be issued by the end of 2005 and will require restatement of
prior periods diluted EPS data. The proposed changes will affect
the application of the treasury stock method and contingently
issuable (based on conditions other than market price) share
guidance for computing year-to-date diluted EPS. In addition to
modifying the year-to-date calculation mechanics, the proposed
revision to SFAS&nbsp;No.&nbsp;128 would eliminate a
company&#146;s ability to overcome the presumption of share
settlement for those instruments or contracts that can be
settled, at the issuer or holder&#146;s option, in cash or
shares. Under the revised guidance, FASB has indicated that any
possibility of share settlement other than in an event of
bankruptcy will require a presumption of share settlement when
calculating diluted EPS. The Company&#146;s 2023 Convertible
Senior Notes and 2014 Convertible Notes contain provisions that
would require share settlement in the event of conversion under
certain limited events of default, including bankruptcy.
Additionally, the 2023 Convertible Senior Notes include a
provision allowing the Company to meet a put with either cash or
shares of stock. The revised guidance, if not amended before
final issuance, would increase the potential dilution to the
Company&#146;s EPS, particularly when the price of the
Company&#146;s common stock is low, since the more dilutive of
calculations would be used considering both:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    (i)&nbsp;normal conversion assuming a combination of cash and a
    variable number of shares; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    (ii)&nbsp;conversion during certain limited events of default
    assuming 100% shares at the fixed conversion rate, or, in the
    case of the 2023 Convertible Senior Notes, meeting a put
    entirely with shares of stock.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>EITF Issue No.&nbsp;03-13</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At the November 2004 EITF meeting, the final consensus was
reached on EITF Issue No.&nbsp;03-13, &#147;Applying the
Conditions in Paragraph&nbsp;42 of FASB Statement No.&nbsp;144
in Determining Whether to Report Discontinued Operations&#148;
(&#147;EITF Issue No. 03-13&#148;). This Issue is effective
prospectively for disposal transactions entered into after
January&nbsp;1, 2005, and provides a model to assist in
evaluating (a)&nbsp;which cash flows should be considered in the
determination of whether cash flows of the disposal component
have been or will be eliminated from the ongoing operations of
the entity and (b)&nbsp;the types of continuing involvement that
constitute significant continuing involvement in the operations
of the disposal component. The Company considered the model
outlined in EITF Issue No.&nbsp;03-13 in its evaluation of the
September 2004 sale of the Canadian and Rockies oil and gas
reserves (see Note&nbsp;10 for more information). The final
consensus did not change the Company&#146;s original conclusions
reached under the existing discontinued operations guidance in
SFAS&nbsp;No.&nbsp;144.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>EITF Issue No.&nbsp;03-06</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In March 2004, the EITF reached a final consensus on EITF Issue
No.&nbsp;03-06, &#147;Participating Securities and the
Two&nbsp;&#151; Class&nbsp;Method under FASB Statement
No.&nbsp;128, Earnings per Share,&#148; (&#147;EITF Issue
No.&nbsp;03-06&#148;) effective for reporting period beginning
after March&nbsp;31, 2004. EITF Issue No.&nbsp;03-06 clarifies
the
</DIV>

<P align="center" style="font-size: 10pt;">F-22

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
definition of a participating security under SFAS&nbsp;No. 128
and how to apply the two-class method of computing EPS once it
is determined that a security is participating, including how to
allocate undistributed earnings to such a security. Prior to the
issuance of EITF Issue No.&nbsp;03-06, the Company had issued
certain convertible debt instruments with features that may have
been considered participating under SFAS&nbsp;No.&nbsp;128.
However, under the clarifying guidance of EITF Issue
No.&nbsp;03-06, none of these features created a
&#147;participating security.&#148; Adoption of this
pronouncement did not impact the Company&#146;s current or
historical reported EPS amounts.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>EITF Issue No.&nbsp;04-10</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In October 2004, FASB ratified EITF Issue No.&nbsp;04-10,
&#147;Determining Whether to Aggregate Operating Segments That
Do Not Meet the Quantitative Thresholds&#148; (&#147;EITF Issue
No.&nbsp;04-10&#148;). This issue addresses how an entity should
evaluate the aggregation criteria in paragraph&nbsp;17 of
SFAS&nbsp;No.&nbsp;131 &#147;Disclosures about Segments of an
Enterprise and Related Information&#148; (&#147;SFAS
No.&nbsp;131&#148;) when determining whether operating segments
that do not meet the quantitative thresholds may be aggregated
in accordance with paragraph&nbsp;19 of SFAS&nbsp;No.&nbsp;131.
The Task Force reached a consensus that operating segments must
always have similar economic characteristics and meet a majority
of the remaining five aggregation criteria, items (a)-(e),
listed in paragraph&nbsp;17, in order to be aggregated under
paragraph&nbsp;19. The consensus was originally effective for
reporting periods ending December&nbsp;31, 2004, with the
corresponding information for earlier periods, including interim
periods, restated unless it is impractical to do so. At the
November 2004 EITF meeting, the Task Force delayed the effective
date of this Issue to coincide with the effective date of the
anticipated FASB Staff Position on the meaning of &#147;similar
economic characteristics.&#148; EITF Issue No.&nbsp;04-10 is not
expected to impact the Company&#146;s current approach to
segment reporting or its historically reported segment results.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>SFAS&nbsp;No.&nbsp;123-R</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In December 2004, FASB issued SFAS No.&nbsp;123 (revised 2004)
(&#147;SFAS&nbsp;No.&nbsp;123-R&#148;), &#147;Share Based
Payments.&#148; This Statement revises SFAS&nbsp;No.&nbsp;123,
&#147;Accounting for Stock-Based Compensation&#148; (&#147;SFAS
No.&nbsp;123&#148;) and supersedes Accounting Principles Board
(&#147;APB&#148;) Opinion No.&nbsp;25, &#147;Accounting for
Stock Issued to Employees&#148; (&#147;APB Opinion
No.&nbsp;25&#148;), and its related implementation guidance.
This statement requires a public entity to measure the cost of
employee services received in exchange for an award of equity
instruments based on the grant-date fair value of the award
(with limited exceptions), which must be recognized over the
period during which an employee is required to provide service
in exchange for the award&nbsp;&#151; the requisite service
period (usually the vesting period). The statement applies to
all share-based payment transactions in which an entity acquires
goods or services by issuing (or offering to issue) its shares,
share options,<B> </B>or other equity instruments or by
incurring liabilities to an employee or other supplier
(a)&nbsp;in amounts based, at least in part, on the price of the
entity&#146;s shares or other equity instruments or
(b)&nbsp;that require or may require settlement by issuing the
entity&#146;s equity shares or other equity instruments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The statement requires the accounting for any excess tax
benefits to be consistent with the existing guidance under
SFAS&nbsp;No.&nbsp;123, which provides a two-transaction model
summarized as follows:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    If settlement of an award creates a tax deduction that exceeds
    compensation cost, the additional tax benefit would be recorded
    as a contribution to paid-in-capital.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    If the compensation cost exceeds the actual tax deduction, the
    write-off of the unrealized excess tax benefits would first
    reduce any available paid-in capital arising from prior excess
    tax benefits, and any remaining amount would be charged against
    the tax provision in the income statement.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">F-23

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company is still evaluating the impact of adopting and
subsequently accounting for excess tax benefits under the
two-transaction model described in SFAS&nbsp;No.&nbsp;123, but
does not expect its consolidated net income or financial
position to be materially affected upon adoption of
SFAS&nbsp;No.&nbsp;123-R.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The statement also amends SFAS&nbsp;No.&nbsp;95, &#147;Statement
of Cash Flows,&#148; to require that excess tax benefits be
reported as a financing cash inflow rather than as an operating
cash inflow. However, the statement does not change the
accounting guidance for share-based payment transactions with
parties other than employees provided in SFAS&nbsp;No.&nbsp;123
as originally issued and EITF Issue No.&nbsp;96-18,
&#147;Accounting for Equity Instruments That Are Issued to Other
Than Employees for Acquiring, or in Conjunction with Selling,
Goods or Services.&#148; Further, this statement does not
address the accounting for employee share ownership plans, which
are subject to AICPA Statement of Position 93-6,
&#147;Employers&#146; Accounting for Employee Stock Ownership
Plans.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The statement applies to all awards granted, modified,
repurchased, or cancelled after July&nbsp;1, 2005, and to the
unvested portion of all awards granted prior to that date.
Public entities that used the fair-value-based method for either
recognition or disclosure under SFAS&nbsp;No.&nbsp;123 may adopt
this Statement using a modified version of prospective
application <I>(modified prospective application).</I> Under
modified prospective application, compensation cost for the
portion of awards for which the employee&#146;s requisite
service has not been rendered that are outstanding as of
July&nbsp;1, 2005 must be recognized as the requisite service is
rendered on or after that date. The compensation cost for that
portion of awards shall be based on the original grant-date fair
value of those awards as calculated for recognition under
SFAS&nbsp;No.&nbsp;123. The compensation cost for those earlier
awards shall be attributed to periods beginning on or after
July&nbsp;1, 2005 using the attribution method that was used
under SFAS&nbsp;No.&nbsp;123. Furthermore, the method of
recognizing forfeitures must now be based on an estimated
forfeiture rate and can no longer be based on forfeitures as
they occur.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Adoption of SFAS&nbsp;No.&nbsp;123-R is not expected to
materially impact the Company&#146;s consolidated results of
operations, cash flows or financial position, due to the
Company&#146;s prior adoption of SFAS&nbsp;No.&nbsp;123 as
amended by SFAS&nbsp;No.&nbsp;148, &#147;Accounting for
Stock-Based Compensation&nbsp;&#151; Transition and
Disclosure,&#148; (&#147;SFAS No.&nbsp;148&#148;) on
January&nbsp;1, 2003. SFAS&nbsp;No.&nbsp;148 allowed companies
to adopt the fair-value-based method for recognition of
compensation expense under SFAS&nbsp;No.&nbsp;123 using
prospective application. Under that transition method,
compensation expense was recognized in the Company&#146;s
Consolidated Statement of Operations only for stock-based
compensation granted after the adoption date of January&nbsp;1,
2003. Furthermore, as we have chosen the multiple option
approach in recognizing compensation expense associated with the
fair value of each option granted, nearly 80% of the total fair
value of the stock option is recognized by the end of the second
year of the vesting period, and therefore remaining compensation
expense associated with options granted before January&nbsp;1,
2003, is expected to be immaterial.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>SFAS&nbsp;No.&nbsp;151</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In November 2004, FASB issued SFAS No.&nbsp;151, &#147;Inventory
Costs, an amendment of ARB No.&nbsp;43, Chapter&nbsp;4&#148;
(&#147;SFAS No.&nbsp;151&#148;). This Statement amends the
guidance in ARB No.&nbsp;43, Chapter&nbsp;4, &#147;Inventory
Pricing,&#148; to clarify the accounting for abnormal amounts of
idle facility expense, freight, handling costs, and wasted
material (spoilage). Paragraph&nbsp;5 of ARB 43, Chapter&nbsp;4,
previously stated that &#147;. . . under some circumstances,
items such as idle facility expense, excessive spoilage, double
freight, and rehandling costs may be so abnormal as to require
treatment as current period charges. . . .&#148; This Statement
requires those items to be recognized as a current-period charge
regardless of whether they meet the criterion of &#147;so
abnormal.&#148; In addition, this Statement requires that
allocation of fixed production overheads to the costs of
conversion be based on the normal capacity of the production
facilities. The provisions of SFAS&nbsp;No.&nbsp;151 are
applicable to inventory costs incurred during fiscal years
beginning after June&nbsp;15, 2005. Adoption of this statement
is not expected to materially impact the Company&#146;s
consolidated results of operations, cash flows or financial
position.
</DIV>

<P align="center" style="font-size: 10pt;">F-24

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>SFAS&nbsp;No.&nbsp;153</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In December 2004, FASB issued SFAS No.&nbsp;153
(&#147;SFAS&nbsp;No.&nbsp;153&#148;), &#147;Exchanges of
Nonmonetary Assets.&#148; This standard eliminates the exception
in APB Opinion No.&nbsp;29, &#147;Accounting for Nonmonetary
Transactions&#148; (&#147;APB Opinion No.&nbsp;29&#148;) for
nonmonetary exchanges of similar productive assets and replaces
it with a general exception for exchanges of nonmonetary assets
that do not have commercial substance. It requires exchanges of
productive assets to be accounted for at fair value, rather than
at carryover basis, unless (1)&nbsp;neither the asset received
nor the asset surrendered has a fair value that is determinable
within reasonable limits or (2)&nbsp;the transaction lacks
commercial substance (as defined). A nonmonetary exchange has
commercial substance if the future cash flows of the entity are
expected to change significantly as a result of the exchange.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The new standard will not apply to the transfers of interests in
assets in exchange for an interest in a joint venture and amends
SFAS&nbsp;No.&nbsp;66, &#147;Accounting for Sales of Real
Estate&#148; (&#147;SFAS No.&nbsp;66&#148;), to clarify that
exchanges of real estate for real estate should be accounted for
under APB Opinion No.&nbsp;29. It also amends
SFAS&nbsp;No.&nbsp;140, to remove the existing scope exception
relating to exchanges of equity method investments for similar
productive assets to clarify that such exchanges are within the
scope of SFAS&nbsp;No.&nbsp;140 and not APB Opinion No.&nbsp;29.
SFAS&nbsp;No.&nbsp;153 is effective for nonmonetary asset
exchanges occurring in fiscal periods beginning after
June&nbsp;15, 2005. Adoption of this statement is not expected
to materially impact the Company&#146;s consolidated results of
operations, cash flows or financial position.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>3.</B></TD>
    <TD>
    <B>Available-for-Sale Debt Securities</B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Collateral Debt Securities</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At December&nbsp;31, 2003, the Company owned held-to-maturity
debt securities that were pledged as collateral to support the
King City operating lease and that matured serially in amounts
equal to a portion of the semi-annual lease payments. At
December&nbsp;31, 2003, the amortized cost of these securities
was $82.6&nbsp;million, which represented the book value of the
instruments when the Company accounted for the securities as
held-to-maturity. In the first quarter of 2004, the Company
reclassified the securities that served as collateral under the
original lease from held-to-maturity to available-for-sale in
accordance with SFAS&nbsp;No.&nbsp;115, &#147;Accounting for
Certain Investments in Debt and Equity Securities&#148;
(&#147;SFAS&nbsp;No.&nbsp;115&#148;). As a result of the
reclassification from held-to-maturity to available-for-sale,
the Company accounted for these securities at fair value for the
duration of 2004 until the instruments were liquidated. On
May&nbsp;19, 2004, the Company restructured the King City
operating lease. See Note&nbsp;13 for more information regarding
the King City restructuring. At the close of the restructuring
transaction, the Company sold the securities for total proceeds
of $95.4&nbsp;million and recorded a pre-tax gain of
$12.3&nbsp;million in the Other Income. Also, in contemplation
of the sale, the Company entered into an interest rate swap with
a financial institution with the intent to hedge against a
decline in value of the collateral debt securities. The swap did
not meet the required criteria for hedge effectiveness under
SFAS&nbsp;No.&nbsp;133 and, as a result, the Company recorded
all changes in the swap&#146;s fair value between the dates of
inception and settlement in the Other Income. Upon settlement of
the swap, the Company had recognized a cumulative gain of
$5.2&nbsp;million, which was also recorded in the Other Income.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>HIGH TIDES Securities Held</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Between September 2003 and July 2004, the Company exchanged
approximately 15.0&nbsp;million shares of Calpine common stock
in privately negotiated transactions for approximately
$77.5&nbsp;million par value of HIGH TIDES I and
15.8&nbsp;million shares of Calpine common stock in privately
negotiated transactions for approximately $75.0&nbsp;million par
value of HIGH TIDES&nbsp;II. On October&nbsp;20, 2004, the
Company repaid the convertible subordinate debentures held by
Trust&nbsp;I and Trust&nbsp;II, which used those proceeds to
redeem the outstanding
5<FONT style="font-size: 70%"><SUP>3</SUP></FONT>/<FONT style="font-size: 60%">4</FONT>%&nbsp;convertible
preferred securities (&#147;HIGH TIDES I&#148;) issued by
Trust&nbsp;I, and
5<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT>%&nbsp;convertible
</DIV>

<P align="center" style="font-size: 10pt;">F-25

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
preferred securities (&#147;HIGH TIDES&nbsp;II&#148;) issued by
Trust&nbsp;II. The redemption price paid per each $50 principal
amount of such convertible preferred securities was $50 plus
accrued and unpaid distributions to the redemption date in the
amount of $0.6309&nbsp;per unit with respect to the convertible
preferred securities issued by Trust&nbsp;I and $0.6035&nbsp;per
unit with respect to the convertible preferred securities issued
by Trust&nbsp;II. See Note&nbsp;12 for further information on
the convertible subordinate debentures. The redemption of the
HIGH TIDES I and HIGH TIDES&nbsp;II available-for-sale
securities previously purchased and held by the Company resulted
in a realized gain of approximately $6.1&nbsp;million. Calpine
intends to cause both Trusts, which are related parties, to be
terminated.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On September&nbsp;30, 2004, the Company repurchased par value of
$115.0&nbsp;million HIGH TIDES&nbsp;III for cash of
$111.6&nbsp;million. Due to the deconsolidation of the Trusts
upon the adoption of FIN&nbsp;46 as of December&nbsp;31, 2003,
and the terms of the underlying debentures, the repurchased HIGH
TIDES&nbsp;III preferred securities could not be offset against
the convertible subordinated debentures and are accounted for as
available for sale securities and recorded in Other Assets at
fair market value at December&nbsp;31, 2004, with the difference
from their repurchase price recorded in OCI (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="29%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap><B>December&nbsp;31, 2004</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="18" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Gross Unrealized</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="11">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Gains in Other</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Realized</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Repurchase</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Comprehensive</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Gains on</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Price(1)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Income/ (Loss)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Redemption</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Redemptions</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Fair Value</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    HIGH TIDES I</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>75,020</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,480</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(77,500</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    HIGH TIDES&nbsp;II</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>71,341</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,659</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(75,000</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    HIGH TIDES&nbsp;III</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>110,592</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>958</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>111,550</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>958</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6,139</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(152,500</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>111,550</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    The repurchase price is shown net of accrued interest. The
    repurchased amount for HIGH TIDES I was $75.4&nbsp;million less
    $0.4&nbsp;million of accrued interest. The repurchased amount
    for HIGH TIDES&nbsp;II was $72.0&nbsp;million less
    $0.7&nbsp;million of accrued interest. The repurchased amount
    for HIGH TIDES III was $111.6&nbsp;million less $1&nbsp;million
    of accrued interest.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>4.&nbsp;Property, Plant and Equipment, Net, and Capitalized
Interest</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of December&nbsp;31, 2004 and 2003, the components of
property, plant and equipment, are stated at cost less
accumulated depreciation and depletion as follows (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="69%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Buildings, machinery, and equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>16,449,029</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>13,137,550</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas properties, including pipelines</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,189,626</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,176,796</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Geothermal properties</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>474,869</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>460,602</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>218,177</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>234,758</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,331,701</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,009,706</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Accumulated depreciation and depletion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,122,371</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,388,225</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,209,330</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,621,481</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Land</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>105,087</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>95,037</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Construction in progress</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,321,977</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,762,132</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Property, plant and equipment, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>20,636,394</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>19,478,650</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Total depreciation and depletion expense for the years ended
December&nbsp;31, 2004, 2003 and 2002 was $593.1&nbsp;million,
$522.8&nbsp;million and $402.4&nbsp;million, respectively.
</DIV>

<P align="center" style="font-size: 10pt;">F-26

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company has various debt instruments that are secured by
certain of its property, plant and equipment. See
Notes&nbsp;11-18 for a detailed discussion of such instruments.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Buildings, Machinery, and Equipment</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This component primarily includes electric power plants and
related equipment. Depreciation is recorded utilizing the
straight-line method over the estimated original composite
useful life, generally 35&nbsp;years for baseload power plants,
exclusive of the estimated salvage value, typically 10%. Peaking
facilities are generally depreciated over 40&nbsp;years, less
the estimated salvage value of 10%. The Company capitalizes
costs for major turbine generator refurbishments for the
&#147;hot gas path section&#148; and compressor components,
which include such significant items as combustor parts (e.g.
fuel nozzles, transition pieces, and &#147;baskets&#148;)
compressor blades, vanes and diaphragms. These refurbishments
are done either under long term service agreements by the
original equipment manufacturer or by Calpine&#146;s Turbine
Maintenance Group. The capitalized costs are depreciated over
their estimated useful lives ranging from 2 to 14&nbsp;years. At
December&nbsp;31, 2004, the weighted average life was
approximately 6&nbsp;years. The Company expenses annual planned
maintenance. Included in buildings, machinery and equipment are
assets under capital leases. See Note&nbsp;13 for more
information regarding these assets under capital leases. Certain
capital improvements associated with leased facilities may be
deemed to be leasehold improvements and are amortized over the
shorter of the term of the lease or the economic life of the
capital improvement.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Oil and Gas Properties</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company follows the successful efforts method of accounting
for oil and natural gas activities. Under the successful efforts
method, lease acquisition costs and all development costs are
capitalized. Exploratory drilling costs are capitalized until
the results are determined. If proved reserves are not
discovered, the exploratory drilling costs are expensed. Other
exploratory costs are expensed as incurred. Interest costs
related to financing major oil and gas projects in progress are
capitalized until the projects are evaluated or until the
projects are substantially complete and ready for their intended
use if the projects are evaluated as successful. The provision
for depreciation, depletion, and amortization is based on the
capitalized costs as determined above, plus future abandonment
costs net of salvage value, using the units of production method
with lease acquisition costs amortized over total proved
reserves and other costs amortized over proved developed
reserves.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company assesses the impairment for oil and gas properties
periodically (at least annually) to determine if impairment of
such properties is necessary. Management utilizes its year-end
reserve report prepared by a licensed independent petroleum
engineering firm and related market factors to estimate the
future cash flows for all proved developed (producing and
non-producing) and proved undeveloped reserves. Property
impairments may occur if a field discovers lower than
anticipated reserves, reservoirs produce below original
estimates or if commodity prices fall below a level that
significantly affects anticipated future cash flows on the
property. Proved oil and gas property values are reviewed when
circumstances suggest the need for such a review and, if
required, the proved properties are written down to their
estimated fair value based on proved reserves and other market
factors. Unproved properties are reviewed quarterly to determine
if there has been impairment of the carrying value, with any
such impairment charges to expense in the current period. As a
result of decreases in proved undeveloped reserves located in
South Texas and proved developed non-producing reserves in
Offshore Gulf of Mexico, a non-cash impairment charge of
approximately $202.1 was recorded for the year ended
December&nbsp;31, 2004, to the &#147;Oil and gas
impairment&#148; line of the Consolidated Statement of
Operations. For the years ended December&nbsp;31, 2003 and 2002,
the impairment charge recorded to the same line item was
$2.9&nbsp;million and $3.4&nbsp;million, respectively. These
charges related exclusively to the Oil and Gas Production and
Marketing segment.
</DIV>

<P align="center" style="font-size: 10pt;">F-27

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Geothermal Properties</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company capitalizes costs incurred in connection with the
development of geothermal properties, including costs of
drilling wells and overhead directly related to development
activities as well as costs of production equipment, the related
facilities and the operating power plants. Proceeds from the
sale of geothermal properties are applied against capitalized
costs, with no gain or loss recognized.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Geothermal costs, including an estimate of future costs to be
incurred, costs to optimize the productivity of the assets, and
the estimated costs to dismantle, are amortized by the units of
production method based on the estimated total productive output
over the estimated useful lives of the related steam fields.
Depreciation of the buildings and roads is computed using the
straight-line method over their estimated useful lives. It is
reasonably possible that the estimate of useful lives, total
unit-of-production or total capital costs to be amortized using
the units-of-production method could differ materially in the
near term from the amounts assumed in arriving at current
depreciation expense. These estimates are affected by such
factors as the ability of the Company to continue selling
electricity to customers at estimated prices, changes in prices
of alternative sources of energy such as hydro-generation and
gas, and changes in the regulatory environment. Geothermal steam
turbine generator refurbishments are expensed as incurred.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Other</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
This component primarily includes software and emission
reduction credits (&#147;ERCs&#148;). Software is amortized over
its estimated useful life, generally 3 to 5&nbsp;years. The
Company holds ERCs that must generally be acquired during the
permitting process for power plants in construction. ERCs are
related to reductions in environmental emissions that result
from some action like increasing energy efficiency, and are
measured and registered in a way so that they can be bought,
sold, and traded. The lives of the ERCs are usually consistent
with the life of the related plant. The gross ERC balance
recorded in property, plant and equipment and included in
&#147;Other&#148; above was $103.6&nbsp;million and
$104.8&nbsp;million as of December&nbsp;31, 2004 and 2003,
respectively. Of this balance $21.3&nbsp;million and
$21.3&nbsp;million related to plants in operation as of
December&nbsp;31, 2004 and 2003, respectively. The depreciation
expense recorded in 2004, 2003 and 2002, related to ERCs was
$0.5&nbsp;million, $0.5&nbsp;million and $0.4&nbsp;million,
respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Construction in Progress</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
CIP is primarily attributable to gas-fired power projects under
construction including prepayments on gas and steam turbine
generators and other long lead-time items of equipment for
certain development projects not yet in construction. Upon
commencement of plant operation, these costs are transferred to
the applicable property category, generally buildings, machinery
and equipment.
</DIV>

<P align="center" style="font-size: 10pt;">F-28

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Capital Spending&nbsp;&#151; Development and Construction</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Construction and development costs in process consisted of the
following at December&nbsp;31, 2004 (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="39%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Equipment</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Project</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B># of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Included in</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Development</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Unassigned</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Projects</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>CIP</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>CIP</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Costs</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Equipment</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Projects in construction(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,194,530</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,094,490</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Projects in advanced development</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>670,806</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>520,036</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>102,829</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Projects in suspended development</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>421,547</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>168,985</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38,398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Projects in early development</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,952</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other capital projects</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>NA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35,094</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unassigned equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>NA</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>66,073</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total construction and development costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,321,977</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,783,511</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>150,179</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>66,073</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    The Company has a total of 11 projects in construction. This
    includes the 10 projects above that are recorded in CIP and 1
    project that is recorded in investments in power projects.
    Construction activities and the capitalization of interest on
    one of the construction projects has been suspended or delayed
    due to current market conditions. The CIP balance on this
    project was $461.5&nbsp;million as of December&nbsp;31, 2004.
    Subsequent to December&nbsp;31, 2004, construction activities
    and the capitalization of interest on two additional
    construction projects was suspended or delayed. Total CIP on
    these two projects was $683.0&nbsp;million as of
    December&nbsp;31, 2004.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Projects in Construction</I>&nbsp;&#151; The 10 projects in
construction are projected to come on line from March 2005 to
November 2007 or later. These projects will bring on line
approximately 4,656&nbsp;MW of base load capacity (5,264&nbsp;MW
with peaking capacity). Interest and other costs related to the
construction activities necessary to bring these projects to
their intended use are being capitalized, unless work has been
suspended, in which case capitalization of interest expense is
suspended until active construction resumes. At
December&nbsp;31, 2004, the estimated funding requirements to
complete these projects, net of expected project financing
proceeds, is approximately $84.6&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Projects in Advanced Development</I>&nbsp;&#151; There are an
additional 10 projects in advanced development. These projects
will bring on line approximately 5,307&nbsp;MW of base load
capacity (6,095&nbsp;MW with peaking capacity). Interest and
other costs related to the development activities necessary to
bring these projects to their intended use are being
capitalized. However, the capitalization of interest has been
suspended on 2&nbsp;projects for which development activities
are substantially complete but construction will not commence
until a PPA and financing are obtained. The estimated cost to
complete the 10 projects in advanced development is
approximately $3.0&nbsp;billion. The Company&#146;s current plan
is to finance these project costs as PPAs are arranged.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Suspended Development Projects</I>&nbsp;&#151; Due to current
electric market conditions, we have ceased capitalization of
additional development costs and interest expense on certain
development projects on which work has been suspended.
Capitalization of costs may recommence as work on these projects
resumes, if certain milestones and criteria are met indicating
that it is again highly probable that the costs will be
recovered through future operations. As is true for all
projects, the suspended projects are reviewed for impairment
whenever there is an indication of potential reduction in a
project&#146;s fair value. Further, if it is determined that it
is no longer probable that the projects will be completed and
all capitalized costs recovered through future operations, the
carrying values of the projects would be written down to their
recoverable value. These projects would bring on line
approximately 2,956&nbsp;MW of base load capacity (3,409&nbsp;MW
with peaking capacity). The estimated cost to complete these
projects is approximately $1.8&nbsp;billion.
</DIV>

<P align="center" style="font-size: 10pt;">F-29

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Projects in Early Development</I>&nbsp;&#151; Costs for
projects that are in early stages of development are capitalized
only when it is highly probable that such costs are ultimately
recoverable and significant project milestones are achieved.
Until then all costs, including interest costs, are expensed.
The projects in early development with capitalized costs relate
to two projects and include geothermal drilling costs and
equipment purchases.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Other Capital Projects</I>&nbsp;&#151; Other capital projects
primarily consist of enhancements to operating power plants, oil
and gas and geothermal resource and facilities development, as
well as software developed for internal use.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Unassigned Equipment</I>&nbsp;&#151; As of December&nbsp;31,
2004, the Company had made progress payments on 4&nbsp;turbines
and other equipment with an aggregate carrying value of
$66.1&nbsp;million. This unassigned equipment is classified on
the balance sheet as other assets because it is not assigned to
specific development and construction projects. The Company is
holding this equipment for potential use on future projects. It
is possible that some of this unassigned equipment may
eventually be sold, potentially in combination with the
Company&#146;s engineering and construction services. For
equipment that is not assigned to development or construction
projects, interest is not capitalized.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Capitalized Interest</I>&nbsp;&#151; The Company capitalizes
interest on capital invested in projects during the advanced
stages of development and the construction period in accordance
with SFAS&nbsp;No.&nbsp;34, &#147;Capitalization of Interest
Cost,&#148; (&#147;SFAS No.&nbsp;34&#148;) as amended by
SFAS&nbsp;No.&nbsp;58, &#147;Capitalization of Interest Cost in
Financial Statements That Include Investments Accounted for by
the Equity Method (an Amendment of FASB Statement
No.&nbsp;34).&#148; The Company&#146;s qualifying assets include
CIP, certain oil and gas properties under development,
construction costs related to unconsolidated investments in
power projects under construction, advanced stage development
costs, as well as such above mentioned assets classified as held
for sale. For the years ended December&nbsp;31, 2004, 2003 and
2002, the total amount of interest capitalized was
$376.1&nbsp;million, $444.5&nbsp;million and
$575.5&nbsp;million, including $49.1&nbsp;million,
$66.0&nbsp;million and $114.2&nbsp;million, respectively, of
interest incurred on funds borrowed for specific construction
projects and $327.0&nbsp;million, $378.5&nbsp;million and
$461.3&nbsp;million, respectively of interest incurred on
general corporate funds used for construction. Upon commencement
of plant operation, capitalized interest, as a component of the
total cost of the plant, is amortized over the estimated useful
life of the plant. The decrease in the amount of interest
capitalized during the year ended December&nbsp;31, 2004
reflects the completion of construction for several power
plants, the suspension of certain of the Company&#146;s
development and construction projects, and a reduction in the
Company&#146;s development and construction program in general.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In accordance with SFAS&nbsp;No.&nbsp;34, the Company determines
which debt instruments best represent a reasonable measure of
the cost of financing construction assets in terms of interest
cost incurred that otherwise could have been avoided. These debt
instruments and associated interest cost are included in the
calculation of the weighted average interest rate used for
capitalizing interest on general funds. The primary debt
instruments included in the rate calculation of interest
incurred on general corporate funds are the Company&#146;s
Senior Notes, the Company&#146;s term loan facilities and the
secured working capital revolving credit facility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Impairment Evaluation</I>&nbsp;&#151; All construction and
development projects and unassigned turbines are reviewed for
impairment whenever there is an indication of potential
reduction in fair value. Equipment assigned to such projects is
not evaluated for impairment separately, as it is integral to
the assumed future operations of the project to which it is
assigned. If it is determined that it is no longer probable that
the projects will be completed and all capitalized costs
recovered through future operations, the carrying values of the
projects would be written down to the recoverable value in
accordance with the provisions of SFAS&nbsp;No.&nbsp;144. The
Company reviews its unassigned equipment for potential
impairment based on probability-weighted alternatives of
utilizing the equipment for future projects versus selling the
equipment. Utilizing this methodology, the Company does not
believe that the equipment held for use is impaired. However,
during the year ended December&nbsp;31, 2004, the Company
recorded to the &#147;Equipment cancellation
</DIV>

<P align="center" style="font-size: 10pt;">F-30

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
and impairment cost&#148; line of the Consolidated Statement of
Operations $3.2&nbsp;million in net losses in connection with
equipment sales. During the year ended December&nbsp;31 2003,
the Company recorded to the same line $29.4&nbsp;million in
losses in connection with the sale of four turbines, and it may
incur further losses should it decide to sell more unassigned
equipment in the future.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Asset Retirement Obligations</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company adopted SFAS&nbsp;No.&nbsp;143, &#147;Accounting for
Asset Retirement Obligations&#148;
(&#147;SFAS&nbsp;No.&nbsp;143&#148;) on January&nbsp;1, 2003. As
required by the new rules, the Company recorded liabilities
equal to the present value of expected future asset retirement
obligations at January&nbsp;1, 2003. The Company identified
obligations related to operating gas-fired power plants,
geothermal power plants and oil and gas properties. The
liabilities are partially offset by increases in net assets
recorded as if the provisions of SFAS&nbsp;No.&nbsp;143 had been
in effect at the date the obligation was incurred, which for
power plants is generally the start of construction, typically
building up during construction until commercial operations for
the facility is achieved. For oil and gas properties the date
the obligation is incurred is generally the start of drilling of
a well or the start of construction of a facility, typically
building up until completion of drilling a well or completion of
construction of a facility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The information below reconciles the values of the asset
retirement obligation from the date the liability was recorded
(in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="83%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Asset retirement obligation at January&nbsp;1, 2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>33,929</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liabilities incurred</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,311</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liabilities settled</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,397</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accretion expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,842</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revisions in the estimated cash flows</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,799</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other (primarily foreign currency translation)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6,815</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Asset retirement obligation at December&nbsp;31, 2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>35,669</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liabilities incurred</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,207</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Liabilities settled</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,279</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accretion expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,430</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revisions in the estimated cash flows</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(329</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other (primarily foreign currency translation)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,350</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Asset retirement obligation at December&nbsp;31, 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>42,348</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>5.</B></TD>
    <TD>
    <B>Goodwill and Other Intangible Assets</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On January&nbsp;1, 2002, the Company adopted
SFAS&nbsp;No.&nbsp;142, &#147;Goodwill and Other Intangible
Assets,&#148; (&#147;SFAS No.&nbsp;142&#148;) which requires
that all intangible assets with finite useful lives be amortized
and that goodwill and intangible assets with indefinite lives
not be amortized, but rather tested upon adoption and at least
annually for impairment. The Company completed its annual
goodwill impairment test as required under
SFAS&nbsp;No.&nbsp;142 and determined that the fair value of the
reporting units with goodwill exceeded their net carrying
values. Therefore, the Company&#146;s goodwill asset was not
impaired as of December&nbsp;31, 2004. Subsequent goodwill
impairment tests will be performed, at a minimum, in December of
each year, in conjunction with the Company&#146;s annual
reporting process.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In accordance with the standard, the Company discontinued the
amortization of its recorded goodwill as of January&nbsp;1,
2002, identified reporting units based on its current segment
reporting structure and allocated all
</DIV>

<P align="center" style="font-size: 10pt;">F-31

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
recorded goodwill, as well as other assets and liabilities, to
the reporting units. The entire balance of goodwill was assigned
to the PSM reporting unit, which is included in the Corporate,
Other and Eliminations reporting segment as defined by
SFAS&nbsp;No.&nbsp;131. Recorded goodwill, by reporting segment,
as of December&nbsp;31, 2003, was (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="74%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Electric Generation and Marketing</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and Gas Production and Marketing</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Corporate, Other and Eliminations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45,160</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45,160</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>45,160</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>45,160</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company also reassessed the useful lives and the
classification of its identifiable intangible assets and
determined that they continue to be appropriate. The components
of the amortizable intangible assets consist of the following
(in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="32%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>As of December&nbsp;31, 2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>As of December&nbsp;31, 2003</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Useful Life/</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Carrying</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Accumulated</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Carrying</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Accumulated</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Contract Life</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Amount(1)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Amortization(1)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Amount(1)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Amortization(1)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Patents</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>485</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(417</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>485</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(320</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Power sales agreements</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>85,099</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(43,115</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>86,962</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(40,180</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fuel supply and fuel management contracts</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,826</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,198</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,991</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Geothermal lease rights</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,518</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(550</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,518</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(450</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Steam purchase agreement</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,223</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,456</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,766</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(944</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,755</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(526</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,088</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(208</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>121,080</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(47,890</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>137,017</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(47,093</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Fully amortized intangible assets are not included.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Amortization expense of Other Intangible Assets was
$5.0&nbsp;million, $5.3&nbsp;million and $21.5&nbsp;million, in
2004, 2003 and 2002, respectively. Assuming no future
impairments of these assets or additions as the result of
acquisitions, annual amortization expense will be
$4.3&nbsp;million in 2005, $4.2&nbsp;million in 2006,
$4.2&nbsp;million in 2007, $4.2&nbsp;million in 2008 and
$3.9&nbsp;million in 2009.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>6.</B></TD>
    <TD>
    <B>Acquisitions</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company seeks to acquire power generating facilities and
certain oil and gas properties that provide significant
potential for revenue, cash flow and earnings growth, and that
provide the opportunity to enhance the operating efficiency of
its plants. Acquisition activity is dependent on the
availability of financing on attractive terms and the
expectation of returns that meets the Company&#146;s long-term
requirements. The following material mergers and acquisitions
were consummated during the years ended December&nbsp;31, 2004
and 2003. There were no mergers or acquisitions consummated
during the year ended December&nbsp;31, 2002. For all business
combinations, the results of operations of the acquired
companies were incorporated into the Company&#146;s Consolidated
Financial Statements commencing on the date of acquisition.
</DIV>

<P align="center" style="font-size: 10pt;">F-32

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>2004 Acquisitions</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Calpine Cogeneration Company Transaction</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On March&nbsp;23, 2004, the Company completed the acquisition of
the remaining 20% interest in Calpine Cogeneration Corporation
(&#147;Calpine Cogen&#148;), which holds interests in six power
facilities, from NRG Energy, Inc. (&#147;NRG&#148;) for
approximately $2.5&nbsp;million. The Company purchased its
initial 80% interest in Calpine Cogen (formerly known as
Cogeneration Corporation of America) from NRG in 1999. Prior to
the acquisition, the Company consolidated the assets of Calpine
Cogen in its financial statements and reflected the 20% interest
held by NRG as a minority interest. NRG&#146;s minority interest
had a carrying value of approximately $37.5&nbsp;million at the
time of acquisition. The carrying value of the underlying assets
was adjusted downward on a pro-rata basis for the difference
between the purchase price and the carrying value of NRG&#146;s
minority interest. As a result of the current transaction, the
Company now has a 100% interest in the Newark, Parlin, Morris
and Pryor facilities, an 83% interest in the Philadelphia Water
Project, and a 50% interest in the Grays Ferry Power Plant.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Aries Transaction</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On March&nbsp;26, 2004, the Company acquired the remaining 50%
interest in the Aries facility from a subsidiary of Aquila, Inc.
(Aquila and its subsidiaries referred to collectively as
&#147;Aquila&#148;). At the same time, Aries terminated a
tolling contract with another subsidiary of Aquila. Aquila paid
$5&nbsp;million in cash and assigned certain transmission and
other rights to the Company. Aquila and the Company also amended
a master netting agreement between them, and as a result, the
Company returned cash margin deposits totaling
$10.8&nbsp;million to Aquila. Contemporaneous with the closing
of the acquisition, Aries&#146; existing construction loan was
converted to two term loans totaling $178.8&nbsp;million. The
Company contributed $15&nbsp;million of equity to Aries in
connection with the term out of the construction loan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The amounts below represents 50% of the fair value of the assets
acquired and liabilities assumed in the transaction. These
amounts together with 50% of the investment owned by the Company
prior to the acquisition are now fully consolidated into the
Company&#146;s financial statements.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="85%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,028</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Contracts</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,505</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Property, plant and equipment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100,793</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,902</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,978</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Derivative liability</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(16,022</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(88,228</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Brazos Valley Power Plant Transaction</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On March&nbsp;31, 2004, the Company closed on the purchase of
the 570-megawatt, natural gas-fired, Brazos Valley Power Plant
(&#147;Brazos Valley&#148;) in Fort&nbsp;Bend County, Texas, for
total consideration of approximately $181.1&nbsp;million. The
Company used the net proceeds from the sale of its undivided
interest in the Lost Pines 1 facility (in January 2004) and cash
on hand to acquire this facility in a transaction structured as
a tax deferred like-kind exchange under IRS Section&nbsp;1031.
The consortium of banks that had provided construction financing
for the power plant and had taken possession of the plant from
the original developer in 2003 indirectly owned the special
purpose companies that owned Brazos Valley. Brazos Valley has
become part of the collateral package for the Calpine
Construction Finance Company, L.P. (&#147;CCFC I&#148;) First
Priority Secured Institutional Term Loans Due 2009 and Second
Priority Senior Secured Floating Rate Notes Due
</DIV>

<P align="center" style="font-size: 10pt;">F-33

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
2011. The fair value of the Brazos Valley facility was equal to
the purchase price and as a result, the entire purchase price
was allocated to the power plant assets and is recorded in
property plant and equipment in the Company&#146;s consolidated
balance sheet.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>2003 Acquisition</B>
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Thomassen Turbine Systems Transaction</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On February&nbsp;26, 2003, the Company, through its wholly-owned
subsidiary Calpine European Finance, LLC, purchased 100% of the
outstanding stock of Babcock Borsig Power Turbine Services
(&#147;BBPTS&#148;) from its parent company, Babcock Borsig.
Immediately following the acquisition, the BBPTS name was
changed to Thomassen Turbine Systems B.V. (&#147;TTS&#148;). The
Company&#146;s total cost of the acquisition was
$12.0&nbsp;million and was comprised of two pieces. The first
was a $7.0&nbsp;million cash payment to Babcock Borsig to
acquire the outstanding stock of TTS. Included in this payment
was the right to a note receivable valued at 11.9&nbsp;million
Euro (approximately US$12.9&nbsp;million on the acquisition
date) due from TTS, which the Company acquired from Babcock
Borsig for $1. Additionally, as of the date of the acquisition,
TTS owed $5.0&nbsp;million in payments to another of the
Company&#146;s wholly owned subsidiaries, PSM, under a
pre-existing license agreement. Because of the acquisition, TTS
ceased to exist as a third party debtor to the Company, thereby
resulting in a reduction of third party receivables of
$5.0&nbsp;million from the Company&#146;s consolidated
perspective.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Pro Forma Effects of Acquisitions</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Acquired subsidiaries are consolidated upon closing date of the
acquisition. The table below reflects the Company&#146;s
unaudited pro forma combined results of operations for all
business combinations during 2004 and 2003, as if the
acquisitions had taken place at the beginning of fiscal year
2002. The Company&#146;s combined results include the effects of
Calpine Cogen, Aries, Brazos Valley and TTS (in thousands,
except per share amounts):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="59%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9,254,727</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,958,416</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,408,668</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before discontinued operations and cumulative
    effect of accounting changes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(448,541</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>70,831</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>28,562</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(250,176</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>266,743</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>120,458</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss) per basic share</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.58</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.68</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.34</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss) per diluted share</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.58</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.33</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In management&#146;s opinion, these unaudited pro forma amounts
are not necessarily indicative of what the actual combined
results of operations might have been if the 2004 and 2003
acquisitions had been effective at the beginning of fiscal year
2002. In addition, they are not intended to be a projection of
future results and do not reflect all the synergies that might
be achieved from combined operations.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>7.</B></TD>
    <TD>
    <B>Investments in Power Projects and Oil and Gas Properties</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company&#146;s investments in power projects and oil and gas
properties are integral to its operations. As discussed in
Note&nbsp;2, the Company&#146;s joint venture investments were
evaluated under FIN&nbsp;46-R to determine which, if any,
entities were VIEs. Based on this evaluation, the Company
determined that the Acadia Power Partners, LLC,
Valladolid&nbsp;III Energy Center, Grays Ferry Power Plant,
Whitby Cogeneration facility and the Androscoggin Energy Center
were VIEs, in which the Company held a significant variable
interest. However, all of the entities except for Acadia Power
Partners, LLC met the definition of a business and qualified for
the business scope exception provided in paragraph&nbsp;4(h) of
FIN&nbsp;46-R, and consequently were not subject to the VIE
consolidated model. Further, based on a qualitative and
quantitative assessment of the expected
</DIV>

<P align="center" style="font-size: 10pt;">F-34

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
variability in Acadia Power Partners, LLC, the Company was not
the Primary Beneficiary. Consequently, the Company continues to
account for its joint venture investments in power projects in
accordance with APB Opinion No.&nbsp;18, &#147;The Equity Method
of Accounting For Investments in Common Stock&#148; and
FIN&nbsp;35, &#147;Criteria for Applying the Equity Method of
Accounting for Investments in Common Stock (An Interpretation of
APB Opinion No.&nbsp;18).&#148; However, in the fourth quarter
of 2004, the Company changed from the equity method to the cost
method to account for its investment in Androscoggin as
discussed below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Acadia Power Partners, LLC (&#147;Acadia&#148;) is the owner of
a 1,210-megawatt electric wholesale generation facility located
in Louisiana and is a joint venture between the Company and
Cleco Corporation. The Company&#146;s involvement in this VIE
began upon formation of the entity in March 2000. The
Company&#146;s maximum potential exposure to loss at
December&nbsp;31, 2004, is limited to the book value of its
investment of approximately $214.5&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Valladolid&nbsp;III Energy Center is the owner of a
525-megawatt, natural gas-fired energy center currently under
construction for Comision Federal de Electricidad
(&#147;CFE&#148;) at Valladolid, Mexico in the Yucatan
Peninsula. The facility will deliver electricity to CFE under a
25-year power sales agreement. The project is a joint venture
between the Company, Mitsui&nbsp;&#38; Co., Ltd.,
(&#147;Mitsui&#148;) and Chubu Electric (&#147;Chubu&#148;),
both headquartered in Japan. The Company owns 45% of the entity
while Mitsui and Chubu each own 27.5%. Construction began in May
2004 and the project is expected to achieve commercial operation
in the summer of 2006. The Company&#146;s maximum potential
exposure to loss at December&nbsp;31, 2004, is limited to the
book value of its investment of approximately $77.4&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Grays Ferry Cogeneration Partnership (&#147;Grays Ferry&#148;)
is the owner of a 175-megawatt gas-fired cogeneration facility
located in Pennsylvania and is a joint venture between the
Company and Trigen-Schuylkill Cogeneration, Inc. The
Company&#146;s involvement in this VIE began with its
acquisition of the independent power producer, Cogeneration
Corporation of America, Inc. (&#147;Cogen America&#148;), now
called Calpine Cogen, in December 1999. The Grays Ferry joint
venture project was part of the portfolio of assets owned by
Cogen America. The Company&#146;s maximum potential exposure to
loss at December&nbsp;31, 2004, is limited to the book value of
its investment of approximately $48.6&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Whitby Cogeneration Limited Partnership (&#147;Whitby&#148;) is
the owner of a 50-megawatt gas-fired cogeneration facility
located in Ontario, Canada and is a joint venture between the
Company and a privately held enterprise. The Company&#146;s
involvement in this VIE began with its acquisition of a
portfolio of assets from Westcoast Energy Inc.
(&#147;Westcoast&#148;) in September 2001, which included the
Whitby joint venture project. The Company&#146;s maximum
potential exposure to loss at December&nbsp;31, 2004, is limited
to the book value of its investment of approximately
$32.5&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Androscoggin Energy LLC (&#147;AELLC&#148;) is the owner of a
136-megawatt gas-fired cogeneration facility located in Maine
and is a joint venture between the Company, and affiliates of
Wisvest Corporation and International Paper Company
(&#147;IP&#148;). The Company&#146;s involvement in this VIE
began with its acquisition of the independent power producer,
SkyGen Energy LLC (&#147;SkyGen&#148;) in October 2000.
Androscoggin Energy LLC project was part of the portfolio of
assets owned by SkyGen. The facility had construction debt of
$60.3&nbsp;million and $60.8&nbsp;million outstanding as of
December&nbsp;31, 2004 and 2003, respectively. The debt is
non-recourse to Calpine Corporation. On November&nbsp;3, 2004, a
jury verdict was rendered against AELLC in a breach of contract
dispute with IP. See Note&nbsp;25 for more information about the
legal proceeding. The Company recorded its $11.6&nbsp;million
share of the award amount in the third quarter of 2004. On
November&nbsp;26, 2004, AELLC filed a voluntary petition for
relief under Chapter&nbsp;11 of the Bankruptcy Code. As a result
of the bankruptcy, the Company has lost significant influence
and control of the project and has adopted the cost method of
accounting for its investment in Androscoggin. Also, in December
2004 the Company determined that its investment, in Androscoggin
including outstanding notes receivable and O&#38;M receivable,
was impaired and recorded a $5.0&nbsp;million impairment reserve.
</DIV>

<P align="center" style="font-size: 10pt;">F-35

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following investments are accounted for under the equity
method except for Androscoggin Energy Center which is accounted
for under the cost method (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="56%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Ownership</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Investment Balance at</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Interest as of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Acadia Energy Center(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>214,501</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>221,038</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Valladolid&nbsp;III Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>77,401</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>67,320</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Grays Ferry Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48,558</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>53,272</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Whitby Cogeneration(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32,528</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>31,033</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Aries Power Plant(3)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>58,205</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Androscoggin Energy Center(4)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32.3</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,823</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,044</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,459</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total investments in power projects and oil and gas properties</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>374,032</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>444,150</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    On May&nbsp;12, 2003, the Company completed the restructuring of
    its interest in Acadia. As part of the transaction, the
    partnership terminated its 580-megawatt, 20-year tolling
    arrangement with a subsidiary of Aquila, Inc. in return for a
    cash payment of $105.5&nbsp;million. Acadia recorded a gain of
    $105.5&nbsp;million and then made a $105.5&nbsp;million
    distribution to Calpine. Contemporaneously, the Company&#146;s
    wholly owned subsidiary, CES, entered into a new 20-year,
    580-megawatt tolling contract with Acadia. CES now markets all
    of the output from the Acadia Power Project under the terms of
    this new contract and an existing 20-year tolling agreement.
    Cleco receives a priority cash distributions as its
    consideration for the restructuring. Also, as a result of this
    transaction, the Company recorded, as its share of the
    termination payment from the Aquila subsidiary, a
    $52.8&nbsp;million gain as of December&nbsp;31, 2003, which was
    recorded within &#147;Income from unconsolidated investments in
    power projects and oil and gas properties&#148; in the
    Consolidated Statement of Operations. Due to the restructuring
    of its interest in Acadia, the Company was required to
    reconsider its investment in the entity under FIN&nbsp;46 and
    determined that it is not the Primary Beneficiary and
    accordingly will continue to account for its investment using
    the equity method. See Note&nbsp;2 for further information. See
    Note&nbsp;25 for a legal proceeding involving Acadia Energy
    Center.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Whitby is owned 50% by the Company but a 70% economic share in
    the Company&#146;s ownership interest has been effectively
    transferred to Calpine Power, Inc. (&#147;CPI&#148;) through a
    loan from CPI to the Company&#146;s entity which holds the
    investment interest in Whitby.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    On March&nbsp;26, 2004, the Company acquired the remaining
    50&nbsp;percent interest in Aries Power Plant. See Note&nbsp;6
    for a discussion of the acquisition.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    Excludes certain Notes&nbsp;Receivable (see Note&nbsp;8).</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On November&nbsp;26, 2003, the Company completed the sale of its
50&nbsp;percent interest in the Gordonsville Power Plant. Under
the terms of the transaction, the Company received
$36.2&nbsp;million in cash for its $25.4&nbsp;million investment
and recorded a pre-tax gain of $7.1&nbsp;million. The remaining
cash of $0.6&nbsp;million is to be distributed to the partners
in late 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On September&nbsp;2, 2004, the Company completed the sale of its
equity investment in the Calpine Natural Gas Trust
(&#147;CNGT&#148;). In accordance with SFAS&nbsp;No.&nbsp;144
the Company&#146;s 25&nbsp;percent equity method investment in
the CNGT was considered part of the larger disposal group and
therefore evaluated and accounted for as a discontinued
operation. Accordingly, the Company made reclassifications to
current and prior period financial statements to reflect the
sale or designation as &#147;held for sale&#148; of the CNGT
investment balance and to separately classify the income from
the unconsolidated investment as well as the gain on sale of
</DIV>

<P align="center" style="font-size: 10pt;">F-36

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
the investment from operating results of continuing operations
to discontinued operations. The tables below for distributions
from investments and related party transactions with
unconsolidated investments in power projects and oil and gas
properties include CNGT through the date of sale,
September&nbsp;2, 2004. See Note&nbsp;10 for more information on
the sale of the Canadian natural gas reserves and petroleum
assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The combined unaudited results of operations and financial
position of the Company&#146;s equity and cost method affiliates
are summarized below (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="60%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Condensed statements of operations:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>240,527</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>417,395</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>372,212</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gross profit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47,339</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>147,782</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>151,784</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income from continuing operations before extraordinary items and
    cumulative effect of a change in accounting principle</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,951</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>175,154</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70,596</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,951</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>175,154</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70,596</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Condensed balance sheets:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>67,928</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>87,538</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Non-current assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>903,681</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,474,607</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>971,609</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,562,145</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>150,845</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>91,051</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Non-current liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>114,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>727,827</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>265,465</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>818,878</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The debt on the books of the unconsolidated investments is not
reflected on the Company&#146;s balance sheet. At
December&nbsp;31, 2004 and 2003, investee debt was approximately
$126.3&nbsp;million and $439.3&nbsp;million, respectively. Of
these amounts, $60.3&nbsp;million and $60.8&nbsp;million,
respectively, relates to the Company&#146;s investment in AELLC,
for which the cost method of accounting was used as of
December&nbsp;31, 2004. Based on the Company&#146;s pro rata
ownership share of each of the investments, the Company&#146;s
share would be approximately $43.3&nbsp;million and
$140.8&nbsp;million for the respective periods. These amounts
include the Company&#146;s share for AELLC of $19.5&nbsp;million
and $19.7&nbsp;million, respectively. However, all such debt is
non-recourse to the Company.
</DIV>

<P align="center" style="font-size: 10pt;">F-37

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following details the Company&#146;s income and
distributions from investments in unconsolidated power projects
and oil and gas properties (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="41%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Income (loss) from</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Unconsolidated Investments</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>in Power Projects and</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="11">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Oil and Gas Properties</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>Distributions</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B>For the Years Ended December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Acadia Power Partners, LLC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>14,142</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>75,272</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>14,590</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>21,394</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>136,977</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>11,969</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Valladolid&nbsp;III Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>76</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Grays Ferry Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,761</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,380</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,499</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Whitby Cogeneration</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,433</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>303</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>411</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,499</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Aries Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,264</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,442</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(43</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Calpine Natural Gas Trust</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,127</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,959</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Androscoggin Energy Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(23,566</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,478</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,951</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gordonsville Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,985</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,763</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,672</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,125</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Lockport Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,570</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>575</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>79</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(351</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>849</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(14,365</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>75,339</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>16,490</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>29,869</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>141,627</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>14,117</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest income on loans to power projects(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>840</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>465</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(13,525</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>75,804</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>16,552</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
The Company provides for deferred taxes to the extent that
distributions exceed earnings.
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    At December&nbsp;31, 2004 and 2003, loans to power projects
    represented an outstanding loan to the Company&#146;s 32.3%
    owned investment, AELLC, in the amounts of $4.0&nbsp;million and
    $13.3&nbsp;million, respectively, after impairment charges and
    reserves.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the fourth quarter of 2002, income from unconsolidated
investments in power projects and oil and gas properties was
reclassified out of total revenue and is now presented as a
component of other income from operations. Prior periods have
also been reclassified accordingly.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Related-Party Transactions with Unconsolidated Investments
    in Power Projects and Oil and Gas Properties</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company and certain of its equity and cost method affiliates
have entered into various service agreements with respect to
power projects and oil and gas properties. Following is a
general description of each of the various agreements:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>Operation and Maintenance Agreements</I>&nbsp;&#151; The
    Company operates and maintains the Acadia and Androscoggin
    Energy Centers. This includes routine maintenance, but not major
    maintenance, which is typically performed under agreements with
    the equipment manufacturers. Responsibilities include
    development of annual budgets and operating plans. Payments
    include reimbursement of costs, including Calpine&#146;s
    internal personnel and other costs, and annual fixed fees.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>Construction Management Services Agreements</I>&nbsp;&#151;
    The Company provides construction management services to the
    Valladolid&nbsp;III Energy Center. Payments include
    reimbursement of costs, including the Company&#146;s internal
    personnel and other costs.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">F-38

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>Administrative Services Agreements</I>&nbsp;&#151; The
    Company handles administrative matters such as bookkeeping for
    certain unconsolidated investments. Payment is on a cost
    reimbursement basis, including Calpine&#146;s internal costs,
    with no additional fee.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>Power Marketing Agreements</I>&nbsp;&#151; Under agreements
    with Androscoggin Energy LLC, CES can either market the
    plant&#146;s power as the power facility&#146;s agent or buy the
    power directly. Terms of any direct purchase are to be agreed
    upon at the time and incorporated into a transaction
    confirmation. Historically, CES has generally bought the power
    from the power facility rather than acting as its agent.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <I>Gas Supply Agreement</I>&nbsp;&#151; CES can be directed to
    supply gas to the Androscoggin Energy Center facility pursuant
    to transaction confirmations between the facility and CES.
    Contract terms are reflected in individual transaction
    confirmations.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The power marketing and gas supply contracts with CES are
accounted for as either purchase and sale arrangements or as
tolling arrangements. In a purchase and sale arrangement, title
and risk of loss associated with the purchase of gas is
transferred from CES to the project at the gas delivery point.
In a tolling arrangement, title to fuel provided to the project
does not transfer, and CES pays the project a capacity and a
variable fee based on the specific terms of the power marketing
and gas supply agreements. In addition to the contracts
specified above, CES maintains two tolling agreements with the
Acadia facility which are accounted for as leases. These tolling
agreements expire in 2022. In accordance with the terms of the
contracts, CES supplies all necessary fuel to generate the
energy it takes and pays a capacity charge as well as an
operations and maintenance fee to Acadia. The Company reflects
100% of the lease expense through CES, a consolidated
subsidiary, and 50% of the lease revenue in equity in earnings
of an unconsolidated subsidiary. The total future minimum lease
payments for the tolling agreements are as follows (in
thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="81%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>


<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>63,967</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>63,967</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2007</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>65,902</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2008</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>67,836</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2009</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>67,836</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Thereafter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>847,952</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,177,460</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
All of the other power marketing and gas supply contracts are
accounted for as purchases and sales.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The related party balances as of December&nbsp;31, 2004 and
2003, reflected in the accompanying consolidated balance sheets,
and the related party transactions for the years ended
December&nbsp;31, 2004, 2003 and 2002, reflected in the
accompanying consolidated statements of operations are
summarized as follows (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="78%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>As of December&nbsp;31,</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounts receivable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>765</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,156</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accounts payable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,489</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,172</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest receivable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,074</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Note&nbsp;Receivable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,037</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,262</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other receivables</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,794</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">F-39

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 18pt; ">

<TR style="font-size: 1pt;">
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>For the Years Ended December&nbsp;31,</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,241</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,493</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,729</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cost of Revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>115,008</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>82,205</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36,290</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>840</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,117</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>132</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gain on sale of assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,240</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>62,176</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>8.</B></TD>
    <TD>
    <B>Notes&nbsp;Receivable</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Generally, notes receivable are recorded at the face amount, net
of allowances. These notes bear interest at rates that
approximate current market interest rates at the time of
issuance. Certain long-term notes receivable have no stated rate
and are recorded by discounting expected future cash flows using
then current interest rates at which similar loans would be made
to borrowers with similar credit ratings and remaining
maturities. The Company intends to hold these notes to maturity.
The amortization of the discount is recognized as interest
income, using the effective interest method, over the repayment
term of the notes. The Company reviews the financial condition
of customers prior to granting credit. The allowance represents
the Company&#146;s best estimate of the amount of probable
credit losses in the Company&#146;s existing notes receivable.
The Company determines the allowance based on a variety of
factors, including economic trends and conditions and
significant one-time events affecting the note issuer, the
length of time principal and interest payments are past due and
historical write off experience. Also, specific provisions are
recorded for individual notes receivables when the Company
becomes aware of a customer&#146;s inability to meet its
financial obligations, such as in the case of bankruptcy filings
or deterioration in the customer&#146;s operating results or
financial position. The Company reviews the adequacy of its
notes receivable allowance quarterly. Generally, individual past
due amounts are reviewed for collectibility. Interest income is
reserved when amounts are more than 90&nbsp;days past due or
sooner if circumstances indicated that recoverability is not
reasonably assured. Past due amounts are charged off against the
allowance after all means of collection have been exhausted and
the potential for recovery is considered remote.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of December&nbsp;31, 2004, and 2003, the components of notes
receivable were (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    PG&#38;E (Gilroy) note</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>145,853</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>155,901</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Panda note</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38,644</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38,644</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Eastman note</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,748</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Androscoggin note</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,037</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,262</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Mitsui&nbsp;&#38; Co., Ltd note</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,779</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,168</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,506</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total notes receivable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>215,450</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>225,092</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Notes receivable, current portion included in other
    current assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,770</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,463</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Notes receivable, net of current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>203,680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>213,629</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Gilroy Note</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Calpine Gilroy Cogen, L.P. (&#147;Gilroy&#148;) had a long-term
PPA with Pacific Gas and Electric Company (&#147;PG&#38;E&#148;)
for the sale of energy through 2018. The terms of the PPA
provided for 120 megawatts of firm capacity and up to 10
megawatts of as-delivered capacity. On December&nbsp;2, 1999,
the California Public Utilities Commission (&#147;CPUC&#148;)
approved the restructuring of the PPA between Gilroy and
PG&#38;E. Under the terms of the restructuring, PG&#38;E and
Gilroy were each released from performance under the PPA
</DIV>

<P align="center" style="font-size: 10pt;">F-40

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<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
effective November&nbsp;1, 2002. Under the restructured
contract, in addition to the normal capacity revenue for the
period, Gilroy had earned from September 1999 to October 2002
restructured capacity revenue it would have earned over the
November 2002 through March 2018 time period, for which PG&#38;E
had issued notes to the Company. These notes are scheduled to be
paid by PG&#38;E during the period from February 2003 to
September 2014. The first scheduled note repayment of
$1.7&nbsp;million was received in February 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On December&nbsp;4, 2003, the Company announced that it had sold
to a group of institutional investors its right to receive
payments from PG&#38;E under the Agreement between PG&#38;E and
Gilroy, a California Limited Partnership (PG&#38;E Log
No.&nbsp;08C002) For Termination and Buy-Out of Standard Offer 4
Power Purchase Agreement, executed by PG&#38;E on July&nbsp;1,
1999 (the &#147;Gilroy Receivable&#148;) for $133.4&nbsp;million
in cash. Because the transaction did not satisfy the criteria
for sales treatment under SFAS&nbsp;No.&nbsp;140 it was
reflected in the Consolidated Financial Statements as a secured
financing, with a note payable of $133.4&nbsp;million. The
receivable balance and note payable balance are both reduced as
PG&#38;E makes payments to the buyer of the Gilroy Note. The
$24.1&nbsp;million difference between the $157.5&nbsp;million
book value of the Gilroy Note at the transaction date and the
cash received is recognized as additional interest expense over
the repayment term. The Company will continue to record interest
income over the repayment term and interest expense will be
accreted on the amortizing note payable balance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the applicable transaction agreements, each of
Gilroy and Calpine Gilroy&nbsp;1, Inc., the general partner of
Gilroy, has been established as an entity with its existence
separate from the Company and other subsidiaries of the Company.
The Company consolidates these entities.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Panda Note</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In June 2000, the Company entered into a series of turbine sale
contracts with, and acquired the development rights to
construct, own and operate the Oneta Energy Center
(&#147;Oneta&#148;) from Panda Energy International, Inc. and
certain related entities. As part of the transaction, the
Company extended PLC&nbsp;II, LLC (&#147;PLC&#148;) a loan
bearing an interest rate of LIBOR plus 5%. The loan is
collateralized by PLC&#146;s carried interest in the income
generated from Oneta, which achieved full commercial operations
in June 2003. Additionally, Panda Energy International, Inc.
executed a parental Guaranty as to the loan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On November&nbsp;5, 2003, Panda Energy International, Inc. and
certain related parties, including PLC, (collectively
&#147;Panda&#148;) filed suit against the Company and certain of
its affiliates alleging, among other things, that the Company
breached duties of care and loyalty allegedly owed to Panda by
failing to correctly construct and operate Oneta in accordance
with Panda&#146;s original plans. Panda alleges that it is
entitled to a portion of the profits from Oneta and that the
Company&#146;s actions have reduced the profits from Oneta,
thereby undermining Panda&#146;s ability to repay monies owed to
the Company under the loan. The Company has filed a counterclaim
against PLC based on a guaranty and a motion to dismiss as to
the causes of action alleging federal and state securities laws
violations. The court recently granted the Company&#146;s motion
to dismiss, but allowed Panda an opportunity to re-plead. The
Company considers Panda&#146;s lawsuit to be without merit and
intends to defend vigorously against it. Discovery is currently
in progress.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Panda defaulted on the loan, which was due on December&nbsp;1,
2003. Because of the Guaranty and the collateral, the Company
determined that a reserve was not needed as of December&nbsp;31,
2004. However, the Company ceased accruing interest after the
default date and continues to closely monitor the receivable
pending the resolution of the litigation. See Note&nbsp;25 for
more information on the litigation.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Eastman Note</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In August 2000, the Company entered into an Energy Services
Agreement (&#147;ESA&#148;) with Eastman Chemical Company
(&#147;Eastman&#148;) at its Columbia facility in South
Carolina. As part of the agreement, the Company financed the
construction of the Heat Thermal Medium Heater System
(&#147;HTM&#148;) facilities. Under
</DIV>

<P align="center" style="font-size: 10pt;">F-41

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<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
this agreement, Eastman will repay the Company
$20.0&nbsp;million for the HTM financed facilities over a period
of 20&nbsp;years with an annual interest rate of 9.76%. The
first note receivable payment was received in April 2004.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Androscoggin Note</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company has a note receivable from its unconsolidated cost
method investee AELLC. The Company ceased accruing interest
income on its note receivable related to unreimbursed
administration costs associated with the Company&#146;s
management of the project after a jury verdict was rendered
against AELLC in a breach of contract dispute. In December 2004,
the Company determined that its investment in Androscoggin was
impaired and recorded a $5.0&nbsp;million impairment reserve. On
December&nbsp;31, 2004, the carrying value after reserves of the
Company&#146;s notes receivable balance due from AELLC was
$4.0&nbsp;million. See Note&nbsp;7 for further information.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Mitsui Note</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In December 2003, the Company contributed two gas turbines with
a book value of approximately $76.0&nbsp;million in exchange for
a 45% interest in the Valladolid Joint Venture project with
Mitsui in Mexico. The Company recorded its interest in the
project at a value of $67.0&nbsp;million, which reflected the
cost of the turbines less a $9.0&nbsp;million note receivable
that was booked upon transfer of the turbines, representing a
return of capital. Subsequently, Mitsui assumed the note
receivable from the project and received additional equity in
the project. At the time of the original investment, the
Company&#146;s investment in and notes receivable from Mitsui
exceeded its share of its underlying equity by $31&nbsp;million,
which will be amortized as an adjustment to the Company&#146;s
share of the project&#146;s net income over the depreciable life
of the underlying assets. In October 2004, the note receivable
matured and all payments were received.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD><B>9.</B></TD>
    <TD>
    <B>Canadian Power and Gas Trusts</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Calpine Power Income Fund</I>&nbsp;&#151; On August&nbsp;29,
2002, the Company announced it had completed a
Cdn$230&nbsp;million (US$147.5&nbsp;million) initial public
offering of its Canadian income fund&nbsp;&#151; Calpine Power
Income Fund (&#147;CPIF&#148;). The 23&nbsp;million
Trust&nbsp;Units issued to the public were priced at
Cdn$10&nbsp;per unit, to initially yield 9.35%&nbsp;per annum.
On September&nbsp;20, 2002, the syndicate of underwriters fully
exercised the over-allotment option that it was granted as part
of the initial public offering of Trust&nbsp;Units and acquired
3,450,000 additional Trust&nbsp;Units of CPIF at Cdn$10&nbsp;per
Trust&nbsp;Unit, generating Cdn$34.5&nbsp;million
(US$21.9&nbsp;million). CPIF used the proceeds of the initial
offering and over-allotment to purchase an equity interest in
CPLP, which holds two of Calpine&#146;s Canadian power
generating assets, the Island Cogeneration Facility and the
Calgary Energy Centre. CPIF also used the proceeds to make a
loan to a Calpine subsidiary which owns Calpine&#146;s other
Canadian power generating asset, the equity investment in the
Whitby cogeneration plant. Combined, these assets represent
approximately 168.3&nbsp;net megawatts of power generating
capacity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On February&nbsp;13, 2003, the Company completed a secondary
offering of 17,034,234 Warranted Units of CPIF for gross
proceeds of Cdn$153.3&nbsp;million (US$100.9&nbsp;million). The
Warranted Units were sold to a syndicate of underwriters at a
price of Cdn$9.00. Each Warranted Unit consisted of one
Trust&nbsp;Unit and one-half of one Trust&nbsp;Unit purchase
warrant. Each Warrant entitled the holder to purchase one
Trust&nbsp;Unit at a price of Cdn$9.00&nbsp;per Trust&nbsp;Unit
at any time on or prior to December&nbsp;30, 2003, after which
time the Warrant became null and void. During 2003 a total of
8,508,517 Warrants were exercised, resulting in cash proceeds to
the Company of Cdn$76.6&nbsp;million (US$56.7&nbsp;million).
CPIF used the proceeds from the secondary offering and Warrant
exercise to purchase an additional equity interest in CPLP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company currently holds less than 1% of CPIF&#146;s trust
units; however, the Company retains a 30%&nbsp;subordinated
equity interest in CPLP and has a significant continuing
involvement in the assets transferred to CPLP. The assets of
CPLP are included in the Company&#146;s consolidated balance
sheet under the
</DIV>

<P align="center" style="font-size: 10pt;">F-42

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<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
guidance of SFAS&nbsp;No.&nbsp;66, &#147;Accounting for Sales of
Real Estate&#148; due to the Company&#146;s significant
continuing involvement in the assets transferred to CPLP.
Therefore, the financial results of CPLP are consolidated in the
Company&#146;s financial statements. The proceeds from the
initial public offering, the exercise of the underwriters
over-allotment, the proceeds from the secondary offering of
Trust&nbsp;Units and the proceeds from the exercise of Warrants
represent the Fund&#146;s 70% equity interest in CPLP and its
underlying generating assets and have been recorded as minority
interests in the Company&#146;s consolidated balance sheet.
Because of this equity ownership in CPLP, the Company considers
CPIF a related party. See Note&nbsp;13 for a discussion of the
capital lease transaction with CPIF.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Calpine Natural Gas Trust</I>&nbsp;&#151; On October&nbsp;15,
2003, the Company closed the initial public offering of CNGT. A
total of 18,454,200 trust units were issued at a price of
Cdn$10.00&nbsp;per trust unit for gross proceeds of
approximately Cdn$184.5&nbsp;million (US$139.4&nbsp;million).
CNGT acquired select natural gas and petroleum properties from
Calpine with the proceeds from the initial public offering,
Cdn$61.5&nbsp;million (US$46.5&nbsp;million) proceeds from a
concurrent issuance of units to a Canadian affiliate of Calpine,
and Cdn$40.0&nbsp;million (US$30.2&nbsp;million) proceeds from
bank debt. Net proceeds to Calpine, totaled approximately
Cdn$207.9&nbsp;million (US$157.1&nbsp;million), reflecting a
gain of $62.2&nbsp;million on the sale of the properties. On
October&nbsp;22, 2003, the syndicate of underwriters fully
exercised the over-allotment option associated with the initial
public offering resulting in additional cash to the CNGT. As a
result of the exercise of the over-allotment option, Calpine
acquired an additional 615,140 trust units at Cdn$10.0&nbsp;per
trust unit for a cash payment to the CNGT of
Cdn$6.2&nbsp;million (US$4.7&nbsp;million). Prior to the
subsequent sale of this investment, the Company held
25&nbsp;percent of the outstanding trust units of CNGT and
accounted for it using the equity method.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On September&nbsp;2, 2004, the Company completed the sale of its
equity investment in the CNGT. In accordance with
SFAS&nbsp;No.&nbsp;144 the Company&#146;s 25&nbsp;percent equity
method investment in the CNGT was considered part of the larger
disposal group and therefore evaluated and accounted for as a
discontinued operation. See Note&nbsp;10 for more information on
the sale of the Canadian natural gas reserves and petroleum
assets. In addition, the Company considered CNGT a related party
and disclosed all transactions up through the date of sale as
such. See Note&nbsp;7 for more information on related party
transactions with unconsolidated investments.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>10.</B></TD>
    <TD>
    <B>Discontinued Operations</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company has adopted a strategy of conserving its core
strategic assets and selectively disposing of certain less
strategically important assets, which serves primarily to raise
cash for general corporate purposes and strengthen the
Company&#146;s balance sheet through repayment of debt. Set
forth below are the Company&#146;s material asset disposals by
reportable segment that impacted the Company&#146;s Consolidated
Financial Statements as of December&nbsp;31, 2004 and
December&nbsp;31, 2003:
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Corporate and Other</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On July&nbsp;31, 2003, the Company completed the sale of its
specialty data center engineering business and recorded a
pre-tax loss on the sale of $11.6&nbsp;million.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Oil and Gas Production and Marketing</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On August&nbsp;29, 2002, the Company completed the sale of
certain non-strategic oil and gas properties (&#147;Medicine
River properties&#148;) located in central Alberta to NAL Oil
and Gas Trust and another institutional investor for
Cdn$125.0&nbsp;million (US$80.1&nbsp;million). As a result of
the sale, the Company recorded a pre-tax gain of
$21.9&nbsp;million in the third quarter 2002.
</DIV>

<P align="center" style="font-size: 10pt;">F-43

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On October&nbsp;1, 2002, the Company completed the sale of
substantially all of its British Columbia oil and gas properties
to Calgary, Alberta-based Pengrowth Corporation for gross
proceeds of approximately Cdn$387.5&nbsp;million
(US$244.3&nbsp;million). Of the total consideration, the Company
received US$155.9&nbsp;million in cash. The remaining
US$88.4&nbsp;million of consideration was paid by Pengrowth
Corporation&#146;s purchase in the open market of
US$203.2&nbsp;million in aggregate principal amount of the
Company&#146;s debt securities. As a result of the transaction,
the Company recorded a US$37.4&nbsp;million pre-tax gain on the
sale of the properties and a gain on the extinguishment of debt
of US$114.8&nbsp;million in the fourth quarter 2002. The Company
used approximately US$50.4&nbsp;million of cash proceeds to
repay amounts outstanding under its US$1.0&nbsp;billion term
loan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On October&nbsp;31, 2002, the Company sold all of its oil and
gas properties in Drake Bay Field located in Plaquemines Parish,
Louisiana for approximately $3&nbsp;million to Goldking Energy
Corporation. As a result of the sale, the Company recognized a
pre-tax loss of $0.02&nbsp;million in the fourth quarter 2002.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On November&nbsp;20, 2003, the Company completed the sale of its
Alvin South Field oil and gas assets located near Alvin, Texas
for approximately $0.06&nbsp;million to Cornerstone Energy, Inc.
As a result of the sale, the Company recognized a pre-tax loss
of $0.2&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On September&nbsp;1, 2004, the Company along with Calpine
Natural Gas L.P., a Delaware limited partnership, completed the
sale of its Rocky Mountain gas reserves that were primarily
concentrated in two geographic areas: the Colorado Piceance
Basin and the New Mexico San&nbsp;Juan Basin. Together, these
assets represented approximately 120&nbsp;billion cubic feet
equivalent (&#147;Bcfe&#148;) of proved gas reserves, producing
approximately 16.3&nbsp;million net cubic feet equivalent
(&#147;Mmcfe&#148;) per day of gas. Under the terms of the
agreement Calpine received net cash payments of approximately
$218.7&nbsp;million, and recorded a pre-tax gain of
approximately $103.7&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On September&nbsp;2, 2004, the Company completed the sale of its
Canadian natural gas reserves and petroleum assets. These
Canadian assets represented approximately 221&nbsp;Bcfe of
proved reserves, producing approximately 61&nbsp;Mmcfe per day.
Included in this sale was the Company&#146;s 25% interest in
approximately 80&nbsp;Bcfe of proved reserves (net of royalties)
and 32&nbsp;Mmcfe per day of production owned by the CNGT. In
accordance with SFAS No.&nbsp;144 the Company&#146;s 25% equity
method investment in the CNGT was considered part of the larger
disposal group (i.e., assets to be disposed of together as a
group in a single transaction to the same buyer), and therefore
evaluated and accounted for as discontinued operations. Under
the terms of the agreement, Calpine received cash payments of
approximately Cdn$808.1&nbsp;million, or approximately
US$626.4&nbsp;million. Calpine recorded a pre-tax gain of
approximately $104.5&nbsp;million on the sale of these Canadian
assets net of $20.1&nbsp;million in foreign exchange losses
recorded in connection with the settlement of forward contracts
entered into to preserve the US dollar value of the Canadian
proceeds.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with the sale of the oil and gas assets in Canada,
the Company entered into a seven-year gas purchase agreement
beginning on March&nbsp;31, 2005, and expiring on
October&nbsp;31, 2011, that allows, but does not require, the
Company to purchase gas from the buyer at current market index
prices. The agreement is not asset specific and can be settled
by any production that the buyer has available.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with the sale of the Rocky Mountain gas reserves,
the New Mexico San&nbsp;Juan Basin sales agreement allows for
the buyer and the Company to execute a ten-year gas purchase
agreement for 100% of the underlying gas production of sold
reserves, at market index prices. Any agreement would be subject
to mutually agreeable collateral requirements and other
customary terms and provisions. As of October&nbsp;1, 2004, the
gas purchase agreement was finalized and executed between the
Company and the buyer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company believes that all final terms of the gas purchase
agreements described above, are on a market value and arm&#146;s
length basis. If the Company elects in the future to exercise a
call option over production from the disposed components, the
Company will consider the call obligation to have been met as
</DIV>

<P align="center" style="font-size: 10pt;">F-44

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
if the actual production delivered to the Company under the call
was from assets other than those constituting the disposed
components.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Electric Generation and Marketing</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On December&nbsp;16, 2002, the Company completed the sale of the
180-megawatt DePere Energy Center in DePere, Wisconsin. The
facility was sold to Wisconsin Public Service for
$120.4&nbsp;million, which included $72.0&nbsp;million in cash
at closing and a $48.4&nbsp;million payment due in December
2003. As a result of the sale, the Company recognized a pre-tax
gain of $35.8&nbsp;million. On December&nbsp;17, 2002, the
Company sold its right to the December 2003 payment to a third
party for $46.3&nbsp;million, and recognized a pre-tax loss of
$2.1&nbsp;million thereon.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On January&nbsp;15, 2004, the Company completed the sale of its
50-percent undivided interest in the 545-megawatt Lost Pines 1
Power Project to GenTex Power Corporation, an affiliate of the
Lower Colorado River Authority (&#147;LCRA&#148;). Under the
terms of the agreement, Calpine received a cash payment of
$148.6&nbsp;million and recorded a pre-tax gain of
$35.3&nbsp;million. In addition, CES entered into a tolling
agreement with LCRA providing for the option to
purchase&nbsp;250 megawatts of electricity through
December&nbsp;31, 2004. At December&nbsp;31, 2003, the
Company&#146;s undivided interest in the Lost Pines facility was
classified as &#147;held for sale&#148; and subsequently sold in
2004.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Summary</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company made reclassifications to current and prior period
financial statements to reflect the sale of these oil and gas
and power plant assets and liabilities and to separately
reclassify the operating results of the assets sold and the gain
(loss) on sale of those assets from the operating results of
continuing operations to discontinued operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The tables below present significant components of the
Company&#146;s income from discontinued operations for 2004,
2003 and 2002, respectively (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="47%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>2004</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Electric</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Oil and Gas</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Generation</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Production</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Corporate</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>and Marketing</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>and Marketing</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>and Other</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,679</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>32,415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>35,094</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gain on disposal before taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>35,326</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>208,172</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>243,498</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Operating income from discontinued operations before taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,938</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,962</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income from discontinued operations before taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>35,350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>213,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>248,460</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income tax provision</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(12,394</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(37,701</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(50,095</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income from discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>22,956</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>175,409</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>198,365</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">F-45

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 24pt; ">

<TR style="font-size: 1pt;">
    <TD width="47%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Electric</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Oil and Gas</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Generation</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Production</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Corporate</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>and Marketing</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>and Marketing</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>and Other</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>72,968</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>49,656</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,748</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>126,372</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Loss on disposal before taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(235</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(11,571</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(11,806</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Operating income (loss) from discontinued operations before taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,147</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,130</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6,918</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,359</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) from discontinued operations before taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,147</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>14,895</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(18,489</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>553</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income tax (provision)&nbsp;benefit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,453</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,651</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,218</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,416</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income from discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>23,546</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(11,271</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>14,969</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>2002</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Electric</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Oil and Gas</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Generation</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Production</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Corporate</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>and Marketing</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>and Marketing</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>and Other</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>75,004</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>134,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,653</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>216,857</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gain on disposal before taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>35,840</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>59,288</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>95,128</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Operating income (loss) from discontinued operations before taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,388</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,452</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(16,968</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,872</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) from discontinued operations before taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>52,228</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>73,740</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(16,968</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>109,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income tax (provision)&nbsp;benefit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(20,151</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,868</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,915</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(17,104</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income from discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>32,077</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>69,872</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(10,053</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>91,896</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The table below presents the assets and liabilities designated
as held for sale on the Company&#146;s balance sheet as of
December&nbsp;31, 2003 (in thousands). At December&nbsp;31,
2004, there were no held-for-sale assets:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="46%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="center" nowrap><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Electric</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Oil and Gas</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Generation</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Production</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Corporate</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>and Marketing</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>and Marketing</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>and Other</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current assets of discontinued operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>651</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,914</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,565</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term assets of discontinued operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>112,148</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>631,001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>743,149</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total assets of discontinued operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>112,799</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>632,915</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>745,714</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current liabilities of discontinued operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>221</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>221</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term liabilities of discontinued operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>161</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,667</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,828</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total liabilities of discontinued operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>161</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>17,888</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18,049</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company allocates interest to discontinued operations in
accordance with EITF Issue No.&nbsp;87-24, &#147;Allocation of
Interest to Discontinued Operations.&#148; The Company includes
interest expense on debt which is required to be repaid as a
result of a disposal transaction in discontinued operations.
Additionally, other interest expense that cannot be attributed
to other operations of the Company is allocated based on the
ratio of
</DIV>

<P align="center" style="font-size: 10pt;">F-46

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
net assets to be sold less debt that is required to be paid as a
result of the disposal transaction to the sum of total net
assets of the Company plus consolidated debt of the Company,
excluding (a)&nbsp;debt of the discontinued operation that will
be assumed by the buyer, (b)&nbsp;debt that is required to be
paid as a result of the disposal transaction and (c)&nbsp;debt
that can be directly attributed to other operations of the
Company. Using the methodology above, the Company allocated
interest expense to its British Columbia oil and gas properties
for approximately $50.4&nbsp;million of debt the Company is
required to pay under the terms of its $1.0&nbsp;billion term
loan. In addition, the Company allocated interest expense
associated with the debt to be repaid as a result of the sale of
the Canadian and Rocky Mountain natural gas reserves and
petroleum assets as well as other debt related to the
Company&#146;s operations in the amount of $17.9&nbsp;million,
$19.8&nbsp;million and $11.0&nbsp;million in 2004, 2003 and
2002, respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>11.</B></TD>
    <TD>
    <B>Debt</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The annual principal repayments or maturities of the
Company&#146;s debt obligations as of December&nbsp;31, 2004,
are as follows (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="79%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
</TR>


<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,033,956</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>944,046</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2007</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,851,022</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2008</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,221,435</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2009</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,667,272</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Thereafter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,257,034</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>17,974,765</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Covenant Restrictions</I>&nbsp;&#151; The covenants in
certain of the Company&#146;s debt agreements currently impose
the following restrictions on its activities:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Certain of the Company&#146;s indentures place conditions on its
    ability to issue indebtedness if the Company&#146;s interest
    coverage ratio (as defined in those indentures) is below 2:1.
    Currently, the Company&#146;s interest coverage ratio (as so
    defined) is below 2:1 and, consequently, the Company generally
    would not be allowed to issue new debt, except for
    (i)&nbsp;certain types of new indebtedness that refinances or
    replaces existing indebtedness, and (ii)&nbsp;non-recourse debt
    and preferred equity interests issued by the Company&#146;s
    subsidiaries for purposes of financing certain types of capital
    expenditures, including plant development, construction and
    acquisition expenses. In addition, if and so long as the
    Company&#146;s interest coverage ratio is below 2:1, the
    Company&#146;s ability to invest in unrestricted subsidiaries
    and non-subsidiary affiliates and make certain other types of
    restricted payments will be limited. As of December&nbsp;31,
    2004, the Company&#146;s interest coverage ratio (as so defined)
    has fallen below 1.75:1 and, until the ratio is greater than
    1.75:1, certain of the Company&#146;s indentures will prohibit
    any further investments in non-subsidiary affiliates.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Certain of the Company&#146;s indebtedness issued in the last
    half of 2004 was permitted under the Company&#146;s indentures
    on the basis that the proceeds would be used to repurchase or
    redeem existing indebtedness. While the Company completed a
    portion of such repurchases during the fourth quarter of 2004
    and the first quarter of 2005, the Company is still in the
    process of completing the required amount of repurchases. While
    the amount of indebtedness that must still be repurchased will
    ultimately depend on the market price of the Company&#146;s
    outstanding indebtedness at the time the indebtedness is
    repurchased, based on current market conditions, the Company
    currently anticipates that it will spend up to approximately
    $202.9&nbsp;million on additional repurchases in order to fully
    satisfy this requirement. The Company&#146;s bond purchase
    requirement was estimated to be approximately</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">F-47

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    $270&nbsp;million as of December&nbsp;31, 2004, and this amount
    has been classified as Senior Notes, current portion on the
    Company&#146;s consolidated balance sheet.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    When the Company or one of its subsidiaries sells a significant
    asset or issues preferred equity, the Company&#146;s indentures
    generally require that the net proceeds of the transaction be
    used to make capital expenditures or to repurchase or repay
    certain types of subsidiary indebtedness, in each case within
    365&nbsp;days of the closing date of the transaction. In light
    of this requirement, and taking into account the amount of
    capital expenditures currently budgeted for 2005, the Company
    anticipates that it will need to use approximately $250.0 of the
    net proceeds of the $360.0&nbsp;million Two-Year Redeemable
    Preferred Shares issued on October&nbsp;26, 2004, and
    approximately $200.0&nbsp;million of the net proceeds of the
    $260.0&nbsp;million Redeemable Preferred Shares issued on
    January&nbsp;31, 2005, to repurchase or repay certain subsidiary
    indebtedness. The $250.0&nbsp;million of long-term debt has been
    reclassified as Senior Notes, current portion liability on the
    Company&#146;s consolidated balance sheet. The actual amount of
    the net proceeds that will be required to be used to repurchase
    or repay subsidiary debt will depend upon the actual amount of
    the net proceeds that is used to make capital expenditures,
    which may be more or less than the amount currently budgeted.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Deferred Financing Costs</I>&nbsp;&#151; The deferred
financing costs related to the Company&#146;s Senior Notes and
the Convertible Senior Notes are amortized over the life of the
related debt, ranging from 4 to 20&nbsp;years, using the
effective interest rate method. Costs incurred in connection
with obtaining other financing are deferred and amortized over
the life of the related debt. However, when timing of debt
transactions involve contemporaneous exchanges of cash between
the Company and the same creditor(s) in connection with the
issuance of a new debt obligation and satisfaction of an
existing debt obligation, deferred financing costs are accounted
for in accordance with EITF Issue No.&nbsp;96-19,
&#147;Debtor&#146;s Accounting for a Modification or Exchange of
Debt Instruments&#148; (&#147;EITF Issue No.&nbsp;96-19&#148;).
Depending on whether the transaction qualifies as an
extinguishment or modification, EITF Issue No.&nbsp;96-19
requires the Company to either write-off the original deferred
financing costs and capitalize the new issuance costs or
continue to amortize the original deferred financing costs and
immediately expense the new issuance costs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
See Notes&nbsp;12-18 below for a description of each of the
Company&#146;s debt obligations.
</DIV>

<P align="center" style="font-size: 10pt;">F-48

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>12.</B></TD>
    <TD>
    <B>Notes&nbsp;Payable and Borrowings Under Lines of Credit,
    Notes&nbsp;Payable to Calpine Capital Trusts and Preferred
    Interests</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The components of notes payable and borrowings under lines of
credit and related outstanding letters of credit are (in
thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="46%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Letters of Credit</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Borrowings Outstanding</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Outstanding</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Corporate Cash Collateralized Letter of Credit Facility</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>233,271</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Power Contract Financing, L.L.C.</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>688,366</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>802,246</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gilroy note payable(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>125,478</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>132,385</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Siemens Westinghouse Power Corporation</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>107,994</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Calpine Northbrook Energy Marketing, LLC (&#147;CNEM&#148;) note</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52,294</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>74,632</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Corporate revolving lines of credit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>135,600</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Power Contract Financing&nbsp;III, LLC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>51,592</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Calpine Commercial Trust</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,255</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,280</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,606</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,158</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>603</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Total notes payable and borrowings under lines of credit</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>974,265</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,127,863</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>239,429</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>136,203</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Total notes payable to Calpine Capital Trusts</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>517,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,153,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Preferred interest in Saltend Energy Centre</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>360,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Preferred interest in Auburndale Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>79,135</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>87,632</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Preferred interest in King City Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>82,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Preferred interest in Gilroy Energy Center, LLC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>67,402</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>74,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Total preferred interests</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>506,537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>243,632</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Total notes payable and borrowings under lines of credit,
    notes payable to Calpine Capital Trusts, preferred interests,
    and term loan</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,998,302</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,524,995</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>239,429</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>136,203</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: notes payable and borrowings under lines of credit,
    current portion, notes payable to Calpine Capital Trusts,
    current portion and preferred interests, current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>213,416</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>265,512</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Notes payable and borrowings under lines of credit, net of
    current portion, notes payable to Calpine Capital Trusts, net of
    current portion, preferred interests, net of current portion,
    and term loan</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,784,886</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,259,483</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    See Note&nbsp;8 for information regarding this note.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Notes&nbsp;Payable and Borrowings Under Lines of Credit
    and Term Loan</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Corporate Cash Collateralized Letter of Credit
Facility</I>&nbsp;&#151; On September&nbsp;30, 2004, the Company
established a new $255&nbsp;million Cash Collateralized Letter
of Credit Facility with Bayerische Landesbank, under which all
letters of credit previously issued under the $300&nbsp;million
Working Capital Revolver and the $200&nbsp;million Cash
Collateralized Letter of Credit Facility have been transitioned
into that new Facility.
</DIV>

<P align="center" style="font-size: 10pt;">F-49

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Power Contract Financing, L.L.C.</I>&nbsp;&#151; On
June&nbsp;13, 2003, PCF, an indirect wholly owned subsidiary of
Calpine, completed an offering of $339.9&nbsp;million of
5.2%&nbsp;Senior Secured Notes Due 2006 and $462.3&nbsp;million
of 6.256%&nbsp;Senior Secured Notes Due 2010. The two tranches
of Senior Secured Notes, totaling $802.2&nbsp;million of gross
proceeds, are secured by fixed cash flows from a fixed-priced,
long-term PPA with the State of California Department of Water
Resources (&#147;CDWR&#148;) and a fixed-priced, long-term power
purchase agreement with a third party and are non- recourse to
the Company&#146;s other consolidated subsidiaries. The two
tranches of Senior Secured Notes have been rated Baa2 by
Moody&#146;s Investor Service, Inc. and BBB (with a negative
outlook) by Standard&nbsp;&#38; Poor&#146;s
(&#147;S&#38;P&#148;). During the year 2004, $113.9&nbsp;million
was repaid based on the agreed upon bond repayment schedule. The
effective interest rates on the 5.2%&nbsp;Senior Secured Notes
Due 2006 and 6.256%&nbsp;Senior Secured Notes Due 2010, after
amortization of deferred financing costs, were 8.3% and 9.4%,
respectively, per annum at December&nbsp;31, 2004 and 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the applicable transaction agreements, PCF has been
established as an entity with its existence separate from the
Company and other subsidiaries of the Company. In accordance
with FIN&nbsp;46 the Company consolidates this entity. See
Note&nbsp;2 for more information on FIN&nbsp;46. The above
mentioned power sales and PPAs, which have been acquired by PCF
from CES, and the PCF Notes are assets and liabilities of PCF,
separate from the assets and liabilities of the Company and
other subsidiaries of the Company. The proceeds of the Senior
Secured Notes were primarily used by PCF to purchase the power
sales and PPAs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Siemens Westinghouse Power Corporation</I>&nbsp;&#151; On
January&nbsp;31, 2002, the Company&#146;s subsidiary, Calpine
Construction Management Company, Inc., entered into an agreement
with Siemens Westinghouse Power Corporation (&#147;SWPC&#148;)
including vendor financing of up to $232.0&nbsp;million bearing
variable interest for gas and steam turbine generators and
related equipment with monthly payment due dates through
January&nbsp;28, 2005. The remaining balance under this
agreement was repaid in 2004. The interest rate at
December&nbsp;31, 2004 and 2003, was 8.5%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Calpine Northbrook Energy Marketing, LLC (&#147;CNEM&#148;)
Note</I>&nbsp;&#151; On May&nbsp;15, 2003, CNEM, a wholly owned
stand-alone subsidiary of CNEM Holdings, LLC, which is a wholly
owned indirect subsidiary of CES, completed an offering of
$82.8&nbsp;million secured by an existing power sales agreement
with the BPA. Under the existing 100-megawatt fixed-price
contract, CNEM delivers baseload power to BPA through
December&nbsp;31, 2006. As a part of the secured transaction,
CNEM entered into a contract with a third party to purchase that
power based on spot prices and a fixed-price swap agreement with
an affiliate of Deutsche Bank to lock in the price of the
purchased power. The terms of both agreements are through
December&nbsp;31, 2006. To complete the transactions, CNEM then
entered into an agreement with an affiliate of Deutsche Bank and
borrowed $82.8&nbsp;million secured by the BPA contract, the
spot market PPA, the fixed price swap agreement and the equity
interests in CNEM. The spread between the price for power under
the BPA contract and the price for power under the fixed price
swap agreement provides the cash flow to pay CNEM&#146;s debt
and other expenses. Proceeds from the borrowing were used to pay
transaction expenses for plant construction and general
corporate purposes, as well as fees and expenses associated with
this transaction. CNEM will make quarterly principal and
interest payments on the loan that matures on December&nbsp;31,
2006. The effective interest rate, after amortization of
deferred financing charges, was 12.2% and 12.7%&nbsp;per annum
at December&nbsp;31, 2004 and 2003, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the applicable transaction agreements, each of CNEM
and its parent, CNEM Holdings, LLC, has been established as an
entity with its existence separate from the Company and other
subsidiaries of the Company. In accordance with FIN&nbsp;46-R
the Company consolidates these entities. The above mentioned
power sales agreement with BPA has been acquired by CNEM from
CES and the spot market PPA with a third party and the swap
agreement have been entered into by CNEM and, together with the
$82.8&nbsp;million loan, are assets and liabilities of CNEM,
separate from the assets and liabilities of the Company and
other subsidiaries of the Company. The only significant asset of
CNEM Holdings, LLC is its equity interest in
</DIV>

<P align="center" style="font-size: 10pt;">F-50

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
CNEM. The proceeds of the $82.8&nbsp;million loan were primarily
used by CNEM to purchase the power sales agreement with BPA.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Corporate Revolving Lines of Credit</I>&nbsp;&#151; On
July&nbsp;16, 2003, the Company entered into agreements for a
new $500&nbsp;million working capital facility. This
first-priority senior secured facility consisted of a two-year,
$300&nbsp;million working capital revolver and a four-year,
$200&nbsp;million term loan that together provide up to
$500&nbsp;million in combined cash borrowing and letter of
credit capacity. The facility replaced the Company&#146;s prior
$600&nbsp;million and $400&nbsp;million working capital
facilities and is secured by a first-priority lien on the same
assets that collateralize the Company&#146;s $3.3&nbsp;billion
term loan and second-priority senior secured notes offering (the
&#147;$3.3&nbsp;billion offering&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On July&nbsp;16, 2003, the Company entered into a cash
collateralized letter of credit facility with The Bank of Nova
Scotia under which it was able to issue up to $200&nbsp;million
of letters of credit through July&nbsp;15, 2005. Amounts
outstanding under letters of credit issued under this facility
had a corresponding amount of cash on deposit and held by The
Bank of Nova Scotia as collateral, which was classified as
restricted cash in the Company&#146;s Consolidated Balance Sheet.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As a result of the sale of certain natural gas properties during
2004, the Company repaid all amounts outstanding under its First
Priority Senior Secured Term Loan&nbsp;B Notes Due 2007 and the
$300&nbsp;million Working Capital Revolver.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Power Contract Financing&nbsp;III, LLC</I>&nbsp;&#151; On
June&nbsp;2, 2004, the Company&#146;s wholly owned subsidiary,
PCF&nbsp;III issued $85.0&nbsp;million of zero coupon notes
collateralized by PCF&nbsp;III&#146;s ownership of PCF. PCF III
owns all of the equity interests in PCF, which holds the
CDWR&nbsp;I contract monetized in June 2003 and maintains a debt
reserve fund, which had a balance of approximately
$94.4&nbsp;million at December&nbsp;31, 2004. The Company
received cash proceeds of approximately $49.8&nbsp;million from
the issuance of the notes. At December&nbsp;31, 2004, the
interest rate was 12%&nbsp;per annum.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Calpine Commercial Trust</I>&nbsp;&#151; In May 2004, in
connection with the King City transaction, Calpine Canada Power
Limited, a wholly owned subsidiary of the Company, entered into
a financing with Calpine Commercial Trust. Interest accrues at
13%, and the loan has principal and interest payments scheduled
through maturity in December 2010. The effective interest rate
of this loan is 17%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Calpine Energy Management, L.P. Letter of Credit
Facility</I>&nbsp;&#151; On August&nbsp;5, 2004, the Company
announced that its newly created entity, Calpine Energy
Management, L.P. (&#147;CEM&#148;), entered into a
$250.0&nbsp;million letter of credit facility with Deutsche Bank
(rated Aa3/ AA-) that expires in October 2005. Deutsche Bank
will guarantee CEM&#146;s power and gas obligations by issuing
letters of credit. Receivables generated through power sales
serve as collateral to support the letters of credit. As of
December&nbsp;31, 2004, there was approximately
$9.6&nbsp;million in letters of credit outstanding.
</DIV>

<P align="center" style="font-size: 10pt;">F-51

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Notes&nbsp;Payable to Calpine Capital Trusts</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 1999 and 2000, the Company, through its wholly owned
subsidiaries, Calpine Capital Trust&nbsp;I, Calpine Capital
Trust&nbsp;II, and Calpine Capital Trust&nbsp;III, statutory
business trusts created under Delaware law, (collectively,
&#147;the Trusts&#148;) completed offerings of Remarketable Term
Income Deferrable Equity Securities (&#147;HIGH TIDES&#148;) at
a value of $50.00&nbsp;per share. A summary of these offerings
follows in the table below ($ in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 7pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="26%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Effective</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Conversion</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Interest Rate</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Ratio&nbsp;&#151;</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>per Annum</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Stated</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>as of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Balance</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Balance</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Common</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Initial</B></TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Interest</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares per 1</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>First</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Redemption</B></TD><TD></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Issue Date</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Rate</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>High Tide</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Redemption Date</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Price</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    HIGH TIDES I</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>October 1999</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,520,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.75</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.38</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>276,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.4620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>November&nbsp;5, 2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>101.440</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    HIGH TIDES&nbsp;II</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>January and</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>February 2000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,200,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.50</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.79</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>360,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.9524</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>February&nbsp;5, 2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>101.375</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    HIGH TIDES&nbsp;III</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>August 2000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,350,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.00</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.09</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>517,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>517,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.1510</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>August&nbsp;5, 2003</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>101.250</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23,070,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>517,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,153,500</TD>
    <TD align="left" valign="bottom" nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Prior to the adoption of FIN&nbsp;46 as of December&nbsp;31,
    2003, the Trusts were consolidated in the Company&#146;s
    Consolidated Balance Sheet, and the HIGH TIDES were recorded
    between total liabilities and stockholders equity as
    Company-obligated mandatorily redeemable convertible preferred
    securities of subsidiary trusts. However, upon adoption of
    FIN&nbsp;46 as of December&nbsp;31, 2003, the Company
    deconsolidated the Trusts as of October&nbsp;1, 2003, and
    therefore no longer records the HIGH TIDES in its Consolidated
    Balance Sheet. As a result, the Company&#146;s convertible
    subordinated debentures (as discussed below) issued to the
    Trusts were no longer eliminated in consolidation and were
    reflected as notes payable to Calpine Capital Trusts in the
    Company&#146;s Consolidated Balance Sheet with an outstanding
    balance of $1.2&nbsp;billion and $517.5&nbsp;million at
    December&nbsp;31, 2003 and December&nbsp;31, 2004, respectively.
    During 2003 and 2004, the Company exchanged 30.8&nbsp;million
    Calpine common shares in privately negotiated transactions for
    approximately $77.5&nbsp;million par value of HIGH TIDES&nbsp;I,
    and $75.0&nbsp;million of HIGH TIDES&nbsp;II. The Company also
    repurchased $115.0&nbsp;million par value of HIGH TIDES&nbsp;III
    for cash of $111.6&nbsp;million. The repurchased HIGH
    TIDES&nbsp;III are reflected in the Company&#146;s consolidated
    balance sheet in Other Assets as available-for-sale securities
    as the repurchase did not meet the debt extinguishment criteria
    in SFAS&nbsp;No.&nbsp;140. See Note&nbsp;2 for further
    information regarding the adoption of FIN&nbsp;46 and
    Note&nbsp;3 regarding the Company&#146;s available-for-sale
    securities.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The net proceeds from each of the offerings were used by the
Trusts to invest in convertible subordinated debentures of the
Company, which represent substantially all of the respective
Trusts&#146; assets. The Company effectively guaranteed all of
the respective Trusts&#146; obligations under the trust
preferred securities. The trust preferred securities had or have
liquidation values of $50.00&nbsp;per share, or
$1.2&nbsp;billion in total for all of the issuances. The Company
had or has the right to defer the interest payments on the
debentures for up to twenty consecutive quarters, which would
also cause a deferral of distributions on the trust preferred
securities. Currently, the Company has no intention of deferring
interest payments on the debentures remaining outstanding. The
Company considers the Trusts related parties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On October&nbsp;20, 2004, the Company repaid the
$276.0&nbsp;million and $360.0&nbsp;million convertible
subordinate debentures held by Trust&nbsp;I (&#147;HIGH
TIDES&nbsp;I&#148;) and Trust&nbsp;II (&#147;HIGH
TIDES&nbsp;II&#148;) respectively, which used those proceeds to
redeem its outstanding
5<FONT style="font-size: 70%"><SUP>3</SUP></FONT>/<FONT style="font-size: 60%">4</FONT>%
convertible preferred securities issued by Trust&nbsp;I, and
5<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT>%
convertible preferred securities issued by Trust&nbsp;II. The
redemption of the HIGH TIDES&nbsp;I and HIGH TIDES&nbsp;II
available-for-sale securities previously purchased and held by
the Company resulted in a realized gain of approximately
$6.1&nbsp;million. The Company intends to cause both Trusts,
which are related parties, to be terminated.
</DIV>

<P align="center" style="font-size: 10pt;">F-52
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Preferred Interests</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In May 2003, FASB issued SFAS&nbsp;No.&nbsp;150, which
establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both
liabilities and equity. SFAS&nbsp;No.&nbsp;150 applies
specifically to a number of financial instruments that companies
have historically presented within their financial statements
either as equity or between the liabilities section and the
equity section, rather than as liabilities.
SFAS&nbsp;No.&nbsp;150 was effective for financial instruments
entered into or modified after May&nbsp;31, 2003, and otherwise
was effective at the beginning of the first interim period
beginning after June&nbsp;15, 2003. The Company adopted
SFAS&nbsp;No.&nbsp;150 on July&nbsp;1, 2003. For those
instruments required to be recoded as debt,
SFAS&nbsp;No.&nbsp;150 does not permit reclassification of prior
period amounts to conform to the current period presentation.
The adoption of SFAS&nbsp;No.&nbsp;150 and related balance sheet
reclassifications did not have an effect on net income or total
stockholders&#146; equity but have impacted the Company&#146;s
debt-to-equity and debt-to-capitalization ratios.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In November 2003, FASB indefinitely deferred certain provisions
of SFAS&nbsp;No.&nbsp;150 as they apply to mandatorily
redeemable non-controlling (minority)&nbsp;interests associated
with finite-lived subsidiaries. The Company owns approximately
30% of CPLP, which is finite-lived, terminating on
December&nbsp;31, 2050. See Note&nbsp;7 for a discussion of the
Company&#146;s investment in CPLP. Upon FASB&#146;s finalization
of this issue, the Company may be required to reclassify the
minority interest relating to the Company&#146;s investment in
Calpine Power Limited Partnership (&#147;CPLP&#148;) to debt. As
of December&nbsp;31, 2004, the minority interest related to CPLP
was approximately $393.4&nbsp;million. The assets of CPLP are
included in the Company&#146;s consolidated balance sheet under
the guidance of SFAS&nbsp;No.&nbsp;66, &#147;Accounting for
Sales of Real Estate&#148; due to the Company&#146;s significant
continuing involvement in the assets transferred to CPLP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Saltend Energy Centre</I>&nbsp;&#151; On October&nbsp;26,
2004, the Company, through its indirect, wholly owned subsidiary
Calpine (Jersey) Limited completed a $360&nbsp;million offering
of two-year, Redeemable Preferred Shares. The Redeemable
Preferred Shares will distribute dividends priced at 3-month
U.S.&nbsp;LIBOR plus 700&nbsp;basis points to the shareholders
on a quarterly basis. The proceeds of the offering of the
Redeemable Preferred Shares were initially loaned to
Calpine&#146;s 1,200-megawatt Saltend Energy Centre located in
Hull, Yorkshire England, and the future payments of principal
and interest on such loan will fund payments on the Redeemable
Preferred Shares. The net proceeds of the Redeemable Preferred
Shares offering are to be used as permitted by the
Company&#146;s indentures. The maximum cost that the Company
would incur to repurchase the Redeemable Preferred Shares at
December&nbsp;31, 2004, is $370.8&nbsp;million. The effective
interest rate, after amortization of deferred financing charges,
was 11.6%&nbsp;per annum at December&nbsp;31, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Auburndale Power Plant</I>&nbsp;&#151; On September&nbsp;3,
2003, the Company announced that it had completed the sale of a
70% preferred interest in its Auburndale power plant to Pomifer
Power Funding, LLC, (&#147;PPF&#148;), a subsidiary of ArcLight
Energy Partners Fund&nbsp;I, L.P., for $88.0&nbsp;million. This
preferred interest meets the criteria of a mandatorily
redeemable financial instrument and has been classified as debt
under the guidance of SFAS&nbsp;No.&nbsp;150, due to certain
preferential distributions to PPF. The preferential
distributions are to be paid quarterly beginning in November
2003 and total approximately $204.7&nbsp;million over the
11-year period. The preferred interest holders&#146; recourse is
limited to the net assets of the entity and distribution terms
are defined in the agreement. The Company has not guaranteed the
payment of these preferential distributions. Calpine will hold
the remaining interest in the facility and will continue to
provide O&#38;M services. Although the Company cannot readily
determine the potential cost to repurchase the interest in
Auburndale Holdings, LLC, the carrying value at
December&nbsp;31, 2004, of its aggregate partners&#146;
interests was $79.1&nbsp;million. The effective interest rate,
after amortization of deferred financing charges, was 17.1% and
16.8%&nbsp;per annum at December&nbsp;31, 2004 and 2003,
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>King City Power Plant</I>&nbsp;&#151; On April&nbsp;29, 2003,
the Company sold a preferred interest in a subsidiary that
leases and operates the 120-megawatt King City Power Plant to GE
Structured Finance for $82.0&nbsp;million. As a result of
adopting SFAS&nbsp;No.&nbsp;150, approximately $82&nbsp;million
of mandatorily redeemable non-controlling
</DIV>

<P align="center" style="font-size: 10pt;">F-53

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
interest in the King City facility, which had previously been
included within the balance sheet caption &#147;Minority
interests,&#148; was reclassified to &#147;Notes payable.&#148;
The distributions and accretion of issuance costs related to
this preferred interest, which was previously reported as a
component of &#147;Minority interest expense&#148; in the
Consolidated Condensed Statements of Operations, was accounted
for as interest expense. Distributions and related accretion
associated with this preferred interest was $5.3&nbsp;million
for the six months ended December&nbsp;31, 2003. As of
December&nbsp;31, 2003, there was $82.0&nbsp;million outstanding
under the preferred interest. The effective interest rate, after
amortization of deferred financing charges, was 13.1% and
12.8%&nbsp;per annum at May 2004 (redemption date) and
December&nbsp;31, 2003, respectively. In connection with the
acquisition of the King City Power Plant by CPIF in May 2004,
which was subject to the Company&#146;s pre-existing operating
lease, proceeds from the sale of the Company&#146;s Collateral
Securities, which supported the lease payments, were used in
part to redeem the balance due under this preferred interest.
See Note&nbsp;3 for a discussion of the Collateral Securities.
The Company expensed approximately $1.2&nbsp;million in deferred
finance costs related to the original issuance of the preferred
interest and paid a $3.0&nbsp;million termination fee. These
debt extinguishment costs were recorded in Other Expense.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the applicable transaction agreements, each of
Calpine King City Cogen, LLC, Calpine Securities Company, L.P.,
a parent company of Calpine King City Cogen, LLC and Calpine
King City, LLC, an indirect parent company of Calpine Securities
Company, L.P., has been established as an entity with its
existence separate from the Company and other subsidiaries of
the Company. The Company consolidates these entities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Gilroy Energy Center, LLC</I>&nbsp;&#151; On
September&nbsp;30, 2003, GEC, a wholly owned subsidiary of the
Company&#146;s subsidiary GEC Holdings, LLC, completed an
offering of $301.7&nbsp;million of 4%&nbsp;Senior Secured Notes
Due 2011 (see Note&nbsp;16 for more information on this secured
financing). In connection with this secured notes borrowing, the
Company received funding on a third party preferred equity
investment in GEC Holdings, LLC totaling $74.0&nbsp;million.
This preferred interest meets the criteria of a mandatorily
redeemable financial instrument and has been classified as debt
under the guidance of SFAS&nbsp;No.&nbsp;150, due to certain
preferential distributions to the third party. The preferential
distributions are due semi-annually beginning in March 2004
through September 2011 and total approximately
$113.3&nbsp;million over the eight-year period. Although the
Company cannot readily determine the potential cost to
repurchase the interest in GEC Holdings, LLC, the carrying value
at December&nbsp;31, 2004, of its aggregate partners&#146;
interests was $67.4&nbsp;million. The effective interest rate,
after amortization of deferred financing charges, was 12.2% and
11.3%&nbsp;per annum at December&nbsp;31, 2004 and 2003,
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to the applicable transaction agreements, GEC has been
established as an entity with its existence separate from the
Company and other subsidiaries of the Company. The Company
consolidates this entity. The long-term power sales agreement
with the CDWR has been acquired by GEC by means of a series of
capital contributions by CES and certain of its affiliates and
is an asset of GEC, and the Senior Secured Notes and preferred
interest are liabilities of GEC, separate from the assets and
liabilities of the Company and other subsidiaries of the
Company. Aside from seven peaker power plants owned directly and
the power sales agreement, GEC&#146;s assets include cash and a
100% equity interest in each of Creed Energy Center, LLC
(&#147;Creed&#148;) and Goose Haven Energy Center, LLC
(&#147;Goose Haven&#148;) each of which is a wholly owned
subsidiary of GEC. Each of Creed and Goose Haven has been
established as an entity with its existence separate from the
Company and other subsidiaries of the Company. Creed and Goose
Haven each have assets consisting of various power plants and
other assets.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>13.</B></TD>
    <TD>
    <B>Capital Lease Obligations</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the first quarter of 2004, CPIF, a related party, acquired
the King City power plant from a third party in a transaction
that closed May&nbsp;19, 2004. See Note&nbsp;9 for a discussion
of the Company&#146;s relationship with CPIF. CPIF became the
new lessor of the facility, which it purchased subject to the
Company&#146;s pre-existing
</DIV>

<P align="center" style="font-size: 10pt;">F-54

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
operating lease. The Company restructured certain provisions of
the operating lease, including a 10-year extension and the
elimination of the collateral requirements necessary to support
the original lease payments. The base term of the restructured
lease expires in 2028 with a renewal option at the then fair
market rental value of the facility. See Note&nbsp;3 for more
information on the elimination of the collateral requirements.
Due to the lease extension and other modifications to the
original lease, the lease was reevaluated under
SFAS&nbsp;No.&nbsp;13 and determined to be a capital lease. The
present value of the minimum lease payments totaled
approximately $114.9&nbsp;million which represented more than
90% of the fair value of the facility. As a result, the Company
recorded a capital lease asset of $114.9&nbsp;million as
property, plant and equipment in the Consolidated Balance Sheet.
This asset will be depreciated over the 24&nbsp;year base lease
term. In recording the capital lease obligation, the outstanding
deferred lease incentive liability ($53.7&nbsp;million including
the current portion as of December&nbsp;31, 2003) recorded as
part of the original operating lease transaction, and the
prepaid operating lease payments asset ($69.4&nbsp;million
including the current portion as of December&nbsp;31, 2003)
accumulated under the original operating lease terms, were
eliminated. The difference between these two balances on
May&nbsp;19, 2004 was approximately $19.9&nbsp;million and is
reflected as a discount to the $114.9&nbsp;million capital lease
obligation. This discount will be accreted as additional
interest expense using the effective interest method over the
24&nbsp;year lease term. The net capital lease obligation
originally recorded as debt in the Consolidated Balance Sheet
was $94.9&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company assumed and consolidated its other capital leases in
conjunction with certain acquisitions that occurred during 2001.
As of December&nbsp;31, 2004 and 2003, the asset balances for
the leased assets totaled $322.3&nbsp;million and
$201.5&nbsp;million, respectively, with accumulated amortization
of $41.8&nbsp;million and $26.0&nbsp;million, respectively. Of
these balances as of December&nbsp;31, 2004, $114.9&nbsp;million
of leased assets and $2.7&nbsp;million of accumulated
amortization related to the King City power plant, which is
leased from a related party. The primary types of property
leased by the Company are power plants and related equipment.
The leases generally provide for the lessee to pay taxes,
maintenance, insurance, and certain other operating costs of the
leased property. The lease terms range up to 28&nbsp;years. Some
of the lease agreements contain customary restrictions on
dividends, additional debt and further encumbrances similar to
those typically found in project financing agreements. In
determining whether a lease qualifies for capital lease
treatment, in accordance with SFAS&nbsp;No.&nbsp;13, the Company
includes all increases due to step rent provisions/escalation
clauses in its minimum lease payments for its capital lease
obligations. Certain capital improvements associated with leased
facilities may be deemed to be leasehold improvements and are
amortized over the shorter of the term of the lease or the
economic life of the capital improvement. Lease concessions
including taxes and insurance are excluded from the minimum
lease payments. The Company&#146;s minimum lease payments are
not tied to an existing variable index or rate.
</DIV>

<P align="center" style="font-size: 10pt;">F-55
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following is a schedule by years of future minimum lease
payments under capital leases together with the present value of
the net minimum lease payments as of December&nbsp;31, 2004 (in
thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>King City</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Capital Lease</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>with related</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Other Capital</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>party</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Leases</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Years Ending December&nbsp;31:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>16,699</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>19,154</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>35,853</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,458</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,760</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36,218</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2007</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,552</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,918</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36,470</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2008</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,199</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,753</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>37,952</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2009</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,592</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38,192</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Thereafter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>175,492</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>268,317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>443,809</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total minimum lease payments</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>257,992</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>370,502</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>628,494</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Amount representing interest(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>162,095</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>177,480</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>339,575</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Present value of net minimum lease payments</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>95,897</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>193,022</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>288,919</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Capital lease obligation, current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,199</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,291</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,490</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Capital lease obligation, net of current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>94,698</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>188,731</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>283,429</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Amount necessary to reduce net minimum lease payments to present
    value calculated at the incremental borrowing rate at the time
    of acquisition.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>14.</B></TD>
    <TD>
    <B>CCFC I Financing</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The components of CCFC I financing as of December&nbsp;31, 2004
and 2003, are (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="69%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Outstanding at</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Calpine Construction Finance Company I Second Priority Senior
    Secured Floating Rate Notes Due 2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>408,568</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>407,598</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    First Priority Secured Institutional Term Loans Due 2009</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>378,182</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>381,391</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>786,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>788,989</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,208</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,208</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    CCFC I financing, net of current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>783,542</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>785,781</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In November 1999, the Company entered into a credit agreement
for $1.0&nbsp;billion through its wholly owned subsidiary CCFC I
with a consortium of banks. The lead arranger was The Bank of
Nova Scotia and the lead arranger syndication agent was Credit
Suisse First Boston. The non-recourse credit facility was
utilized to finance the construction of certain of the
Company&#146;s gas-fired power plants. The Company repaid the
outstanding balance of $880.1&nbsp;million in August 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On August&nbsp;14, 2003, the Company&#146;s wholly owned
subsidiaries, CCFC I and CCFC Finance Corp., closed a
$750.0&nbsp;million institutional term loans and secured notes
offering, proceeds from which were utilized to repay a majority
of CCFC I&#146;s indebtedness which would have matured in the
fourth quarter of 2003. The offering included
$385.0&nbsp;million of First Priority Secured Institutional Term
Loans Due 2009 (the &#147;CCFC I Term Loans&#148;) offered at
98% of par and priced at LIBOR plus 600&nbsp;basis points, with
a LIBOR floor of
</DIV>

<P align="center" style="font-size: 10pt;">F-56

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
150&nbsp;basis points, and $365.0&nbsp;million of Second
Priority Senior Secured Floating Rate Notes Due 2011 (the
&#147;CCFC I Senior Notes&#148;) offered at 98.01% of par and
priced at LIBOR plus 850&nbsp;basis points, with a LIBOR floor
of 125&nbsp;basis points. On September&nbsp;25, 2003, CCFC I and
CCFC Finance Corp. closed on an additional $50.0&nbsp;million of
the CCFC I Senior Notes offered at 99% of par. The
noteholders&#146; recourse is limited to seven of CCFC I&#146;s
natural gas-fired electric generating facilities located in
various power markets in the United States, and related assets
and contracts. S&#38;P has assigned a B corporate credit rating
to CCFC I. S&#38;P also assigned a B+ rating (with a negative
outlook) to the CCFC I Term Loans and a B- rating (with a
negative outlook) to the CCFC I Senior Notes. The interest rate
of the CCFC I Senior Notes was 10.5% at December&nbsp;31, 2004,
and 9.8% at December&nbsp;31, 2003. The effective interest rate,
after amortization of deferred financing costs, was
10.8%&nbsp;per annum at December&nbsp;31, 2004, and 10.0% at
December&nbsp;31, 2003. The interest rate of the CCFC I Term
Loans was 8.4% at December&nbsp;31, 2004, and 7.5% at
December&nbsp;31, 2003. The effective interest rate, after
amortization of deferred financing costs, was 8.5%&nbsp;per
annum at December&nbsp;31, 2004, and 8.2% at December&nbsp;31,
2003.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>15.</B></TD>
    <TD>
    <B>CalGen/ CCFC&nbsp;II Financing</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The components of CalGen/ CCFC&nbsp;II financing as of
December&nbsp;31, 2004 and 2003, are (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Letters of Credit</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Outstanding at</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Outstanding at</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Calpine Generating Company, LLC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Third Priority Secured Floating Rate Notes Due 2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>680,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Priority Secured Floating Rate Notes Due 2010</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>631,639</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    First Priority Secured Term Loans Due 2009</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>600,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    First Priority Secured Floating Rate Notes Due 2009</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>235,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Third Priority Secured Fixed Rate Notes Due 2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>150,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Priority Secured Term Loans Due 2010</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>98,693</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    First Priority Secured Revolving Loans</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>189,958</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Calpine Construction Finance Company&nbsp;II Revolver</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,200,358</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>53,190</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total CalGen/ CCFC&nbsp;II financing</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,395,332</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,200,358</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>189,958</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>53,190</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In October 2000, the Company entered into a credit agreement for
$2.5&nbsp;billion through its wholly owned subsidiary Calpine
Construction Finance Company&nbsp;II, LLC
(&#147;CCFC&nbsp;II&#148;) with a consortium of banks. The lead
arrangers were The Bank of Nova Scotia and Credit Suisse First
Boston. The non-recourse credit facility was utilized to finance
the construction of certain of the Company&#146;s gas-fired
power plants. The interest rate at December&nbsp;31, 2003 was
2.6%. The interest rate ranged from 2.6% to 4.8% during 2004 and
2.6% to 2.9% during 2003. The effective interest rate, after
amortization of deferred financing costs, was 7.2% and
3.4%&nbsp;per annum at December&nbsp;31, 2004 and 2003,
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On March&nbsp;23, 2004, the Company&#146;s wholly owned
subsidiary Calpine Generating Company, LLC (&#147;CalGen&#148;),
formerly known as CCFC&nbsp;II, completed its offering of
secured term loans and secured notes. As expected, the Company
realized net total proceeds from the offerings (after payment of
transaction fees and
</DIV>

<P align="center" style="font-size: 10pt;">F-57

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
expenses, including the fee payable to Morgan Stanley in
connection with an index hedge) in the approximate amount of
$2.3&nbsp;billion. The interest rates associated with the
instruments are as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="64%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B>Description</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Interest Rate</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    First Priority Secured Floating Rate Notes Due 2009</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>LIBOR plus 375&nbsp;basis points</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Priority Secured Floating Rate Notes Due 2010</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>LIBOR plus 575&nbsp;basis points</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Third Priority Secured Floating Rate Notes Due 2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>LIBOR plus 900&nbsp;basis points</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Third Priority Secured Notes Due 2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11.50%</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    First Priority Secured Term Loans due 2009</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>LIBOR plus 375&nbsp;basis points(1)</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Priority Secured Term Loans due 2010</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>LIBOR plus 575&nbsp;basis points(2)</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    The Company may also elect a Base Rate plus 275&nbsp;basis
    points.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    The Company may also elect a Base Rate plus 475&nbsp;basis
    points.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The secured term loans and secured notes described above in each
case are collateralized, through a combination of pledges of the
equity interests in CalGen and its first tier subsidiary, CalGen
Expansion Company, liens on the assets of CalGen&#146;s power
generating facilities (other than its Goldendale facility) and
related assets located throughout the United States. The
lenders&#146; recourse is limited to such collateral, and none
of the indebtedness is guaranteed by Calpine. Net proceeds from
the offerings were used to refinance amounts outstanding under
the $2.5&nbsp;billion CCFC&nbsp;II revolving construction credit
facility, which was scheduled to mature in November 2004, and to
pay fees and transaction costs associated with the refinancing.
Concurrently with this refinancing, the Company amended and
restated the CCFC&nbsp;II credit facility (as amended and
restated, the &#147;CalGen revolving credit facility&#148;) to
reduce the commitments under the facility to $200.0&nbsp;million
and extend its maturity to March 2007. Borrowings under the
CalGen revolving credit facility bear interest at LIBOR plus
350&nbsp;basis points (or, at the Company&#146;s election, the
Base Rate plus 250&nbsp;basis points). Interest rates and
effective interest rates, after amortization of deferred
financing costs are as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="51%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004 Effective Interest</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Interest Rate at</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Rate after Amortization of</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>December&nbsp;31, 2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Deferred Financing Costs</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    First Priority Secured Floating Rate Notes Due 2009</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Priority Secured Floating Rate Notes Due 2010</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.1</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Third Priority Secured Floating Rate Notes Due 2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11.2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10.9</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Third Priority Secured Fixed Rate Notes Due 2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11.8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    First Priority Secured Term Loans Due 2009</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Priority Secured Term Loans Due 2010</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.0</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    First Priority Secured Revolving Loans</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17.5</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">F-58

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>16.</B></TD>
    <TD>
    <B>Other Construction/ Project Financing</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The components of the Company&#146;s other construction/project
financing as of December&nbsp;31, 2004 and 2003, are (in
thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="51%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap><B>Letters of Credit</B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Outstanding at</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap><B>Outstanding at</B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap><B>December&nbsp;31,</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="left" nowrap><B>Projects</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>2003</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Riverside Energy Center, LLC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>368,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>165,347</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pasadena Cogeneration, L.P.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>282,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>289,115</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Broad River Energy LLC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>275,112</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>291,612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Fox Energy Company LLC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>266,075</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Rocky Mountain Energy Center, LLC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>264,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gilroy Energy Center, LLC, 4%&nbsp;Senior Secured Notes Due 2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>261,382</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>298,065</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Aries Power Plant</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>174,914</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Blue Spruce Energy Center, LLC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>98,272</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>140,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Otay Mesa Energy Center, LLC&nbsp;&#151; Ground Lease</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Calpine Newark, LLC&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47,816</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Calpine Parlin, LLC&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32,451</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,999,051</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,271,406</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>75,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>93,393</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>61,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term construction/project financing</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,905,658</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,209,506</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Riverside Energy Center</I>&nbsp;&#151; On August&nbsp;25,
2003, the Company announced that it had completed a
$230.0&nbsp;million non-recourse project financing for its
603-megawatt Riverside Energy Center. The natural gas-fueled
electric generating facility is currently under construction in
Beloit, Wisconsin. Upon completion of the project, which was
scheduled for June 2004, Calpine was required to sell 450
megawatts of electricity to Wisconsin Power and Light under the
terms of a nine-year tolling agreement and provide 75 megawatts
of capacity to Madison Gas&nbsp;&#38; Electric under a nine-year
power sales agreement. A group of banks, including Credit
Lyonnais, Co-Bank, Bayerische Landesbank, HypoVereinsbank and
NordLB, were to finance construction of the plant at a rate of
Libor plus 250&nbsp;basis points. Upon commercial operation of
the Riverside Energy Center, the banks were required to provide
a three-year term-loan facility initially priced at Libor plus
275&nbsp;basis points. The interest rate at refinancing on
June&nbsp;29, 2004, and December&nbsp;31, 2003, was 3.7%. The
interest rate ranged from 3.6% to 3.7% during 2004. The
effective interest rate, after amortization of deferred
financing costs, was 4.7% and 5.3%&nbsp;per annum at refinancing
on June&nbsp;29, 2004, and December&nbsp;31, 2003, respectively.
This facility was refinanced along with Rocky Mountain on
June&nbsp;29, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Pasadena Cogeneration, L.P.</I>&nbsp;&#151; In September
2000, the Company completed the financing, which matures in
2048, for both Phase&nbsp;I and Phase&nbsp;II of the Pasadena,
Texas cogeneration project. Under the terms of the project
financing, the Company received $400.0&nbsp;million in gross
proceeds. The interest rate at December&nbsp;31, 2004 and 2003,
was 8.6%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Broad River Energy LLC</I>&nbsp;&#151; In October 2001, the
Company completed the financing, which matures in 2041, for the
Broad River Energy Center in South Carolina. Under the terms of
the project financing, the Company received $300.0&nbsp;million
in gross proceeds. The interest rate at December&nbsp;31, 2004
and 2003, was 7.9% and 8.1%, respectively.
</DIV>

<P align="center" style="font-size: 10pt;">F-59
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<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Fox Energy Company LLC</I>&nbsp;&#151; On November&nbsp;19,
2004, the Company entered into a $400&nbsp;million, 25-year,
non-recourse sale/leaseback transaction with affiliates of GE
Commercial Finance Energy Financial Services (&#147;GECF&#148;)
for the 560-megawatt Fox Energy Center under construction in
Wisconsin. The proceeds will be used to reimburse Calpine for
construction capital spent to date on the project, to repay
existing debt associated with equipment for the project and to
complete the construction of the facility. Once construction is
complete, the Company will lease the power plant from GECF under
a 25-year facility lease. The Company also has an option to
renew the lease for a 15-year term. Due to significant
continuing involvement, as defined in SFAS No.&nbsp;98,
&#147;Accounting for Leases,&#148; the transaction does not
currently qualify for sale lease-back accounting under that
statement and has been accounted for as a financing. The
proceeds received from GECF are recorded as debt in the
Company&#146;s consolidated balance sheet. The power plant
assets will be depreciated over their estimated useful life and
the lease payments will be applied to principal and interest
expense using the effective interest method until such time as
the Company&#146;s continuing involvement is removed, expires or
is otherwise eliminated. Once the Company no longer has
significant continuing involvement in the power plant assets,
the legal sale will be recognized for accounting purposes and
the underlying lease will be evaluated and classified in
accordance with SFAS&nbsp;No.&nbsp;13. The effective interest
rate at December&nbsp;31, 2004 was 7.1%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Rocky Mountain Energy Center, LLC</I>&nbsp;&#151; On
February&nbsp;20, 2004, the Company completed a
$250.0&nbsp;million, non-recourse project financing for the
621-megawatt Rocky Mountain Energy Center. A consortium of banks
financed the construction of the plant at a rate of LIBOR plus
250&nbsp;basis points. This loan was refinanced in June 2004, as
described below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Rocky Mountain Energy Center, LLC and Riverside Energy
Center, LLC</I>&nbsp;&#151; On June&nbsp;29, 2004, Rocky
Mountain Energy Center, LLC and Riverside Energy Center, LLC,
wholly owned stand-alone subsidiaries of the Company&#146;s
Calpine Riverside Holdings, LLC subsidiary, received funding in
the aggregate amount of $661.5&nbsp;million comprised of
$633.4&nbsp;million of First Priority Secured Floating Rate Term
Loans Due 2011 priced at LIBOR plus 425&nbsp;basis points and
$28.1&nbsp;million letter of credit-linked deposit facility. Net
proceeds from the loans, after transaction costs and fees, were
used to pay final construction costs and refinance amounts
outstanding under the $250&nbsp;million non-recourse project
financing for the Rocky Mountain facility and the
$230&nbsp;million non-recourse project financing for the
Riverside facility. In connection with this refinancing, the
Company wrote off $13.2&nbsp;million in deferred financing
costs. In addition, approximately $160.0&nbsp;million was used
to reimburse the Company for costs incurred in connection with
the development and construction of the Rocky Mountain and
Riverside facilities. The Company also received approximately
$79.0&nbsp;million in proceeds via a combination of cash and
increased credit capacity as a result of the elimination of
certain reserves and cancellation of letters of credit
associated with the original non-recourse project financings.
The interest rate of the Rocky Mountain facility at
December&nbsp;31, 2004, was 8.6%. The interest rate of the
Riverside facility at December&nbsp;31, 2004 was 6.4%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Gilroy Energy Center, LLC</I>&nbsp;&#151; On
September&nbsp;30, 2003, GEC, a wholly owned, stand-alone
subsidiary of the Company&#146;s subsidiary GEC Holdings, LLC,
closed on $301.7&nbsp;million of 4%&nbsp;Senior Secured Notes
Due 2011. The senior secured notes are secured by GEC&#146;s and
its subsidiaries&#146; 11 peaking units located at nine
power-generating sites in northern California. The notes also
are secured by a long-term power sales agreement for 495
megawatts of peaking capacity with the CDRW, which is being
served by the 11 peaking units. In addition, payment of the
principal and interest on the notes when due is insured by an
unconditional and irrevocable financial guaranty insurance
policy that was issued simultaneously with the delivery of the
notes. Proceeds of the notes offering (after payment of
transaction expenses, including payment of the financial
guaranty insurance premium, which are capitalized and included
in deferred financing costs on the balance sheet) will be used
to reimburse costs incurred in connection with the development
and construction of the peaker projects. The noteholders&#146;
recourse is limited to the financial guaranty insurance policy
and, insofar as payment has not been made under such policy, to
the assets of GEC and its subsidiaries. The Company has not
guaranteed repayment of the notes. The effective interest rate,
after amortization of deferred
</DIV>

<P align="center" style="font-size: 10pt;">F-60

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<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
financing charges, was 6.7% and 5.1%&nbsp;per annum at
December&nbsp;31, 2004 and 2003, respectively. In connection
with this offering, the Company has received funding on a third
party preferred equity investment in GEC Holdings, LLC totaling
$74.0&nbsp;million. See Note&nbsp;12 for more information
regarding this preferred interest.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Aries Power Plant</I>&nbsp;&#151; On March&nbsp;26, 2004, in
connection with the closing of the acquisition of the Aries
Power Plant, the existing construction loan was converted to two
term loans totaling $178.8&nbsp;million. At December&nbsp;31,
2004, Tranche&nbsp;A had an aggregate principal amount of
$126.8&nbsp;million, with quarterly payments maturing in
December 2016. At December&nbsp;31, 2004, Tranche&nbsp;B had an
aggregate principal amount of $48.1&nbsp;million, with quarterly
payments maturing in December 2019. After taking interest rate
swaps into consideration, the interest rates on Tranches A and B
were 9.25% and 10.32%, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Blue Spruce Energy Center, LLC</I>&nbsp;&#151; On
August&nbsp;22, 2002, the Company completed a
$106.0&nbsp;million non-recourse project financing for the
construction of its 285-megawatt Blue Spruce Energy Center. On
November&nbsp;7, 2003, the Company repaid the outstanding
balance of $102.0&nbsp;million with the proceeds of a new term
financing described below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On November&nbsp;7, 2003, the Company completed a new
$140.0&nbsp;million term loan financing for the Blue Spruce
Energy Center. The term loan is made up of two facilities,
Tranche&nbsp;A and Tranche&nbsp;B, which have 15-year and 6-year
repayment terms, respectively. At December&nbsp;31, 2004, there
was $98.3&nbsp;million outstanding under Tranche&nbsp;A while
Tranche&nbsp;B was repaid. The effective interest rate, after
amortization of deferred financing costs, for Tranche&nbsp;A and
Tranche&nbsp;B was 8.2% and 8.6%, respectively, per annum at
December&nbsp;31, 2003. The effective interest rate, after
amortization of deferred financing costs, for Tranche&nbsp;A was
14.4%&nbsp;per annum at December&nbsp;31, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Otay Mesa Energy Center, LLC</I>&nbsp;&#151; On July&nbsp;8,
2003, Otay Mesa Generating Company, LLC, entered into a ground
lease and easement agreement with D&#38;D Landholdings, a
Limited Partnership. The interest rate at December&nbsp;31, 2004
and 2003 was 12.6%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Calpine Newark, LLC and Calpine Parlin, LLC</I>&nbsp;&#151;
In December 2002, the Company completed a $50.0&nbsp;million
project financing secured by the Newark Power Plant. This
financing was fully repaid in May 2004 in connection with the
contract termination discussed below. The interest rate at
repayment in May 2004 and at December&nbsp;31, 2003, was 10.6%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In December 2002, the Company completed a $37.0&nbsp;million
project financing secured by the Parlin Power Plant. This
financing was fully repaid in May 2004 in connection with the
contract termination discussed below. The interest rate at
repayment in May 2004 and at December&nbsp;31, 2003, was 9.8%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On May&nbsp;26, 2004, the Company and Jersey Central
Power&nbsp;&#38; Light Company (&#147;JCPL&#148;) terminated
their existing toll arrangements with the Newark and Parlin
power plants, resulting in a pre-tax gain of
$100.6&nbsp;million. Proceeds from this transaction were used to
retire project financing debt of $78.8&nbsp;million. In
conjunction with this termination, Utility Contract
Funding&nbsp;II, LLC (&#147;UCF&#148;), a wholly owned
subsidiary of CES, entered into a long-term PPA with JCPL. UCF
was then sold. The Company recognized an $85.4&nbsp;million
pre-tax gain on the sale of UCF. The total pre-tax gain, net of
transaction costs and the write-off of unamortized deferred
financing costs, was $171.5&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>California Peaker Financing</I>&nbsp;&#151; On May&nbsp;14,
2002, the Company&#146;s subsidiary, Calpine California Energy
Finance, LLC, entered into an $100.0&nbsp;million amended and
restated credit agreement with ING Capital LLC for the funding
of 9 California peaker facilities, of which $100.0&nbsp;million
was drawn on May&nbsp;24, 2002, and $50.0&nbsp;million was
repaid on August&nbsp;7, 2002, and the remaining
$50.0&nbsp;million was repaid on July&nbsp;21, 2003. The
interest rate ranged from 3.5% to 3.9% during 2003. The
effective interest rate, after amortization of deferred
financing costs, was 4.0%&nbsp;per annum at December&nbsp;31,
2003.
</DIV>

<P align="center" style="font-size: 10pt;">F-61

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>17.</B></TD>
    <TD>
    <B>Convertible Senior Notes</B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>4%&nbsp;Convertible Senior Notes Due 2006</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In December 2001 and January 2002, the Company completed the
issuance of $1.2&nbsp;billion in aggregate principal amount of
4%&nbsp;Convertible Senior Notes Due 2006 (&#147;2006
Convertible Senior Notes&#148;). These securities are
convertible, at the option of the holder, into shares of Calpine
common stock at a price of $18.07. Holders had the right to
require the Company to repurchase all or a portion of the 2006
Convertible Senior Notes on December&nbsp;26, 2004, at 100% of
their principal amount plus any accrued and unpaid interest. The
Company can repurchase the 2006 Convertible Senior Notes with
cash, shares of Calpine common stock, or a combination of cash
and stock. During 2004 and 2003 the Company repurchased
approximately $658.7&nbsp;million and $474.9&nbsp;million in
aggregate outstanding principal amount of the 2006 Convertible
Senior Notes at a repurchase price of $657.7&nbsp;million and
$458.8&nbsp;million plus accrued interest, respectively.
Additionally, during 2003 approximately $65.0&nbsp;million in
aggregate outstanding principal amount of the 2006 Convertible
Senior Notes were exchanged for 12.0&nbsp;million shares of
Calpine common stock in privately negotiated transactions.
During 2004 and 2003 the Company recorded a pre-tax loss of
$5.3&nbsp;million and a pre-tax gain of $13.6&nbsp;million,
respectively, on these transactions, net of write-offs of the
associated unamortized deferred financing costs and unamortized
premiums or discounts. The effective interest rate on these
notes at December&nbsp;31, 2004 and 2003, after amortization of
deferred financing costs, was 4.6% and 4.9%&nbsp;per annum,
respectively. At December&nbsp;31, 2004, approximately
$1.3&nbsp;million of the 2006 Convertible Senior Notes remain
outstanding.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>4<FONT style="font-size: 70%"><SUP>3</SUP></FONT>/<FONT style="font-size: 60%">4</FONT>%
    Contingent Convertible Senior Notes Due 2023</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On November&nbsp;17, 2003, the Company completed the issuance of
$650&nbsp;million of 2023 Convertible Senior Notes. These 2023
Convertible Senior Notes are convertible, at the option of
holder, into cash and into shares of Calpine common stock at a
price of $6.50&nbsp;per share, which represents a 38% premium
over the New York Stock Exchange closing price of $4.71&nbsp;per
Calpine common share on November&nbsp;6, 2003. Holders have the
right to require the Company to repurchase all or a portion of
these securities on November&nbsp;15, 2009, November&nbsp;15,
2013, and November&nbsp;15, 2018, at 100% of their principal
amount plus any accrued and unpaid interest and liquidated
damages, if any, up to the date of repurchase. Otherwise,
conversion is subject to a common stock price condition where
the Company&#146;s common stock is trading for at least 20
trading days in the period of 30 consecutive trading days ending
on the last trading day of the calendar quarter preceding the
quarter in which the conversion occurs is more than 120% of the
conversion price per share of the common stock in effect on that
30th trading day. Conversion is also subject to a trading price
condition where during the five trading day period after any
five consecutive trading day period in which the trading price
of $1,000 principal amount of the notes for each day of such
five-day period was less than 95% of the product of the closing
sale price of our common stock price on that day multiplied by
the Conversion Rate. Note holders have a limited amount of time
to convert their notes once a conversion condition has been
achieved. Generally, upon conversion of the notes the Company is
required to deliver the par value of the notes in cash and any
additional conversion value in Calpine common stock. However, if
the notes are put back to the Company on November&nbsp;15, 2009,
November&nbsp;15, 2013 or November&nbsp;15, 2018, the Company
has the right to pay the repurchase price in cash, shares of
Calpine common stock, or a combination of cash and stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On January&nbsp;9, 2004, one of the initial purchasers of the
2023 Convertible Senior Notes exercised in full its option to
purchase an additional $250.0&nbsp;million of these notes. The
notes are convertible into cash and into shares of Calpine
common stock upon the occurrence of certain contingencies at an
initial conversion price of $6.50&nbsp;per share, which
represents a 38% premium over the New York Stock Exchange
closing price of $4.71&nbsp;per share on November&nbsp;6, 2003,
the date the notes were originally priced.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2004, the Company repurchased approximately
$266.2&nbsp;million in aggregate outstanding principal amount of
2023 Convertible Senior Notes at a repurchase price of
$177.0&nbsp;million plus accrued interest. At December&nbsp;31,
2004, there was $633.8&nbsp;million in outstanding borrowings
under these notes. The effective
</DIV>

<P align="center" style="font-size: 10pt;">F-62
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
interest rate on these notes, after amortization of deferred
financing costs, was approximately 5.3% and 4.9%&nbsp;per annum
at December&nbsp;31, 2004 and 2003.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>6% Contingent Convertible Notes Due 2014</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On September&nbsp;30, 2004, the Company closed on
$736&nbsp;million aggregate principal amount at maturity of 2014
Convertible Notes, offered at 83.9% of par. Net proceeds were
used to repurchase certain outstanding Senior Notes, 2023
Convertible Senior Notes, and HIGH TIDES securities. The Company
recorded a pre-tax gain on these transactions in the amount of
$167.2&nbsp;million, net of write-offs of unamortized deferred
financing costs and the unamortized premiums or discounts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The 2014 Convertible Notes are convertible into cash and into a
variable number of shares of Calpine common stock based on a
conversion value derived from the conversion price of
$3.85&nbsp;per share. The number of shares to be delivered upon
conversion will be determined by the market price of Calpine
common shares at the time of conversion. However, conversion is
subject to a common stock price condition where the
Company&#146;s common stock is trading for at least 20 trading
days in the period of 30 consecutive trading days ending on the
last trading day of the calendar quarter preceding the quarter
in which the conversion occurs is more than 120% of the
conversion price per share of the common stock in effect on the
30th trading day. Conversion is also subject to a trading price
condition where during the five trading day period after any
five consecutive trading day period in which the trading price
of $1,000 principal amount at maturity of the notes for each day
of such five-day period was less than 95% of the product of the
closing sale price of our common stock price on that day
multiplied by the Conversion Rate. Note holders have a limited
amount of time to convert their notes once a conversion
condition has been achieved.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The conversion price of $3.85&nbsp;per share represents a
premium of approximately 23% over The New York Stock Exchange
closing price of $3.14&nbsp;per Calpine common share on
September&nbsp;27, 2004. The 2014 Convertible Notes will pay
Contractual cash interest at a rate of 6%, except that in years
three, four and five, in lieu of interest, the original
principal amount of $839&nbsp;per note will accrete daily
beginning September&nbsp;30, 2006, to the full principal amount
of $1,000&nbsp;per note at September&nbsp;30, 2009. For
accounting purposes, the Company has calculated the effective
interest rate of the 2014 Convertible Notes capturing the 6%
stated rate and the 16.1% discount and is recording interest
expense over the 10-year term of the instrument using the
effective interest method in accordance with paragraph 13-15 of
APB Opinion No.&nbsp;21, &#147;Interest on Receivables and
Payables.&#148; Upon conversion of the 2014 Convertible Notes,
the Company is required to deliver the accreted principal amount
of the notes in cash and any additional conversion value in
Calpine common stock. However, in certain events of default the
Company is required to deliver the par value of the notes in
Calpine common stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At December&nbsp;31, 2004, there was $620.2&nbsp;million in
outstanding borrowings under these notes. The effective interest
rate on these notes, after amortization of deferred financing
costs, was approximately 6.3%&nbsp;per annum at
December&nbsp;31, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In conjunction with the 2014 Convertible Notes offering, the
Company entered into a ten-year Share Lending Agreement with
Deutsche Bank AG London (&#147;DB London&#148;), under which the
Company loaned DB London 89&nbsp;million shares of newly issued
Calpine common stock (the &#147;loaned shares&#148;) in exchange
for a loan fee of $.001&nbsp;per share. DB London sold the
entire 89&nbsp;million shares on September&nbsp;30, 2004, at a
price of $2.75&nbsp;per share in a registered public offering.
The Company did not receive any of the proceeds of the public
offering. DB London is required to return the loaned shares to
the Company no later than the end of the ten-year term of the
Share Lending Agreement, or earlier under certain circumstances.
Once loaned shares are returned, they may not be re-borrowed
under the Share Lending Agreement. Under the Share Lending
Agreement, DB London is required to post and maintain collateral
in the form of cash, government securities, certificates of
deposit, high-grade commercial paper of U.S.&nbsp;issuers or
money market shares at least equal to 100% of the market value
of the loaned shares as security for the obligation of DB London
to return the loaned
</DIV>

<P align="center" style="font-size: 10pt;">F-63

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
shares to the Company. This collateral is held in an account at
a DB London affiliate. The Company has no access to the
collateral unless DB London defaults under its obligations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Share Lending Agreement is similar to an accelerated share
repurchase transaction which is addressed by EITF Issue
No.&nbsp;99-07, <I>&#147;Accounting for an Accelerated Share
Repurchase Program.&#148;</I> This EITF issue requires an
accelerated share repurchase transaction to be accounted for as
two transactions: a treasury stock purchase and a forward sales
contract. The Share Lending Agreement involved the issuance of
89&nbsp;million shares of the Company&#146;s common stock in
exchange for a physically settling forward contract for the
reacquisition of the shares at a future date. We recorded the
issuance of shares in equity at the fair value of the Calpine
common stock on the date of issuance in the amount of
$258.1&nbsp;million. As there was minimal cash consideration in
the transaction, the requirement to the return of these shares
is considered to be a prepaid forward purchase contract. We have
evaluated the prepaid forward contract under the guidance of
SFAS&nbsp;No.&nbsp;133, and determined that the instrument was
not a derivative in its entirety and that the embedded
derivative would not require separate accounting. The hybrid
contract was classified similar to a shareholder loan which was
recorded in equity at the fair value of the Calpine common stock
on the date of issuance in the amount of $258.1&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Under SFAS&nbsp;No.&nbsp;150, entities that have entered into a
forward contract that requires physical settlement by repurchase
of a fixed number of the issuer&#146;s equity shares of common
stock in exchange for cash shall exclude the common shares to be
redeemed or repurchased when calculating basic and diluted EPS.
The Share Lending Agreement does not provide for cash
settlement, but rather physical settlement is required (i.e. the
shares must be returned by the end of the arrangement). The
Company analogizes to the guidance in SFAS&nbsp;No.&nbsp;150
such that the prepaid forward contract results in a reduction in
the number of outstanding shares used to calculate basic and
diluted EPS. Consequently, the 89&nbsp;million shares of common
stock subject to the Share Lending Agreement are excluded from
the earnings per share EPS calculation.
</DIV>

<P align="center" style="font-size: 10pt;">F-64

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>18.</B></TD>
    <TD>
    <B>Senior Notes</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Senior Notes payable consist of the following as of
December&nbsp;31, 2004 and 2003, (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Fair Value as of</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>December&nbsp;31, (3)</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Interest</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>First Call</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Rates</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Date</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    First Priority Senior Secured Notes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    First Priority Senior Secured Notes Due 2014</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>95/8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>(12)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>778,971</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>801,367</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    First Priority Senior Secured Term Loan&nbsp;B Notes Due 2007</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>(4)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>(2)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>199,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>202,243</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total First Priority Senior Secured Notes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>778,971</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>199,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>801,367</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>202,243</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Priority Senior Secured Notes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Priority Senior Secured Term Loan&nbsp;B Notes Due 2007</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>(5)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>(8)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>740,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>748,125</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>677,672</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>727,552</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Priority Senior Secured Floating Rate Notes Due 2007</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>(6)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>(7)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>493,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>498,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>449,313</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>488,775</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Priority Senior Secured Notes Due 2010</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>81/2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>(7)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,150,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,150,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>987,563</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,127,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Priority Senior Secured Notes Due 2013</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>83/4</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>(7)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>900,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>900,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>740,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>877,500</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Second Priority Senior Secured Notes Due 2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>97/8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>393,150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>392,159</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>344,006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>401,963</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total Second Priority Senior Secured Notes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,677,525</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,689,034</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,198,804</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,622,790</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="5" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unsecured Senior Notes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Senior Notes Due 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>81/4</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>(2)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>185,949</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>224,679</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>188,424</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>215,692</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Senior Notes Due 2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>101/2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>152,695</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>166,575</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>151,359</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>163,243</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Senior Notes Due 2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75/8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>111,563</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>214,613</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>109,332</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>191,006</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Senior Notes Due 2007</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>83/4</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2002</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>195,305</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>226,120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>177,728</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>187,679</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Senior Notes Due 2007(9)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>83/4</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>(2)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>165,572</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>154,120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>150,671</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>114,049</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Senior Notes Due 2008</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>77/8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>227,071</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>305,323</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>191,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>236,624</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Senior Notes Due 2008</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>81/2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>(2)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,581,539</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,925,067</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,347,472</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,540,053</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Senior Notes Due 2008(10)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>83/8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>(2)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>160,050</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>154,140</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>121,638</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>114,064</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Senior Notes Due 2009</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>73/4</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>(1)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>221,539</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>232,520</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>177,231</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>179,041</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Senior Notes Due 2010</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>85/8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>(2)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>496,973</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>496,909</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>402,548</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>390,074</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Senior Notes Due 2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>81/2</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>(2)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,063,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,179,911</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>792,568</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>932,130</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Senior Notes Due 2011(11)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>87/8</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>(2)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>232,511</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>215,242</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>167,989</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>157,127</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total Unsecured Senior Notes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,794,617</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,495,219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,978,835</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,420,782</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total Senior Notes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,251,113</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,383,753</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,979,006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,245,815</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Senior Notes, current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>718,449</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>198,449</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,500</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Senior Notes, net of current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,532,664</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9,369,253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,780,557</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,231,315</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="5">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Not redeemable prior to maturity.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Redeemable by the Company at any time prior to maturity.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">F-65

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 15pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="1%"></TD>
    <TD width="4%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    Represents the market values of the Senior Notes at the
    respective dates.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    3-month US$ LIBOR, plus a spread.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(5)&nbsp;</TD>
    <TD align="left">
    U.S.&nbsp;Prime Rate in combination with the Federal Funds
    Effective Rate, plus a spread.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(6)&nbsp;</TD>
    <TD align="left">
    British Bankers Association LIBOR Rate for deposit in
    U.S.&nbsp;dollars for a period of three months, plus a spread.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(7)&nbsp;</TD>
    <TD align="left">
    At any time before July&nbsp;15, 2005, with respect to the
    Second Priority Senior Secured Floating Rate Notes Due 2007 (the
    &#147;2007 notes&#148;) and before July&nbsp;15, 2006, with
    respect to the Second Priority Senior Secured Notes Due 2010
    (the &#147;2010 notes&#148;) and the Second Priority Senior
    Secured Notes Due 2013 (the &#147;2013 notes&#148;), on one or
    more occasions, the Company can choose to redeem up to 35% of
    the outstanding principal amount of the applicable series of
    notes, including any additional notes issued in such series,
    with the net cash proceeds of any one or more public equity
    offerings so long as (1)&nbsp;the Company pays holders of the
    notes a redemption price equal to par plus the applicable
    Eurodollar rate then in effect with respect to the 2007 notes,
    108.500% with respect to the 2010 notes, and 108.750% with
    respect to the 2013 notes, at the face amount of the notes the
    Company redeems, plus accrued interest; (2)&nbsp;the Company
    must redeem the notes within 45&nbsp;days of such public equity
    offering; and (3)&nbsp;at least 65% of the aggregate principal
    amount of the applicable series of notes originally issued under
    the applicable indenture, including the principal amount of any
    additional notes, remains outstanding immediately after each
    such redemption.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(8)&nbsp;</TD>
    <TD align="left">
    The Company may not voluntarily prepay these notes prior to
    July&nbsp;15, 2005, except that the Company may on any one or
    more occasions make such prepayment with the proceeds of one or
    more public equity offerings.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>(9)&nbsp;</TD>
    <TD align="left">
    Issued in Canadian dollars.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>(10)&nbsp;</TD>
    <TD align="left">
    Issued in Euros.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(11)&nbsp;</TD>
    <TD align="left">
    Issued in Sterling.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(12)&nbsp;</TD>
    <TD align="left">
    The Company may redeem some or all of the notes at any time on
    or after October&nbsp;1, 2009 at specified redemption prices. At
    any time prior to October&nbsp;1, 2009, the Company may redeem
    some or all of the notes at a price equal to 100% of their
    principal amount and the applicable premium plus accrued and
    unpaid interest. In addition, at any time prior to
    October&nbsp;1, 2007, the Company may redeem up to 35% of the
    aggregate principal amount of the notes with the net proceeds
    from one or more public equity offerings at a stated redemption
    price.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company has completed a series of public debt offerings
since 1994. Interest is payable quarterly or semiannually at
specified rates. Deferred financing costs are amortized using
the effective interest method, over the respective lives of the
notes. There are no sinking fund or mandatory redemptions of
principal before the maturity dates of each offering. Certain of
the Senior Note indentures limit the Company&#146;s ability to
incur additional debt, pay dividends, sell assets and enter into
certain transactions. As of December&nbsp;31, 2004, the Company
was in compliance with all debt covenants relating to the Senior
Notes. The effective interest rates for each of the
Company&#146;s Senior Notes outstanding at December&nbsp;31,
2004, are consistent with the respective notes outstanding
during 2003, unless otherwise noted.
</DIV>

<P align="center" style="font-size: 10pt;">F-66

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Senior notes repurchased by the Company during 2004 and 2003
totaled $743.4&nbsp;million and $1,378.5&nbsp;million,
respectively, in aggregate outstanding principal amount at a
repurchase price of $559.3&nbsp;million and
$1,116.5&nbsp;million, respectively, plus accrued interest. The
Company recorded a pre-tax gain on these transactions in the
amount of $177.6&nbsp;million and $245.5&nbsp;million,
respectively, net of write-offs of unamortized deferred
financing costs and the unamortized premiums or discounts. The
following table summarizes the total senior notes repurchased by
the Company in the year ended December&nbsp;31, 2004 and 2003,
respectively (in millions):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="51%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Principal</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Amount</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Principal</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Amount</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B>Debt Security</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Amount</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Paid</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Amount</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Paid</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    8<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">4</FONT>%&nbsp;Senior
    Notes Due 2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>38.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>34.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>24.5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    10<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT>%&nbsp;Senior
    Notes Due 2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    7<FONT style="font-size: 70%"><SUP>5</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%&nbsp;Senior
    Notes Due 2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>103.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>96.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32.5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    8<FONT style="font-size: 70%"><SUP>3</SUP></FONT>/<FONT style="font-size: 60%">4</FONT>%&nbsp;Senior
    Notes Due 2007</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45.0</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    7<FONT style="font-size: 70%"><SUP>7</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%&nbsp;Senior
    Notes Due 2008</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>78.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>74.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>58.3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    8<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT>%&nbsp;Senior
    Notes Due 2008(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>344.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>249.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42.3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    8<FONT style="font-size: 70%"><SUP>3</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%&nbsp;Senior
    Notes Due 2008(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>59.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>46.6</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    7<FONT style="font-size: 70%"><SUP>3</SUP></FONT>/<FONT style="font-size: 60%">4</FONT>%&nbsp;Senior
    Notes Due 2009</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>97.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75.9</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    8<FONT style="font-size: 70%"><SUP>5</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%&nbsp;Senior
    Notes Due 2010</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>210.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>170.7</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    8<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT>%&nbsp;Senior
    Notes Due 2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>116.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>73.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>648.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>521.3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    8<FONT style="font-size: 70%"><SUP>7</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%&nbsp;Senior
    Notes Due 2011(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>125.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>94.3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>743.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>559.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,378.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,116.5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    $395.5&nbsp;million of such repurchased notes have been pledged
    as security as part of the transactions relating to the issuance
    by Calpine (Jersey) Limited of Redeemable Preferred Shares. See
    Note&nbsp;12 for additional information on such issuance of
    Redeemable Preferred Shares.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Additionally, senior notes totaling $80.0&nbsp;million in
principal amount were exchanged for 11.5&nbsp;million shares of
Calpine common stock in privately negotiated transactions during
2003. The Company recorded a $17.9&nbsp;million pre-tax gain on
these transactions, net of write-offs of unamortized deferred
financing costs and the unamortized premiums or discounts. The
following table summarizes the total senior notes exchanged for
common stock by the Company in the year ended December&nbsp;31,
2003 (in millions):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="69%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Principal</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Common Stock</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Debt Security</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Amount</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Issued</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    8<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT>%&nbsp;Senior
    Notes Due 2008</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>55.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    8<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT>%&nbsp;Senior
    Notes Due 2011</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.4</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>80.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11.5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>First Priority Senior Secured Notes Due 2014</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On September&nbsp;30, 2004, the Company closed on
$785&nbsp;million of
9<FONT style="font-size: 70%"><SUP>5</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%
First-Priority Senior Secured Notes Due 2014
(&#147;9<FONT style="font-size: 70%"><SUP>5</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%&nbsp;Senior
Notes&#148;), offered at 99.212% of par. The
9<FONT style="font-size: 70%"><SUP>5</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%&nbsp;Senior
Notes are secured, by substantially all of the assets owned
directly by Calpine Corporation, and by the stock of
substantially all of its first-tier subsidiaries. Net proceeds
from the
9<FONT style="font-size: 70%"><SUP>5</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%&nbsp;Senior
Notes offering were used to make open-market purchases of the
Company&#146;s existing indebtedness and any remaining proceeds
will be applied toward further open-market purchases (or
redemption) of existing indebtedness and as otherwise permitted
by the
</DIV>

<P align="center" style="font-size: 10pt;">F-67

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Company&#146;s indentures. The Company may redeem some or all of
the notes at any time on or after October&nbsp;1, 2009 at
specified redemption prices. At any time prior to
October&nbsp;1, 2009, the Company may redeem some or all of the
notes at a price equal to 100% of their principal amount and the
applicable premium plus accrued and unpaid interest. In
addition, at any time prior to October&nbsp;1, 2007, the Company
may redeem up to 35% of the aggregate principal amount of the
notes with the net proceeds from one or more public equity
offerings at a stated redemption price. Interest is payable on
these notes on April&nbsp;1 and October&nbsp;1 of each year,
beginning on April&nbsp;1, 2005. The notes will mature on
September&nbsp;30, 2014. At December&nbsp;31, 2004, both the
book and face value of these notes were $779.0&nbsp;million and
$785.0&nbsp;million, respectively. The effective interest rate,
after amortization of deferred financing costs, was
10.0%&nbsp;per annum at December&nbsp;31, 2004.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>First Priority Senior Secured Term Loan&nbsp;B Notes Due
    2007</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company was to repay these notes in 16 consecutive quarterly
installments, commencing on October&nbsp;15, 2003, and ending on
July&nbsp;15, 2007, the first fifteen of which were to be for
0.25% of the original principal amount of the notes thru
April&nbsp;15, 2007. These notes were redeemable at any time
prior to maturity with certain provisions. These notes were
repaid prior to their maturity with the proceeds from the sale
of certain oil and gas properties during 2004. The effective
interest rate, after amortization of deferred financing costs,
was 5.2% and 5.0%&nbsp;per annum at December&nbsp;31, 2004 and
2003, respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Second Priority Senior Secured Term Loan&nbsp;B Notes Due
    2007</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company must repay these notes in 16 consecutive quarterly
installments, commencing on October&nbsp;15, 2003, and ending on
July&nbsp;15, 2007, the first fifteen of which will be 0.25% of
the original principal amount of the notes thru April&nbsp;15,
2007. The final installment, on July&nbsp;15, 2007, will be
96.25% of the original principal amount. Interest is payable on
each quarterly payment date occurring after the closing date of
July&nbsp;16, 2003. The Company may not voluntarily prepay these
notes prior to July&nbsp;15, 2005, except that the Company may
on any one or more occasions make such prepayment with the
proceeds of one or more public equity offerings. At
December&nbsp;31, 2004, both the book and face value of these
notes was $740.6&nbsp;million. The effective interest rate,
after amortization of deferred financing costs, was 7.8% and
7.5%&nbsp;per annum at December&nbsp;31, 2004 and 2003,
respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Second Priority Senior Secured Floating Rate Notes Due
    2007</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company must repay these notes in 16 consecutive quarterly
installments, commencing on October&nbsp;15, 2003, and ending on
July&nbsp;15, 2007, the first fifteen of which will be 0.25% of
the original principal amount of the notes thru April&nbsp;15,
2007. The final installment, on July&nbsp;15, 2007, will be
96.25% of the original principal amount. On or before
July&nbsp;15, 2005, on one or more occasions, the Company may
use the proceeds from one or more public equity offerings to
redeem up to 35% of the aggregate principal amount of the notes
at the stated redemption price of par plus the applicable
Eurodollar rate in effect at the time of redemption. Interest is
payable on each quarterly payment date occurring after the
closing date of July&nbsp;16, 2003. At December&nbsp;31, 2004,
both the book and face value of these notes was
$493.8&nbsp;million. The effective interest rate, after
amortization of deferred financing costs, was 7.8% and
7.4%&nbsp;per annum at December&nbsp;31, 2004 and 2003,
respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Second Priority Senior Secured Notes Due 2010</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interest is payable on these notes on January 15 and July 15 of
each year. The notes will mature on July&nbsp;15, 2010. On or
before July&nbsp;15, 2006, on one or more occasions, the Company
may use the proceeds from one or more public equity offerings to
redeem up to 35% of the aggregate principal amount of the notes
at the stated redemption price of 108.5%. At December&nbsp;31,
2003, both the book and face value of these notes were
</DIV>

<P align="center" style="font-size: 10pt;">F-68

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
$1,150.0&nbsp;million. The effective interest rate, after
amortization of deferred financing costs, was 8.9% and
8.8%&nbsp;per annum at December&nbsp;31, 2004 and 2003,
respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Second Priority Senior Secured Notes Due 2011</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interest is payable on these notes on June&nbsp;1 and
December&nbsp;1 of each year, commencing on June&nbsp;1, 2004.
The notes will mature on December&nbsp;1, 2011, and are not
redeemable prior to maturity. At December&nbsp;31, 2004, the
book and face value of these notes were $393.2&nbsp;million and
$400.0&nbsp;million, respectively. The effective interest rate,
after amortization of deferred financing costs, was 10.7% and
10.5%&nbsp;per annum at December&nbsp;31, 2004 and 2003,
respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Second Priority Senior Secured Notes Due 2013</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interest is payable on these notes on January 15 and July 15 of
each year. The notes will mature on July&nbsp;15, 2013. On or
before July&nbsp;15, 2006, on one or more occasions, the Company
may use the proceeds from one or more public equity offerings to
redeem up to 35% of the aggregate principal amount of the notes
at the stated redemption price of 108.75%. At December&nbsp;31,
2004, both the book and face value of these notes were
$900.0&nbsp;million. The effective interest rate, after
amortization of deferred financing costs, was 9.0%&nbsp;per
annum at December&nbsp;31, 2004 and 2003.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Senior Notes Due 2005</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interest on the
8<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">4</FONT>%&nbsp;notes
is payable semi-annually on February 15 and August 15. The notes
mature on August&nbsp;15, 2005, or may be redeemed at any time
prior to maturity at a redemption price equal to 100% of their
principal amount plus accrued and unpaid interest plus a
make-whole premium. At December&nbsp;31, 2004, the book value
and face value of these notes were $185.9&nbsp;million and
$186.1&nbsp;million, respectively. The effective interest rate,
after amortization of deferred financing costs, is 8.7%&nbsp;per
annum.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Senior Notes Due 2006</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interest on the
10<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT>%&nbsp;notes
is payable semi-annually on May 15 and November 15 each year.
The notes mature on May&nbsp;15, 2006, or are redeemable, at the
option of the Company, at any time on or after May&nbsp;15,
2001, at various redemption prices. In addition, the Company may
redeem up to $63.0&nbsp;million of the Senior Notes Due 2006
from the proceeds of any public equity offering. At
December&nbsp;31, 2004, both the book value and face value of
these notes were $152.7&nbsp;million. The effective interest
rate, after amortization of deferred financing costs, was
11.0%&nbsp;per annum at December&nbsp;31, 2004, and
10.6%&nbsp;per annum at December&nbsp;31, 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interest on the
7<FONT style="font-size: 70%"><SUP>5</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%&nbsp;notes
is payable semi-annually on April 15 and October 15 each year.
The notes mature on April&nbsp;15, 2006, and are not redeemable
prior to maturity. At December&nbsp;31, 2004, the book value and
face value of these notes were $111.6&nbsp;million. The
effective interest rate, after amortization of deferred
financing costs, was 8.0% and 7.9%&nbsp;per annum at
December&nbsp;31, 2004 and 2003, respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Senior Notes Due 2007</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interest on the
8<FONT style="font-size: 70%"><SUP>3</SUP></FONT>/<FONT style="font-size: 60%">4</FONT>%&nbsp;notes
maturing on July&nbsp;15, 2007, is payable semi-annually on
January 15 and July 15 each year. These notes are redeemable, at
the option of the Company, at any time on or after July&nbsp;15,
2002, at various redemption prices. In addition, the Company may
redeem up to $96.3&nbsp;million of the Senior Notes Due 2007
from the proceeds of any public equity offering. At
December&nbsp;31, 2004, both the book value and face value of
these notes were $195.3&nbsp;million. The effective interest
rate, after amortization of deferred financing costs, was 9.2%
and 9.1%&nbsp;per annum at December&nbsp;31, 2004 and 2003,
respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interest on the
8<FONT style="font-size: 70%"><SUP>3</SUP></FONT>/<FONT style="font-size: 60%">4</FONT>%&nbsp;notes
maturing on October&nbsp;15, 2007, is payable semi-annually on
April 15 and October 15 each year. The notes may be redeemed
prior to maturity, at any time in whole or from time to time
</DIV>

<P align="center" style="font-size: 10pt;">F-69
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
in part, at a redemption price equal to the greater of
(a)&nbsp;the &#147;Discounted Value&#148; of the senior notes,
which equals the sum of the present values of all remaining
scheduled payments of principal and interest, or (b)&nbsp;100%
of the principal amount plus accrued and unpaid interest to the
redemption date. The notes are fully and unconditionally
guaranteed by the Company. At December&nbsp;31, 2004, the book
value and face value of these notes were $165.6&nbsp;million and
$166.0&nbsp;million, respectively. The effective interest rate,
after amortization of deferred financing costs and the effect of
cross currency swaps, was 9.4% at December&nbsp;31, 2004, and
8.9% at December&nbsp;31, 2003.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Senior Notes Due 2008</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interest on the
7<FONT style="font-size: 70%"><SUP>7</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%&nbsp;notes
is payable semi-annually on April&nbsp;1 and October&nbsp;1 each
year. These notes mature on April&nbsp;1, 2008, and are not
redeemable prior to maturity. At December&nbsp;31, 2004, the
book value and face value of these notes were
$227.1&nbsp;million and $227.3&nbsp;million, respectively. The
effective interest rate, after amortization of deferred
financing costs, was 8.1%&nbsp;per annum at December&nbsp;31,
2004 and 2003. The notes are fully and unconditionally
guaranteed by the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interest on the
8<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT>%&nbsp;notes
is payable semi-annually on May&nbsp;1 and November&nbsp;1 each
year. The notes mature on May&nbsp;1, 2008, or may be redeemed
prior to maturity at a redemption price equal to 100% of the
principal amount plus accrued and unpaid interest plus a
make-whole premium. At December&nbsp;31, 2004, the book value
and face value of these notes were $1,581.5&nbsp;million and
$1,582.4&nbsp;million, respectively. The effective interest
rate, after amortization of deferred financing costs, was
8.8%&nbsp;per annum at December&nbsp;31, 2004, and 8.7%&nbsp;per
annum at December&nbsp;31, 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interest on the
8<FONT style="font-size: 70%"><SUP>3</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%&nbsp;notes
is payable semi- annually on April 15 and October 15 each year.
The notes mature on October&nbsp;15, 2008, or may be redeemed
prior to maturity at a redemption price equal to 100% of the
principal amount plus accrued and unpaid interest plus a
make-whole premium. At December&nbsp;31, 2004, both the book
value and face value of these notes were $160.0&nbsp;million.
The effective interest rate, after amortization of deferred
financing costs and the effect of cross currency swaps, was
8.6%&nbsp;per annum at December&nbsp;31, 2004, and 8.7%&nbsp;per
annum at December&nbsp;31, 2003.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Senior Notes Due 2009</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interest on these
7<FONT style="font-size: 70%"><SUP>3</SUP></FONT>/<FONT style="font-size: 60%">4</FONT>%&nbsp;notes
is payable semi-annually on April 15 and October 15 each year.
The notes mature on April&nbsp;15, 2009, and are not redeemable
prior to maturity. At December&nbsp;31, 2003, the book value and
face value of these notes were $221.5&nbsp;million and
$221.6&nbsp;million, respectively. The effective interest rate,
after amortization of deferred financing costs, was
8.0%&nbsp;per annum at December&nbsp;31, 2004 and 2003.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Senior Notes Due 2010</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interest on these
8<FONT style="font-size: 70%"><SUP>5</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%&nbsp;notes
is payable semi-annually on August 15 and February 15 each year.
The notes mature on August&nbsp;15, 2010, and may be redeemed at
any time prior to maturity at a redemption price equal to 100%
of their principal amount plus accrued and unpaid interest plus
a make-whole premium. At December&nbsp;31, 2004, the book value
and face value of these notes were $497.0&nbsp;million and
$497.3&nbsp;million, respectively. The effective interest rate,
after amortization of deferred financing costs, was
8.8%&nbsp;per annum.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Senior Notes Due 2011</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interest on the
8<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT>%&nbsp;notes
is payable semi-annually on February 15 and August 15 each year.
The notes mature on February&nbsp;15, 2011, and may be redeemed
prior to maturity at a redemption price equal to 100% of the
principal amount plus accrued and unpaid interest plus a
make-whole premium. At December&nbsp;31, 2004, the book value
and face value of these notes were $1,063.9&nbsp;million and
$1,088.6&nbsp;million, respectively. The
</DIV>

<P align="center" style="font-size: 10pt;">F-70
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
effective interest rate, after amortization of deferred
financing costs, was 8.4% and 8.7%&nbsp;per annum at
December&nbsp;31, 2004 and 2003, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Interest on the
8<FONT style="font-size: 70%"><SUP>7</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%&nbsp;notes
is payable semi-annually on April 15 and October 15 each year.
The notes mature on October&nbsp;15, 2011, and may be redeemed
prior to maturity at a redemption price equal to 100% of the
principal amount plus accrued and unpaid interest plus a
make-whole premium. At December&nbsp;31, 2004, the book value
and face value of these notes were $232.5&nbsp;million and
$233.9&nbsp;million, respectively. The effective interest rate,
after amortization of deferred financing costs and the effect of
cross currency swaps, was 9.3%&nbsp;per annum at
December&nbsp;31, 2004, and 9.4%&nbsp;per annum at
December&nbsp;31, 2003.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>19.</B></TD>
    <TD>
    <B>Provision for Income Taxes</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The jurisdictional components of income (loss) from continuing
operations and before provision for income taxes at
December&nbsp;31, 2004, 2003, and 2002, are as follows (in
thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="61%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    U.S.&nbsp;</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(552,849</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>35,207</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>25,225</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    International</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(164,526</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>59,398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,332</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before provision for income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(717,375</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>94,605</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>37,557</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The components of the provision (benefit) for income taxes for
the years ended December&nbsp;31, 2004, 2003, and 2002, consists
of the following (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="54%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Federal</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(72,835</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    State</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,198</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(21,305</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,837</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,975</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total Current</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,173</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(20,955</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(68,998</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Federal</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(161,542</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>413</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75,377</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    State</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6,194</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23,089</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,964</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(119,986</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,948</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(9,508</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total Deferred</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(287,722</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,450</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>79,833</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total provision (benefit)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(276,549</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,495</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>10,835</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">F-71

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A reconciliation of the Company&#146;s overall actual effective
tax rate (benefit) to the statutory U.S.&nbsp;Federal income tax
rate of 35% to pretax income from continuing operations is as
follows for the years ended December&nbsp;31:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Expected tax (benefit) rate at United States statutory tax rate</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(35.00</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35.00</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35.00</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    State income tax (benefit), net of federal benefit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.45</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.23</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30.81</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Depletion and other permanent items</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1.38</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.90</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.20</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Valuation allowances</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4.84</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Tax credits</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.21</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2.62</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign tax at rates other than U.S.&nbsp;statutory rate</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.57</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(34.44</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(36.76</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other, net (including U.S.&nbsp;tax on Foreign Income)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.91</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Effective income tax (benefit) rate</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(38.55</TD>
    <TD align="left" valign="bottom" nowrap>)%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.98</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28.85</TD>
    <TD align="left" valign="bottom" nowrap>%</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The components of the deferred income taxes, net as of
December&nbsp;31, 2004 and 2003, are as follows (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="63%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred tax assets:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net operating loss and credit carryforwards</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,098,446</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>478,118</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Taxes related to risk management activities and
    SFAS&nbsp;No.&nbsp;133</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>77,017</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>77,905</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other differences</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>324,040</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>105,280</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred tax assets before valuation allowance</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,499,503</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>661,303</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Valuation allowance</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(62,822</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(19,335</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total Deferred tax assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,436,681</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>641,968</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred tax liabilities:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Property differences</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,382,813</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,968,012</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total Deferred tax liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,382,813</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,968,012</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net deferred tax liability</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(946,132</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,326,044</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Current portion: asset/(liability)(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(75,608</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,709</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred income taxes, net of current portion</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1,021,740</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1,310,335</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Current portion of net deferred income taxes are classified
    within other current assets in 2004 and other current
    liabilities in 2003 on the Consolidated Balance Sheet.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The net operating loss carryforward consists of federal and
state carryforwards of approximately $2.3&nbsp;billion which
expire between 2017 and 2019. The federal and state net
operating loss carryforwards available are subject to
limitations on their annual usage. The Company also has loss
carryforwards in certain foreign subsidiaries, resulting in tax
benefits of approximately $152&nbsp;million, the majority of
which expire by 2008. The Company provided a valuation allowance
on certain state and foreign tax jurisdiction deferred tax
assets to reduce the gross amount of these assets to the extent
necessary to result in an amount that is more likely than not of
being realized. Realization of the deferred tax assets and net
operating loss carryforwards is dependent, in part, on
generating sufficient taxable income prior to expiration of the
loss carryforwards. The amount of the deferred tax asset
considered realizable, however, could be reduced in the near
term if estimates of future taxable income during the
carryforward period are reduced. The Company is under an Internal
</DIV>

<P align="center" style="font-size: 10pt;">F-72
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Revenue Service review for the years 1999 through 2002 and is
periodically under audit for various state and foreign
jurisdictions for income and sales and use taxes. The Company
believes that the ultimate resolution of these examinations will
not have a material effect on its consolidated financial
position.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company&#146;s foreign subsidiaries had no cumulative
undistributed earnings at December&nbsp;31, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the years ended December&nbsp;31, 2004, 2003 and 2002, the
net change in the valuation allowance was an increase (decrease)
of $43.5&nbsp;million, $(7.3)&nbsp;million and
$26.7&nbsp;million, respectively, and is primarily related to
loss carryforwards that are not currently realizable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On October&nbsp;22, 2004, the American Jobs Creation Act of 2004
was signed into law. This legislation contains a number of
changes to the Internal Revenue Code. The Company has analyzed
the law in order to determine its effects. The two most notable
provisions are those dealing with the reduced tax rate on the
repatriation of money from foreign operations and the deduction
for domestic-based manufacturing activity. The Company
determined that it qualifies for both of these provisions. See
Note&nbsp;10 for further information. Since the Company is
projecting that it will continue to generate net operating
losses for at least the next twelve months it cannot take
advantage of the domestic-based manufacturing deduction at this
time.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>20.</B></TD>
    <TD>
    <B>Employee Benefit Plans</B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Retirement Savings Plan</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company has a defined contribution savings plan under
Section&nbsp;401(a) and 501(a) of the Internal Revenue Code. The
plan provides for tax deferred salary deductions and after-tax
employee contributions. Employees are immediately eligible upon
hire. Contributions include employee salary deferral
contributions and employer profit-sharing contributions made
entirely in cash of 4% of employees&#146; salaries, with
employer contributions capped at $8,200&nbsp;per year for 2004
and $8,400&nbsp;per year for 2005. Employer profit-sharing
contributions in 2004, 2003, and 2002 totaled
$12.8&nbsp;million, $10.7&nbsp;million, and $11.6&nbsp;million,
respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>2000 Employee Stock Purchase Plan</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company adopted the 2000 Employee Stock Purchase Plan
(&#147;ESPP&#148;) in May 2000. Eligible employees may in the
aggregate purchase up to 28,000,000&nbsp;shares of common stock
at semi-annual intervals through periodic payroll deductions.
Purchases are limited to a maximum value of $25,000&nbsp;per
calendar year based on the IRS code Section&nbsp;423 limitation.
Shares are purchased on May&nbsp;31 and November&nbsp;30 of each
year until termination of the plan on May&nbsp;31, 2010 and
limited to 2,400&nbsp;shares per purchase interval. Under the
ESPP, 4,545,858 and 3,636,139&nbsp;shares were issued at a
weighted average fair value of $3.26 and $3.69&nbsp;per share in
2004 and 2003, respectively. The purchase price is 85% of the
lower of (i)&nbsp;the fair market value of the common stock on
the participant&#146;s entry date into the offering period, or
(ii)&nbsp;the fair market value on the semi-annual purchase
date. The purchase price discount is significant enough to cause
the ESPP to be considered compensatory under
SFAS&nbsp;No.&nbsp;123. As a result, the ESPP is accounted for
as stock-based compensation in accordance with
SFAS&nbsp;No.&nbsp;123. See Note&nbsp;21 for information related
to the Company&#146;s stock-based compensation expense.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>1996 Stock Incentive Plan</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company adopted the 1996 Stock Incentive Plan
(&#147;SIP&#148;) in September 1996. The SIP succeeded the
Company&#146;s previously adopted stock option program. Prior to
the adoption of SFAS&nbsp;No.&nbsp;123 prospectively on
January&nbsp;1, 2003, (see Note&nbsp;21), the Company accounted
for the SIP under APB Opinion No.&nbsp;25, under which no
compensation cost was recognized through December&nbsp;31, 2002.
See Note&nbsp;21 for the effects the SIP would have on the
Company&#146;s financial statements if stock-based compensation
had been accounted for under SFAS&nbsp;No.&nbsp;123 prior to
January&nbsp;1, 2003.
</DIV>

<P align="center" style="font-size: 10pt;">F-73

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the year ended December&nbsp;31, 2004, the Company granted
options to purchase&nbsp;5,660,262&nbsp;shares of common stock.
Over the life of the SIP, options exercised have equaled
5,088,290, leaving 32,937,993 granted and not yet exercised.
Under the SIP, the option exercise price generally equals the
stock&#146;s fair market value on date of grant. The SIP options
generally vest ratably over four years and expire after
10&nbsp;years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with the merger with Encal in 2001, the Company
adopted Encal&#146;s existing stock option plan. All outstanding
options under the Encal stock option plan were converted at the
time of the merger into options to purchase Calpine stock. No
new options may be granted under the Encal stock option plan. As
of December&nbsp;31, 2004, there were 87,274 and 1,752,590
options granted and not yet exercised under the Encal and
Calpine&#146;s 1992 stock option plans, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Changes in options outstanding, granted, exercisable and
canceled during the years 2004, 2003, and 2002, under the option
plans of Calpine and Encal were as follows:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Available for</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Outstanding</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Average</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Option or</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Exercise</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Award</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Options</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Price</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Outstanding January&nbsp;1, 2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,855,949</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,690,564</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9.32</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Additional shares reserved</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,070,588</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Granted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8,997,720</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,997,720</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.20</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercised</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5,112,535</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.77</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Canceled</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,470,802</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,470,802</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26.53</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Canceled options(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(237,705</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Outstanding December&nbsp;31, 2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,161,914</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30,104,947</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9.30</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Granted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5,998,585</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,998,585</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.93</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercised</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(536,730</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.01</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Canceled</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,725,221</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,725,221</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13.59</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Canceled options(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(72,470</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Awards issued</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,150</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.03</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Outstanding December&nbsp;31, 2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,816,080</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33,838,431</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.25</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Additional shares reserved</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Granted</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5,660,262</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,660,262</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.47</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exercised</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,629,824</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.83</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Canceled</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,089,032</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,089,032</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18.21</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Canceled options(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(38,945</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Awards issued</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,980</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.33</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Outstanding December&nbsp;31, 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,205,905</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,777,857</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.42</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Options exercisable:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    December&nbsp;31, 2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,418,239</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.14</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    December&nbsp;31, 2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,953,781</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.02</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    December&nbsp;31, 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,949,497</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9.30</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Represents cessation of options awarded under the Encal stock
    option plan</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">F-74

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following tables summarizes information concerning
outstanding and exercisable options at December&nbsp;31, 2004:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Weighted</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Remaining</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Average</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Number of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Average</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Options</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Contractual</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Exercise</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Options</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Exercise</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="center" nowrap><B>Range of Exercise Prices</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Outstanding</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Life in Years</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Price</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Exercisable</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Price</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $&nbsp;0.645-$&nbsp;2.150</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,073,196</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1.606</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,072,693</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1.606</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $&nbsp;2.240-$&nbsp;3.860</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,220,014</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.58</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.321</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,166,889</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.321</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $&nbsp;3.910-$&nbsp;3.980</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,254,837</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8.02</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.980</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,720,183</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.980</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $&nbsp;4.010-$&nbsp;5.240</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,036,785</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.157</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,691,122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.094</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $&nbsp;5.250-$&nbsp;5.560</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,397,275</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>152,350</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.549</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $&nbsp;5.565-$&nbsp;7.640</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,854,747</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.97</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.561</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,847,889</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7.538</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $&nbsp;7.750-$13.850</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,735,013</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10.595</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,465,918</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10.343</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $13.917-$48.150</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,063,810</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>31.054</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,705,184</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29.569</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $48.188-$56.920</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>140,330</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6.23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>51.292</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>125,419</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>51.271</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $56.990-$56.990</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6.33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56.990</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56.990</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    $&nbsp;0.645-$56.990</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,777,857</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.416</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,949,497</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9.299</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>21.</B></TD>
    <TD>
    <B>Stockholders&#146; Equity</B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Common Stock</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Increase in Authorized Shares</I>&nbsp;&#151; On June&nbsp;2,
2004, the Company filed amended certificates with the Delaware
Secretary of State to increase the number of authorized shares
of common stock to 2,000,000,000 from 1,000,000,000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Equity Offerings</I>&nbsp;&#151; On April&nbsp;30, 2002,
Calpine completed a registered offering of
66,000,000&nbsp;shares of common stock at $11.50&nbsp;per share.
The proceeds from this offering, after underwriting fees, were
$734.3&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On September&nbsp;30, 2004, in conjunction with the 2014
Convertible Notes offering (see Note&nbsp;17 for more
information regarding this offering), the Company entered into a
ten-year Share Lending Agreement with Deutsche Bank AG London
(&#147;DB London&#148;), under which the Company loaned DB
London 89&nbsp;million shares of newly issued Calpine common
stock in exchange for a loan fee of $0.001&nbsp;per share. DB
London sold the 89&nbsp;million shares on September&nbsp;30,
2004 at a price of $2.75&nbsp;per share in a registered public
offering. The Company did not receive any of the proceeds of the
public offering. As discussed in Note&nbsp;17, the requirement
to return these shares is considered to be a prepaid forward
purchase contract and the Company analogizes to the guidance in
SFAS&nbsp;No.&nbsp;150 so that the 89&nbsp;million shares of
common stock subject to the Share Lending Agreement are excluded
from the EPS calculation.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Preferred Stock and Preferred Share Purchase Rights</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On June&nbsp;5, 1997, Calpine adopted a stockholders&#146;
rights plan to strengthen Calpine&#146;s ability to protect
Calpine&#146;s stockholders. The plan was amended on
September&nbsp;19, 2001, and further amended on
September&nbsp;28, 2004 and March&nbsp;18, 2005. The rights plan
was 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, Calpine declared a
dividend of one preferred share purchase right for each
outstanding share of Calpine&#146;s common stock held on record
as of June&nbsp;18, 1997, and directed the issuance of one
preferred share purchase right with respect to each share of
Calpine&#146;s common stock that shall become outstanding
thereafter until the rights
</DIV>

<P align="center" style="font-size: 10pt;">F-75

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
become exercisable or they expire as described below. On
December&nbsp;31, 2004, there were 536,509,231 rights
outstanding. Each right initially represents a contingent right
to purchase, under certain circumstances, one one-thousandth of
a share, called a &#147;unit,&#148; of Calpine&#146;s
Series&nbsp;A Participating Preferred Stock, par value
$.001&nbsp;per share, at a price of $140.00&nbsp;per unit,
subject to adjustment. The rights become exercisable and trade
independently from Calpine&#146;s common stock upon the public
announcement of the acquisition by a person or group of 15% or
more of Calpine&#146;s common stock, or ten days after
commencement of a tender or exchange offer that would result in
the acquisition of 15% or more of Calpine&#146;s 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 Calpine&#146;s liquidation, each share of
the participating preferred stock will be entitled to any
payment made per share of common stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If Calpine is acquired in a merger or other business combination
transaction after a person or group has acquired 15% or more of
Calpine&#146;s common stock, each right will entitle its holder
to purchase at the right&#146;s exercise price a number of the
acquiring company&#146;s shares of common stock having a market
value of twice the right&#146;s exercise price. In addition, if
a person or group acquires 15% or more of Calpine&#146;s common
stock, each right will entitle its holder (other than the
acquiring person or group) to purchase, at the right&#146;s
exercise price, a number of fractional shares of Calpine&#146;s
participating preferred stock or shares of Calpine&#146;s common
stock having a market value of twice the right&#146;s exercise
price.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The rights remain exercisable for up to 90&nbsp;days following a
triggering event (such as a person acquiring 15% or more of the
Company&#146;s common Stock). The rights expire on May&nbsp;1,
2005, unless redeemed earlier by Calpine. Calpine can redeem the
rights at a price of $.01&nbsp;per right at any time before the
rights become exercisable, and thereafter only in limited
circumstances.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Stock-Based Compensation</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On January&nbsp;1, 2003, the Company prospectively adopted the
fair value method of accounting for stock-based employee
compensation pursuant to SFAS&nbsp;No.&nbsp;123 as amended by
SFAS&nbsp;No.&nbsp;148. SFAS&nbsp;No.&nbsp;148 amends
SFAS&nbsp;No.&nbsp;123 to provide alternative methods of
transition for companies that voluntarily change their
accounting for stock-based compensation from the less preferred
intrinsic value based method to the more preferred fair value
based method. Prior to its amendment, SFAS&nbsp;No.&nbsp;123
required that companies enacting a voluntary change in
accounting principle from the intrinsic value methodology
provided by APB Opinion No.&nbsp;25 could only do so on a
prospective basis; no adoption or transition provisions were
established to allow for a restatement of prior period financial
statements. SFAS&nbsp;No.&nbsp;148 provides two additional
transition options to report the change in accounting
principle&nbsp;&#151; the modified prospective method and the
retroactive restatement method. Additionally,
SFAS&nbsp;No.&nbsp;148 amends the disclosure requirements of
SFAS&nbsp;No.&nbsp;123 to require prominent disclosures in both
annual and interim financial statements about the method of
accounting for stock-based employee compensation and the effect
of the method used on reported results. The Company elected to
adopt the provisions of SFAS&nbsp;No.&nbsp;123 on a prospective
basis; consequently, the Company is required to provide a
pro-forma disclosure of net income and EPS as if
SFAS&nbsp;No.&nbsp;123 accounting had been applied to all prior
periods presented within its financial statements. As shown
below, the adoption of SFAS&nbsp;No.&nbsp;123 has had a material
impact on the Company&#146;s financial statements. The table
below reflects the pro forma impact of stock-based compensation
on the Company&#146;s net income (loss) and earnings (loss) per
share for the years ended December&nbsp;31, 2004, 2003 and 2002,
had the Company applied the accounting
</DIV>

<P align="center" style="font-size: 10pt;">F-76

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
provisions of SFAS&nbsp;No.&nbsp;123 to its financial statements
in years prior to adoption of SFAS&nbsp;No.&nbsp;123 on
January&nbsp;1, 2003 (in thousands, except per share amounts):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    As reported</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(242,461</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>282,022</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>118,618</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pro Forma</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(247,316</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>270,418</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>83,025</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Earnings (loss) per share data:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Basic earnings (loss) per share</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    As reported</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.56</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.33</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pro Forma</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.57</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.69</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.23</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Diluted earnings per share</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    As reported</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.56</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.33</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Pro Forma</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.57</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.68</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.23</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Stock-based compensation cost included in net income (loss), as
    reported</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>12,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9,724</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Stock-based compensation cost included in net income (loss), pro
    forma</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,589</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,328</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35,593</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The range of fair values of the Company&#146;s stock options
granted in 2004, 2003, and 2002 were as follows, based on
varying historical stock option exercise patterns by different
levels of Calpine employees: $1.83-$4.45 in 2004, $1.50-$4.38 in
2003 and $3.73-$6.62 in 2002 on the date of grant using the
Black-Scholes option pricing model with the following
weighted-average assumptions: expected dividend yields of 0%,
expected volatility of 69%-98% for 2004, 70%-113% for 2003 and
70%-83% for 2002, risk-free interest rates of 2.35%-4.54% for
2004, 1.39%-4.04% for 2003 and 2.39%-3.83% for 2002, and
expected option terms of 3-9.5&nbsp;years for 2004,
1.5-9.5&nbsp;years for 2003 and 4-9&nbsp;years for 2002.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In December 2004, FASB issued SFAS&nbsp;No.&nbsp;123-R. This
Statement revises SFAS&nbsp;No.&nbsp;123 and supersedes APB
Opinion No.&nbsp;25, and its related implementation guidance.
See Note&nbsp;2 for further information.
</DIV>

<DIV style="margin-top: 16pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Comprehensive Income (Loss)</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Comprehensive income is the total of net income and all other
non-owner changes in equity. Comprehensive income includes the
Company&#146;s net income, unrealized gains and losses from
derivative instruments that qualify as cash flow hedges,
unrealized gains and losses from available-for-sale securities
which are marked to market, the Company&#146;s share of its
equity method investee&#146;s OCI, and the effects of foreign
currency translation adjustments. The Company reports
Accumulated Other Comprehensive Income
(&#147;AOCI&#148;)&nbsp;in its
</DIV>

<P align="center" style="font-size: 10pt;">F-77

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Consolidated Balance Sheet. The tables below detail the changes
during 2004, 2003 and 2002 in the Company&#146;s AOCI balance
and the components of the Company&#146;s comprehensive income
(in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 3pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Accumulated</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Foreign</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Other</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Cash Flow</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Available-For-</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Currency</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Comprehensive</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Comprehensive</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Hedges(1)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Sale Investments</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Translation</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Income (Loss)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Income (Loss)</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accumulated other comprehensive loss at January&nbsp;1, 2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(180,819</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(60,061</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(240,880</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>118,618</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash flow hedges:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Comprehensive pre-tax gain on cash flow hedges before
    reclassification adjustment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>96,905</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Reclassification adjustment for gain included in net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(169,205</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income tax benefit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28,705</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3"><FONT style="font-size: 9pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(43,595</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(43,595</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(43,595</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign currency translation gain</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47,018</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47,018</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47,018</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total comprehensive income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>122,041</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accumulated other comprehensive loss at December&nbsp;31, 2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(224,414</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(13,043</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(237,457</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>282,022</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash flow hedges:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Comprehensive pre-tax gain on cash flow hedges before
    reclassification adjustment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>112,481</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Reclassification adjustment for loss included in net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income tax provision</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(74,106</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3"><FONT style="font-size: 9pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>93,995</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>93,995</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>93,995</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign currency translation gain</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>200,056</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>200,056</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>200,056</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total comprehensive income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>576,073</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accumulated other comprehensive gain (loss) at December&nbsp;31,
    2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(130,419</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>187,013</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>56,594</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(242,461</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash flow hedges:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Comprehensive pre-tax loss on cash flow hedges before
    reclassification adjustment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(106,071</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Reclassification adjustment for loss included in net loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>89,888</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income tax provision</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,451</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3"><FONT style="font-size: 9pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(9,732</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(9,732</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(9,732</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Available-for-sale investments:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Comprehensive pre-tax gain on available-for-sale investments
    before reclassification adjustment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,239</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Reclassification adjustment for gain included in net loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(18,281</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income tax provision</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(376</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3"><FONT style="font-size: 9pt">&nbsp;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>582</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>582</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>582</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign currency translation gain</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>62,067</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>62,067</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>62,067</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total comprehensive loss</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(189,544</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accumulated other comprehensive gain (loss) at December&nbsp;31,
    2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(140,151</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>582</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>249,080</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>109,511</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Includes AOCI from cash flow hedges held by unconsolidated
    investees. At December&nbsp;31, 2004, 2003 and 2002, these
    amounts were $1,698, $6,911 and $12,018, respectively.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">F-78

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>22.</B></TD>
    <TD>
    <B>Customers</B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Significant Customer</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2004, 2003 and 2002, Calpine had one significant customer
that accounted for more than 10% of the Company&#146;s annual
consolidated revenues: the CDWR. See below for a discussion of
the Company&#146;s contracts with CDWR.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the years ended December&nbsp;31, 2004, 2003, and 2002, CDWR
revenues were $1,148.0&nbsp;million, $1,219.7&nbsp;million and
$754.2&nbsp;million, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Calpine&#146;s receivables from CDWR at December&nbsp;31, 2004,
2003 and 2002, were $98.5&nbsp;million, $97.8&nbsp;million and
$78.8&nbsp;million, respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Counterparty Exposure</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company&#146;s customer and supplier base is concentrated
within the energy industry. Additionally, the Company has
exposure to trends within the energy industry, including
declines in the creditworthiness of its marketing
counterparties. Currently, certain companies within the energy
industry are in bankruptcy or have below investment grade credit
ratings. However, we do not currently have any significant
exposure to counterparties that are not paying on a current
basis.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>California Department of Water Resources</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2001, California adopted legislation permitting it to issue
long-term revenue bonds to fund wholesale purchases of power by
the CDWR. The bonds will be repaid with the proceeds of payments
by retail power customers over time. CES and CDWR entered into
four long-term supply contracts during 2001. The Company has
recorded deferred revenue in connection with one of the
long-term power supply contracts (&#147;Contract 3&#148;). All
of the Company&#146;s accounts receivables from CDWR are
current, with the exception of approximately $1.0&nbsp;million
which the Company is working to resolve with the customer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In early 2002, the CPUC and the California Electricity Oversight
Board (&#147;EOB&#148;) filed complaints under Section&nbsp;206
of the Federal Power Act with the Federal Energy Regulatory
Commission (&#147;FERC&#148;) alleging that the prices and terms
of the long-term contracts with CDWR were unjust and
unreasonable and contrary to the public interest (the &#147;206
Complaint&#148;). The contracts entered into by CES and CDWR
were subject to the 206 Complaint.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On April&nbsp;22, 2002, the Company announced that it had
renegotiated CES&#146;s long-term power contracts with CDWR and
settled the 206 Complaint. The Office of the Governor, the CPUC,
the EOB and the Attorney General for the State of California all
endorsed the renegotiated contracts and dropped all pending
claims against the Company and its affiliates, including any
efforts by the CPUC and the EOB to seek refunds from the Company
and its affiliates through the FERC California Refund
Proceedings. In connection with the renegotiation, the Company
agreed to pay $6&nbsp;million over three years to the Attorney
General to resolve any and all possible claims.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Lease Income</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company records income under power purchase agreements that
are accounted for as operating leases under
SFAS&nbsp;No.&nbsp;13 and EITF Issue No.&nbsp;01-08. For income
statement presentation purposes, this income is classified
within electricity and steam revenue in the Consolidated
Statements of Operations.
</DIV>

<P align="center" style="font-size: 10pt;">F-79

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The total contractual future minimum lease payments for these
power purchase agreements are as follows (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="81%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>123,435</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>175,349</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2007</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>213,431</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2008</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>285,386</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2009</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>288,516</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Thereafter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,844,717</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,930,834</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The contingent income for these agreements related to our
Canadian power generation asset was $20.1&nbsp;million,
$25.3&nbsp;million and $28.7&nbsp;million for the respective
periods, while contingent income under the other power purchase
agreements were collectively immaterial. Property leased to
customers under operating leases is recorded at cost and is
depreciated on the straight line basis to its estimated residual
value. Estimated useful lives are 35&nbsp;years. As of
December&nbsp;31, 2004, the cost of the leased property was
$1,409.6&nbsp;million and the accumulated depreciation was
$55.6&nbsp;million. These power purchase agreements expire over
the next 27&nbsp;years.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <I>Credit Evaluations</I></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company&#146;s treasury department includes a credit group
focused on monitoring and managing counterparty risk. The credit
group monitors the net exposure with each counterparty on a
daily basis. The analysis is performed on a mark-to-market basis
using the forward curves analyzed by the Company&#146;s Risk
Controls group. The net exposure is compared against a
counterparty credit risk threshold which is determined based on
each counterparty&#146;s credit rating and evaluation of the
financial statements. The credit department monitors these
thresholds to determine the need for additional collateral or
restriction of activity with the counterparty.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>23.</B></TD>
    <TD>
    <B>Derivative Instruments</B></TD>
</TR>

</TABLE>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Commodity Derivative Instruments</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As an independent power producer primarily focused on generation
of electricity using gas-fired turbines, the Company&#146;s
natural physical commodity position is &#147;short&#148; fuel
(i.e., natural gas consumer) and &#147;long&#148; power (i.e.,
electricity seller). To manage forward exposure to price
fluctuation in these and (to a lesser extent) other commodities,
the Company enters into derivative commodity instruments. The
Company enters into commodity instruments to convert floating or
indexed electricity and gas (and to a lesser extent oil and
refined product) prices to fixed prices in order to lessen its
vulnerability to reductions in electric prices for the
electricity it generates, to reductions in gas prices for the
gas it produces, and to increases in gas prices for the fuel it
consumes in its power plants. The Company seeks to
&#147;self-hedge&#148; its gas consumption exposure to an extent
with its own gas production position. The hedging, balancing, or
optimization activities that the Company engages in are directly
related to the Company&#146;s asset-based business model of
owning and operating gas-fired electric power plants and are
designed to protect the Company&#146;s &#147;spark spread&#148;
(the difference between the Company&#146;s fuel cost and the
revenue it receives for its electric generation). The Company
hedges exposures that arise from the ownership and operation of
power plants and related sales of electricity and purchases of
natural gas. The Company also utilizes derivatives to optimize
the returns it is able to achieve from these assets. From time
to time the Company has entered into contracts considered energy
trading contracts under EITF Issue No.&nbsp;02-03. However, the
Company&#146;s traders have low capital at risk and value at
risk limits for energy trading, and its risk management policy
limits, at any given time, its net sales of
</DIV>

<P align="center" style="font-size: 10pt;">F-80
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
power to its generation capacity and limits its net purchases of
gas to its fuel consumption requirements on a total portfolio
basis. This model is markedly different from that of companies
that engage in significant commodity trading operations that are
unrelated to underlying physical assets. Derivative commodity
instruments are accounted for under the requirements of
SFAS&nbsp;No.&nbsp;133.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company also routinely enters into physical commodity
contracts for sales of its generated electricity and sales of
its natural gas production to ensure favorable utilization of
generation and production assets. Such contracts often meet the
criteria of SFAS&nbsp;No.&nbsp;133 as derivatives but are
generally eligible for the normal purchases and sales exception.
Some of those contracts that are not deemed normal purchases and
sales can be designated as hedges of the underlying consumption
of gas or production of electricity.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Interest Rate and Currency Derivative Instruments</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company also enters into various interest rate swap
agreements to hedge against changes in floating interest rates
on certain of its project financing facilities and to adjust the
mix between fixed and floating rate debt in its capital
structure to desired levels. Certain of the interest rate swap
agreements effectively convert floating rates into fixed rates
so that the Company can predict with greater assurance what its
future interest costs will be and protect itself against
increases in floating rates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In conjunction with its capital markets activities, the Company
enters into various forward interest rate agreements to hedge
against interest rate fluctuations that may occur after the
Company has decided to issue long-term fixed rate debt but
before the debt is actually issued. The forward interest rate
agreements effectively prevent the interest rates on anticipated
future long-term debt from increasing beyond a certain level,
allowing the Company to predict with greater assurance what its
future interest costs on fixed rate long-term debt will be.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Also, in conjunction with its capital market activities, the
Company enters into various interest rate swap agreements to
hedge against the change in fair value on certain of its fixed
rate Senior Notes. These interest rate swap agreements
effectively convert fixed rates into floating rates so that the
Company can predict with greater assurance what the fair value
of its fixed rate Senior Notes will be and protect itself
against unfavorable future fair value movements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company enters into various foreign currency swap agreements
to hedge against changes in exchange rates on certain of its
senior notes denominated in currencies other than the
U.S.&nbsp;dollar. The foreign currency swaps effectively convert
floating exchange rates into fixed exchange rates so that the
Company can predict with greater assurance what its
U.S.&nbsp;dollar cost will be for purchasing foreign currencies
to satisfy the interest and principal payments on these senior
notes.
</DIV>

<P align="center" style="font-size: 10pt;">F-81

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Summary of Derivative Values</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The table below reflects the amounts (in thousands) that are
recorded as assets and liabilities at December&nbsp;31, 2004,
for the Company&#146;s derivative instruments:
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="49%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Commodity</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Interest Rate</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Derivative</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Derivative</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Instruments</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Derivative</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Instruments</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Net</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Instruments</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current derivative assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>323,586</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>324,206</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term derivative assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>506,050</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>506,050</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>829,636</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>830,256</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current derivative liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>21,578</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>343,387</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>364,965</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term derivative liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>58,909</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>467,689</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>526,598</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>80,487</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>811,076</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>891,563</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net derivative assets (liabilities)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(79,867</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18,560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(61,307</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Of the Company&#146;s net derivative assets, $289.9&nbsp;million
and $55.4&nbsp;million are net derivative assets of PCF and
CNEM, respectively, each of which is an entity with its
existence separate from the Company and other subsidiaries of
the Company. The Company fully consolidates CNEM and, as
discussed more fully in Note&nbsp;2, the Company records the
derivative assets of PCF in its balance sheet.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At any point in time, it is highly unlikely that total net
derivative assets and liabilities will equal AOCI, net of tax
from derivatives, for three primary reasons:
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Tax effect of OCI</I>&nbsp;&#151; When the values and
    subsequent changes in values of derivatives that qualify as
    effective hedges are recorded into OCI, they are initially
    offset by a derivative asset or liability. Once in OCI, however,
    these values are tax effected against a deferred tax liability
    or asset account, thereby creating an imbalance between net OCI
    and net derivative assets and liabilities.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Derivatives not designated as cash flow hedges and hedge
    ineffectiveness</I>&nbsp;&#151; Only derivatives that qualify as
    effective cash flow hedges will have an offsetting amount
    recorded in OCI. Derivatives not designated as cash flow hedges
    and the ineffective portion of derivatives designated as cash
    flow hedges will be recorded into earnings instead of OCI,
    creating a difference between net derivative assets and
    liabilities and pre-tax OCI from derivatives.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    <I>Termination of effective cash flow hedges prior to
    maturity</I>&nbsp;&#151; Following the termination of a cash
    flow hedge, changes in the derivative asset or liability are no
    longer recorded to OCI. At this point, an AOCI balance remains
    that is not recognized in earnings until the forecasted
    initially hedged transactions occur. As a result, there will be
    a temporary difference between OCI and derivative assets and
    liabilities on the books until the remaining OCI balance is
    recognized in earnings.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">F-82
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Below is a reconciliation of the Company&#146;s net derivative
liabilities to its accumulated other comprehensive loss, net of
tax from derivative instruments at December&nbsp;31, 2004 (in
thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 9pt; ">

<TR style="font-size: 1pt;">
    <TD width="84%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net derivative liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(61,307</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Derivatives not designated as cash flow hedges and recognized
    hedge ineffectiveness</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(86,496</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cash flow hedges terminated prior to maturity</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(75,725</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred tax asset attributable to accumulated other
    comprehensive loss on cash flow hedges</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>77,640</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    AOCI from unconsolidated investees</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,737</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accumulated other comprehensive loss from derivative
    instruments, net of tax(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(140,151</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Amount represents one portion of the Company&#146;s total AOCI
    balance. See Note&nbsp;21 for further information.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The asset and liability balances for the Company&#146;s
commodity derivative instruments represent the net totals after
offsetting certain assets against certain liabilities under the
criteria of FIN&nbsp;39. For a given contract, FIN&nbsp;39 will
allow the offsetting of assets against liabilities so long as
four criteria are met: (1)&nbsp;each of the two parties under
contract owes the other determinable amounts; (2)&nbsp;the party
reporting under the offset method has the right to set off the
amount it owes against the amount owed to it by the other party;
(3)&nbsp;the party reporting under the offset method intends to
exercise its right to set off; and; (4)&nbsp;the right of
set-off is enforceable by law. The table below reflects both the
amounts (in thousands) recorded as assets and liabilities by the
Company and the amounts that would have been recorded had the
Company&#146;s commodity derivative instrument contracts not
qualified for offsetting as of December&nbsp;31, 2004.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 9pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="67%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>December&nbsp;31, 2004</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Gross</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Net</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current derivative assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>844,050</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>323,586</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term derivative assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>967,089</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>506,050</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total derivative assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,811,139</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>829,636</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Current derivative liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>863,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>343,387</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Long-term derivative liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>928,729</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>467,689</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total derivative liabilities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,792,579</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>811,076</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net commodity derivative assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18,560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18,560</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The table above excludes the value of interest rate and currency
derivative instruments.
</DIV>

<P align="center" style="font-size: 10pt;">F-83

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The tables below reflect the impact of unrealized mark-to-market
gains (losses) on the Company&#146;s pre-tax earnings, both from
cash flow hedge ineffectiveness and from the changes in market
value of derivatives not designated as hedges of cash flows, for
the years ended December&nbsp;31, 2004, 2003 and 2002,
respectively (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>


<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>2002</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Hedge</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Undesignated</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Hedge</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Undesignated</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Hedge</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Undesignated</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Ineffectiveness</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Derivatives</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Ineffectiveness</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Derivatives</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Ineffectiveness</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Derivatives</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Natural gas derivatives(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5,827</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(10,700</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(4,873</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,768</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>10,921</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,147</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(14,792</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(12,645</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Power derivatives(1)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,814</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(31,666</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(29,852</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5,001</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(56,693</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(61,694</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,934</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,974</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,040</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest rate derivatives(2)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,492</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,035</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,527</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(974</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(974</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(810</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(810</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Currency derivatives</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12,897</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12,897</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9,133</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(49,228</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(40,095</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(2,822</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(48,925</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(51,747</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(3,597</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1,818</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(5,415</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Represents the unrealized portion of mark-to-market activity on
    gas and power transactions. The unrealized portion of
    mark-to-market activity is combined with the realized portions
    of mark-to-market activity and presented in the Consolidated
    Statements of Operations as mark-to-market activities, net.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Recorded within Other Income</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The table below reflects the contribution of the Company&#146;s
cash flow hedge activity to pre-tax earnings based on the
reclassification adjustment from OCI to earnings for the years
ended December&nbsp;31, 2004, 2003 and 2002, respectively (in
thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="59%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Natural gas and crude oil derivatives</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>58,308</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>40,752</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(119,419</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Power derivatives</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(128,556</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(79,233</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>304,073</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest rate derivatives</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(17,625</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(27,727</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10,993</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign currency derivatives</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,015</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,588</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,456</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total derivatives</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(89,888</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(55,620</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>169,205</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of December&nbsp;31, 2004, the maximum length of time over
which the Company was hedging its exposure to the variability in
future cash flows for forecasted transactions was 7 and
12&nbsp;years, for commodity and interest rate derivative
instruments, respectively. The Company estimates that pre-tax
losses of $137.6&nbsp;million would be reclassified from AOCI
into earnings during the twelve months ended December&nbsp;31,
2005, as the hedged transactions affect earnings assuming
constant gas and power prices, interest rates, and exchange
rates over time; however, the actual amounts that will be
reclassified will likely vary based on the probability that gas
and power prices as well as interest rates and exchange rates
will, in fact, change. Therefore, management is unable to
predict what the actual reclassification from OCI to earnings
(positive or negative) will be for the next twelve months.
</DIV>

<P align="center" style="font-size: 10pt;">F-84

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The table below presents (in thousands) the pre-tax gains
(losses) currently held in OCI that will be recognized annually
into earnings, assuming constant gas and power prices, interest
rates, and exchange rates over time.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2010&nbsp;&#38;</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2007</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2008</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2009</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>After</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gas OCI</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(29,476</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>55,612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,111</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>702</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>343</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>28,542</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Power OCI</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(88,357</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(80,619</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,854</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(589</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(343</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(94</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(173,856</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest rate OCI</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(17,745</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10,960</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,941</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5,170</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,126</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(20,855</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(66,797</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Foreign currency OCI</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,014</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,014</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,624</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(28</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5,680</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total pre-tax OCI</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(137,592</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(37,981</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(12,308</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(5,085</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(4,126</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(20,699</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(217,791</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">F-85

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>24.</B></TD>
    <TD>
    <B>Earnings per Share</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Basic earnings (loss) per common share were computed by dividing
net income (loss) by the weighted average number of common
shares outstanding for the respective periods. The dilutive
effect of the potential exercise of outstanding options to
purchase shares of common stock is calculated using the treasury
stock method. The dilutive effect of the assumed conversion of
certain convertible securities into the Company&#146;s common
stock is based on the dilutive common share equivalents and the
after tax distribution expense avoided upon conversion. The
calculation of basic and diluted earnings (loss) per common
share is shown in the following table (in thousands, except per
share data).
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="24%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="34" align="center" nowrap><B>For the Years Ended December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="34" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>2002</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="10" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Net</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Net</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Net Income</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>EPS</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Income</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>EPS</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Income</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Shares</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>EPS</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Basic earnings (loss) per common share:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before discontinued operations and cumulative
    effect of a change in accounting principle</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(440,826</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>430,775</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1.02</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>86,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>390,772</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>26,722</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>354,822</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.07</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>198,365</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,969</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>91,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.26</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative effect of a change in accounting principle, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>180,943</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(242,461</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>430,775</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.56</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>282,022</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>390,772</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>118,618</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>354,822</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.33</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Diluted earnings per common share:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Common shares issuable upon exercise of stock options using
    treasury stock method</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,447</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,711</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income before dilutive effect of certain convertible securities,
    discontinued operations and cumulative effect of a change in
    accounting principle</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(440,826</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>430,775</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1.02</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>86,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>396,219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>26,722</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>362,533</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.07</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Dilutive effect of certain convertible securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income before discontinued operations and cumulative effect of a
    change in accounting principle</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(440,826</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>430,775</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1.02</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>86,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>396,219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26,722</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>362,533</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.07</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>198,365</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,969</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>91,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.26</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative effect of a change in accounting principle, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>180,943</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(242,461</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>430,775</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.56</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>282,022</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>396,219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.71</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>118,618</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>362,533</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.33</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">F-86

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;
The Company incurred losses before discontinued operations and
cumulative effect of a change in accounting principle for the
year ended December&nbsp;31, 2004. As a result, basic shares
were used in the calculations of fully diluted loss per share
for these periods, under the guidelines of
SFAS&nbsp;No.&nbsp;128 as using the basic shares produced the
more dilutive effect on the loss per share. Potentially
convertible securities, shares to be purchased under the
Company&#146;s ESPP and unexercised employee stock options to
purchase a weighted average of 47.2&nbsp;million,
127.1&nbsp;million and 136.7&nbsp;million &nbsp;shares of the
Company&#146;s common stock were not included in the computation
of diluted shares outstanding during the years ended
December&nbsp;31, 2004, 2003 and 2002, respectively, because
such inclusion would be antidilutive.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the years ended December&nbsp;31, 2004, 2003 and 2002,
approximately 8.9&nbsp;million, 61.0&nbsp;million and
66.4&nbsp;million, respectively, weighted common shares of the
Company&#146;s outstanding 2006 Convertible Senior Notes were
excluded from the diluted EPS calculations as the inclusion of
such shares would have been antidilutive. See Note&nbsp;17 for a
further discussion of these convertible securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with the convertible notes payable to
Trust&nbsp;I, Trust&nbsp;II and Trust&nbsp;III, net of
repurchases, there were 34.4&nbsp;million, 44.1&nbsp;million and
44.9&nbsp;million weighted average common shares potentially
issuable, respectively, that were excluded from the diluted EPS
calculation for the years ended December&nbsp;31, 2004, 2003 and
2002 as their inclusion would be antidilutive. See Note&nbsp;12
for a further discussion of these securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the years ended December&nbsp;31, 2004 and 2003, under the
new guidance of EITF&nbsp;04-08 there were no shares potentially
issuable and thus potentially included in the diluted EPS
calculation under the Company&#146;s 2023 Convertible Senior
Notes issued in November&nbsp;2003, because the Company&#146;s
closing stock price at each period end was below the conversion
price. However, in future reporting periods where the
Company&#146;s closing stock price is above $6.50, and depending
on the closing stock price at conversion, the maximum potential
shares issuable under the conversion provisions of the 2023
Convertible Senior Notes and included (if dilutive) in the
diluted EPS calculation is approximately 97.5&nbsp;million
shares. See Note&nbsp;17 for a further discussion of these
convertible securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For the year ended December&nbsp;31, 2004, under the new
guidance of EITF&nbsp;04-08 approximately 8.6&nbsp;million
weighted common shares potentially issuable under the
Company&#146;s outstanding 2014 Convertible Notes were excluded
from the diluted earnings per share calculations as the
inclusion of such shares would have been antidilutive because of
the Company&#146;s net loss. However, in future reporting
periods where the Company&#146;s has net income and closing
stock price is above $3.85, and depending on the closing stock
price at conversion, the maximum potential shares issuable under
the conversion provisions of the 2014 Convertible Notes and
included in the diluted EPS calculation is approximately
191.2&nbsp;million shares. See Note&nbsp;17 for a further
discussion of these convertible securities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As discussed in Note&nbsp;17, the Company has excluded the
89&nbsp;million shares of common stock subject to the Share
Lending Agreement from the EPS calculation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
See Note&nbsp;2 for a discussion of the potential impact of
SFAS&nbsp;No.&nbsp;128-R on the calculation of diluted EPS.
</DIV>

<P align="center" style="font-size: 10pt;">F-87
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV style="margin-top: 24pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>25.</B></TD>
    <TD>
    <B>Commitments and Contingencies</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Turbines</I>&nbsp;&#151; On February&nbsp;11, 2003, the
Company announced a significant restructuring of its turbine
agreements, which enabled the Company to cancel up to 131 steam
and gas turbines. The Company recorded a pre-tax charge of
$207.4&nbsp;million in the quarter ending December&nbsp;31,
2002, in connection with fees paid to vendors to restructure
these contracts. This charge was recorded in the Equipment
cancellation and impairment costs line item on the Consolidated
Statements of Operations in the year ended December&nbsp;31,
2002. As of December&nbsp;31, 2004, 91 of these turbines had
been cancelled and 2 had been applied to Calpine projects,
leaving the disposition of 38 turbines still to be determined.
The following table sets forth an analysis of the components of
the turbine restructuring charges recorded in the fourth quarter
of fiscal 2002 (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="53%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Three Months Ended</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>December&nbsp;31, 2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Turbine</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Turbine</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Turbine CIP</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Restructuring</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Restructuring</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD align="left" nowrap><B>Description</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Write-Off</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Accrual</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Charge</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Turbine write-offs and contract restructuring charges</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>182,534</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>24,824</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>207,358</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth in the Company&#146;s turbine
restructuring reserves as of December&nbsp;31, 2003 (in
thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>As of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>As of</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Adjustments to</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Payments</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Accrual(1)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Turbine restructuring accrual</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>24,824</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(15,805</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(473</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,546</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    In March 2003, it was determined that the actual invoices for
    the steam turbine equipment cancellations were less than the
    amount which had been accrued as of December&nbsp;31, 2002.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth in the Company&#146;s
restructuring reserves as of December&nbsp;31, 2004 (in
thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>As of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>As of</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Adjustments to</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Payments</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Accrual(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Turbine restructuring accrual</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,546</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(4,498</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,048</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In July 2003, the Company completed a restructuring of its
existing agreements with Siemens Westinghouse Power Corporation
for 20 gas and 2 steam turbines. The new agreement provides for
later payment dates, which are in line with the Company&#146;s
construction program. The table below sets forth future turbine
payments for construction and development projects, as well as
for unassigned turbines. It includes previously delivered
turbines, payments and delivery year for the last turbine to be
delivered as well as payment required for the potential
cancellation costs of the remaining 38 gas and steam turbines.
The table does not include payments that would result if the
Company were to release for manufacturing any of these remaining
38 turbines.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="62%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Units to be</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="left" nowrap><B>Year</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Delivered</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>(In thousands)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>27,463</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,862</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2007</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>977</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>33,302</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">F-88

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Other Restructuring Charges</I>&nbsp;&#151; In fiscal years
2002, 2003 and 2004, in connection with management&#146;s plan
to reduce costs and improve operating efficiencies, the Company
recorded restructuring charges primarily comprised of severance
and benefits related to the involuntary termination of employees
and charges related to the vacancy of a number of facilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth the Company&#146;s restructuring
reserves relating to its vacancy of various facilities as of
December&nbsp;31, 2003 (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>As of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Reclass</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>As of</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>from</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Adjustments</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Additions</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Long-term</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Amortization</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>to Accrual</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accrued rent&nbsp;&#151; Short-term</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,009</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,062</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>825</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(3,718</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(166</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,012</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accrued rent&nbsp;&#151; Long-term</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,370</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,341</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(825</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(162</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>195</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,919</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total accrued rent liability</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6,379</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>10,403</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(3,880</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>12,931</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth the Company&#146;s restructuring
reserves relating to its vacancy of various facilities as of
December&nbsp;31, 2004 (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="21%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>As of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Reclass</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>As of</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>from</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Adjustments</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Additions</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Long-term</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Amortization</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Accretion</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>to Accrual</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accrued rent&nbsp;&#151; Short-term</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,012</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,313</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,512</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(2,585</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,264</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accrued rent&nbsp;&#151; Long-term</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,919</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>354</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,512</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,325</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>54</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,140</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total accrued rent liability</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>12,931</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,667</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(2,585</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,325</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>66</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>13,404</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The 2003 charge of $10.4&nbsp;million was recorded in the
&#147;Sales, general and administrative expense&#148; line item
on the Consolidated Statements of Operations for the year ended
December&nbsp;31, 2003. In 2004 $1.5&nbsp;million of the vacancy
related charges were recorded in the &#147;Discontinued
operations, net&#148; line and $0.1&nbsp;million in the
&#147;Sales, general and administrative expense&#148; line of
the Consolidated Statement of Operations as of December&nbsp;31,
2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth the Company&#146;s restructuring
reserves relating to its involuntary termination of employees as
of December&nbsp;31, 2003 (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="33%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>As of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>As of</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Additions</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Payments</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Adjustments</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Severance liability</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,556</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,914</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(5,191</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>414</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>693</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth the Company&#146;s restructuring
reserves relating to its involuntary termination of employees as
of December&nbsp;31, 2004 (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="33%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>As of</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>As of</B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>December&nbsp;31,</B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Additions</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Payments</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Adjustments</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>2004</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Severance liability</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>693</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6,154</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(5,292</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(1,555</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Severance-related charges of $1.1&nbsp;million were recorded in
the &#147;Plant operating expense&#148; line with the remaining
$2.8&nbsp;million in the &#147;Selling, general and
administrative expense&#148; line of the Consolidated Statements
of Operations for the year ended December&nbsp;31, 2003.
Severance-related charges of $6.2&nbsp;million were recorded in
the &#147;Discontinued operations, net&#148; line of the
Consolidated Statement of Operations for the year ended
December&nbsp;31, 2004.
</DIV>

<P align="center" style="font-size: 10pt;">F-89

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Power Plant Operating Leases</I>&nbsp;&#151; The Company has
entered into long-term operating leases for power generating
facilities, expiring through 2049, including renewal options.
Many of the lease agreements provide for renewal options at fair
value, and some of the agreements contain customary restrictions
on dividends, additional debt and further encumbrances similar
to those typically found in project finance agreements. In
accordance with SFAS&nbsp;No.&nbsp;13 and SFAS&nbsp;No.&nbsp;98
the Company&#146;s operating leases are not reflected on our
balance sheet. Lease payments on the Company&#146;s operating
leases which contain escalation clauses or step rent provisions
are recognized on a straight-line basis. Certain capital
improvements associated with leased facilities may be deemed to
be leasehold improvements and are amortized over the shorter of
the term of the lease or the economic life of the capital
improvement. Future minimum lease payments under these leases
are as follows (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Initial</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Year</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2007</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2008</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2009</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Thereafter</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Watsonville</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1995</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,905</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,905</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,905</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,905</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,065</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>15,685</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Greenleaf</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1998</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,723</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,495</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,490</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,643</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>71,651</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Geysers</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1999</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55,890</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47,991</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47,150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42,886</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34,566</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>106,017</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>334,500</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    KIAC</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24,077</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23,845</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24,473</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24,537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>240,082</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>360,889</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Rumford/ Tiverton</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44,942</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>563,292</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>788,234</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    South Point</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>307,190</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>355,290</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    RockGen</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,031</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26,088</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,478</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>28,732</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,360</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>169,252</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>307,941</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>173,188</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>164,129</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>164,648</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>161,111</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>155,638</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,415,476</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,234,190</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In 2004, 2003, and 2002, rent expense for power plant operating
leases amounted to $105.9&nbsp;million, $112.1&nbsp;million and
$111.0&nbsp;million, respectively. Calpine guarantees
$1.6&nbsp;billion of the total future minimum lease payments of
its consolidated subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On May&nbsp;19, 2004, the Company restructured the King City
power plant operating lease. Due to the lease extension and
other modifications to the original lease, the lease
classification was reevaluated under SFAS&nbsp;No.&nbsp;13 and
determined to be a capital lease. See Notes&nbsp;3 and 13 for
more information on the restructuring.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Production Royalties and Leases</I>&nbsp;&#151; The Company
is committed under numerous geothermal leases and right-of-way,
easement and surface agreements. The geothermal leases generally
provide for royalties based on production revenue with
reductions for property taxes paid. The right-of-way, easement
and surface agreements are based on flat rates or adjusted based
on CPI changes and are not material. Under the terms of most
geothermal leases, prior to May 1999, when the Company
consolidated the steam field and power plant operations in Lake
and Sonoma Counties in northern California (&#147;The
Geysers&#148;), royalties were based on steam and effluent
revenue. Following the consolidation of operations, the
royalties began to accrue as a percentage of electrical
revenues. Certain properties also have net profits and
overriding royalty interests that are in addition to the land
base lease royalties. Some lease agreements contain clauses
providing for minimum lease payments to lessors if production
temporarily ceases or if production falls below a specified
level.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Production royalties for gas-fired and geothermal facilities for
the years ended December&nbsp;31, 2004, 2003, and 2002, were
$28.7&nbsp;million, $24.9&nbsp;million and $17.6&nbsp;million,
respectively.
</DIV>

<P align="center" style="font-size: 10pt;">F-90
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Office and Equipment Leases</I>&nbsp;&#151; The Company
leases its corporate, regional and satellite offices as well as
some of its office equipment under noncancellable operating
leases expiring through 2014. Future minimum lease payments
under these leases are as follows (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="83%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2005</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>29,244</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2006</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24,415</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2007</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,299</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2008</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,291</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    2009</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,127</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Thereafter</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>58,172</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>176,548</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Lease payments are subject to adjustments for the Company&#146;s
pro rata portion of annual increases or decreases in building
operating costs. In 2004, 2003, and 2002, rent expense for
noncancellable operating leases amounted to $29.7&nbsp;million,
$21.6&nbsp;million and $25.8&nbsp;million, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Natural Gas Purchases</I>&nbsp;&#151; The Company enters into
gas purchase contracts of various terms with third parties to
supply gas to its gas-fired cogeneration projects.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Gas Pipeline Transportation in Canada</I>&nbsp;&#151; To
support production and marketing operations, Calpine, through
CES, has firm commitments in the ordinary course of business for
gathering, processing and transmission services that require the
Company to deliver certain minimum quantities of natural gas to
third parties or pay the corresponding tariffs. The agreements
expire at various times through 2017. Estimated payments to be
made under these arrangements are $39.9&nbsp;million,
$33.4&nbsp;million, $31.8&nbsp;million, $31.1&nbsp;million,
$27.8&nbsp;million and $115.0&nbsp;million for each of the next
five years and thereafter, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Guarantees</I>&nbsp;&#151; As part of normal business,
Calpine enters into various agreements providing, or otherwise
arranges, financial or performance assurance to third parties on
behalf of its subsidiaries. Such arrangements include
guarantees, standby letters of credit and surety bonds. These
arrangements are entered into primarily to support or enhance
the creditworthiness otherwise attributed to a subsidiary on a
stand-alone basis, thereby facilitating the extension of
sufficient credit to accomplish the subsidiaries&#146; intended
commercial purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Calpine routinely issues guarantees to third parties in
connection with contractual arrangements entered into by
Calpine&#146;s direct and indirect wholly owned subsidiaries in
the ordinary course of such subsidiaries&#146; respective
business, including power and natural gas purchase and sale
arrangements and contracts associated with the development,
construction, operation and maintenance of Calpine&#146;s fleet
of power generating facilities and natural gas facilities. Under
these guarantees, if the subsidiary in question were to fail to
perform its obligations under the guaranteed contract, giving
rise to a default and/or an amount owing by the subsidiary to
the third party under the contract, Calpine could be called upon
to pay such amount to the third party or, in some instances, to
perform the subsidiary&#146;s obligations under the contract. It
is Calpine&#146;s policy to attempt to negotiate specific limits
or caps on Calpine&#146;s overall liability under these types of
guarantees; however, in some instances, Calpine&#146;s liability
is not limited by way of such a contractual liability cap.
</DIV>

<P align="center" style="font-size: 10pt;">F-91
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At December&nbsp;31, 2004, guarantees of subsidiary debt,
standby letters of credit and surety bonds to third parties and
guarantees of subsidiary operating lease payments and their
respective expiration dates were as follows (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Commitments Expiring</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2005</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2006</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2007</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2008</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2009</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Thereafter</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Guarantee of subsidiary debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>16,284</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18,798</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,930,657</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>19,848</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,133,896</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,137,817</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Standby letters of credit(1)(3)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>579,607</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,641</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,802</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>586,450</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Surety bonds(2)(3)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,531</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,531</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Guarantee of subsidiary operating lease payments(3)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>83,169</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>81,772</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>82,487</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>115,604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>113,977</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,163,783</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,640,792</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>681,109</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>101,697</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>104,087</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,046,661</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>133,825</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,310,210</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5,377,589</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    The standby letters of credit disclosed above include those
    disclosed in Notes&nbsp;12, 15 and 16.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    The surety bonds do not have expiration or cancellation dates.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    These are off balance sheet obligations.</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The balance of the guarantees of subsidiary debt, standby
letters of credit and surety bonds were as follows (in
thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="69%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>Balance at December&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Guarantee of subsidiary debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,137,817</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,102,829</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Standby letters of credit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>586,450</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>410,803</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Surety bonds</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,531</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70,480</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,736,798</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4,584,112</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company has guaranteed the principal payment of
$2,139.7&nbsp;million and $2,448.6&nbsp;million, as of
December&nbsp;31, 2004 and 2003, respectively, of Senior Notes
for two wholly owned finance subsidiaries of Calpine, Calpine
Canada Energy Finance ULC and Calpine Canada Energy
Finance&nbsp;II ULC. As of December&nbsp;31, 2004, the Company
has guaranteed $275.1&nbsp;million and $72.4&nbsp;million,
respectively, of project financing for the Broad River Energy
Center and Pasadena Power Plant and $291.6&nbsp;million and
$71.8&nbsp;million, respectively, as of December&nbsp;31, 2003,
for these power plants. In 2004 and 2003 the Company has
debenture obligations in the amount of $517.5&nbsp;million and
$1,153.5&nbsp;million, respectively, the payment of which will
fund the obligations of the Trusts (see Note&nbsp;12 for more
information). The Company agreed to indemnify Duke Capital
Corporation $101.4&nbsp;million and $101.7&nbsp;million as of
December&nbsp;31, 2004 and 2003, respectively, in the event Duke
Capital Corporation is required to make any payments under its
guarantee of the lease of the Hidalgo Energy Center. As of
December&nbsp;31, 2004 and 2003, the Company has also guaranteed
$31.7&nbsp;million and $35.6&nbsp;million, respectively, of
other miscellaneous debt. All of the guaranteed debt is recorded
on the Company&#146;s Consolidated Balance Sheet.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Calpine has guaranteed the payment of a portion of the rents due
under the lease of the Greenleaf generating facilities in
California, which lease is between an owner trustee acting on
behalf of Union Bank of California, as lessor, and a Calpine
subsidiary, Calpine Greenleaf, Inc., as lessee. Calpine does not
currently meet the requirements of a financial covenant
contained in the guarantee agreement. The lessor has waived this
non-compliance through April&nbsp;30, 2005, and Calpine is
currently in discussions with the lessor concerning the
possibility of modifying the lease and/or Calpine&#146;s
guarantee thereof so as to eliminate or modify the covenant in
question. In the event the lessor&#146;s waiver were to expire
prior to completion of this amendment, the lessor could at that
time elect to accelerate the payment of certain amounts owing
under the lease, totaling approximately $15.9&nbsp;million. In
the event the lessor were to elect to require Calpine to make
this payment, the
</DIV>

<P align="center" style="font-size: 10pt;">F-92

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
lessor&#146;s remedy under the guarantee and the lease would be
limited to taking steps to collect damages from Calpine; the
lessor would not be entitled to terminate or exercise other
remedies under the Greenleaf lease.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In connection with several of the Company&#146;s
subsidiaries&#146; lease financing transactions (Greenleaf,
Pasadena, Broad River, RockGen and South Point) the insurance
policies the Company has in place do not comply in every respect
with the insurance requirements set forth in the financing
documents. The Company has requested from the relevant financing
parties, and is expecting to receive, waivers of this
noncompliance. While failure to have the required insurance in
place is listed in the financing documents as an event of
default, the financing parties may not unreasonably withhold
their approval of the Company&#146;s waiver request so long as
the required insurance coverage is not reasonably available or
commercially feasible and the Company delivers a report from its
insurance consultant to that effect.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company has delivered the required insurance consultant
reports to the relevant financing parties and therefore
anticipates that the necessary waivers will be executed shortly.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Calpine routinely arranges for the issuance of letters of credit
and various forms of surety bonds to third parties in support of
its subsidiaries&#146; contractual arrangements of the types
described above and may guarantee the operating performance of
some of its partially owned subsidiaries up to the
Company&#146;s ownership percentage. The letters of credit
outstanding under various credit facilities support CES risk
management, and other operational and construction activities.
Of the total letters of credit outstanding, $2.5&nbsp;million
and $14.5&nbsp;million were issued to support CES risk
management at December&nbsp;31, 2004 and 2003, respectively. In
the event a subsidiary were to fail to perform its obligations
under a contract supported by such a letter of credit or surety
bond, and the issuing bank or surety were to make payment to the
third party, Calpine would be responsible for reimbursing the
issuing bank or surety within an agreed timeframe, typically a
period of 1 to 10&nbsp;days. To the extent liabilities are
incurred as a result of activities covered by letters of credit
or the surety bonds, such liabilities are included in the
Consolidated Balance Sheets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At December&nbsp;31, 2004, investee debt was
$126.3&nbsp;million. Based on the Company&#146;s ownership share
of each of the investments, the Company&#146;s share would be
approximately $43.3&nbsp;million. However, all such debt is
non-recourse to the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In the course of its business, Calpine and its subsidiaries have
entered into various purchase and sale agreements relating to
stock and asset acquisitions or dispositions. These purchase and
sale agreements customarily provide for indemnification by each
of the purchaser and the seller, and/or their respective parent,
to the counter-party for liabilities incurred as a result of a
breach of a representation or warranty by the indemnifying
party. These indemnification obligations generally have a
discrete term and are intended to protect the parties against
risks that are difficult to predict or impossible to quantify at
the time of the consummation of a particular transaction. The
Company has no reason to believe that it currently has any
material liability relating to such routine indemnification
obligations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Additionally, Calpine and its subsidiaries from time to time
assume other indemnification obligations in conjunction with
transactions other than purchase or sale transactions. These
indemnification obligations generally have a discrete term and
are intended to protect our counterparties against risks that
are difficult to predict or impossible to quantify at the time
of the consummation of a particular transaction, such as the
costs associated with litigation that may result from the
transaction. The Company has no reason to believe that it
currently has any material liability relating to such routine
indemnification obligations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Calpine has in a few limited circumstances directly or
indirectly guaranteed the performance of obligations by
unrelated third parties. These circumstances have arisen in
situations in which a third party has contractual obligations
with respect to the construction, operation or maintenance of a
power generating facility or related equipment owned in whole or
in part by Calpine. Generally, the third party&#146;s
obligations with respect to related equipment are guaranteed for
the direct or indirect benefit of Calpine by the third
party&#146;s parent or other party. A financing party or
investor in such facility or equipment may negotiate for Calpine
also
</DIV>

<P align="center" style="font-size: 10pt;">F-93
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
to guarantee the performance of such third party&#146;s
obligations as additional support for the third party&#146;s
obligations. For example, in conjunction with the financing of
California peaker program, Calpine guaranteed for the benefit of
the lenders certain warranty obligations of third party
suppliers and contractors. Calpine has entered into few
guarantees of unrelated third party&#146;s obligations. Calpine
has no reason to believe that it currently has any liability
with respect to these guarantees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company believes that the likelihood that it would be
required to perform or otherwise incur any significant losses
associated with any of these guarantees is remote.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Litigation</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company is party to various litigation matters arising out
of the normal course of business, the more significant of which
are summarized below. The ultimate outcome of each of these
matters cannot presently be determined, nor can the liability
that could potentially result from a negative outcome be
reasonably estimated presently for every case. The liability the
Company may ultimately incur with respect to any one of these
matters in the event of a negative outcome may be in excess of
amounts currently accrued with respect to such matters and, as a
result of these matters, may potentially be material to the
Company&#146;s Consolidated Financial Statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Securities Class&nbsp;Action Lawsuits.</I> Beginning on
March&nbsp;11, 2002, fifteen securities class action complaints
were filed in the U.S.&nbsp;District Court for the Northern
District of California against Calpine and certain of its
employees, officers, and directors. All of these actions were
ultimately assigned to Judge Saundra Brown Armstrong, and Judge
Armstrong ordered the actions consolidated for all purposes on
August&nbsp;16, 2002, as <I>In re Calpine Corp. Securities
Litigation</I>, Master File No.&nbsp;C 02-1200 SBA. There is
currently only one claim remaining from the consolidated
actions: a claim for violation of Section&nbsp;11 of the
Securities Act of 1933 (&#147;Securities Act&#148;). The Court
has dismissed all of the claims brought under Section&nbsp;10(b)
of the Securities Exchange Act of 1934 with prejudice.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On October&nbsp;17, 2003, plaintiffs filed their third amended
complaint (&#147;TAC&#148;), which alleges violations of
Section&nbsp;11 of the Securities Act by Calpine, Peter
Cartwright, Ann B. Curtis and Charles B. Clark,&nbsp;Jr. The TAC
alleges that the registration statement and prospectuses for
Calpine&#146;s 2011 Notes contained materially false or
misleading statements about the factors that caused the power
shortages in California in 2000-2001 and the resulting increase
in wholesale energy prices. The TAC alleges that the true but
undisclosed cause of the energy crisis is that Calpine and other
power producers were engaging in physical withholding of
electricity. In discovery, plaintiff has argued that the TAC is
not based solely on allegedly concealed physical withholding,
but instead is based on alleged undisclosed market manipulation
in the form of physical withholding, economic withholding, and
trading strategies. The TAC defines the potential class to
include all purchasers of the Notes pursuant to the registration
statement and prospectuses on or before January&nbsp;27, 2003.
The Court has not yet certified the class. The class
certification hearing will be set for May&nbsp;3, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On April&nbsp;15, 2004, The Policemen and Firemen Retirement
System of the City of Detroit (the &#147;Detroit Fund&#148;)
filed a request to be appointed as lead plaintiff in the case.
The Court granted the Detroit Fund&#146;s request for
appointment as lead plaintiff on May&nbsp;7, 2004. The Court
also approved the Detroit Fund&#146;s choice of Kohn,
Swift&nbsp;&#38; Graf,&nbsp;P.C. (Philadelphia) as lead counsel
for the class.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
At the Court&#146;s invitation, defendants subsequently moved
for summary judgment on grounds that the Section&nbsp;11 claim
was barred by the statute of limitations. On November&nbsp;2,
2004, the Court denied the motion on grounds that defendants had
not established as a matter of law that plaintiff was on notice
of the alleged misstatement prior to January&nbsp;27, 2002, one
year before plaintiff first alleged that Calpine had
misrepresented the causes of the energy crisis. The Court has
set a November&nbsp;7, 2005 trial date. Fact discovery will
close on July&nbsp;1, 2005. We consider the lawsuit to be
without merit and intend to continue to defend vigorously
against the allegations.
</DIV>

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<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Hawaii Structural Ironworkers Pension Fund&nbsp;v. Calpine,
et&nbsp;al.</I> This case is a Section&nbsp;11 case brought as a
class action on behalf of purchasers in Calpine&#146;s April,
2002 stock offering. This case was filed in San&nbsp;Diego
County Superior Court on March&nbsp;11, 2003, but defendants won
a motion to transfer the case to Santa&nbsp;Clara County.
Defendants in this case are Calpine, Cartwright, Curtis, John
Wilson, Kenneth Derr, George Stathakis, CSFB, Banc of America
Securities, Deutsche Bank Securities, and Goldman,
Sachs&nbsp;&#38; Co. Plaintiff is the Hawaii Structural
Ironworkers Pension Trust&nbsp;Fund.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Hawaii Fund alleges that the prospectus and registration
statement for the April 2002 offering had false or misleading
statements regarding: Calpine&#146;s actual financial results
for 2000 and 2001; Calpine&#146;s projected financial results
for 2002; Cartwright&#146;s agreement not to sell or purchase
shares within 90&nbsp;days of the offering; and Calpine&#146;s
alleged involvement in &#147;wash trades.&#148; The core
allegation of the complaint is that a March 2003 restatement
(concerning two sales-leaseback transactions) revealed that
Calpine had misrepresented its financial results in the
prospectus/registration statement for the April 2002 offering.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
There is no discovery cut off date or trial date in this action.
The next scheduled court hearing will be a case management
conference on July&nbsp;5, 2005, at which time the court should
set a discovery deadline and trial date. We consider this
lawsuit to be without merit and intend to continue to defend
vigorously against the allegations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Phelps&nbsp;v. Calpine Corporation, et&nbsp;al.</I> On
April&nbsp;17, 2003, James Phelps filed a class action complaint
in the Northern District of California, alleging claims under
the Employee Retirement Income Security Act (&#147;ERISA&#148;).
On May&nbsp;19, 2003, a nearly identical class action complaint
was filed in the Northern District by Lenette Poor-Herena. The
parties agreed to have both of the ERISA actions assigned to
Judge Armstrong, who oversees the above-described federal
securities class action and the <I>Gordon </I>derivative action
(see below). On August&nbsp;20, 2003, pursuant to an agreement
between the parties, Judge Armstrong ordered that the two ERISA
actions be consolidated under the caption, <I>In re Calpine
Corp. ERISA Litig.</I>, Master File No.&nbsp;C 03-1685 SBA (the
&#147;ERISA Class&nbsp;Action&#148;). Plaintiff James Phelps
filed a consolidated ERISA complaint on January&nbsp;20, 2004
(&#147;Consolidated Complaint&#148;). Ms.&nbsp;Poor-Herena is
not identified as a plaintiff in the Consolidated Complaint.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Consolidated Complaint defines the class as all participants
in, and beneficiaries of, the Calpine Corporation Retirement
Savings Plan (the &#147;Plan&#148;) for whose accounts
investments were made in Calpine stock during the period from
January&nbsp;5, 2001 to the present. The Consolidated Complaint
names as defendants Calpine, the members of its Board of
Directors, the Plan&#146;s Advisory Committee and its members
(Kati Miller, Lisa Bodensteiner, Rick Barraza, Tom Glymph,
Patrick Price, Trevor Thor, Bob McCaffrey, and Bryan Bertacchi),
signatories of the Plan&#146;s Annual Return/ Report of Employee
Benefit Plan Forms&nbsp;5500 for 2001 and 2002 (Pamela J. Norley
and Marybeth Kramer-Johnson, respectively), an employee of a
consulting firm hired by the Plan (Scott Farris), and
unidentified fiduciary defendants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Consolidated Complaint alleges that defendants breached
their fiduciary duties involving the Plan, in violation of
ERISA, by misrepresenting Calpine&#146;s actual financial
results and earnings projections, failing to disclose certain
transactions between Calpine and Enron that allegedly inflated
Calpine&#146;s revenues, failing to disclose that the shortage
of power in California during 2000-2001 was due to withholding
of capacity by certain power companies, failing to investigate
whether Calpine common stock was an appropriate investment for
the Plan, and failing to take appropriate actions to prevent
losses to the Plan. In addition, the consolidated ERISA
complaint alleges that certain of the individual defendants
suffered from conflicts of interest due to their sales of
Calpine stock during the class period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Defendants moved to dismiss the consolidated complaint. At a
February&nbsp;11, 2005 hearing, Judge Armstrong granted the
motion and dismissed three of the four claims with prejudice.
The fourth claim was dismissed with leave to amend. This claim
was based, in part, on the same statements that are at issue in
the Section&nbsp;11 bond class action. Plan participants did not
receive the prospectus supplements that are at issue in
</DIV>

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<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
the Section&nbsp;11 bond class action, but plaintiffs&#146;
counsel told Judge Armstrong that these statements appeared in
documents that were given to Plan participants. Relying on
assurances by plaintiffs&#146; counsel that misstatements about
the California energy crisis appeared in documents that were
given to Plan participants (or that were incorporated by
reference into documents given to participants), the Court
granted leave to re-plead this claim. We expect the second
amended consolidated complaint to be due in the near future. We
consider this lawsuit to be without merit and intend to continue
to defend vigorously against the allegations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Johnson&nbsp;v. Peter Cartwright, et&nbsp;al.</I> On
December&nbsp;17, 2001, a shareholder filed a derivative lawsuit
on behalf of Calpine against its directors and one of its senior
officers. This lawsuit is styled <I>Johnson vs. Cartwright,
et&nbsp;al.</I> (No.&nbsp;CV803872) and is pending in state
superior court of Santa&nbsp;Clara County, California. Calpine
is a nominal defendant in this lawsuit, which alleges claims
relating to purportedly misleading statements about Calpine and
stock sales by certain of the director defendants and the
officer defendant. In December 2002, the court dismissed the
complaint with respect to certain of the director defendants for
lack of personal jurisdiction, though plaintiff may appeal this
ruling. In early February 2003, plaintiff filed an amended
complaint, naming a few additional officer defendants. Calpine
and the individual defendants filed demurrers (motions to
dismiss) and a motion to stay the case in March 2003. On
July&nbsp;1, 2003, the Court granted Calpine&#146;s motion to
stay this proceeding until the above-described Section&nbsp;11
action is resolved, or until further order of the Court. We
consider the lawsuit to be without merit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Gordon&nbsp;v. Peter Cartwright, et&nbsp;al.</I> On
August&nbsp;8, 2002, a shareholder filed a derivative suit in
the United States District Court for the Northern District of
California on behalf of Calpine against its directors, captioned
<I>Gordon&nbsp;v. Cartwright, et&nbsp;al.</I> similar to
<I>Johnson&nbsp;v. Cartwright.</I> Motions have been filed to
dismiss the action against certain of the director defendants on
the grounds of lack of personal jurisdiction, as well as to
dismiss the complaint in total on other grounds. In February
2003, plaintiff agreed to stay these proceedings until the
above-described federal Section&nbsp;11 action is resolved, and
to dismiss without prejudice certain director defendants. On
March&nbsp;4, 2003, plaintiff filed papers with the court
voluntarily agreeing to dismiss without prejudice his claims
against three of the outside directors. We consider this lawsuit
to be without merit.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>International Paper Company&nbsp;v. Androscoggin Energy
LLC.</I> In October 2000, International Paper Company filed a
complaint against Androscoggin Energy LLC (&#147;AELLC&#148;)
alleging that AELLC breached certain contractual representations
and warranties arising out of an Amended Energy Services
Agreement (&#147;ESA&#148;) by failing to disclose facts
surrounding the termination, effective May&nbsp;8, 1998, of one
of AELLC&#146;s fixed-cost gas supply agreements. The steam
price paid by IP under the ESA is derived from AELLC&#146;s cost
of gas under its gas supply agreements. We had acquired a 32.3%
economic interest and a 49.5% voting interest in AELLC as part
of the Skygen transaction, which closed in October 2000. AELLC
filed a counterclaim against International Paper Company that
has been referred to arbitration that AELLC may commence at its
discretion upon further evaluation. On November&nbsp;7, 2002,
the court issued an opinion on the parties&#146; cross motions
for summary judgment finding in AELLC&#146;s favor on certain
matters though granting summary judgment to International Paper
Company on the liability aspect of a particular claim against
AELLC. The court also denied a motion submitted by IP for
preliminary injunction to permit IP to make payment of funds
into escrow (not directly to AELLC) and require AELLC to post a
significant bond.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In mid-April of 2003, IP unilaterally availed itself to
self-help in withholding amounts in excess of $2&nbsp;million as
a setoff for litigation expenses and fees incurred to date as
well as an estimated portion of a rate fund to AELLC. AELLC has
submitted an amended complaint and request for immediate
injunctive relief against such actions. The court heard the
motion on April&nbsp;24, 2003 and ordered that IP must pay the
approximate $1.2&nbsp;million withheld as attorneys&#146; fees
related to the litigation as any such perceived entitlement was
premature, but declined to order injunctive relief on the
incomplete record concerning the offset of $799,000 as an
estimated pass-through of the rate fund. IP complied with the
order on April&nbsp;29, 2003 and tendered payment to AELLC of
the approximate $1.2&nbsp;million. On June&nbsp;26, 2003, the
court entered an order
</DIV>

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<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
dismissing AELLC&#146;s amended counterclaim without prejudice
to AELLC re-filing the claims as breach of contract claims in a
separate lawsuit. On December&nbsp;11, 2003, the court denied in
part IP&#146;s summary judgment motion pertaining to damages. In
short, the court: (i)&nbsp;determined that, as a matter of law,
IP is entitled to pursue an action for damages as a result of
AELLC&#146;s breach, and (ii)&nbsp;ruled that sufficient
questions of fact remain to deny IP summary judgment on the
measure of damages as IP did not sufficiently establish
causation resulting from AELLC&#146;s breach of contract (the
liability aspect of which IP obtained a summary judgment in
December 2002). On February&nbsp;2, 2004, the parties filed a
Final Pretrial Order with the court. The case recently proceeded
to trial, and on November&nbsp;3, 2004, a jury verdict in the
amount of $41&nbsp;million was rendered in favor of IP. AELLC
was held liable on the misrepresentation claim, but not on the
breach of contract claim. The verdict amount was based on
calculations proffered by IP&#146;s damages experts. AELLC has
made an additional accrual to recognize the jury verdict and the
Company has recognized its 32.3% share.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
AELLC filed a post-trial motion challenging both the
determination of its liability and the damages award and, on
November&nbsp;16, 2004, the court entered an order staying the
execution of the judgment. The order staying execution of the
judgment has not expired. If the judgment is not vacated as a
result of the post-trial motions, AELLC intends to appeal the
judgment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Additionally, on November&nbsp;26, 2004, AELLC filed a voluntary
petition for relief under Chapter&nbsp;11 of the Bankruptcy
Code. As noted above, we had acquired a 32.3% economic interest
and a 49.5% voting interest in AELLC as part of the Skygen
transaction, which closed in October 2000. AELLC is continuing
in possession of its property and is operating and maintaining
its business as a debtor in possession, pursuant to
Section&nbsp;1107(a) and 1108 of the Bankruptcy Code. No request
has been made for the appointment of a trustee or examiner in
the proceeding, and no official committee of unsecured creditors
has yet been appointed by the Office of the United States
Trustee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Panda Energy International, Inc., et&nbsp;al.&nbsp;v. Calpine
Corporation, et&nbsp;al.</I> On November&nbsp;5, 2003, Panda
Energy International, Inc. and certain related parties,
including PLC&nbsp;II, LLC, (collectively &#147;Panda&#148;)
filed suit against Calpine and certain of its affiliates in the
United States District Court for the Northern District of Texas,
alleging, among other things, that the Company breached duties
of care and loyalty allegedly owed to Panda by failing to
correctly construct and operate the Oneta Energy Center
(&#147;Oneta&#148;), which the Company acquired from Panda, in
accordance with Panda&#146;s original plans. Panda alleges that
it is entitled to a portion of the profits from Oneta and that
Calpine&#146;s actions have reduced the profits from Oneta
thereby undermining Panda&#146;s ability to repay monies owed to
Calpine on December&nbsp;1, 2003, under a promissory note on
which approximately $38.6&nbsp;million (including interest
through December&nbsp;1, 2003) is currently outstanding and past
due. The note is collateralized by Panda&#146;s carried interest
in the income generated from Oneta, which achieved full
commercial operations in June 2003. Calpine filed a counterclaim
against Panda Energy International, Inc. (and PLC&nbsp;II, LLC)
based on a guaranty and a motion to dismiss as to the causes of
action alleging federal and state securities laws violations.
The court recently granted Calpine&#146;s motion to dismiss, but
allowed Panda an opportunity to re-plead. The Company considers
Panda&#146;s lawsuit to be without merit and intends to
vigorously defend it. Discovery is currently in progress. The
Company stopped accruing interest income on the promissory note
due December&nbsp;1, 2003, as of the due date because of
Panda&#146;s default in repayment of the note.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>California Business&nbsp;&#38; Professions Code
Section&nbsp;17200 Cases, of which the lead case is T&#38;E
Pastorino Nursery&nbsp;v. Duke Energy Trading and Marketing,
L.L.C., et&nbsp;al.</I> This purported class action complaint
filed in May 2002 against 20 energy traders and energy
companies, including CES, alleges that defendants exercised
market power and manipulated prices in violation of California
Business&nbsp;&#38; Professions Code Section&nbsp;17200 et seq.,
and seeks injunctive relief, restitution, and attorneys&#146;
fees. The Company also has been named in eight other similar
complaints for violations of Section&nbsp;17200. All eight cases
were removed from the various state courts in which they were
originally filed to federal court for pretrial proceedings with
other cases in which the Company is not named as a defendant.
However, at the present time, the Company cannot estimate the
</DIV>

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<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
potential loss, if any, that might arise from this matter. The
Company considers the allegations to be without merit, and filed
a motion to dismiss on August&nbsp;28, 2003. The court granted
the motion, and plaintiffs have appealed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prior to the motion to dismiss being granted, one of the
actions, captioned Millar&nbsp;v. Allegheny Energy Supply Co.,
LLP, et&nbsp;al., was remanded to state superior court of
Alameda County, California. On January&nbsp;12, 2004, CES was
added as a defendant in Millar. This action includes similar
allegations to the other Section&nbsp;17200 cases, but also
seeks rescission of the long-term power contracts with the
California Department of Water Resources. Millar was removed to
federal court and transferred to the same judge that is
presiding over the other Section&nbsp;17200 cases described
above, where it was to be consolidated. However, that judge
recently remanded the case back to state superior court for
handling.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Nevada Power Company and Sierra Pacific Power Company&nbsp;v.
Calpine Energy Services, L.P. before the FERC, filed on
December&nbsp;4, 2001, Nevada Section&nbsp;206 Complaint.</I> On
December&nbsp;4, 2001, Nevada Power Company (&#147;NPC&#148;)
and Sierra Pacific Power Company (&#147;SPPC&#148;) filed a
complaint with FERC under Section&nbsp;206 of the Federal Power
Act against a number of parties to their power sales agreements,
including Calpine. NPC and SPPC allege in their complaint, that
the prices they agreed to pay in certain of the power sales
agreements, including those signed with Calpine, were negotiated
during a time when the spot power market was dysfunctional and
that they are unjust and unreasonable. The complaint therefore
sought modification of the contract prices. The administrative
law judge issued an Initial Decision on December&nbsp;19, 2002,
that found for Calpine and the other respondents in the case and
denied NPC and SPPC the relief that they were seeking. In a
June&nbsp;26, 2003 order, FERC affirmed the judge&#146;s
findings and dismissed the complaint, and subsequently denied
rehearing of that order. The matter is pending on appeal before
the United States Court of Appeals for the Ninth Circuit. The
Company has participated in briefing and arguments before the
Ninth Circuit defending the FERC orders, but the Company is not
able to predict at this time the outcome of the Ninth Circuit
appeal.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Transmission Service Agreement with Nevada Power Company.</I>
On March&nbsp;16, 2004, NPC filed a petition for declaratory
order at FERC (Docket No. EL04-90-000) asking that an order be
issued requiring Calpine and Reliant Energy Services, Inc.
(&#147;Reliant&#148;) to pay for transmission service under
their Transmission Service Agreements (&#147;TSAs&#148;) with
NPC or, if the TSAs are terminated, to pay the lesser of the
transmission charges or a pro rata share of the total cost of
NPC&#146;s Centennial Project (approximately $33&nbsp;million
for Calpine). The Centennial Project involves construction of
various transmission facilities in two phases; Calpine&#146;s
Moapa Energy Center (&#147;MEC&#148;) was scheduled to receive
service under its TSA from facilities yet to be constructed in
the second phase of the Centennial Project. Calpine filed a
protest to the petition asserting that (a)&nbsp;Calpine would
take service under the TSA if NPC proceeds to execute a purchase
power agreement (&#147;PPA&#148;) with MEC based on MEC&#146;s
winning bid in the Request for Proposals that NPC conducted in
2003; (b)&nbsp;if NPC did not execute a PPA with MEC, Calpine
would terminate the TSA and any payment by Calpine would be
limited to a pro rata allocation of certain costs incurred by
NPC in connection with the second phase of the project
(approximately $4.5&nbsp;million in total to date) among the
three customers to be served.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On November&nbsp;18, 2004, FERC issued a decision in Docket
No.&nbsp;EL04-90-000 which found that neither Calpine nor
Reliant had the right to unilaterally terminate their respective
TSAs, and that upon commencement of service both Calpine and
Reliant would be obligated to pay either the associated demand
charges for service or their respective share of the capital
cost associated with the transmission upgrades that have been
made in order to provide such service. The November&nbsp;18,
2004 order, however, did not indicate the amount or measure of
damages that would be owed to NPC in the event that either
Calpine or Reliant breached its respective obligations under the
TSAs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On December&nbsp;10, 2004, NPC filed a request for rehearing of
the November&nbsp;18, 2004 decision, alleging that FERC had
erred in holding that a determination of damages for breach of
either Calpine or Reliant was
</DIV>

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<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
premature and that both Calpine and Reliant had breached their
respective TSAs. Calpine filed an answer on January&nbsp;4, 2005
requesting that FERC deny NPC&#146;s request for rehearing.
NPC&#146;s request for rehearing remains pending before FERC for
further consideration. The Company cannot predict how FERC will
rule on NPC&#146;s rehearing request.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In light of the November&nbsp;18, 2004 order, on
November&nbsp;22, 2004 Calpine delivered to NPC a notice (the
&#147;November&nbsp;22, 2004 Letter&#148;) that it did not
intend to perform its obligations under the Calpine TSA, that
NPC should exercise its duty to mitigate its damages, if any,
and that NPC should not incur any additional costs or expenses
in reliance upon the TSA for Calpine&#146;s account. Calpine
introduced the November&nbsp;22, 2004 Letter into evidence in
proceedings before the Public Utilities Commission of Nevada
(&#147;PUCN&#148;) regarding NPC&#146;s third amendment to its
integrated resource plan (&#147;Resource Plan&#148;). In the
Resource Plan, NPC sought approval to proceed with the
construction of the second phase of the Centennial Project (the
transmission project intended to serve the Calpine and Reliant
TSAs) (the &#147;HAM Line&#148;). On December&nbsp;28, 2004, the
PUCN issued an order granting NPC&#146;s request to proceed with
the construction of the HAM Line. On January&nbsp;11, 2005,
Calpine filed a petition for reconsideration of the
December&nbsp;28, 2004 order. On February&nbsp;9, 2005, the PUCN
issued an order denying Calpine&#146;s petitions For
reconsideration. At this time Calpine is unable to predict the
impact of the December&nbsp;28, 2004 and the February&nbsp;9,
2005 PUCN orders, if any on the District Court Complaint
(discussed below) or any possible action by NPC before FERC
regarding Calpine&#146;s notice that it will not perform its
obligations under the Calpine TSA.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Calpine had previously provided security to NPC for
Calpine&#146;s share of the HAM Line costs, in the form of a
surety bond issued by Fireman&#146;s Fund&nbsp;Insurance Company
(&#147;FFIC&#148;). The bond issued by FFIC, by its terms,
expired on May&nbsp;1, 2004. On or about April&nbsp;27, 2004,
NPC asserted to FFIC that Calpine had committed a default under
the bond by failing to agree to renew or replace the bond upon
its expiration and made demand on FFIC for the full amount of
the surety bond, $33,333,333. On April&nbsp;29, 2004, FFIC filed
a complaint for declaratory relief in state superior court of
Marin County, California in connection with this demand.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
FFIC&#146;s complaint sought an order declaring that
(a)&nbsp;FFIC has no obligation to make payment under the bond;
and (b)&nbsp;if the court were to determine that FFIC has an
obligation to make payment, then (i)&nbsp;Calpine has an
obligation to replace it with funds equal to the amount of
NPC&#146;s demand against the bond and (ii)&nbsp;Calpine is
obligated to indemnify and hold FFIC harmless for all loss,
costs and fees incurred as a result of the issuance of the bond.
Calpine filed an answer denying the allegations of the complaint
and asserting affirmative defenses, including that it has fully
performed its obligations under the TSA and surety bond. NPC
filed a motion to quash service for lack of personal
jurisdiction in California.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On September&nbsp;3, 2004, the superior court granted NPC&#146;s
motion, and NPC was dismissed from the proceeding. Subsequently,
FFIC agreed to dismiss the complaint as to Calpine. On
September&nbsp;30, 2004 NPC filed a complaint in state district
court of Clark County, Nevada against Calpine, Moapa Energy
Center, LLC, FFIC and unnamed parties alleging, among other
things, breach by Calpine of its obligations under the TSA and
breach by FFIC of its obligations under the surety bond. On
November&nbsp;4, 2004, the case was removed to Federal District
Court. At this time, Calpine is unable to predict the outcome of
this proceeding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Calpine Canada Natural Gas Partnership&nbsp;v. Enron Canada
Corp.</I> On February&nbsp;6, 2002, Calpine Canada Natural Gas
Partnership (&#147;Calpine Canada&#148;) filed a complaint in
the Alberta Court of Queens Branch alleging that Enron Canada
Corp. (&#147;Enron Canada&#148;) owed it approximately
US$1.5&nbsp;million from the sale of gas in connection with two
Master Firm gas Purchase and Sale Agreements. To date, Enron
Canada has not sought bankruptcy relief and has counterclaimed
in the amount of US$18&nbsp;million. Discovery is currently in
progress, and the Company believes that Enron Canada&#146;s
counterclaim is without merit and intends to vigorously defend
against it.
</DIV>

<P align="center" style="font-size: 10pt;">F-99

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<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Estate of Jones, et al.&nbsp;v. Calpine Corporation.</I> On
June&nbsp;11, 2003, the Estate of Darrell Jones and the Estate
of Cynthia Jones filed a complaint against Calpine in the United
States District Court for the Western District of Washington.
Calpine purchased Goldendale Energy, Inc., a Washington
corporation, from Darrell Jones of National Energy Systems
Company (&#147;NESCO&#148;). The agreement provided, among other
things, that upon &#147;Substantial Completion&#148; of the
Goldendale facility, Calpine would pay Mr.&nbsp;Jones
(i)&nbsp;the fixed sum of $6.0&nbsp;million and (ii)&nbsp;a
decreasing sum equal to $18.0&nbsp;million less
$0.2&nbsp;million per day for each day that elapsed between
July&nbsp;1, 2002, and the date of Substantial Completion.
Substantial Completion of the Goldendale facility occurred in
September 2004 and the daily reduction in the payment amount
reduced the $18.0&nbsp;million payment to zero. The complaint
alleged that by not achieving Substantial Completion by
July&nbsp;1, 2002, Calpine breached its contract with
Mr.&nbsp;Jones, violated a duty of good faith and fair dealing,
and caused an inequitable forfeiture. On July&nbsp;28, 2003,
Calpine filed a motion to dismiss the complaint for failure to
state a claim upon which relief can be granted. The Court
granted Calpine&#146;s motion to dismiss the complaint on
March&nbsp;10, 2004. The Court denied the plaintiffs&#146;
subsequent motions for reconsideration and for leave to amend,
granted in part Calpine&#146;s motion for an award of
attorneys&#146; fees, and entered judgment dismissing the
action. The plaintiffs appealed the dismissal to the United
States Court of Appeals for the Ninth Circuit, where the matter
is pending. Briefing is complete. Oral argument has not yet been
scheduled. Calpine believes the facility reached Substantial
Completion in the second half of 2004. Calpine thereafter paid
to or for the benefit of the Jones estate the fixed sum of
$6&nbsp;million, which Calpine agreed it was obligated to pay
upon Substantial Completion whenever achieved.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Calpine Energy Services v Acadia Power Partners.</I> Calpine,
through its subsidiaries, owns 50% of Acadia Power Partners, LLC
(&#147;APP&#148;) which company owns the Acadia Energy Center
near Eunice, Louisiana (the &#147;Facility&#148;). A Cleco Corp
subsidiary owns the remaining 50% of APP. CES is the purchaser
under two power purchase agreements with APP, which agreements
entitle CES to all of the Facility&#146;s capacity and energy.
In August 2003 certain transmission constraints previously
unknown to CES and APP began to severely limit the ability of
CES to obtain all of the energy from the Facility. CES has
asserted that it is entitled to certain relief under the
purchase agreements, to which assertions APP disagrees.
Accordingly, the parties are engaging in the initial alternative
dispute resolution steps set forth in the power purchase
agreements. It is possible that the dispute will result in
binding arbitration pursuant to the agreements if a settlement
is not reached. In addition, CES and APP are discussing certain
billing calculation disputes which relate to efficiency matters.
The dispute covers the time period from June 2002 (commercial
operation date of the plant) to June 2004. It is expected that
the parties will be able to resolve these disputes, and that APP
could be liable to CES for an amount up to $3.1&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Hulsey, et&nbsp;al. v. Calpine Corporation.</I> On
September&nbsp;20, 2004, Virgil D. Hulsey,&nbsp;Jr. (a current
employee) and Ray Wesley (a former employee) filed a class
action wage and hour lawsuit against Calpine Corporation and
certain of its affiliates. The complaint alleges that the
purported class members were entitled to overtime pay and
Calpine failed to pay the purported class members at legally
required overtime rates. The matter has been transferred to the
Santa Clara County Superior Court and Calpine filed an answer on
January&nbsp;7, 2005, denying plaintiffs&#146; claims. the
parties have agreed to discuss possible resolutions alternative
to litigation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Michael Portis v. Calpine Corp.&nbsp;&#151; Department of
Labor Claim.</I> On January&nbsp;25, 2005, Michael Portis
(&#147;Portis&#148;), a former employee of Calpine, brought a
complaint to the United States Department of Labor (the
&#147;DOL&#148;), alleging that his employment with the Company
was wrongfully terminated. Portis alleges that Calpine and its
subsidiaries evaded sales and use tax in various states and in
doing so filed false tax reports and that his employment was
terminated in retaliation for having reported these allegations
to management. Portis claims that the Company&#146;s alleged
actions constitute violations of the employee protection
provisions of the Sarbanes Oxley Act of 2002. The Company
considers Portis&#146; claims to be without merit and intends to
vigorously defend against the allegations.
</DIV>

<P align="center" style="font-size: 10pt;">F-100

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<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Auburndale Power Partners and Cutrale. </I>Calpine
Corporation owns an interest in the Auburndale Power Partners
cogeneration facility (the &#147;APP facility&#148;), which
provides steam to Cutrale, a juice company. The APP facility
currently operates on a &#147;cycling&#148; basis whereby the
plant operates only a portion of the day. During the hours that
the APP facility is not operating, APP does not provide Cutrale
Steam. Cutrale has filed an arbitration claim alleging that they
are entitled to damages due to APP&#146;s failure to provide
them with steam 24 hours a day. APP believes that Cutrale&#146;s
position is not supported by the language of the contract in
place between APP and Cutrale and that it will prevail in
arbitration. Nevertheless, to preserve its positive relationship
with Cutrale, APP will continue to try to resolve the matter
through a commercial settlement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Sargent Electric Company v.&nbsp;Kvaerner-Songer Inc., et al.
v. CCFC; McCarls Inc. v. Kvaerner-Songer Inc., CCFC, et al.
</I>On June&nbsp;18, 2003, Kvaerner-Songer Inc.
(&#147;KSI&#148;) filed a third-party complaint against CCFC in
the Court of Common Pleas of Berks County, Pennsylvania,
alleging material breach of contract and seeking unspecified
damages in an amount in excess of the jurisdictional amount of
$75,000. KSI, along with Kvaerner-Jaddco and Safeco Insurance
Company of America were defendants in a claim filed by Sargent
Electric Company (&#147;Sargent&#148;) in the Court of Common
Pleas of Berks County, Pennsylvania on October&nbsp;11, 2002,
which claim alleged breach of contract stemming from
Sargent&#146;s work as an electrical subcontractor for KSI
during construction of the Ontelaunee project, claiming, among
other things, change in work scope, delays and increased costs.
KSI&#146;s third-party claim against CCFC alleged that CCFC was
liable to KSI to the extent that Sargent was entitled to any
recovery from KSI. In separate submittals to us, as part of our
claims evaluation process, KSI informed us that Sargent had
submitted claims in the amount of $5.7&nbsp;million against KSI
and KSI had submitted claims to us in the amount of
$3.5&nbsp;million. R.L. Bondy Inc. had submitted claims to KSI
in the amount of approximately $1.7&nbsp;million for
miscellaneous work on the Ontelaunee project. On June&nbsp;1,
2004, CCFC filed an answer, new matter and counterclaim
specifically denying KSI&#146;s allegations and requesting that
the third party complaint be dismissed. In addition, CCFC
submitted that KSI had breached its contract with respect to
warranty, commissioning and acceleration matters and requested
restitution in the amount of $7,744,586.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On February&nbsp;3, 2004, McCarls Inc. (&#147;McCarls&#148;)
filed suit against KSI and CCFC for unjust enrichment relating
to certain piping work. McCarls had also filed claims for
promissory estoppel and unjust enrichment against Calpine
Corporation. These claims totaled approximately
$12&nbsp;million. In addition, in April 2004, KSI filed a cross
claim against Calpine and CCFC alleging breach of contract. On
April&nbsp;12, 2004, the Court overruled preliminary objections
filed by CCFC and Calpine in opposition to the complaint.
Following the Court&#146;s ruling, CCFC and Calpine filed a
motion to extend the time to answer the McCarls complaint. The
Court allowed Calpine&#146;s motion to extend and on
May&nbsp;24, 2004 and June&nbsp;1, 2004, Calpine filed its
answer, new matter and counterclaim against McCarls and KSI
respectively. Calpine and CCFC denied the allegations of both
McCarls and KSI, requested that the actions be dismissed and
filed a counterclaim for unjust enrichment, promissory estoppel
and misrepresentation. In addition, Calpine filed a request for
indemnification against KSI and asserted that KSI breached its
contract with respect to warranty, commissioning and
acceleration matters and requested restitution in the amount of
$7,744,586.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On August&nbsp;20, 2004, Sargent filed a companion case
captioned Sargent Electric v. CCFC for Judgment of Foreclosure
of Mechanic&#146;s Lien. The underlying basis for the complaint
stems from the same cause of action set forth above. An answer
was to be filed by October&nbsp;15, but the case was dismissed
with prejudice on September&nbsp;22, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Sargent/ KSI and McCarls cases were settled on
December&nbsp;31, 2004 and January&nbsp;28, 2005 respectively.
Calpine paid a total sum of $14,250,000 to KSI (the general
contractor) as part of the settlement of both cases and KSI paid
a portion to Sargent (the electrical subcontractor) and to
McCarls (the piping subcontractor). Calpine&#146;s settlement
payment was for construction costs of the Ontelaunee project.
</DIV>

<P align="center" style="font-size: 10pt;">F-101

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<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, the Company is involved in various other claims and
legal actions arising out of the normal course of its business.
The Company does not expect that the outcome of these
proceedings will have a material adverse effect on its financial
position or results of operations.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>26.</B></TD>
    <TD>
    <B>Operating Segments</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company is first and foremost an electric generating
company. In pursuing this business strategy, it is the
Company&#146;s long-range objective to produce a portion of its
fuel consumption requirements from its own natural gas reserves
(&#147;equity gas&#148;). The Company&#146;s oil and gas
production and marketing activity has reached the quantitative
criteria to be considered a reportable segment under
SFAS&nbsp;No.&nbsp;131. The Company&#146;s segments are
therefore electric generation and marketing; oil and gas
production and marketing; and corporate and other activities.
Electric generation and marketing includes the development,
acquisition, ownership and operation of power production
facilities, hedging, balancing, optimization, and trading
activity transacted on behalf of the Company&#146;s power
generation facilities. Oil and gas production includes the
ownership and operation of gas fields, gathering systems and gas
pipelines for internal gas consumption, third party sales and
hedging, balancing, optimization, and trading activity
transacted on behalf of the Company&#146;s oil and gas
operations. Corporate activities and other consists primarily of
financing transactions, activities of the Company&#146;s parts
and services businesses, including the Company&#146;s specialty
data center engineering business, which was divested in the
third quarter of 2003, and general and administrative costs.
Certain costs related to company-wide functions are allocated to
each segment, such as interest expense, distributions on HIGH
TIDES prior to October&nbsp;1, 2003, and interest income, which
are allocated based on a ratio of segment assets to total assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company evaluates performance based upon several criteria
including profits before tax. The accounting policies of the
operating segments are the same as those described in
Note&nbsp;2. The financial results for the Company&#146;s
operating segments have been prepared on a basis consistent with
the manner in which the Company&#146;s management internally
disaggregates financial information for the purposes of
assisting in making internal operating decisions.
</DIV>

<P align="center" style="font-size: 10pt;">F-102

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<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Due to the integrated nature of the business segments, estimates
and judgments have been made in allocating certain revenue and
expense items, and reclassifications have been made to prior
periods to present the allocation consistently.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="51%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Electric</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Oil and Gas</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Generation</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Production</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Corporate</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>and Marketing</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>and Marketing</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>and Other</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>(In thousands)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>2004</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revenue from external customers</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9,102,959</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>63,153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>63,776</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9,229,888</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Intersegment revenues</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>208,170</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>208,170</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Depreciation and amortization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>486,927</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>85,225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,048</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>574,200</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas impairment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>202,120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>202,120</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Income) from unconsolidated investments in power projects and
    oil and gas properties</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,525</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,525</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Equipment cancellation and impairment costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42,374</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42,374</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,055,767</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>41,867</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>43,168</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,140,802</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest (income)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(52,207</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,070</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,135</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(56,412</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Income) from repurchase of various issuances of debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(246,949</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(246,949</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other (income) expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(222,515</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,221</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>68,201</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(149,093</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income before taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(818,865</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(207,602</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>309,092</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(717,375</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Provision (benefit) for income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(112,150</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(167,654</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,255</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(276,549</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,956</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>175,409</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>198,365</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25,187,414</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>998,810</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,029,864</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,216,088</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Investments in power projects and oil and gas properties</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>374,032</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>374,032</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Property additions</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,465,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>60,197</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23,760</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,549,357</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>2003</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revenue from external customers</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,773,574</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>59,156</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>38,303</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,871,033</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Intersegment revenues</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>284,951</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>284,951</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Depreciation and amortization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>407,547</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>93,733</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>504,383</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas impairment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,931</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,931</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Income) from unconsolidated investments in power projects and
    oil and gas properties</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(75,804</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(75,804</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Equipment cancellation and impairment cost</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>64,384</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>64,384</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>621,912</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47,177</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>37,218</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>706,307</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest (income)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(34,971</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,652</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,093</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(39,716</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Income) from repurchase of various issuances of debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(278,612</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(278,612</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other (income) expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(44,961</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(47,941</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>46,776</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(46,126</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income before taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>124,627</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>135,459</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(165,481</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>94,605</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Provision (benefit) for income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(23,497</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(45,243</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>77,235</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,495</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23,546</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11,271</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,969</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative effect of a change in accounting principle, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>183,270</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,443</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(884</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>180,943</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>24,041,450</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,823,751</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,438,731</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>27,303,932</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Investments in power plants and oil and gas properties</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>444,150</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>444,150</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Property Additions</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,737,159</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>107,644</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,822</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,860,625</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">F-103

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="51%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Electric</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Oil and Gas</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Generation</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Production</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Corporate</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>and Marketing</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>and Marketing</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>and Other</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>(In thousands)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>2002</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revenue from external customers</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,103,972</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>243,889</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,892</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,349,753</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Intersegment revenues</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>141,263</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>141,263</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Depreciation and amortization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>298,928</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>91,926</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,035</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>398,889</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas impairment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,399</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,399</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Income) from unconsolidated investments in power projects and
    oil and gas properties</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(16,552</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(16,552</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Equipment cancellation and impairment costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>404,737</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>404,737</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>331,066</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,501</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>402,677</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Interest (income)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(34,500</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,182</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5,404</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(43,086</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Income) from repurchase of various issuances of debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(118,020</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(118,020</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Other (income) expense</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(41,043</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,674</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,517</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(34,200</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income before taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>175,960</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6,127</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(132,276</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>37,557</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Provision (benefit) for income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>95,590</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(107,882</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23,126</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,835</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>32,077</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>69,872</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10,053</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>91,896</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Intersegment revenues primarily relate to the use of internally
procured gas for the Company&#146;s power plants. These
intersegment revenues have been included in Total Revenue and
Income before taxes in the oil and gas production and marketing
reporting segment and eliminated in the corporate and other
reporting segment.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Geographic Area Information</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During the year ended December&nbsp;31, 2004, the Company owned
interests in 88&nbsp;operating power plants in the United
States, three operating power plants in Canada and one operating
power plant in the United Kingdom. In addition, the Company had
oil and gas interests in the United States. Geographic revenue
and property, plant and equipment information is based on
physical location of the assets at the end of each period.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="49%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>United States</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Canada</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Europe</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="6" align="center" nowrap><B>(In thousands)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>2004</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total Revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,704,249</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>93,071</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>432,568</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9,229,888</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Property, plant and equipment, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,041,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>498,136</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,096,383</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20,636,394</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>2003</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total Revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,436,176</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>121,219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>313,638</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,871,033</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Property, plant and equipment, net</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,959,466</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>474,280</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,044,904</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,478,650</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>2002</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total Revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,073,283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>70,586</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>205,884</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,349,753</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>27.</B></TD>
    <TD>
    <B>California Power Market</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>California Refund Proceeding.</I> On August&nbsp;2, 2000, the
California Refund Proceeding was initiated by a complaint made
at FERC by San&nbsp;Diego Gas&nbsp;&#38; Electric Company under
Section&nbsp;206 of the Federal Power Act alleging, among other
things, that the markets operated by the California Independent
System Operator (&#147;CAISO&#148;) and the California Power
Exchange (&#147;CalPX&#148;) were dysfunctional. FERC
established a refund effective period of October&nbsp;2, 2000,
to June&nbsp;19, 2001 (the &#147;Refund Period&#148;), for sales
made into those markets.
</DIV>

<P align="center" style="font-size: 10pt;">F-104
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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On December&nbsp;12, 2002, an Administrative Law Judge issued a
Certification of Proposed Finding on California Refund Liability
(&#147;December 12 Certification&#148;) making an initial
determination of refund liability. On March&nbsp;26, 2003, FERC
issued an order (the &#147;March 26 Order&#148;) adopting many
of the findings set forth in the December 12 Certification. In
addition, as a result of certain findings by the FERC staff
concerning the unreliability or misreporting of certain reported
indices for gas prices in California during the Refund Period,
FERC ordered that the basis for calculating a party&#146;s
potential refund liability be modified by substituting a gas
proxy price based upon gas prices in the producing areas plus
the tariff transportation rate for the California gas price
indices previously adopted in the California Refund Proceeding.
The Company believes, based on information that the Company has
analyzed to date, that any refund liability that may be
attributable to it could total approximately $9.9&nbsp;million
(plus interest, if applicable), after taking the appropriate
set-offs for outstanding receivables owed by the CalPX and CAISO
to Calpine. The Company believes it has appropriately reserved
for the refund liability that by its current analysis would
potentially be owed under the refund calculation clarification
in the March 26 Order. The final determination of the refund
liability and the allocation of payment obligations among the
numerous buyers and sellers in the California markets is subject
to further Commission proceedings. It is possible that there
will be further proceedings to require refunds from certain
sellers for periods prior to the originally designated Refund
Period. In addition, the FERC orders concerning the Refund
Period, the method for calculating refund liability and numerous
other issues are pending on appeal before the U.S. Court of
Appeals for the Ninth Circuit. At this time, the Company is
unable to predict the timing of the completion of these
proceedings or the final refund liability. Thus, the impact on
the Company&#146;s business is uncertain.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On April&nbsp;26, 2004, Dynegy Inc. entered into a settlement of
the California Refund Proceeding and other proceedings with
California governmental entities and the three California
investor-owned utilities. The California governmental entities
include the Attorney General, the CPUC, the CDWR, and the EOB.
Also, on April&nbsp;27, 2004, The Williams Companies, Inc.
(&#147;Williams&#148;) entered into a settlement of the
California Refund Proceeding and other proceedings with the
three California investor-owned utilities; previously, Williams
had entered into a settlement of the same matters with the
California governmental entities. The Williams settlement with
the California governmental entities was similar to the
settlement that Calpine entered into with the California
governmental entities on April&nbsp;22, 2002. Calpine&#146;s
settlement resulted in a FERC order issued on March&nbsp;26,
2004, which partially dismissed Calpine from the California
Refund Proceeding to the extent that any refunds are owed for
power sold by Calpine to CDWR or any other agency of the State
of California. On June&nbsp;30, 2004, a settlement conference
was convened at the FERC to explore settlements among additional
parties. On December&nbsp;7, 2004, FERC approved the settlement
of the California Refund Proceeding and other proceedings among
Duke Energy Corporation and its affiliates, the three California
investor-owned utilities, and the California governmental
entities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>FERC Investigation into Western Markets.</I> On
February&nbsp;13, 2002, FERC initiated an investigation of
potential manipulation of electric and natural gas prices in the
western United States. This investigation was initiated as a
result of allegations that Enron and others used their market
position to distort electric and natural gas markets in the
West. The scope of the investigation is to consider whether, as
a result of any manipulation in the short-term markets for
electric energy or natural gas or other undue influence on the
wholesale markets by any party since January&nbsp;1, 2000, the
rates of the long-term contracts subsequently entered into in
the West are potentially unjust and unreasonable. On
August&nbsp;13, 2002, the FERC staff issued the Initial Report
on Company-Specific Separate Proceedings and Generic
Reevaluations; Published Natural Gas Price Data; and Enron
Trading Strategies (the &#147;Initial Report&#148;), summarizing
its initial findings in this investigation. There were no
findings or allegations of wrongdoing by Calpine set forth or
described in the Initial Report. On March&nbsp;26, 2003, the
FERC staff issued a final report in this investigation (the
&#147;Final Report&#148;). In the Final Report, the FERC staff
recommended that FERC issue a show cause order to a number of
companies, including Calpine, regarding certain power scheduling
practices that may have been in violation of the CAISO&#146;s or
CalPX&#146;s tariff. The Final Report also recommended that FERC
modify the basis
</DIV>

<P align="center" style="font-size: 10pt;">F-105

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<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
for determining potential liability in the California Refund
Proceeding discussed above. Calpine believes that it did not
violate these tariffs and that, to the extent that such a
finding could be made, any potential liability would not be
material.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Also, on June&nbsp;25, 2003, FERC issued a number of orders
associated with these investigations, including the issuance of
two show cause orders to certain industry participants. FERC did
not subject Calpine to either of the show cause orders. FERC
also issued an order directing the FERC Office of Markets and
Investigations to investigate further whether market
participants who bid a price in excess of $250&nbsp;per megawatt
hour into markets operated by either the CAISO or the CalPX
during the period of May&nbsp;1, 2000, to October&nbsp;2, 2000,
may have violated CAISO and CalPX tariff prohibitions. No
individual market participant was identified. The Company
believes that it did not violate the CAISO and CalPX tariff
prohibitions referred to by FERC in this order; however, the
Company is unable to predict at this time the final outcome of
this proceeding or its impact on Calpine.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>CPUC Proceeding Regarding QF Contract Pricing for Past
Periods.</I> Our Qualifying Facilities (&#147;QF&#148;)
contracts with PG&#38;E provide that the CPUC has the authority
to determine the appropriate utility &#147;avoided cost&#148; to
be used to set energy payments by determining the short run
avoided cost (&#147;SRAC&#148;) energy price formula. In
mid-2000 our QF facilities elected the option set forth in
Section&nbsp;390 of the California Public Utilities Code, which
provided QFs the right to elect to receive energy payments based
on the CalPX market clearing price instead of the SRAC price
administratively determined by the CPUC. Having elected such
option, the Company&#146;s QF&nbsp;facilities were paid based
upon the CalPX zonal day-ahead clearing price (&#147;CalPX
Price&#148;) for various periods commencing in the summer of
2000 until January&nbsp;19, 2001, when the CalPX ceased
operating a day-ahead market. The CPUC has conducted proceedings
(R.99-11-022) to determine whether the CalPX Price was the
appropriate price for the energy component upon which to base
payments to QFs which had elected the CalPX-based pricing
option. One CPUC Commissioner at one point issued a proposed
decision to the effect that the CalPX Price was the appropriate
energy price to pay QFs who selected the pricing option then
offered by Section&nbsp;390. No final decision, however, has
been issued to date. Therefore, it is possible that the CPUC
could order a payment adjustment based on a different energy
price determination. On January&nbsp;10, 2001, PG&#38;E filed an
emergency motion (the &#147;Emergency Motion&#148;) requesting
that the CPUC issue an order that would retroactively change the
energy payments received by QFs based on CalPX-based pricing for
electric energy delivered during the period commencing during
June 2000 and ending on January&nbsp;18, 2001. On April&nbsp;29,
2004, PG&#38;E, the Utility Reform Network, a consumer advocacy
group, and the Office of Ratepayer Advocates, an independent
consumer advocacy department of the CPUC (collectively, the
&#147;PG&#38;E Parties&#148;), filed a Motion for Briefing
Schedule&nbsp;Regarding True-Up of Payments to QF Switchers (the
&#147;April 2004 Motion&#148;). The April 2004 Motion requests
that the CPUC set a briefing schedule in R.99-11-022 to
determine what is the appropriate price that should be paid to
the QFs that had switched to the CalPX Price. The PG&#38;E
Parties allege that the appropriate price should be determined
using the methodology that has been developed thus far in the
California Refund Proceeding discussed above. Supplemental
pleadings have been filed on the April 2004 Motion, but neither
the CPUC nor the assigned administrative law judge has issued
any rulings with respect to either the April 2004 Motion or the
initial Emergency Motion. The Company believes that the CalPX
Price was the appropriate price for energy payments for its QFs
during this period, but there can be no assurance that this will
be the outcome of the CPUC proceedings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>City of Lodi Agreement.</I> On February&nbsp;9, 2001, the
Company entered into an agreement with the City of Lodi (the
Northern California Power Agency acted as agent on behalf of the
City of Lodi) whereby CES would sell 25&nbsp;MW of ATC fixed
price power plus a 1.7&nbsp;MW day-ahead call option to the City
of Lodi for delivery from January&nbsp;1, 2002, through
December&nbsp;31, 2011. In September 2002 the City of Lodi and
Calpine agreed to terminate this agreement resulting in a
$41.5&nbsp;million gain to the Company. The gain is included in
Other income in the accompanying consolidated financial
statements.
</DIV>

<P align="center" style="font-size: 10pt;">F-106

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Geysers Reliability Must Run Section&nbsp;206 Proceeding.</I>
CAISO, EOB, CPUC, PG&#38;E, San&nbsp;Diego Gas&nbsp;&#38;
Electric Company, and Southern California Edison Company
(collectively referred to as the &#147;Buyers Coalition&#148;)
filed a complaint on November&nbsp;2, 2001 at FERC requesting
the commencement of a Federal Power Act Section&nbsp;206
proceeding to challenge one component of a number of separate
settlements previously reached on the terms and conditions of
&#147;reliability must run&#148; contracts (&#147;RMR
Contracts&#148;) with certain generation owners, including
Geysers Power Company, LLC, which settlements were also
previously approved by FERC. RMR Contracts require the owner of
the specific generation unit to provide energy and ancillary
services when called upon to do so by the ISO to meet local
transmission reliability needs or to manage transmission
constraints. The Buyers Coalition has asked FERC to find that
the availability payments under these RMR Contracts are not just
and reasonable. Geysers Power Company, LLC filed an answer to
the complaint in November 2001. To date, FERC has not
established a Section&nbsp;206 proceeding. The outcome of this
litigation and the impact on the Company&#146;s business cannot
be determined at the present time.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>28.</B></TD>
    <TD>
    <B>Subsequent Events</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On January&nbsp;28, 2005, the Company&#146;s indirect subsidiary
Metcalf Energy Center, LLC obtained a $100.0&nbsp;million,
non-recourse credit facility for the Metcalf Energy Center in
San&nbsp;Jose, CA. Loans extended to Metcalf under the facility
will fund the balance of construction activities for the
602-megawatt, natural gas-fired power plant. The project finance
facility will mature in July 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On January&nbsp;31, 2005, the Company received funding on a
$260.0&nbsp;million offering of Redeemable Preferred Shares, due
on July&nbsp;30, 2005. The Company offered the shares in a
private placement in the United States under Regulation&nbsp;D
under the Securities Act of 1933 and outside of the United
States pursuant to Regulation&nbsp;S under the Securities Act of
1933. The Redeemable Preferred Shares priced at U.S.&nbsp;LIBOR
plus 850&nbsp;basis points, were offered at 99% of par. The
proceeds from the offering of the shares were used in accordance
with the provisions of the Company&#146;s existing bond
indentures.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On March&nbsp;1, 2005, our indirect subsidiary, Calpine
Steamboat Holdings, LLC, closed on a $503.0&nbsp;million
non-recourse project finance facility that will provide
$466.5&nbsp;million to complete the construction of the Mankato
Energy Center (&#147;Mankato&#148;) in Blue Earth County,
Minnesota, and the Freeport Energy center in Freeport, Texas.
The remaining $36.5&nbsp;million of the facility provides a
letter of credit for Mankato that is required to serve as
collateral available to Northern States Power Company if Mankato
does not meet its obligations under the power purchase
agreement. The project finance facility will initially be
structured as a construction loan, converting to a term loan
upon commercial operations of the plants, and will mature in
December 2011. The facility will initially be priced at LIBOR
plus 1.75%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On March&nbsp;31, 2005, Deer Park Energy Center, Limited
Partnership (&#147;Deer Park&#148;), an indirect, wholly-owned
subsidiary of Calpine, entered into an agreement to sell power
to and buy gas from Merrill Lynch Commodities, Inc.
(&#147;MLCI&#148;). The agreement covers 650 MW of Deer
Park&#146;s capacity and deliveries under the agreement will
begin on April&nbsp;1, 2005 and continue through
December&nbsp;31, 2010. Under the terms of the agreement, Deer
Park will sell power to MLCI at a discount to prevailing market
prices at the time the agreement was executed. In exchange for
the discounted pricing, Deer Park received a cash payment of
approximately $195&nbsp;million and expects to receive
additional cash payments as additional power transactions are
executed with discounts to prevailing market prices. The
agreements are derivatives under SFAS&nbsp;No.&nbsp;133 and
because of their discounted pricing will result in the
recognition of a derivative liability. The upfront payments
received by Deer Park from the transaction will be recorded as
cash flow from financing activity in accordance with guidance
contained in SFAS&nbsp;No.&nbsp;149, &#147;Amendment of
Statement 133 on Derivative Instruments and Hedging
Activities.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Subsequent to December&nbsp;31, 2004, the Company repurchased
$31.8&nbsp;million in principal amount of its outstanding
8<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT>%&nbsp;Senior
Notes Due 2011 in exchange for $23.0&nbsp;million in cash plus
accrued interest. The Company also repurchased
$48.7&nbsp;million in principal amount of its outstanding
8<FONT style="font-size: 70%"><SUP>5</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%
Senior Notes Due 2010
</DIV>

<P align="center" style="font-size: 10pt;">F-107
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
in exchange for $35.0&nbsp;million in cash plus accrued
interest. The Company recorded a pre-tax gain on these
transactions in the amount of $22.5&nbsp;million before
write-offs of unamortized deferred financing costs and the
unamortized premiums or discounts.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="5%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD><B>29.</B></TD>
    <TD>
    <B>Quarterly Consolidated Financial Data (unaudited)</B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company&#146;s quarterly operating results have fluctuated
in the past and may continue to do so in the future as a result
of a number of factors, including, but not limited to, the
timing and size of acquisitions, the completion of development
projects, the timing and amount of curtailment of operations
under the terms of certain power sales agreements, the degree of
risk management and trading activity, and variations in levels
of production. Furthermore, the majority of the dollar value of
capacity payments under certain of the Company&#146;s power
sales agreements are received during the months of May through
October.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Company&#146;s common stock has been traded on the New York
Stock Exchange since September&nbsp;19, 1996. There were 2,366
common stockholders of record at December&nbsp;31, 2004. No
dividends were paid for the years ended December&nbsp;31, 2004
and 2003. All share data has been adjusted to reflect the
two-for-one stock split effective June&nbsp;8, 2000, and the
two-for-one stock split effective November&nbsp;14, 2000.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="43%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>Quarter Ended</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>September&nbsp;30,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>June&nbsp;30,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>March&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>(In thousands, except per share amounts)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>2004 Common stock price per share:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    High</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4.98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6.42</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Low</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.87</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.35</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>2004, Restated (for periods through September&nbsp;30,
    2004)</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,336,181</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,557,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,304,215</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,032,292</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas impairment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>201,475</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>645</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Income) from repurchase of various issuances of debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(76,401</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(167,154</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,559</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(835</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gross profit (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(68,314</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>254,403</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>56,851</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>112,152</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) from operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(189,242</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>162,419</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12,586</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>45,117</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before discontinued operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(290,113</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,587</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(58,069</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(107,231</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,416</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>126,538</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29,371</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36,040</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(283,696</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>141,125</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(28,698</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(71,192</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Basic earnings per common share:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before discontinued operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.65</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.14</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.26</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.09</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.64</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.07</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.17</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Diluted earnings per common share:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before discontinued operations and dilutive effect
    of certain trust preferred securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.65</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.14</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.26</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Dilutive effect of certain trust preferred securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before discontinued operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.65</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.14</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.26</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.09</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.64</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.07</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.17</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>2004, As Reported(i)</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,336,181</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,557,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,314,634</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,042,738</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas impairment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>201,475</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>645</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Income) from repurchase of various issuances of debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(76,401</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(167,154</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2,559</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(835</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gross profit (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(68,314</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>254,403</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>67,690</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>120,544</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) from operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(189,242</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>162,418</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,167</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>51,911</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before discontinued operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(258,807</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(47,532</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(28,896</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(94,049</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">F-108

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="43%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>Quarter Ended</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>September&nbsp;30,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>June&nbsp;30,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>March&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>(In thousands, except per share amounts)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>31,507</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>62,551</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>198</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,857</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(227,301</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>15,019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(28,698</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(71,192</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Basic earnings per common share:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before discontinued operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.58</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.11</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.07</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.23</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.06</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.51</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.07</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.17</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Diluted earnings per common share:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before discontinued operations and dilutive effect
    of certain trust preferred securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.58</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.11</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.07</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.23</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Dilutive effect of certain trust preferred securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before discontinued operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.58</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.11</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.07</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.23</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.06</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.51</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.07</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.17</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>2003 Common stock price per share:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    High</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>4.42</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Low</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.28</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4.76</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3.33</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2.51</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>2003, Restated</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,909,598</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,656,588</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,152,478</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,152,368</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas impairment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,931</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Income) from repurchase of various issuances of debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(64,611</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(207,238</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6,763</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gross profit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>117,979</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>338,872</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>162,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>144,486</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) from operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(19,818</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>287,096</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>142,760</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100,360</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before discontinued operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(21,476</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>176,530</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(14,729</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(54,215</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(39,316</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>61,252</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8,637</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,670</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative effect of a change in accounting principle</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>180,414</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>529</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>119,622</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>237,782</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(23,366</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(52,016</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Basic earnings per common share:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before discontinued operations and cumulative
    effect of a change in accounting principle</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.05</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.04</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.14</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.10</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.02</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative effect of a change in accounting principle</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.06</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.14</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Diluted earnings per common share:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before discontinued operations and dilutive effect
    of certain trust preferred securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.05</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.04</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.14</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Dilutive effect of certain trust preferred securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.09</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before discontinued operations and cumulative
    effect of a change in accounting principle</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.05</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.04</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.14</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.10</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.02</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative effect of a change in accounting principle</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.06</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.14</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>2003, As Reported(i)</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total revenue</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,920,575</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,656,588</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,165,308</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,165,933</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas impairment(ii)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,931</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    (Income) from repurchase of various issuances of debt</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(64,611</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(207,238</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6,763</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">F-109

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt;">
<B>CALPINE CORPORATION AND SUBSIDIARIES</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS&nbsp;&#151;&nbsp;(Continued)</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="43%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>Quarter Ended</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>December&nbsp;31,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>September&nbsp;30,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>June&nbsp;30,</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>March&nbsp;31,</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>(In thousands, except per share amounts)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gross profit</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>126,691</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>338,872</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>175,593</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>165,137</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) from operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(20,032</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>287,096</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>153,471</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>119,040</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before discontinued operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(59,827</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>237,701</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(16,375</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(51,538</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(967</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6,991</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,007</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative effect of a change in accounting principle</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>180,414</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>529</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>119,622</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>237,782</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(23,366</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(52,016</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Basic earnings per common share:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before discontinued operations and cumulative
    effect of a change in accounting principle</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.15</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.04</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.14</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.02</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative effect of a change in accounting principle</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.61</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.06</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.14</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Diluted earnings per common share:</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before discontinued operations and dilutive effect
    of certain trust preferred securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.15</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>0.60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.04</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(0.14</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Dilutive effect of certain trust preferred securities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.09</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before discontinued operations and cumulative
    effect of a change in accounting principle</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.15</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.04</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.14</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discontinued operations, net of tax</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.02</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Cumulative effect of a change in accounting principle</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net income (loss)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>0.51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.06</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(0.14</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(i)&nbsp;&nbsp;</TD>
    <TD align="left">
    As reported in 2004 Form&nbsp;10-Q filings for quarters ended
    March&nbsp;31, 2004, June&nbsp;30, 2004 and September&nbsp;30,
    2004. The consolidated financial statements for the three and
    nine months ended September&nbsp;30, 2004 and as of
    September&nbsp;30, 2004 were restated to correct the tax
    provision.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(ii)&nbsp;</TD>
    <TD align="left">
    Oil and gas impairment for quarter ended December&nbsp;31, 2003,
    was previously a component of Depreciation Expense.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">F-110

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>SCHEDULE&nbsp;II VALUATION AND QUALIFYING ACCOUNTS</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="33%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Charged to</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Accumulated</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Balance at</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Other</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Beginning</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Charged to</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Comprehensive</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Balance at</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="2" align="left" nowrap><B>Description</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>of Year</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Expense</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Loss</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Reductions(1)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Other(2)</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>End of Year</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>


<TR style="font-size: 7pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="22" align="center" nowrap><B>(In thousands)</B></TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Year ended December&nbsp;31, 2004</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Allowance for doubtful accounts</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,614</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,412</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(7,828</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>481</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,679</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Reserve for notes receivable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>273</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,637</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,910</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gross reserve for California Refund Liability</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,905</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,905</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Reserve for impairment of investment in Androscoggin Energy
    Center</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Reserve for derivative assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,454</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,825</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>173</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,184</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,268</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Repayment reserve for third-party default on emission reduction
    credits&#146; settlement</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5,850</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred tax asset valuation allowance</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,335</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>43,487</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>62,822</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Year ended December&nbsp;31, 2003</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Allowance for doubtful accounts</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5,955</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,278</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(2,099</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>480</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,614</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Reserve for notes receivable</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>273</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>273</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gross reserve for California Refund Liability</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,205</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,905</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Reserve for derivative assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,452</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,459</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,640</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(32,097</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,454</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gain reserved on certain Enron transactions</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,862</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(17,862</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Repayment reserve for third-party default on emission reduction
    credits&#146; settlement</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,000</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred tax asset valuation allowance</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26,665</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7,330</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,335</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Year Ended December&nbsp;31, 2002</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Allowance for doubtful accounts</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>15,422</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,636</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(11,246</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>143</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5,955</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gross reserve for California Refund Liability</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,700</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Reserve for derivative assets</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,583</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,444</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10,828</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,452</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Gain reserved on certain Enron transactions</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,862</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,862</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Reserve for third-party default on emission reduction credits</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17,677</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(17,677</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Deferred tax asset valuation allowance</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26,665</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26,665</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Represents write-offs of accounts considered to be uncollectible
    and recoveries of amounts previously written off or reserved.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Primarily relates to foreign currency translation adjustments.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">F-111

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>SUPPLEMENTAL OIL AND GAS DISCLOSURES</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(Unaudited)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Oil and Gas Producing Activities</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following disclosures for Calpine Corporation (the
&#147;Company&#148;) are made in accordance with Statement of
Financial Accounting Standards (&#147;SFAS&#148;) No.&nbsp;69,
&#147;Disclosures About Oil and Gas Producing Activities (An
Amendment of FASB Statements&nbsp;19, 25, 33 and 39)&#148;
(&#147;SFAS No.&nbsp;69&#148;). Users of this information should
be aware that the process of estimating quantities of proved,
proved developed and proved undeveloped crude oil and natural
gas reserves is very complex, requiring significant subjective
decisions in the evaluation of all available geological,
engineering and economic data for each reservoir. The data for a
given reservoir may also change substantially over time as a
result of numerous factors including, but not limited to,
additional development activity, evolving production history and
continual reassessment of the viability of production under
varying economic conditions. Consequently, material revisions to
existing reserve estimates occur from time to time. Although
every reasonable effort is made to ensure that reserve estimates
reported represent the most accurate assessments possible, the
significance of the subjective decisions required and variances
in available data for various reservoirs make these estimates
generally less precise than other estimates presented in
connection with financial statement disclosures.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Proved reserves represent estimated quantities of natural gas
and crude oil that geological and engineering data demonstrate,
with reasonable certainty, to be recoverable in future years
from known reservoirs under economic and operating conditions
existing at the time the estimates were made.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Proved developed reserves are proved reserves expected to be
recovered, through wells and equipment in place and under
operating methods being utilized at the time the estimates were
made.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Proved undeveloped reserves are reserves that are expected to be
recovered from new wells on undrilled acreage or from existing
wells where a relatively major expenditure is required for
recompletion. Reserves on undrilled acreage are limited to those
drilling units offsetting productive units that are reasonably
certain of production when drilled. Proved reserves for other
undrilled units can be claimed only where it can be demonstrated
with certainty that there is continuity of production from the
existing productive formation. Estimates for proved undeveloped
reserves are not attributed to any acreage for which an
application of fluid injection or other improved recovery
technique is contemplated, unless such techniques have been
proved effective by actual tests in the area and in the same
reservoir.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Estimates of proved developed and proved undeveloped reserves as
of December&nbsp;31, 2004, 2003 and 2002, were based on
estimates made by Netherland, Sewell&nbsp;&#38; Associates Inc.
(&#147;NSA&#148;) for reserves in the United States and by
Gilbert Laustsen Jung Associates Ltd. (&#147;GLJ&#148;) for 2003
and 2002 reserves in Canada, both independent petroleum
reservoir engineers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our independent engineers are engaged by and provide their
reports to our senior management team at Calpine Fuels Company
(&#147;CFC&#148;), our oil and gas subsidiary, and these
reservoir engineers are independent and are engaged to prepare
the reserves reports independently rather than to audit reports
prepared by CFC management. CFC management represents to the
independent engineers that we have provided all relevant
operating data and documents, and CFC management reviews the
reports to ensure completeness and accuracy. The President of
our CFC subsidiary, in consultation with CFC&#146;s Senior Vice
President, Exploration and Development, makes the final decision
on booked proved reserves by incorporating the proved reserves
from the independent engineers&#146; reports.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Our relevant management controls over proved reserve
attribution, estimation and evaluation include:
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    controls over and processes for the collection and processing of
    all pertinent operating data and documents needed by our
    independent reservoir engineers to estimate our proved reserves;</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    engagement of well qualified and independent reservoir engineers
    for review of our operating data and documents and preparation
    of reserve reports annually in accordance with all SEC reserve
    estimation guidelines;&nbsp;and</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    review by our senior reservoir engineer and his staff of the
    independent reservoir engineers&#146; reserves reports for
    completion and accuracy.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">F-112

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Prior to 2003, all CFC management and staff were under the
Company&#146;s existing Management Incentive Plan
(&#147;MIP&#148;), which did not consider proved reserves in
determining bonus amounts. In 2003, a Fuel&#146;s Incentive Plan
(&#147;FIP&#148;) was put in place whereby 70% of the CFC bonus
compensation was based on oil and gas financial and operational
criteria while 30% continued under the existing MIP plan. Of the
70% oil and gas bonus portion, 25% was related to reserve
additions, 25% to annual production, 25% to earnings before
interest, taxes, depreciation, depletion and amortization, 15%
to finding cost, 5% to lifting cost and 5% to general and
administrative cost budget targets. Proved reserves are only
utilized in the calculation of reserve additions and related
finding cost and include proved reserve revisions of prior
estimates. The President of CFC is not eligible to participate
in the FIP. We believe that our FIP is consistent with industry
standards and is structured and monitored in a manner to assure
compliance with all existing SEC and industry proved reserve
guidelines.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Market prices as of each year-end were used for future sales of
natural gas, crude oil and natural gas liquids. Future operating
costs, production and ad valorem taxes and capital costs were
based on current costs as of each year-end, with no escalation.
There are numerous uncertainties inherent in estimating
quantities of proved reserves and in projecting the future rates
of production and timing of development expenditures. Reserve
data represent estimates only and should not be construed as
being exact. Moreover, the standardized measure should not be
construed as the current market value of the proved oil and gas
reserves or the costs that would be incurred to obtain
equivalent reserves. A market value determination would include
many additional factors including (a)&nbsp;anticipated future
changes in natural gas and crude oil prices, production and
development costs, (b)&nbsp;an allowance for return on
investment, (c)&nbsp;the value of additional reserves, not
considered proved at present, which may be recovered as a result
of further exploration and development activities, and
(d)&nbsp;other business risk.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In accordance with SFAS&nbsp;No.&nbsp;144 &#147;Accounting for
Impairment or Disposal of Long-Lived Assets&#148; (&#147;SFAS
No.&nbsp;144&#148;), United States and Canadian natural gas
reserves and petroleum asset divestments were accounted for as
discontinued operations in preparing SFAS&nbsp;No.&nbsp;69 data.
Discontinued operations is discussed in detail under
Note&nbsp;10 of the Notes to Consolidated Financial Statements.
</DIV>

<DIV style="margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Capitalized Costs Relating to Oil and Gas Producing
    Activities</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth the capitalized costs relating to
the Company&#146;s natural gas and crude oil producing
activities (excluding pipeline and related assets) at
December&nbsp;31, 2004, 2003 and 2002, (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="52%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>Continuing Operations</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2004</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2001</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proved properties</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,095,022</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,084,499</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>909,494</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>853,857</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unproved properties</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,538</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>268,983</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>260,454</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,105,560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,095,782</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,178,477</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,114,311</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Accumulated depreciation, depletion and amortization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(500,722</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(237,374</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(220,376</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(145,467</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net capitalized costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>604,838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>858,408</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>958,101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>968,844</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Company&#146;s share of equity method investees&#146; net
    capitalized costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,160</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,255</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 12pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="55%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap><B>Discontinued Operations</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="14" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2003</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2002</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>2001</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proved properties</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>995,372</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>759,132</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,059,168</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unproved properties</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>51,860</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36,656</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>62,281</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,047,232</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>795,788</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,121,449</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Less: Accumulated depreciation, depletion and amortization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(466,207</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(305,324</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(374,280</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net capitalized costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>581,025</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>490,464</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>747,169</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Company&#146;s share of equity method investees&#146; net
    capitalized costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>53,228</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">F-113

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to SFAS&nbsp;No.&nbsp;143 &#147;Accounting for Asset
Retirement Obligations&#148;, net capitalized cost includes
related asset retirement cost of $6,560 and $13,819 as of
December&nbsp;31, 2004, and December&nbsp;31, 2003, respectively.
</DIV>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Costs Incurred in Oil and Gas Property Acquisition,
    Exploration and Development Activities</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The acquisition, exploration and development costs disclosed in
the following tables are in accordance with definitions in
SFAS&nbsp;No.&nbsp;19, &#147;Financial Accounting and Reporting
by Oil and Gas Producing Companies.&#148; Acquisition costs
include costs incurred to purchase, lease or otherwise acquire
property. Exploration costs include exploration expenses and
additions to exploration wells, including those in progress.
Development costs include additions to production facilities and
equipment, as well as additions to development wells, including
those in progress. The following table sets forth costs incurred
related to the Company&#146;s oil and gas activities for the
years ended December&nbsp;31, 2004, 2003, and 2002, (in
thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>United</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Continuing</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Discontinued</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>States</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Canada</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Operations</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Operations</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>December&nbsp;31, 2004:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Acquisition costs of properties</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proved</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,425</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,425</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,571</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unproved</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,060</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,060</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>105</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Subtotal</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,485</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,485</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,676</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exploration costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,471</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>22,521</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,313</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Development costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42,038</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,554</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47,592</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>37,243</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>68,994</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5,604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>74,598</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>42,232</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Company&#146;s share of equity method investees&#146; costs of
    property acquisition, exploration and development</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,020</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>December&nbsp;31, 2003:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Acquisition costs of properties</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proved</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,178</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,178</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>13,087</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unproved</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,597</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,597</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,324</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Subtotal</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,775</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21,775</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,411</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exploration costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33,364</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>603</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33,967</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,235</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Development costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>41,911</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,199</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55,110</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55,006</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>97,050</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>13,802</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>110,852</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>77,652</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Company&#146;s share of equity method investees&#146; costs of
    property acquisition, exploration and development</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,268</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,268</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>53,039</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>December&nbsp;31, 2002:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Acquisition costs of properties</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Proved</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>3,415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>8,998</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Unproved</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,769</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14,769</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4,615</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Subtotal</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,184</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18,184</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,383</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exploration costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,958</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,818</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,776</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,741</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Development costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44,309</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>11,084</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55,393</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>60,802</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>73,451</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>12,902</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>86,353</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>70,926</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">F-114

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Results of Operations for Oil and Gas Producing
    Activities</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth results of operations for oil and
gas producing activities (excluding pipeline and related
operations) for the years ended December&nbsp;31, 2004, 2003,
and 2002, (in thousands):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="52%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>United States</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Canada</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Total</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>December&nbsp;31, 2004:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas production revenues</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Third-party</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>57,644</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>5,461</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>63,105</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Intercompany</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>190,143</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,458</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>193,601</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total revenues</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>247,787</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,919</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>256,706</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exploration expenses, including dry hole</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,175</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,175</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Production costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>43,016</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,521</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>46,537</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Depreciation, depletion and amortization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>81,590</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>776</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>82,366</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas impairment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>202,120</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>202,120</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(87,114</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,622</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(82,492</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income tax provision (benefit)</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(33,289</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,949</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(31,340</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Results of continuing operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(53,825</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,673</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(51,152</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Results of discontinued operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>7,162</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>14,103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>21,265</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Company&#146;s share of equity method investees&#146; results of
    operations for producing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>324</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>324</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>December&nbsp;31, 2003:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas production revenues</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Third-party</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>56,162</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>10,030</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>66,192</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Intercompany</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>223,532</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>47,379</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>270,911</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total revenues</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>279,694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>57,409</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>337,103</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exploration expenses, including dry hole</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,753</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,443</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,196</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Production costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40,956</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12,384</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>53,340</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Depreciation, depletion and amortization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>72,766</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,823</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>89,589</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas impairment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,931</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,931</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income before income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>146,288</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25,759</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>172,047</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income tax provision</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>55,620</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>16,450</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>72,070</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Results of continuing operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>90,668</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>9,309</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>99,977</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Results of discontinued operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>6,903</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>21,764</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>28,667</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Company&#146;s share of equity method investees&#146; results of
    operations for producing activities</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>187</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="4" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>December&nbsp;31, 2002:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas production revenues</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Third-party</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>37,716</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>35,541</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>73,257</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Intercompany</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>126,833</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,262</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>132,095</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Total revenues</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>164,549</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40,803</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>205,352</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Exploration expenses, including dry hole</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>10,204</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,797</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13,001</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Production costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>33,249</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15,214</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48,463</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Depreciation, depletion and amortization</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>67,060</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23,631</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>90,691</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Oil and gas impairment</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,399</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,399</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income (loss) before income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>50,637</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(839</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>49,798</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Income tax provision</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19,749</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5,708</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25,457</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="4">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Results of continuing operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>30,888</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(6,547</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>24,341</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Results of discontinued operations</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>(330</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>28,281</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>27,951</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The results of operations for oil and gas producing activities
exclude interest charges and general corporate expenses.
</DIV>

<P align="center" style="font-size: 10pt;">F-115

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Net Proved and Proved Developed Reserve Summary</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth the Company&#146;s net proved and
proved developed reserves at December&nbsp;31 for each of the
three years in the period ended December&nbsp;31, 2004, and the
changes in the net proved reserves for each of the three years
in the period then ended as estimated by the independent
petroleum consultants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
During 2004, the Company revised downward its estimate of
continuing proved reserves by a total of approximately
58&nbsp;Bcfe or 12%. Approximately 69% of the total revision was
attributable to the downward revision of the Company&#146;s
estimate of proved reserves in the Company&#146;s South Texas
fields. The downward revisions of the Company&#146;s estimates
were due to information received from production results and
drilling activity that occurred during 2004. As a result of the
decreases in proved undeveloped reserves, a non-cash impairment
charge of approximately $202.1&nbsp;million was recorded for the
year ended December&nbsp;31, 2004, to the &#147;Oil and gas
impairment&#148; line of the Consolidated Statement of
Operations. For the years ended December&nbsp;31, 2003 and 2002,
the impairment charge recorded to the same line item was
$2.9&nbsp;million and $3.4&nbsp;million, respectively.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>United</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Continuing</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Discontinued</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>States</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Canada</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Operations</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Operations</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Natural gas (Bcf)(1):</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net proved reserves at December&nbsp;31, 2001</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>509</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>72</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>581</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>454</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revisions of previous estimates</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(24</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(20</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchases in place</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Extensions, discoveries and other additions</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales in place</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(122</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Production</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(47</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(59</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(40</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net proved reserves at December&nbsp;31, 2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>479</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>316</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revisions of previous estimates</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(21</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(22</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(25</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchases in place</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Extensions, discoveries and other additions</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>21</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales in place</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(60</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(65</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Production</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(50</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(58</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(28</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net proved reserves at December&nbsp;31, 2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>467</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>289</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revisions of previous estimates</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(60</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(60</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchases in place</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Extensions, discoveries and other additions</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>5</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales in place</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(14</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(296</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Production</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(37</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(37</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(18</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net proved reserves at December&nbsp;31, 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>374</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>374</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Natural gas liquids and crude oil (MBbl)(2)(3):</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net proved reserves at December&nbsp;31, 2001</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,640</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,986</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,626</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>35,564</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revisions of previous estimates</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>269</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,192</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,461</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(414</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchases in place</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Extensions, discoveries and other additions</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>165</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>214</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>796</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales in place</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(23,967</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Production</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(543</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(655</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1,198</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,080</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net proved reserves at December&nbsp;31, 2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3,531</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,572</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,899</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revisions of previous estimates</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(338</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(254</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(592</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(647</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchases in place</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Extensions, discoveries and other additions</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>133</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>133</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>822</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales in place</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,775</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3,783</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(118</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Production</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(434</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(542</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(976</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(960</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net proved reserves at December&nbsp;31, 2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,902</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,903</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8,008</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revisions of previous estimates</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>260</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(929</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchases in place</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Extensions, discoveries and other additions</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>422</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales in place</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(3</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6,862</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Production</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(600</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(600</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(639</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net proved reserves at December&nbsp;31, 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,611</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,611</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Billion cubic feet or billion cubic feet equivalent, as
    applicable.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">F-116
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="50%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>United</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Continuing</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Discontinued</B></TD><TD></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>States</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Canada</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Operations</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Operations</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>(Bcfe)(1) equivalents(4):</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net proved reserves at December&nbsp;31, 2001</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>530</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>96</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>626</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>668</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revisions of previous estimates</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(23</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(17</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchases in place</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Extensions, discoveries and other additions</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales in place</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(266</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Production</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(50</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(12</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(62</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(63</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net proved reserves at December&nbsp;31, 2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>499</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>109</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>608</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>370</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revisions of previous estimates</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(23</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(1</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(24</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(30</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchases in place</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>9</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Extensions, discoveries and other additions</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>26</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales in place</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(83</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(88</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Production</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(52</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(63</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(35</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net proved reserves at December&nbsp;31, 2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>472</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>486</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>335</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revisions of previous estimates</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(58</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(58</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchases in place</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Extensions, discoveries and other additions</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales in place</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(2</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(14</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(16</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(335</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Production</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(41</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(41</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(22</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net proved reserves at December&nbsp;31, 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>389</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>389</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Company&#146;s proportional interest in reserves of investees
    accounted for by the equity method&nbsp;&#151; December&nbsp;31,
    2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Net proved developed reserves:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Natural gas (Bcf)(1)</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    December&nbsp;31, 2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>318</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>393</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>247</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    December&nbsp;31, 2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>306</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>318</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>227</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    December&nbsp;31, 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>256</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>256</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Natural gas liquids and crude oil (MBbl)(2)(3)</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    December&nbsp;31, 2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,030</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>4,271</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,301</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7,831</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    December&nbsp;31, 2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,508</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>219</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,727</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6,963</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    December&nbsp;31, 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,402</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,402</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>Bcf(1) equivalents(4)</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    December&nbsp;31, 2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>330</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>430</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>295</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    December&nbsp;31, 2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>315</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>328</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>268</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    December&nbsp;31, 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>264</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>264</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Billion cubic feet or billion cubic feet equivalent, as
    applicable.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Thousand barrels.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    Includes crude oil, condensate and natural gas liquids.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    Natural gas liquids and crude oil volumes have been converted to
    equivalent gas volumes using a conversion factor of six cubic
    feet of gas to one barrel of natural gas liquids and crude oil.</TD>
</TR>

</TABLE>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Standardized Measure of Discounted Future Net Cash Flows
    Relating to Proved Oil and Gas Reserves</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following information has been developed utilizing
procedures prescribed by SFAS&nbsp;No.&nbsp;69 and based on
natural gas and crude oil reserve and production volumes
estimated by the independent petroleum reservoir engineers. This
information may be useful for certain comparison purposes but
should not be solely relied upon in evaluating the Company or
its performance. Further, information contained in the following
table should not be considered as representative of realistic
assessments of future cash flows, nor should the standardized
measure of discounted future net cash flows be viewed as
representative of the current value of the Company&#146;s oil
and gas assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The future cash flows presented below are based on sales prices,
cost rates and statutory income tax rates in existence as of the
date of the projections. It is expected that material revisions
to some estimates of natural gas and crude oil reserves may
occur in the future, development and production of the reserves
may occur in periods other than those assumed, and actual prices
realized and costs incurred may vary significantly from those
used. Income tax expense, for both the United States and Canada,
has been computed using expected future tax rates and giving
effect to tax deductions and credits available, under current
laws, and which relate to oil and gas producing activities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Management does not rely upon the following information in
making investment and operating decisions. Such decisions are
based upon a wide range of factors, including estimates of
probable as well as proved
</DIV>

<P align="center" style="font-size: 10pt;">F-117

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt;">
reserves and varying price and cost assumptions considered more
representative of a range of possible economic conditions that
may be anticipated.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth the standardized measure of
discounted future net cash flows from projected production of
the Company&#146;s natural gas and crude oil reserves for the
years ended December&nbsp;31, 2004, 2003, and 2002, (in
millions):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="53%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>United</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Continuing</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Discontinued</B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>States</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Canada</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Operations</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B>Operations</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>December&nbsp;31, 2004:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Future cash inflows</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,427</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,427</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Future production costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(568</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(568</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Future development costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(190</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(190</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Future net cash flows before income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,669</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,669</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Future income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(474</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(474</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Future net cash flows</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,195</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,195</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discount to present value at 10% annual rate</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(542</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(542</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Standardized measure of discounted future net cash flows
    relating to proved gas, natural gas liquids and crude oil
    reserves</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>653</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>653</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Company&#146;s share of equity method investees&#146;
    standardized measure of discounted future net cash flows</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to SFAS&nbsp;No.&nbsp;143, future development costs in
2004 includes future cash outflows related to the settlement of
asset retirement obligations within the United States of
$11&nbsp;million.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="53%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>United</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Continuing</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Discontinued</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>States</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Canada</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Operations</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Operations</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>December&nbsp;31, 2003:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Future cash inflows</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,752</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,814</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,784</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Future production costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(563</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(14</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(577</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(573</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Future development costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(200</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(210</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(118</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Future net cash flows before income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,989</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,027</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,093</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Future income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(553</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(8</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(561</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(240</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Future net cash flows</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,436</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,466</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>853</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discount to present value at 10% annual rate</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(661</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(7</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(668</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(310</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Standardized measure of discounted future net cash flows
    relating to proved gas, natural gas liquids and crude oil
    reserves</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>775</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>798</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>543</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Company&#146;s share of equity method investees&#146;
    standardized measure of discounted future net cash flows</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>18</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">F-118

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Pursuant to SFAS&nbsp;No.&nbsp;143, future development costs in
2003 includes future cash outflows related to the settlement of
asset retirement obligations within the United States of
$45&nbsp;million and within Canada of $61&nbsp;million.
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="62%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B>December&nbsp;31, 2002:</B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Future cash inflows</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,391</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>439</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>2,830</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>1,537</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Future production costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(538</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(95</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(633</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(434</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Future development costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(156</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(167</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(53</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Future net cash flows before income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,697</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2,030</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,050</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Future income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(480</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(110</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(590</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(337</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Future net cash flows</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,217</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>223</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>1,440</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>713</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Discount to present value at 10% annual rate</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(537</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(77</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(614</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(280</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Standardized measure of discounted future net cash flows
    relating to proved gas, natural gas liquids and crude oil
    reserves</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>146</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>826</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>433</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">F-119

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I>Changes in Standardized Measure of Discounted Future Net
    Cash Flows</I></B></TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following table sets forth the changes in the standardized
measure of discounted future net cash flows at December&nbsp;31,
2004, 2003, and 2002 (in millions):
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="52%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>United</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Continuing</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Discontinued</B></TD><TD></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>States</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Canada</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Operations</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap><B>Operations</B></TD><TD></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance, December&nbsp;31, 2001</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>402</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>63</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>465</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>514</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales and transfers of gas, natural gas liquids and crude oil
    produced, net of production costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(131</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(26</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(157</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(126</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net changes in prices and production costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>491</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>63</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>554</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>615</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Extensions, discoveries, additions and improved recovery, net of
    related costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>96</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>96</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>68</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Development costs incurred</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>36</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revisions of previous quantity estimates and development costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(81</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(66</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(10</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accretion of discount</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net change in income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(173</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(23</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(196</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(50</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchases of reserves in place</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales of reserves in place</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(521</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Changes in timing and other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>51</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(55</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance, December&nbsp;31, 2002</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>680</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>146</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>826</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>433</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales and transfers of gas, natural gas liquids and crude oil
    produced, net of production costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(239</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(45</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(284</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(119</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net changes in prices and production costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>248</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(27</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>221</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>17</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Extensions, discoveries, additions and improved recovery, net of
    related costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>117</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>117</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>60</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Development costs incurred</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>41</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revisions of previous quantity estimates and development costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(80</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(11</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(91</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(69</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accretion of discount</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>68</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>44</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net change in income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(28</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>95</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchases of reserves in place</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>19</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales of reserves in place</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(6</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(124</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(130</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(42</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Changes in timing and other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(35</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(27</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>64</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance, December&nbsp;31, 2003</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>775</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>798</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>543</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales and transfers of gas, natural gas liquids and crude oil
    produced, net of production costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(205</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(210</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(81</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net changes in prices and production costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>128</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Extensions, discoveries, additions and improved recovery, net of
    related costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>15</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Development costs incurred</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>29</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Revisions of previous quantity estimates and development costs</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(193</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(193</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>6</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Accretion of discount</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>78</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>71</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Net change in income taxes</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>60</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Purchases of reserves in place</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>3</TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Sales of reserves in place</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(5</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(23</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(28</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(733</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Changes in timing and other</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(4</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>(41</TD>
    <TD align="left" valign="bottom" nowrap>)</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    Balance, December&nbsp;31, 2004</DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>653</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>653</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right" valign="bottom" nowrap>&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>

</TR>

</TABLE>
</CENTER>

<P align="center" style="font-size: 10pt;">F-120
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>EXHIBIT INDEX</B>
</DIV>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; margin-top: 6pt; ">

<TR style="font-size: 1pt;">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3" align="center" nowrap><B>Exhibit</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3" align="center" nowrap><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Purchase and Sale Agreement, dated July&nbsp;1, 2004, among
    Calpine Corporation (the &#147;Company&#148;), Calpine Natural
    Gas L.P. and Pogo Producing Company.(a)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2</TD>
    <TD align="left" valign="top" nowrap>.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Purchase and Sale Agreement, dated July&nbsp;1, 2004, among the
    Company, Calpine Natural Gas L.P. and Bill Barrett
    Corporation.(a)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>2</TD>
    <TD align="left" valign="top" nowrap>.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Asset and Trust&nbsp;Unit Purchase and Sale Agreement, dated
    July&nbsp;1, 2004, among the Company, Calpine Canada Natural Gas
    Partnership, Calpine Energy Holdings Limited, PrimeWest Gas
    Corp. and PrimeWest Energy Trust.(a)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amended and Restated Certificate of Incorporation of the
    Company, as amended through June&nbsp;2, 2004.(b)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>3</TD>
    <TD align="left" valign="top" nowrap>.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amended and Restated By-laws of the Company.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.1.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture dated as of May&nbsp;16, 1996, between the Company and
    U.S.&nbsp;Bank (as successor trustee to Fleet National Bank), as
    Trustee, including form of Notes.(d)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.1.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    First Supplemental Indenture dated as of August&nbsp;1, 2000,
    between the Company and U.S.&nbsp;Bank (as successor trustee to
    Fleet National Bank), as Trustee.(e)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.1.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Second Supplemental Indenture dated as of April&nbsp;26, 2004,
    between the Company and U.S.&nbsp;Bank (as successor trustee to
    Fleet National Bank), as Trustee.(f)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.2.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture dated as of July&nbsp;8, 1997, between the Company and
    The Bank of New York, as Trustee, including form of Notes.(g)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.2.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Supplemental Indenture dated as of September&nbsp;10, 1997,
    between the Company and The Bank of New York, as Trustee.(h)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.2.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Second Supplemental Indenture dated as of July&nbsp;31, 2000,
    between the Company and The Bank of New York, as Trustee.(e)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.2.4</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Third Supplemental Indenture dated as of April&nbsp;26, 2004,
    between the Company and The Bank of New York, as Trustee.(f)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.3.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture dated as of March&nbsp;31, 1998, between the Company
    and The Bank of New York, as Trustee, including form of Notes.(i)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.3.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Supplemental Indenture dated as of July&nbsp;24, 1998, between
    the Company and The Bank of New&nbsp;York, as Trustee.(i)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.3.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Second Supplemental Indenture dated as of July&nbsp;31, 2000,
    between the Company and The Bank of New York, as Trustee.(e)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.3.4</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Third Supplemental Indenture dated as of April&nbsp;26, 2004,
    between the Company and The Bank of New York, as Trustee.(f)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.4.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture dated as of March&nbsp;29, 1999, between the Company
    and The Bank of New York, as Trustee, including form of Notes.(j)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.4.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    First Supplemental Indenture dated as of July&nbsp;31, 2000,
    between the Company and The Bank of New York, as Trustee.(e)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.4.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Second Supplemental Indenture dated as of April&nbsp;26, 2004,
    between the Company and The Bank of New York, as Trustee.(f)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.5.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture dated as of March&nbsp;29, 1999, between the Company
    and The Bank of New York, as Trustee, including form of Notes.(j)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.5.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    First Supplemental Indenture dated as of July&nbsp;31, 2000,
    between the Company and The Bank of New York, as Trustee.(e)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.5.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Second Supplemental Indenture dated as of April&nbsp;26, 2004,
    between the Company and The Bank of New York, as Trustee.(f)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.6.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture dated as of August&nbsp;10, 2000, between the Company
    and Wilmington Trust Company, as Trustee.(k)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.6.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    First Supplemental Indenture dated as of September&nbsp;28,
    2000, between the Company and Wilmington Trust Company, as
    Trustee.(e)</TD>
</TR>

</TABLE>
</CENTER>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Exhibit</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.6.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Second Supplemental Indenture dated as of September&nbsp;30,
    2004, between the Company and Wilmington Trust Company, as
    Trustee.(l)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.7.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amended and Restated Indenture dated as of October&nbsp;16,
    2001, between Calpine Canada Energy Finance ULC and Wilmington
    Trust Company, as Trustee.(m)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.7.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Guarantee Agreement dated as of April&nbsp;25, 2001, between the
    Company and Wilmington Trust Company, as Trustee.(n)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.7.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    First Amendment, dated as of October&nbsp;16, 2001, to Guarantee
    Agreement dated as of April&nbsp;25, 2001, between the Company
    and Wilmington Trust Company, as Trustee.(m)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.8.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture dated as of October&nbsp;18, 2001, between Calpine
    Canada Energy Finance&nbsp;II ULC and Wilmington Trust Company,
    as Trustee.(m)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.8.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    First Supplemental Indenture, dated as of October&nbsp;18, 2001,
    between Calpine Canada Energy Finance&nbsp;II ULC and Wilmington
    Trust Company, as Trustee.(m)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.8.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Guarantee Agreement dated as of October&nbsp;18, 2001, between
    the Company and Wilmington Trust Company, as Trustee.(m)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.8.4</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    First Amendment, dated as of October&nbsp;18, 2001, to Guarantee
    Agreement dated as of October&nbsp;18, 2001, between the Company
    and Wilmington Trust Company, as Trustee.(m)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.9</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture, dated as of June&nbsp;13, 2003, between Power
    Contract Financing, L.L.C. and Wilmington Trust Company, as
    Trustee, Accounts&nbsp;Agent, Paying Agent and Registrar,
    including form of Notes.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.10</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture, dated as of July&nbsp;16, 2003, between the Company
    and Wilmington Trust Company, as Trustee, including form of
    Notes.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.11</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture, dated as of July&nbsp;16, 2003, between the Company
    and Wilmington Trust Company, as Trustee, including form of
    Notes.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.12</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture, dated as of July&nbsp;16, 2003, between the Company
    and Wilmington Trust Company, as Trustee, including form of
    Notes.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.13.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture, dated as of August&nbsp;14, 2003, among Calpine
    Construction Finance Company, L.P., CCFC Finance Corp., each of
    Calpine Hermiston, LLC, CPN Hermiston, LLC and Hermiston Power
    Partnership, as Guarantors, and Wilmington Trust Company, as
    Trustee, including form of Notes.(p)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.13.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Supplemental Indenture, dated as of September&nbsp;18, 2003,
    among Calpine Construction Finance Company, L.P., CCFC Finance
    Corp., each of Calpine Hermiston, LLC, CPN Hermiston, LLC and
    Hermiston Power Partnership, as Guarantors, and Wilmington Trust
    Company, as Trustee.(p)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.13.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Second Supplemental Indenture, dated as of January&nbsp;14,
    2004, among Calpine Construction Finance Company, L.P., CCFC
    Finance Corp., each of Calpine Hermiston, LLC, CPN Hermiston,
    LLC and Hermiston Power Partnership, as Guarantors, and
    Wilmington Trust Company, as Trustee.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.13.4</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Third Supplemental Indenture, dated as of March&nbsp;5, 2004,
    among Calpine Construction Finance Company, L.P., CCFC Finance
    Corp., each of Calpine Hermiston, LLC, CPN Hermiston, LLC and
    Hermiston Power Partnership, as Guarantors, and Wilmington Trust
    Company, as Trustee.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.14</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture, dated as of September&nbsp;30, 2003, among Gilroy
    Energy Center, LLC, each of Creed Energy Center, LLC and Goose
    Haven Energy Center, as Guarantors, and Wilmington Trust
    Company, as Trustee and Collateral Agent, including form of
    Notes.(p)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.15</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture, dated as of November&nbsp;18, 2003, between the
    Company and Wilmington Trust Company, as Trustee, including form
    of Notes.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.16.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amended and Restated Indenture, dated as of March&nbsp;12, 2004,
    between the Company and Wilmington Trust Company, including form
    of Notes.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.16.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Registration Rights Agreement, dated as of November&nbsp;14,
    2003, between the Company and Deutsche Bank Securities, Inc., as
    Representative of the Initial Purchasers.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.17.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    First Priority Indenture, dated as of March&nbsp;23, 2004, among
    Calpine Generating Company, LLC, CalGen Finance Corp. and
    Wilmington Trust&nbsp;FSB, as Trustee, including form of
    Notes.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.17.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Second Priority Indenture, dated as of March&nbsp;23, 2004,
    among Calpine Generating Company, LLC, CalGen Finance Corp. and
    Wilmington Trust&nbsp;FSB, as Trustee, including form of
    Notes.(q)</TD>
</TR>

</TABLE>
</CENTER>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Exhibit</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.17.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Third Priority Indenture, dated as of March&nbsp;23, 2004, among
    Calpine Generating Company, LLC, CalGen Finance Corp. and
    Wilmington Trust&nbsp;FSB, as Trustee, including form of
    Notes.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.18</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture, dated as of June&nbsp;2, 2004, between Power Contract
    Financing&nbsp;III, LLC and Wilmington Trust Company, as
    Trustee, Accounts&nbsp;Agent, Paying Agent and Registrar,
    including form of Notes.(b)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.19</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture, dated as of September&nbsp;30, 2004, between the
    Company and Wilmington Trust Company, as Trustee, including form
    of Notes.(r)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.20.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amended and Restated Rights Agreement, dated as of
    September&nbsp;19, 2001, between Calpine Corporation and
    Equiserve Trust Company, N.A., as Rights Agent.(s)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.20.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amendment No.&nbsp;1 to Rights Agreement, dated as of
    September&nbsp;28, 2004, between Calpine Corporation and
    Equiserve Trust Company, N.A., as Rights Agent.(l)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.20.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amendment No.&nbsp;2 to Rights Agreement, dated as of
    March&nbsp;18, 2005, between Calpine Corporation and Equiserve
    Trust Company, N.A., as Rights Agent.(bb)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.21</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Memorandum and Articles of Association of Calpine (Jersey)
    Limited.(t)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.22</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Memorandum and Articles of Association of Calpine European
    Funding (Jersey) Limited.(t)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.23</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    High Tides&nbsp;III</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.23.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amended and Restated Certificate of Trust of Calpine Capital
    Trust&nbsp;III, a Delaware statutory trust, filed July&nbsp;19,
    2000.(u)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.23.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Declaration of Trust of Calpine Capital Trust&nbsp;III dated
    June&nbsp;28, 2000, among the Company, as Depositor and
    Debenture Issuer, The Bank of New York (Delaware), as Delaware
    Trustee, The Bank of New York, as Property Trustee and the
    Administrative Trustees named therein.(u)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.23.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amendment No.&nbsp;1 to the Declaration of Trust of Calpine
    Capital Trust&nbsp;III dated July&nbsp;19, 2000, among the
    Company, as Depositor and Debenture Issuer, Wilmington Trust
    Company, as Delaware Trustee, Wilmington Trust Company, as
    Property Trustee, and the Administrative Trustees named
    therein.(u)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.23.4</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture dated as of August&nbsp;9, 2000, between the Company
    and Wilmington Trust Company, as Trustee.(u)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.23.5</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Remarketing Agreement dated as of August&nbsp;9, 2000, among the
    Company, Calpine Capital Trust&nbsp;III, Wilmington Trust
    Company, as Tender Agent, and Credit Suisse First Boston
    Corporation, as Remarketing Agent.(u)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.23.6</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Registration Rights Agreement dated as August&nbsp;9, 2000,
    between the Company, Calpine Capital Trust&nbsp;III, Credit
    Suisse First Boston Corporation, ING Barings LLC and CIBC World
    Markets Corp.(u)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.23.7</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amended and Restated Declaration of Trust of Calpine Capital
    Trust&nbsp;III dated as of August&nbsp;9, 2000, the Company, as
    Depositor and Debenture Issuer, Wilmington Trust Company, as
    Delaware Trustee, Wilmington Trust Company, as Property Trustee,
    and the Administrative Trustees named therein, including the
    form of Preferred Security and form of Common Security.(u)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.23.8</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Preferred Securities Guarantee Agreement dated as of
    August&nbsp;9, 2000, between the Company, as Guarantor, and
    Wilmington Trust Company, as Guarantee Trustee.(u)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.24</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Pass Through Certificates (Tiverton and Rumford)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.24.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Pass Through Trust&nbsp;Agreement dated as of December&nbsp;19,
    2000, among Tiverton Power Associates Limited Partnership,
    Rumford Power Associates Limited Partnership and State Street
    Bank and Trust Company of Connecticut, National Association, as
    Pass Through Trustee, including the form of Certificate.(e)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.24.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Participation Agreement dated as of December&nbsp;19, 2000,
    among the Company, Tiverton Power Associates Limited
    Partnership, Rumford Power Associates Limited Partnership, PMCC
    Calpine New England Investment LLC, PMCC Calpine NEIM LLC, State
    Street Bank and Trust Company of Connecticut, National
    Association, as Indenture Trustee, and State Street Bank and
    Trust Company of Connecticut, National Association, as Pass
    Through Trustee.(e)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.24.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
    Interpretation.(e)</TD>
</TR>

</TABLE>
</CENTER>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Exhibit</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.24.4</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Trust, Mortgage and Security Agreement, dated as of
    December&nbsp;19, 2000, between PMCC Calpine New England
    Investment LLC and State Street Bank and Trust Company of
    Connecticut, National Association, as Indenture Trustee,
    including the forms of Lessor Notes.(e)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.24.5</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (Tiverton) dated as of
    December&nbsp;19, 2000, by the Company, as Guarantor, to PMCC
    Calpine New England Investment LLC, PMCC Calpine NEIM LLC, State
    Street Bank and Trust Company of Connecticut, as Indenture
    Trustee, and State Street Bank and Trust Company of Connecticut,
    as Pass Through Trustee.(e)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.24.6</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (Rumford) dated as of
    December&nbsp;19, 2000, by the Company, as Guarantor, to PMCC
    Calpine New England Investment LLC, PMCC Calpine NEIM LLC, State
    Street Bank and Trust Company of Connecticut, as Indenture
    Trustee, and State Street Bank and Trust Company of Connecticut,
    as Pass Through Trustee.(e)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Pass Through Certificates (South Point, Broad River and RockGen)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Pass Through Trust&nbsp;Agreement A dated as of October&nbsp;18,
    2001, among South Point Energy Center, LLC, Broad River Energy
    LLC, RockGen Energy LLC and State Street Bank and Trust Company
    of Connecticut, National Association, as Pass Through Trustee,
    including the form of 8.400% Pass Through Certificate,
    Series&nbsp;A.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Pass Through Trust&nbsp;Agreement B dated as of October&nbsp;18,
    2001, among South Point Energy Center, LLC, Broad River Energy
    LLC, RockGen Energy LLC and State Street Bank and Trust Company
    of Connecticut, National Association, as Pass Through Trustee,
    including the form of 9.825% Pass Through Certificate,
    Series&nbsp;B.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Participation Agreement (SP-1) dated as of October&nbsp;18,
    2001, among the Company, South Point Energy Center, LLC, South
    Point OL-1, LLC, Wells Fargo Bank Northwest, National
    Association, as Lessor Manager, SBR OP-1, LLC, State Street Bank
    and Trust Company of Connecticut, National Association, as
    Indenture Trustee, and State Street Bank and Trust Company of
    Connecticut, National Association, as Pass Through Trustee,
    including Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
    Interpretation.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.4</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Participation Agreement (SP-2) dated as of October&nbsp;18,
    2001, among the Company, South Point Energy Center, LLC, South
    Point OL-2, LLC, Wells Fargo Bank Northwest, National
    Association, as Lessor Manager, SBR OP-2, LLC, State Street Bank
    and Trust Company of Connecticut, National Association, as
    Indenture Trustee, and State Street Bank and Trust Company of
    Connecticut, National Association, as Pass Through Trustee,
    including Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
    Interpretation.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.5</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Participation Agreement (SP-3) dated as of October&nbsp;18,
    2001, among the Company, South Point Energy Center, LLC, South
    Point OL-3, LLC, Wells Fargo Bank Northwest, National
    Association, as Lessor Manager, SBR OP-3, LLC, State Street Bank
    and Trust Company of Connecticut, National Association, as
    Indenture Trustee, and State Street Bank and Trust Company of
    Connecticut, National Association, as Pass Through Trustee,
    including Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
    Interpretation.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.6</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Participation Agreement (SP-4) dated as of October&nbsp;18,
    2001, among the Company, South Point Energy Center, LLC, South
    Point OL-4, LLC, Wells Fargo Bank Northwest, National
    Association, as Lessor Manager, SBR OP-4, LLC, State Street Bank
    and Trust Company of Connecticut, National Association, as
    Indenture Trustee, and State Street Bank and Trust Company of
    Connecticut, National Association, as Pass Through Trustee,
    including Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
    Interpretation.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.7</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Participation Agreement (BR-1) dated as of October&nbsp;18,
    2001, among the Company, Broad River Energy LLC, Broad River
    OL-1, LLC, Wells Fargo Bank Northwest, National Association, as
    Lessor Manager, SBR OP-1, LLC, State Street Bank and Trust
    Company of Connecticut, National Association, as Indenture
    Trustee, and State Street Bank and Trust Company of Connecticut,
    National Association, as Pass Through Trustee, including
    Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
    Interpretation.(c)</TD>
</TR>

</TABLE>
</CENTER>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Exhibit</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.8</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Participation Agreement (BR-2) dated as of October&nbsp;18,
    2001, among the Company, Broad River Energy LLC, Broad River
    OL-2, LLC, Wells Fargo Bank Northwest, National Association, as
    Lessor Manager, SBR OP-2, LLC, State Street Bank and Trust
    Company of Connecticut, National Association, as Indenture
    Trustee, and State Street Bank and Trust Company of Connecticut,
    National Association, as Pass Through Trustee, including
    Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
    Interpretation.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.9</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Participation Agreement (BR-3) dated as of October&nbsp;18,
    2001, among the Company, Broad River Energy LLC, Broad River
    OL-3, LLC, Wells Fargo Bank Northwest, National Association, as
    Lessor Manager, SBR OP-3, LLC, State Street Bank and Trust
    Company of Connecticut, National Association, as Indenture
    Trustee, and State Street Bank and Trust Company of Connecticut,
    National Association, as Pass Through Trustee, including
    Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
    Interpretation.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.10</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Participation Agreement (BR-4) dated as of October&nbsp;18,
    2001, among the Company, Broad River Energy LLC, Broad River
    OL-4, LLC, Wells Fargo Bank Northwest, National Association, as
    Lessor Manager, SBR OP-4, LLC, State Street Bank and Trust
    Company of Connecticut, National Association, as Indenture
    Trustee, and State Street Bank and Trust Company of Connecticut,
    National Association, as Pass Through Trustee, including
    Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
    Interpretation.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.11</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Participation Agreement (RG-1) dated as of October&nbsp;18,
    2001, among the Company, RockGen Energy LLC, RockGen OL-1, LLC,
    Wells Fargo Bank Northwest, National Association, as Lessor
    Manager, SBR OP-1, LLC, State Street Bank and Trust Company of
    Connecticut, National Association, as Indenture Trustee, and
    State Street Bank and Trust Company of Connecticut, National
    Association, as Pass Through Trustee, including
    Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
    Interpretation.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.12</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Participation Agreement (RG-2) dated as of October&nbsp;18,
    2001, among the Company, RockGen Energy LLC, RockGen OL-2, LLC,
    Wells Fargo Bank Northwest, National Association, as Lessor
    Manager, SBR OP-2, LLC, State Street Bank and Trust Company of
    Connecticut, National Association, as Indenture Trustee, and
    State Street Bank and Trust Company of Connecticut, National
    Association, as Pass Through Trustee, including
    Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
    Interpretation.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.13</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Participation Agreement (RG-3) dated as of October&nbsp;18,
    2001, among the Company, RockGen Energy LLC, RockGen OL-3, LLC,
    Wells Fargo Bank Northwest, National Association, as Lessor
    Manager, SBR OP-3, LLC, State Street Bank and Trust Company of
    Connecticut, National Association, as Indenture Trustee, and
    State Street Bank and Trust Company of Connecticut, National
    Association, as Pass Through Trustee, including
    Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
    Interpretation.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.14</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Participation Agreement (RG-4) dated as of October&nbsp;18,
    2001, among the Company, RockGen Energy LLC, RockGen OL-4, LLC,
    Wells Fargo Bank Northwest, National Association, as Lessor
    Manager, SBR OP-4, LLC, State Street Bank and Trust Company of
    Connecticut, National Association, as Indenture Trustee, and
    State Street Bank and Trust Company of Connecticut, National
    Association, as Pass Through Trustee, including
    Appendix&nbsp;A&nbsp;&#151; Definitions and Rules of
    Interpretation.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.15</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Trust, Deed of Trust, Assignment of Rents and
    Leases, Security Agreement and Financing Statement, dated as of
    October&nbsp;18, 2001, between South Point OL-1, LLC and State
    Street Bank and Trust Company of Connecticut, National
    Association, as Indenture Trustee and Account&nbsp;Bank,
    including the form of South Point Lessor Notes.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.16</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Trust, Deed of Trust, Assignment of Rents and
    Leases, Security Agreement and Financing Statement, dated as of
    October&nbsp;18, 2001, between South Point OL-2, LLC and State
    Street Bank and Trust Company of Connecticut, National
    Association, as Indenture Trustee and Account&nbsp;Bank,
    including the form of South Point Lessor Notes.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.17</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Trust, Deed of Trust, Assignment of Rents and
    Leases, Security Agreement and Financing Statement, dated as of
    October&nbsp;18, 2001, between South Point OL-3, LLC and State
    Street Bank and Trust Company of Connecticut, National
    Association, as Indenture Trustee and Account&nbsp;Bank,
    including the form of South Point Lessor Notes.(c)</TD>
</TR>

</TABLE>
</CENTER>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Exhibit</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.18</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Trust, Deed of Trust, Assignment of Rents and
    Leases, Security Agreement and Financing Statement, dated as of
    October&nbsp;18, 2001, between South Point OL-4, LLC and State
    Street Bank and Trust Company of Connecticut, National
    Association, as Indenture Trustee and Account&nbsp;Bank,
    including the form of South Point Lessor Notes.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.19</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Trust, Mortgage, Security Agreement and Fixture
    Filing, dated as of October&nbsp;18, 2001, between Broad River
    OL-1, LLC and State Street Bank and Trust Company of
    Connecticut, National Association, as Indenture Trustee,
    Mortgagee and Account&nbsp;Bank, including the form of Broad
    River Lessor Notes.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.20</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Trust, Mortgage, Security Agreement and Fixture
    Filing, dated as of October&nbsp;18, 2001, between Broad River
    OL-2, LLC and State Street Bank and Trust Company of
    Connecticut, National Association, as Indenture Trustee,
    Mortgagee and Account&nbsp;Bank, including the form of Broad
    River Lessor Notes.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.21</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Trust, Mortgage, Security Agreement and Fixture
    Filing, dated as of October&nbsp;18, 2001, between Broad River
    OL-3, LLC and State Street Bank and Trust Company of
    Connecticut, National Association, as Indenture Trustee,
    Mortgagee and Account&nbsp;Bank, including the form of Broad
    River Lessor Notes.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.22</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Trust, Mortgage, Security Agreement and Fixture
    Filing, dated as of October&nbsp;18, 2001, between Broad River
    OL-4, LLC and State Street Bank and Trust Company of
    Connecticut, National Association, as Indenture Trustee,
    Mortgagee and Account&nbsp;Bank, including the form of Broad
    River Lessor Notes.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.23</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Trust, Mortgage and Security Agreement, dated as of
    October&nbsp;18, 2001, between RockGen OL-1, LLC and State
    Street Bank and Trust Company of Connecticut, National
    Association, as Indenture Trustee and Account&nbsp;Bank,
    including the form of RockGen Lessor Notes.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.24</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Trust, Mortgage and Security Agreement, dated as of
    October&nbsp;18, 2001, between RockGen OL-2, LLC and State
    Street Bank and Trust Company of Connecticut, National
    Association, as Indenture Trustee and Account&nbsp;Bank,
    including the form of RockGen Lessor Notes.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.25</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Trust, Mortgage and Security Agreement, dated as of
    October&nbsp;18, 2001, between RockGen OL-3, LLC and State
    Street Bank and Trust Company of Connecticut, National
    Association, as Indenture Trustee and Account&nbsp;Bank,
    including the form of RockGen Lessor Notes.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.26</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Indenture of Trust, Mortgage and Security Agreement, dated as of
    October&nbsp;18, 2001, between RockGen OL-4, LLC and State
    Street Bank and Trust Company of Connecticut, National
    Association, as Indenture Trustee and Account&nbsp;Bank,
    including the form of RockGen Lessor Notes.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.27</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (South Point SP-1) dated
    as of October&nbsp;18, 2001, by Calpine, as Guarantor, to South
    Point OL-1, LLC, SBR OP-1, LLC, State Street Bank and Trust
    Company of Connecticut, as Indenture Trustee, and State Street
    Bank and Trust Company of Connecticut, as Pass Through
    Trustee.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.28</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (South Point SP-2) dated
    as of October&nbsp;18, 2001, by Calpine, as Guarantor, to South
    Point OL-2, LLC, SBR OP-2, LLC, State Street Bank and Trust
    Company of Connecticut, as Indenture Trustee, and State Street
    Bank and Trust Company of Connecticut, as Pass Through
    Trustee.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.29</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (South Point SP-3) dated
    as of October&nbsp;18, 2001, by Calpine, as Guarantor, to South
    Point OL-3, LLC, SBR OP-3, LLC, State Street Bank and Trust
    Company of Connecticut, as Indenture Trustee, and State Street
    Bank and Trust Company of Connecticut, as Pass Through
    Trustee.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.30</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (South Point SP-4) dated
    as of October&nbsp;18, 2001, by Calpine, as Guarantor, to South
    Point OL-4, LLC, SBR OP-4, LLC, State Street Bank and Trust
    Company of Connecticut, as Indenture Trustee, and State Street
    Bank and Trust Company of Connecticut, as Pass Through
    Trustee.(c)</TD>
</TR>

</TABLE>
</CENTER>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Exhibit</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.31</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (Broad River BR-1) dated
    as of October&nbsp;18, 2001, by Calpine, as Guarantor, to Broad
    River OL-1, LLC, SBR OP-1, LLC, State Street Bank and Trust
    Company of Connecticut, as Indenture Trustee, and State Street
    Bank and Trust Company of Connecticut, as Pass Through
    Trustee.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.32</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (Broad River BR-2) dated
    as of October&nbsp;18, 2001, by Calpine, as Guarantor, to Broad
    River OL-2, LLC, SBR OP-2, LLC, State Street Bank and Trust
    Company of Connecticut, as Indenture Trustee, and State Street
    Bank and Trust Company of Connecticut, as Pass Through
    Trustee.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.33</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (Broad River BR-3) dated
    as of October&nbsp;18, 2001, by Calpine, as Guarantor, to Broad
    River OL-3, LLC, SBR OP-3, LLC, State Street Bank and Trust
    Company of Connecticut, as Indenture Trustee, and State Street
    Bank and Trust Company of Connecticut, as Pass Through
    Trustee.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.34</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (Broad River BR-4) dated
    as of October&nbsp;18, 2001, by Calpine, as Guarantor, to Broad
    River OL-4, LLC, SBR OP-4, LLC, State Street Bank and Trust
    Company of Connecticut, as Indenture Trustee, and State Street
    Bank and Trust Company of Connecticut, as Pass Through
    Trustee.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.35</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (RockGen RG-1) dated as
    of October&nbsp;18, 2001, by Calpine, as Guarantor, to RockGen
    OL-1, LLC, SBR OP-1, LLC, State Street Bank and Trust Company of
    Connecticut, as Indenture Trustee, and State Street Bank and
    Trust Company of Connecticut, as Pass Through Trustee.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.36</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (RockGen RG-2) dated as
    of October&nbsp;18, 2001, by Calpine, as Guarantor, to RockGen
    OL-2, LLC, SBR OP-2, LLC, State Street Bank and Trust Company of
    Connecticut, as Indenture Trustee, and State Street Bank and
    Trust Company of Connecticut, as Pass Through Trustee.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.37</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (RockGen RG-3) dated as
    of October&nbsp;18, 2001, by Calpine, as Guarantor, to RockGen
    OL-3, LLC, SBR OP-3, LLC, State Street Bank and Trust Company of
    Connecticut, as Indenture Trustee, and State Street Bank and
    Trust Company of Connecticut, as Pass Through Trustee.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>4</TD>
    <TD align="left" valign="top" nowrap>.25.38</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Guaranty and Payment Agreement (RockGen RG-4) dated as
    of October&nbsp;18, 2001, by Calpine, as Guarantor, to RockGen
    OL-4, LLC, SBR OP-4, LLC, State Street Bank and Trust Company of
    Connecticut, as Indenture Trustee, and State Street Bank and
    Trust Company of Connecticut, as Pass Through Trustee.(c)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Financing and Term Loan Agreements</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Share Lending Agreement, dated as of September&nbsp;28, 2004,
    among the Company, as Lender, Deutsche Bank AG London, as
    Borrower, through Deutsche Bank Securities Inc., as agent for
    the Borrower, and Deutsche Bank Securities Inc., in its capacity
    as Collateral Agent and Securities Intermediary.(l)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amended and Restated Credit Agreement, dated as of
    March&nbsp;23, 2004, among Calpine Generating Company, LLC, the
    Guarantors named therein, the Lenders named therein, The Bank of
    Nova Scotia, as Administrative Agent, LC Bank, Lead Arranger and
    Sole Bookrunner, Bayerische Landesbank Cayman Islands Branch, as
    Arranger and Co-Syndication Agent, Credit Lyonnais New York
    Branch, as Arranger and Co-Syndication Agent, ING Capital LLC,
    as Arranger and Co-Syndication Agent, Toronto-Dominion (Texas)
    Inc., as Arranger and Co-Syndication Agent, and Union Bank of
    California, N.A., as Arranger and Co-Syndication Agent.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.3.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Letter of Credit Agreement, dated as of July&nbsp;16, 2003,
    among the Company, the Lenders named therein, and The Bank of
    Nova Scotia, as Administrative Agent.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.3.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amendment to Letter of Credit Agreement, dated as of
    September&nbsp;30, 2004, between the Company and The Bank of
    Nova Scotia, as Administrative Agent.(v)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.4</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Letter of Credit Agreement, dated as of September&nbsp;30, 2004,
    between the Company and Bayerische Landesbank, acting through
    its Cayman Islands Branch, as the Issuer.(v)</TD>
</TR>

</TABLE>
</CENTER>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Exhibit</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.5</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Credit Agreement, dated as of July&nbsp;16, 2003, among the
    Company, the Lenders named therein, Goldman Sachs Credit
    Partners L.P., as Sole Lead Arranger, Sole Bookrunner and
    Administrative Agent, The Bank of Nova Scotia, as Arranger and
    Syndication Agent, TD Securities (USA)&nbsp;Inc., ING (U.S.)
    Capital LLC and Landesbank Hessen-Thuringen, as Co-Arrangers,
    and Credit Lyonnais New York Branch and Union Bank of
    California, N.A., as Managing Agents.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.6.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Credit and Guarantee Agreement, dated as of August&nbsp;14,
    2003, among Calpine Construction Finance Company, L.P., each of
    Calpine Hermiston, LLC, CPN Hermiston, LLC and Hermiston Power
    Partnership, as Guarantors, the Lenders named therein, and
    Goldman Sachs Credit Partners L.P., as Administrative Agent and
    Sole Lead Arranger.(p)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.6.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amendment No.&nbsp;1 to the Credit and Guarantee Agreement,
    dated as of September&nbsp;12, 2003, among Calpine Construction
    Finance Company, L.P., each of Calpine Hermiston, LLC, CPN
    Hermiston, LLC and Hermiston Power Partnership, as Guarantors,
    the Lenders named therein, and Goldman Sachs Credit Partners
    L.P., as Administrative Agent and Sole Lead Arranger.(p)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.6.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amendment No.&nbsp;2 to the Credit and Guarantee Agreement,
    dated as of January&nbsp;13, 2004, among Calpine Construction
    Finance Company, L.P., each of Calpine Hermiston, LLC, CPN
    Hermiston, LLC and Hermiston Power Partnership, as Guarantors,
    the Lenders named therein, and Goldman Sachs Credit Partners
    L.P., as Administrative Agent and Sole Lead Arranger.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.6.4</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amendment No.&nbsp;3 to the Credit and Guarantee Agreement,
    dated as of March&nbsp;5, 2004, among Calpine Construction
    Finance Company, L.P., each of Calpine Hermiston, LLC, CPN
    Hermiston, LLC and Hermiston Power Partnership, as Guarantors,
    the Lenders named therein, and Goldman Sachs Credit Partners
    L.P., as Administrative Agent and Sole Lead Arranger.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.7</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Credit and Guarantee Agreement, dated as of March&nbsp;23, 2004,
    among Calpine Generating Company, LLC, the Guarantors named
    therein, the Lenders named therein, Morgan Stanley Senior
    Funding, Inc., as Administrative Agent, and Morgan Stanley
    Senior Funding, Inc., as Sole Lead Arranger and Sole
    Bookrunner.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.8</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Credit and Guarantee Agreement, dated as of March&nbsp;23, 2004,
    among Calpine Generating Company, LLC, the Guarantors named
    therein, the Lenders named therein, Morgan Stanley Senior
    Funding, Inc., as Administrative Agent, and Morgan Stanley
    Senior Funding, Inc., as Sole Lead Arranger and Sole
    Bookrunner.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.9</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Credit Agreement, dated as of June&nbsp;24, 2004, among
    Riverside Energy Center, LLC, the Lenders named therein, Union
    Bank of California, N.A., as the Issuing Bank, Credit Suisse
    First Boston, acting through its Cayman Islands Branch, as Lead
    Arranger, Book Runner, Administrative Agent and Collateral
    Agent, and CoBank, ACB, as Syndication Agent.(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.10</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Credit Agreement, dated as of June&nbsp;24, 2004, among Rocky
    Mountain Energy Center, LLC, the Lenders named therein, Union
    Bank of California, N.A., as the Issuing Bank, Credit Suisse
    First Boston, acting through its Cayman Islands Branch, as Lead
    Arranger, Book Runner, Administrative Agent and Collateral
    Agent, and CoBank, ACB, as Syndication Agent.(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.1.11</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Credit Agreement, dated as of February 25, 2005, among Calpine
    Steamboat Holdings, LLC, the Lenders named therein, Calyon New
    York Branch, as a Lead Arranger, Underwriter, Co-Book Runner,
    Administrative Agent, Collateral Agent and LC Issuer, CoBank,
    ACB, as a Lead Arranger, Underwriter, Co-Syndication Agent and
    Co-Book Runner, HSH Nordbank AG, as a Lead Arranger, Underwriter
    and Co-documentation Agent, UFJ Bank Limited, as a Lead
    Arranger, Underwriter and Co-Documentation Agent, and Bayerische
    Hypo-Und Vereinsbank AG, New York Branch, as a Lead Arranger,
    Underwriter and Co-Syndication Agent.(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Security Agreements</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Guarantee and Collateral Agreement, dated as of July&nbsp;16,
    2003, made by the Company, JOQ Canada, Inc., Quintana Minerals
    (USA)&nbsp;Inc., and Quintana Canada Holdings LLC, in favor of
    The Bank of New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    First Amendment Pledge Agreement, dated as of July&nbsp;16,
    2003, made by JOQ Canada, Inc., Quintana Minerals
    (USA)&nbsp;Inc., and Quintana Canada Holdings LLC in favor of
    The Bank of New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    First Amendment Assignment and Security Agreement, dated as of
    July&nbsp;16, 2003, made by the Company in favor of The Bank of
    New York, as Collateral Trustee.(o)</TD>
</TR>

</TABLE>
</CENTER>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Exhibit</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.4.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Second Amendment Pledge Agreement (Stock Interests), dated as of
    July&nbsp;16, 2003, made by the Company in favor of The Bank of
    New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.4.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amendment No.&nbsp;1 to the Second Amendment Pledge Agreement
    (Stock Interests), dated as of November&nbsp;18, 2003, made by
    the Company in favor of The Bank of New York, as Collateral
    Trustee.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.5.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Second Amendment Pledge Agreement (Membership Interests), dated
    as of July&nbsp;16, 2003, made by the Company in favor of The
    Bank of New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.5.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amendment No.&nbsp;1 to the Second Amendment Pledge Agreement
    (Membership Interests), dated as of November&nbsp;18, 2003, made
    by the Company in favor of The Bank of New York, as Collateral
    Trustee.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.6</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    First Amendment Note&nbsp;Pledge Agreement, dated as of
    July&nbsp;16, 2003, made by the Company in favor of The Bank of
    New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.7.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Collateral Trust&nbsp;Agreement, dated as of July&nbsp;16, 2003,
    among the Company, JOQ Canada, Inc., Quintana Minerals
    (USA)&nbsp;Inc., Quintana Canada Holdings LLC, Wilmington Trust
    Company, as Trustee, The Bank of Nova Scotia, as Agent, Goldman
    Sachs Credit Partners L.P., as Administrative Agent, and The
    Bank of New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.7.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    First Amendment to the Collateral Trust&nbsp;Agreement, dated as
    of November&nbsp;18, 2003, among the Company, JOQ Canada, Inc.,
    Quintana Minerals (USA)&nbsp;Inc., Quintana Canada Holdings LLC,
    Wilmington Trust Company, as Trustee, The Bank of Nova Scotia,
    as Agent, Goldman Sachs Credit Partners L.P., as Administrative
    Agent, and The Bank of New York, as Collateral Trustee.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.8</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Amended and Restated Mortgage, Deed of Trust,
    Assignment, Security Agreement, Financing Statement and Fixture
    Filing (Multistate), dated as of July&nbsp;16, 2003, from the
    Company to Messrs.&nbsp;Denis O&#146;Meara and James Trimble, as
    Trustees, and The Bank of New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.9</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Amended and Restated Mortgage, Deed of Trust,
    Assignment, Security Agreement, Financing Statement and Fixture
    Filing (Multistate), dated as of July&nbsp;16, 2003, from the
    Company to Messrs.&nbsp;Kemp Leonard and John Quick, as
    Trustees, and The Bank of New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.10</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Amended and Restated Mortgage, Deed of Trust,
    Assignment, Security Agreement, Financing Statement and Fixture
    Filing (Colorado), dated as of July&nbsp;16, 2003, from the
    Company to Messrs.&nbsp;Kemp Leonard and John Quick, as
    Trustees, and The Bank of New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.11</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Amended and Restated Mortgage, Deed of Trust,
    Assignment, Security Agreement, Financing Statement and Fixture
    Filing (New Mexico), dated as of July&nbsp;16, 2003, from the
    Company to Messrs.&nbsp;Kemp Leonard and John Quick, as
    Trustees, and The Bank of New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.12</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Amended and Restated Mortgage, Assignment, Security
    Agreement and Financing Statement (Louisiana), dated as of
    July&nbsp;16, 2003, from the Company to The Bank of New York, as
    Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.13</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Amended and Restated Deed of Trust with Power of Sale,
    Assignment of Production, Security Agreement, Financing
    Statement and Fixture Filings (California), dated as of
    July&nbsp;16, 2003, from the Company to Chicago
    Title&nbsp;Insurance Company, as Trustee, and The Bank of New
    York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.14</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Deed to Secure Debt, Assignment of Rents and Security
    Agreement (Georgia), dated as of July&nbsp;16, 2003, from the
    Company to The Bank of New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.15</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Mortgage, Assignment of Rents and Security Agreement
    (Florida), dated as of July&nbsp;16, 2003, from the Company to
    The Bank of New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.16</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Deed of Trust, Assignment of Rents and Security
    Agreement and Fixture Filing (Texas), dated as of July&nbsp;16,
    2003, from the Company to Malcolm S. Morris, as Trustee, in
    favor of The Bank of New York, as Collateral Trustee.(o)</TD>
</TR>

</TABLE>
</CENTER>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Exhibit</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.17</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Deed of Trust, Assignment of Rents and Security
    Agreement (Washington), dated as of July&nbsp;16, 2003, from the
    Company to Chicago Title&nbsp;Insurance Company, in favor of The
    Bank of New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.18</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Deed of Trust, Assignment of Rents, and Security
    Agreement (California), dated as of July&nbsp;16, 2003, from the
    Company to Chicago Title&nbsp;Insurance Company, in favor of The
    Bank of New York, as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.19</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Mortgage, Collateral Assignment of Leases and Rents,
    Security Agreement and Financing Statement (Louisiana), dated as
    of July&nbsp;16, 2003, from the Company to The Bank of New York,
    as Collateral Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.20</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amended and Restated Hazardous Materials Undertaking and
    Indemnity (Multistate), dated as of July&nbsp;16, 2003, by the
    Company in favor of The Bank of New York, as Collateral
    Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.21</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Amended and Restated Hazardous Materials Undertaking and
    Indemnity (California), dated as of July&nbsp;16, 2003, by the
    Company in favor of The Bank of New York, as Collateral
    Trustee.(o)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.2.22</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Designated Asset Sale Proceeds Account&nbsp;Control Agreement,
    dated as of July&nbsp;16, 2003, among the Company, Union Bank of
    California, N.A., and The Bank of New York, as Collateral
    Agent.(q)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Management Contracts or Compensatory Plans or Arrangements.</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.1.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Employment Agreement, dated as of January&nbsp;1, 2005, between
    the Company and Mr.&nbsp;Peter Cartwright.(w)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.1.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Employment Agreement, dated as of January&nbsp;1, 2000, between
    the Company and Mr.&nbsp;Peter Cartwright.(y)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Employment Agreement, dated as of January&nbsp;1, 2000, between
    the Company and Ms.&nbsp;Ann B. Curtis.(c)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Employment Agreement, dated as of January&nbsp;1, 2000, between
    the Company and Mr.&nbsp;Ron A. Walter.(c)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.4</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Employment Agreement, dated as of January&nbsp;1, 2000, between
    the Company and Mr.&nbsp;Robert D. Kelly.(c)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.5</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Employment Agreement, dated as of January&nbsp;1, 2000, between
    the Company and Mr.&nbsp;Thomas R. Mason.(c)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.6.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Consulting Contract, dated as of January&nbsp;1, 2005, between
    the Company and Mr.&nbsp;George J. Stathakis.(*)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.6.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Consulting Contract, dated as of January&nbsp;1, 2004, between
    the Company and Mr.&nbsp;George J. Stathakis.(q)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.7</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Indemnification Agreement for directors and
    officers.(z)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.8</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Indemnification Agreement for directors and
    officers.(c)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.9</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Corporation 1996 Stock Incentive Plan and forms of
    agreements there under.(q)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.10</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Base Salary, Bonus, Stock Option Grant and Restricted Stock
    Summary Sheet.(w)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.11</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Stock Option Agreement.(w)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.12</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Form of Restricted Stock Agreement.(w)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.13</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Calpine Corporation 2003 Management Incentive Plan.(*)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>10</TD>
    <TD align="left" valign="top" nowrap>.3.14</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    2000 Employee Stock Purchase Plan.(aa)(x)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>12</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Statement on Computation of Ratio of Earnings to Fixed
    Charges.(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>21</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Subsidiaries of the Company.(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>23</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Consent of Deloitte&nbsp;&#38; Touche LLP, Independent
    Registered Public Accounting Firm.(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>23</TD>
    <TD align="left" valign="top" nowrap>.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Consent of PricewaterhouseCoopers LLP, Independent Registered
    Public Accounting Firm.(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>23</TD>
    <TD align="left" valign="top" nowrap>.3</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Consent of Netherland, Sewell&nbsp;&#38; Associates, Inc.,
    independent engineer.(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>23</TD>
    <TD align="left" valign="top" nowrap>.4</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Consent of Gilbert Laustsen Jung Associates Ltd., independent
    engineer.(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>24</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Power of Attorney of Officers and Directors of Calpine
    Corporation (set forth on the signature pages of this report).(*)</TD>
</TR>

</TABLE>
</CENTER>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt; ">

<TR style="font-size: 1pt;">
    <TD width="8%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="80%">&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Exhibit</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2" align="center" nowrap><B>Number</B></TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap><B>Description</B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD><TD></TD>
    <TD>&nbsp;</TD>
    <TD align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>31</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Certification of the Chairman, President and Chief Executive
    Officer Pursuant to Rule&nbsp;13a-14(a) or Rule&nbsp;15d-14(a)
    under the Securities Exchange Act of 1934, as Adopted Pursuant
    to Section&nbsp;302 of the Sarbanes-Oxley Act of 2002.(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>31</TD>
    <TD align="left" valign="top" nowrap>.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Certification of the Executive Vice President and Chief
    Financial Officer Pursuant to Rule&nbsp;13a-14(a) or
    Rule&nbsp;15d-14(a) under the Securities Exchange Act of 1934,
    as Adopted Pursuant to Section&nbsp;302 of the Sarbanes-Oxley
    Act of 2002.(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>32</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Certification of Chief Executive Officer and Chief Financial
    Officer Pursuant to 18&nbsp;U.S.C. Section&nbsp;1350, as Adopted
    Pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of
    2002.(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>99</TD>
    <TD align="left" valign="top" nowrap>.1</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Acadia Power Partners, LLC and Subsidiary, Consolidated
    Financial Statements, December&nbsp;31, 2003, 2002 and 2001.(*)</TD>
</TR>

<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" nowrap>99</TD>
    <TD align="left" valign="top" nowrap>.2</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    Consent of PricewaterhouseCoopers LLP, Independent Registered
    Public Accounting Firm.(*)</TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left" style="font-size: 3pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 18%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    (*)</TD>
    <TD></TD>
    <TD valign="top">
    Filed herewith.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (a)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s Current
    Report on Form&nbsp;8-K/ A filed with the SEC on
    September&nbsp;14, 2004.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (b)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Quarterly Report on Form&nbsp;10-Q dated June&nbsp;30, 2004,
    filed with the SEC on August&nbsp;9, 2004.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (c)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s Annual
    Report on Form&nbsp;10-K dated December&nbsp;31, 2001, filed
    with the SEC on March&nbsp;29, 2002.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (d)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Registration Statement on Form&nbsp;S-4 (Registration Statement
    No.&nbsp;333-06259) filed with the SEC on June&nbsp;19, 1996.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (e)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s Annual
    Report on Form&nbsp;10-K for the year ended December&nbsp;31,
    2000, filed with the SEC on March&nbsp;15, 2001.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (f)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Quarterly Report on Form&nbsp;10-Q dated March&nbsp;31, 2004,
    filed with the SEC on May&nbsp;10, 2004.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (g)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Quarterly Report on Form&nbsp;10-Q dated June&nbsp;30, 1997,
    filed with the SEC on August&nbsp;14, 1997.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (h)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Registration Statement on Form&nbsp;S-4 (Registration Statement
    No.&nbsp;333-41261) filed with the SEC on November&nbsp;28, 1997.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (i)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Registration Statement on Form&nbsp;S-4 (Registration Statement
    No.&nbsp;333-61047) filed with the SEC on August&nbsp;10, 1998.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (j)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Registration Statement on Form&nbsp;S-3/ A (Registration
    Statement No.&nbsp;333-72583) filed with the SEC on
    March&nbsp;8, 1999.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (k)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Registration Statement on Form&nbsp;S-3 (Registration
    No.&nbsp;333-76880) filed with the SEC on January&nbsp;17, 2002.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (l)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s Current
    Report on Form&nbsp;8-K filed with the SEC on September&nbsp;30,
    2004.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (m)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s Current
    Report on Form&nbsp;8-K dated October&nbsp;16, 2001, filed with
    the SEC on November&nbsp;13, 2001.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (n)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Registration Statement on Form&nbsp;S-3/ A (Registration
    No.&nbsp;333-57338) filed with the SEC on April&nbsp;19, 2001.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (o)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Quarterly Report on Form&nbsp;10-Q dated June&nbsp;30, 2003,
    filed with the SEC on August&nbsp;14, 2003.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (p)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Quarterly Report on Form&nbsp;10-Q dated September&nbsp;30,
    2003, filed with the SEC on November&nbsp;13, 2003.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (q)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s Annual
    Report on Form&nbsp;10-K for the year ended December&nbsp;31,
    2003, filed with the SEC on March&nbsp;25, 2004.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (r)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s Current
    Report on Form&nbsp;8-K filed with the SEC on October&nbsp;6,
    2004.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (s)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Registration Statement on Form&nbsp;8-A/ A (Registration
    No.&nbsp;001-12079) filed with the SEC on September&nbsp;28,
    2001.</TD>
</TR>

</TABLE>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 10pt;">

<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96%"></TD>
</TR>

<TR>
    <TD valign="top">
    (t)</TD>
    <TD></TD>
    <TD valign="top">
    This document has been omitted in reliance on
    Item&nbsp;601(b)(4)(iii) of Regulation&nbsp;S-K. Calpine
    Corporation agrees to furnish a copy of such document to the SEC
    upon request.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (u)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Registration Statement on Form&nbsp;S-3 (Registration Statement
    No.&nbsp;333-47068) filed with the SEC on September&nbsp;29,
    2000.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (v)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Quarterly Report on Form&nbsp;10-Q dated September&nbsp;30,
    2004, filed with the SEC on November&nbsp;9, 2004.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (w)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s Current
    Report on Form&nbsp;8-K filed with the SEC on March&nbsp;17,
    2005.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (x)</TD>
    <TD></TD>
    <TD valign="top">
    Management contract or compensatory plan or arrangement.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (y)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s Annual
    Report on Form&nbsp;10-K for the year ended December&nbsp;31,
    1999, filed with the SEC on February&nbsp;29, 2000.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (z)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Registration Statement on Form&nbsp;S-1/ A (Registration
    Statement No.&nbsp;333-07497) filed with the SEC on
    August&nbsp;22, 1996.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (aa)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s
    Definitive Proxy Statement on Schedule&nbsp;14A dated
    April&nbsp;13, 2000, filed with the SEC on April&nbsp;13, 2000.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&nbsp;</TD>
</TR>

<TR>
    <TD valign="top">
    (bb)</TD>
    <TD></TD>
    <TD valign="top">
    Incorporated by reference to Calpine Corporation&#146;s Current
    Report on Form&nbsp;8-K filed with the SEC on March&nbsp;23,
    2005.</TD>
</TR>

</TABLE>
</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1.9
<SEQUENCE>2
<FILENAME>f05222exv10w1w9.txt
<DESCRIPTION>EXHIBIT 10.1.9
<TEXT>
<PAGE>

                                                                  EXHIBIT 10.1.9
                                                               EXECUTION VERSION

                                CREDIT AGREEMENT

                                      among

                          RIVERSIDE ENERGY CENTER, LLC,
                      a Wisconsin limited liability company
                                   (Borrower)

                                       and

                           CREDIT SUISSE FIRST BOSTON,
                    acting through its Cayman Islands Branch
     (Lead Arranger, Book Runner, Administrative Agent and Collateral Agent)

                                       and

                                   COBANK, ACB
                               (Syndication Agent)

                                       and

                    THE FINANCIAL INSTITUTIONS PARTIES HERETO
                                    (Lenders)

                  617 MW Combined Cycle Power Generation Plant
                                   located in
                            Town of Beloit, Wisconsin

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                       PAGE
                                                                                                                       ----
<S>                                                                                                                    <C>
ARTICLE 1 DEFINITIONS.............................................................................................       1

    1.1     Definitions...........................................................................................       1
    1.2     Rules of Interpretation...............................................................................       1

ARTICLE 2 THE TERM LOAN FACILITY..................................................................................       2

    2.1     Term Loan Facility....................................................................................       2
    2.2     Fees..................................................................................................      10
    2.3     Other Payment Terms...................................................................................      10
    2.4     Pro Rata Treatment....................................................................................      14
    2.5     Change of Circumstances...............................................................................      15
    2.6     Funding Losses........................................................................................      17
    2.7     Alternate Office; Minimization of Costs...............................................................      17

ARTICLE 3 CONDITIONS PRECEDENT....................................................................................      19

    3.1     Conditions Precedent to the Closing Date..............................................................      19

ARTICLE 4 REPRESENTATIONS AND WARRANTIES..........................................................................      28

    4.1     Organization..........................................................................................      28
    4.2     Authorization; No Conflict............................................................................      28
    4.3     Enforceability........................................................................................      28
    4.4     Compliance with Law...................................................................................      29
    4.5     Business, Debt, Contracts, Joint Ventures Etc.........................................................      29
    4.6     Anti-Terrorism Laws...................................................................................      29
    4.7     Investment Company Act................................................................................      30
    4.8     ERISA.................................................................................................      30
    4.9     Permits...............................................................................................      30
    4.10    Hazardous Substances..................................................................................      31
    4.11    Litigation............................................................................................      32
    4.12    Labor Disputes and Acts of God........................................................................      32
    4.13    Disclosure............................................................................................      33
    4.14    Flood Zone Disclosure.................................................................................      33
    4.15    Taxes.................................................................................................      33
    4.16    Governmental Regulation...............................................................................      34
    4.17    Regulation U, Etc.....................................................................................      34
    4.18    Initial Operating Budget; Projections.................................................................      35
    4.19    Financial Statements..................................................................................      35
    4.20    No Default............................................................................................      35
    4.21    Organizational ID Number; Location of Collateral......................................................      35
    4.22    Title and Liens.......................................................................................      35
    4.23    Intellectual Property.................................................................................      36
</TABLE>

                                        i

<PAGE>

<TABLE>
<CAPTION>
                                                                                                                       PAGE
                                                                                                                       ----
<S>                                                                                                                    <C>
    4.24    Collateral............................................................................................      36
    4.25    Sufficiency of Project Documents......................................................................      37
    4.26    Utilities.............................................................................................      37
    4.27    Other Facilities......................................................................................      37
    4.28    Proper Subdivision....................................................................................      38

ARTICLE 5 AFFIRMATIVE COVENANTS...................................................................................      38

    5.1     Use of Proceeds and Project Revenues..................................................................      38
    5.2     Payment...............................................................................................      38
    5.3     Warranty of Title.....................................................................................      38
    5.4     Notices...............................................................................................      39
    5.5     Financial Statements..................................................................................      40
    5.6     Books, Records, Access................................................................................      41
    5.7     Compliance with Laws, Instruments, Applicable Permits, Etc............................................      41
    5.8     Reports...............................................................................................      41
    5.9     Existence, Conduct of Business, Properties, Etc.......................................................      41
    5.10    Debt Service Coverage Ratio...........................................................................      42
    5.11    Exemption from Regulation.............................................................................      42
    5.12    Punchlist Items.......................................................................................      42
    5.13    Offer to Prepay Upon Change of Control................................................................      42
    5.14    Operation and Maintenance of Project; Annual Operating Budget.........................................      43
    5.15    Preservation of Rights; Further Assurances............................................................      44
    5.16    Additional Consents...................................................................................      45
    5.17    Maintenance of Insurance..............................................................................      46
    5.18    Taxes, Other Government Charges and Utility Charges...................................................      46
    5.19    Event of Eminent Domain...............................................................................      46
    5.20    Interest Rate Protection..............................................................................      47
    5.21    Rocky Mountain Distributions..........................................................................      47
    5.22    Financial Covenants...................................................................................      48
    5.23    Required HoldCo Transfer..............................................................................      48
    5.24    Maintenance of Ratings................................................................................      48

ARTICLE 6 NEGATIVE COVENANTS......................................................................................      49

    6.1     Contingent Liabilities................................................................................      49
    6.2     Limitations on Liens..................................................................................      49
    6.3     Indebtedness..........................................................................................      49
    6.4     Sale or Lease of Assets...............................................................................      49
    6.5     Changes...............................................................................................      50
    6.6     Distributions.........................................................................................      50
    6.7     Investments...........................................................................................      51
    6.8     Transactions With Affiliates..........................................................................      51
    6.9     Regulations...........................................................................................      51
    6.10    Partnerships, etc.....................................................................................      51
    6.11    Dissolution; Merger...................................................................................      51
    6.12    Amendments; Change Orders.............................................................................      51
    6.13    Name and Location; Fiscal Year........................................................................      52
</TABLE>

                                       ii
<PAGE>

<TABLE>
<CAPTION>
                                                                                                                       PAGE
                                                                                                                       ----
<S>                                                                                                                    <C>
    6.14    Use of Site...........................................................................................      52
    6.15    Assignment............................................................................................      52
    6.16    Accounts..............................................................................................      52
    6.17    Hazardous Substances..................................................................................      53
    6.18    Additional Project Documents..........................................................................      53
    6.19    Assignment By Third Parties...........................................................................      53
    6.20    Acquisition of Real Property..........................................................................      53
    6.21    Employee Benefit Plans................................................................................      54
    6.22    Power Sales...........................................................................................      54
    6.23    Governing Document Changes............................................................................      54

ARTICLE 7 EVENTS OF DEFAULT; REMEDIES.............................................................................      54

    7.1     Events of Default.....................................................................................      54
    7.2     Remedies..............................................................................................      59

ARTICLE 8 SCOPE OF LIABILITY......................................................................................      61

ARTICLE 9 AGENTS; SUBSTITUTION....................................................................................      62

    9.1     Appointment, Powers and Immunities....................................................................      62
    9.2     Reliance..............................................................................................      63
    9.3     Non-Reliance..........................................................................................      64
    9.4     Defaults; Material Adverse Effect.....................................................................      64
    9.5     Successor Agent.......................................................................................      65
    9.6     Authorization.........................................................................................      66
    9.7     Other Roles...........................................................................................      66
    9.8     Amendments and Waivers................................................................................      66
    9.9     Withholding Tax.......................................................................................      68
    9.10    General Provisions as to Payments.....................................................................      68
    9.11    Expenses; Indemnity; Damage Waiver....................................................................      69
    9.12    Successors and Assigns................................................................................      70
    9.13    Laws..................................................................................................      74

ARTICLE 10 INDEPENDENT CONSULTANTS................................................................................      74

    10.1    Removal and Fees......................................................................................      74
    10.2    Duties................................................................................................      74
    10.3    Independent Consultants' Certificates.................................................................      74
    10.4    Certification of Dates................................................................................      75

ARTICLE 11 MISCELLANEOUS..........................................................................................      75

    11.1    Addresses.............................................................................................      75
    11.2    Additional Security; Right to Set-Off.................................................................      76
    11.3    Delay and Waiver......................................................................................      76
    11.4    Entire Agreement......................................................................................      77
    11.5    Governing Law.........................................................................................      77
    11.6    Severability..........................................................................................      77
</TABLE>

                                      iii
<PAGE>

<TABLE>
<CAPTION>
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<S>                                                                                                                    <C>
    11.7    Headings..............................................................................................      77
    11.8    Accounting Terms......................................................................................      77
    11.9    Additional Financing..................................................................................      78
    11.10   No Partnership, Etc...................................................................................      78
    11.11   Mortgage/Collateral Documents.........................................................................      78
    11.12   Limitation on Liability...............................................................................      78
    11.13   Waiver of Jury Trial..................................................................................      79
    11.14   Consent to Jurisdiction...............................................................................      79
    11.15   Knowledge and Attribution.............................................................................      79
    11.16   Counterparts..........................................................................................      79
    11.17   Usury.................................................................................................      80
    11.18   Survival..............................................................................................      80
    11.19   Intercreditor Agreement...............................................................................      80
    11.20   Confidentiality.......................................................................................      80
</TABLE>

                                       iv

<PAGE>

                                      INDEX OF EXHIBITS

Exhibit A                    Definitions and Rules of Interpretation

                             NOTES

Exhibit B                    Form of Note

                             LOAN DISBURSEMENT PROCEDURES

Exhibit C-1                  Form of Notice of Borrowing

Exhibit C-2                  Form of Confirmation of Interest Period Selection

Exhibit C-3                  Form of Notice of Conversion of Loan Type

                             SECURITY-RELATED DOCUMENTS

Exhibit D-1                  Form of Mortgage

Exhibit D-2                  Form of Security Agreement

Exhibit D-3                  Form of Pledge Agreement

Exhibit D-4                  Form of Depositary Agreement

Exhibit D-5                  Form of Subordination Agreement

Exhibit D-6                  Schedule of Security Filings

Exhibit D-7                  Form of Intercreditor Agreement

                             CONSENTS

Exhibit E-1                  Form of Consent for Contracting Party

Exhibit E-2                  Schedule of Closing Date Consents

                             CLOSING CERTIFICATES

Exhibit F-1                  Form of Borrower's Closing Certificate

Exhibit F-2                  Form of Insurance Consultant's Certificate

Exhibit F-3                  Form of Independent Engineer's Certificate

Exhibit F-4                  Form of Power Market Consultant's Certificate

                             PROJECT DESCRIPTION EXHIBITS

Exhibit G-1                  Schedule of Applicable Permits

Exhibit G-2                  Sources and Uses

Exhibit G-3                  Base Case Project Projections

Exhibit G-4                  Initial O&M Budget

Exhibit G-5                  Pending Litigation

Exhibit G-6                  Hazardous Substances Disclosure

                                        v
<PAGE>

                                         OTHER

Exhibit H                    Lenders Proportionate Shares

Exhibit I                    Amortization Schedule

Exhibit J                    Form of Non-Bank Certificate

Exhibit K                    Insurance Requirements

Exhibit L                    Form of Annual Insurance Certificate

Exhibit M                    Form of Assignment and Acceptance

                                        vi
<PAGE>

            This CREDIT AGREEMENT, dated as of June 24, 2004 (this "Agreement"),
is entered into among RIVERSIDE ENERGY CENTER, LLC, a limited liability company
formed under the laws of the State of Wisconsin, as borrower ("Borrower"), the
financial institutions listed on Exhibit H or who later become a party hereto,
as lenders (the financial institutions party to this Agreement being
collectively referred to as the "Lenders"), CREDIT SUISSE FIRST BOSTON, acting
through its Cayman Islands Branch, as lead arranger (in such capacity, "Lead
Arranger"), as book runner (in such capacity, "Book Runner"), as administrative
agent for the Lenders (in such capacity, "Administrative Agent") and as
collateral agent for the Secured Parties (in such capacity, "Collateral Agent"),
and COBANK, ACB, as syndication agent (in such capacity, "Syndication Agent").

                                    RECITALS

            A. Borrower leases, owns, operates, maintains and uses the Project
referred to herein, consisting of an approximately 617 megawatt natural gas
fired combined cycle electric generating facility located in the Town of Beloit,
Wisconsin, and, in connection therewith, Borrower has requested that the Lenders
provide senior secured credit facilities in order to repay certain existing
indebtedness under the Existing Riverside Credit Facility, fund certain
reserves, fund a distribution to the direct or indirect owners of Borrower
representing the repayment of capital initially provided to finance the
construction or purchase of, or repairs, improvements or additions to, the Site
and/or the Project, fund a portion of Borrower's working capital requirements
and for such other purposes set forth herein; and

            B. The Lenders are willing to provide such financing upon the terms
and subject to the conditions set forth herein and in the other Credit
Documents.

                                    AGREEMENT

            NOW, THEREFORE, in consideration of the agreements herein and in the
other Credit Documents and in reliance upon the representations and warranties
set forth herein and therein, the parties hereto agree as follows:

                                   ARTICLE 1
                                  DEFINITIONS

      1.1   DEFINITIONS.

            Except as otherwise expressly provided, capitalized terms used in
this Agreement (including its exhibits and schedules) shall have the meanings
given to such terms in Exhibit A.

      1.2   RULES OF INTERPRETATION.

            Except as otherwise expressly provided, the rules of interpretation
set forth in Exhibit A shall apply to this Agreement and the other Credit
Documents.

<PAGE>

                                   ARTICLE 2
                             THE TERM LOAN FACILITY

      2.1   TERM LOAN FACILITY.

            2.1.1 Total Term Loan Commitment. Notwithstanding anything that may
be construed to the contrary in this Agreement, the aggregate principal amount
of all Term Loans made by the Lenders shall not exceed $368,500,000 (the "Total
Term Loan Commitment").

            2.1.2 Availability; Term Loans. Subject to the terms and conditions
set forth in this Agreement and in reliance upon the representations and
warranties of Borrower set forth herein, each Lender severally agrees to make,
on the Closing Date, a term loan under this Section 2.1.2 (individually a "Term
Loan" and, collectively, the "Term Loans") to Borrower in an amount equal to
such Lender's Proportionate Share of the Total Term Loan Commitment. Borrower
may make only one borrowing under the Total Term Loan Commitment, which shall be
on the Closing Date. Any amount borrowed under this Agreement and subsequently
repaid or prepaid may not be reborrowed. All amounts owed hereunder with respect
to the Term Loans shall be paid in full no later than the Maturity Date.

            2.1.3 Borrowing Mechanics for Term Loans.

            (a) Notice of Borrowing. On or before the date which is three
Banking Days prior to the Closing Date, Borrower shall deliver to Administrative
Agent a written notice in the form of Exhibit C-1, appropriately completed (the
"Notice of Borrowing"). Such Notice of Borrowing shall be delivered by
first-class mail, facsimile or electronic mail to Administrative Agent at the
office, to the facsimile number or to the electronic mail address and during the
hours specified in Section 11.1. Administrative Agent shall promptly notify each
Lender of the contents of such Notice of Borrowing.

            (b) Lender Funding. Each Lender shall make the Term Loan to be made
by it hereunder available to Administrative Agent not later than 12:00 noon (New
York City time) on the Closing Date, by wire transfer of same day funds in
Dollars, to the account designated for such purpose from time to time by
Administrative Agent. Upon satisfaction or waiver of the conditions precedent
specified in Article 3 and subject to Sections 2.1.4(b) and 2.1.5,
Administrative Agent shall make the proceeds of the Term Loans available to
Borrower on the Closing Date by causing an amount of same day funds in Dollars
equal to the proceeds of all such Term Loans received by Administrative Agent
from the Lenders to be credited to one or more accounts as may be designated in
writing to Administrative Agent by Borrower.

            2.1.4 Amount of Term Loans; Availability of Funds.

            (a) Amount of Term Loans. All Term Loans shall be made by the
Lenders simultaneously in the amount of their respective Term Loan Commitments,
it being understood that no Lender shall be responsible for any default by any
other Lender in such other Lender's obligation to make a Term Loan hereunder nor
shall any Term Loan Commitment of any Lender be increased or decreased as a
result of a default by any other Lender in such other Lender's obligation to
make a Term Loan hereunder.

                                        2
<PAGE>

            (b) Availability of Funds. Unless Administrative Agent shall have
been notified by any Lender prior to the Closing Date that such Lender does not
intend to make available to Administrative Agent the amount of such Lender's
Proportionate Share of the Total Term Loan Commitment, Administrative Agent may
assume that such Lender has made such amount available to Administrative Agent
on such date in accordance with the prior paragraph and Administrative Agent
may, in its sole discretion and in reliance upon such assumption, make available
to Borrower a corresponding amount on such date. If such corresponding amount is
not in fact made available to Administrative Agent by such Lender,
Administrative Agent shall be entitled to recover such corresponding amount on
demand (and, in any event, within three Banking Days from the Closing Date) from
such Lender together with interest thereon, for each day from the Closing Date
until the date such amount is paid to Administrative Agent, at the Federal Funds
Rate for the first three Banking Days after the Closing Date. If such Lender
pays such amount to Administrative Agent, then such amount shall constitute such
Lender's Proportionate Share of the Total Term Loan Commitment. If such Lender
does not pay such corresponding amount forthwith upon Administrative Agent's
demand therefore or within three Banking Days from the Closing Date,
Administrative Agent shall promptly notify Borrower and Borrower shall
immediately pay such corresponding amount to Administrative Agent together with
interest thereon (but no penalty or premium), for each day from the Closing Date
until the date such amount is paid to Administrative Agent, at the rate then
payable under this Agreement for Base Rate Term Loans. Nothing in this Section
2.1.4(b) shall be deemed to relieve any Lender from its obligation to fulfill
its obligations hereunder or to prejudice any rights that Borrower may have
against any Lender as a result of any default by such Lender hereunder.

            2.1.5 Use of Proceeds. Borrower shall apply the proceeds of the Term
Loans on the Closing Date as follows: (a) $157,457,127.38 shall be applied to
indefeasibly fund the Payout Amount, (b) $2,073,000 shall be applied to fund the
anticipated O&M Costs to be incurred by Borrower during the 30 days immediately
following the Closing Date, (c) $32,019,865 shall be applied to fund the
Pre-Funded Punchlist Expense Account, (d) to pay the fees and expenses then due
under this Agreement and the other Credit Documents, (e) $164,527,793.35 shall
be applied to fund a distribution to Sponsor representing the repayment of
capital initially provided to finance the construction or purchase of, or
repairs, improvements or additions to, the Site and/or the Project (such
distribution, the "Riverside Closing Date Distribution") and (f) as otherwise
set forth on Exhibit G-2. Borrower shall not use any portion of the proceeds of
any Term Loan in any manner that causes or might cause the funding of the Term
Loans or the application of such proceeds to violate Regulation T, Regulation U
or Regulation X or any other regulation of the Federal Reserve Board.

            2.1.6 Term Loan Principal Payment. Borrower shall repay to
Administrative Agent, for the account of each Lender, the aggregate unpaid
principal amount of the Term Loan made by such Lender (as reduced in connection
with any voluntary prepayment or Mandatory Prepayments of, or any accepted
Mandatory Repayment Offers on, the Term Loans, in accordance with Section
2.1.10) in installments payable on each Principal Repayment Date following the
Closing Date in accordance with the repayment schedule set forth on Exhibit I,
with any remaining unpaid principal, interest, fees and costs due and payable on
the Maturity Date.

                                        3
<PAGE>

            2.1.7 Interest Provisions Relating to Term Loans.

            (a) Term Loan Interest. Except as otherwise set forth herein,
Borrower shall pay interest on the unpaid principal amount of each Term Loan
from the Closing Date until the maturity or prepayment thereof at one of the
following rates per annum:

                  (i) With respect to the principal portion of such Term Loan
which is, and during such periods as such Term Loan is, a Base Rate Term Loan,
at a rate per annum equal to the Base Rate (such rate to change from time to
time as the Base Rate shall change) plus 3.25%.

                  (ii) With respect to the principal portion of such Term Loan
which is, and during such periods as such Term Loan is, a LIBOR Term Loan, at a
rate per annum during each Interest Period for such LIBOR Term Loan equal to the
LIBO Rate for such Interest Period plus 4.25%.

            (b) Applicable Interest Rate. Subject to Section 2.3.3, the
applicable basis for determining the rate of interest with respect to any Term
Loan shall be selected by Borrower initially at the time the Notice of Borrowing
is given pursuant to Section 2.1.3(a). The basis for determining the interest
rate with respect to any Term Loan may be changed from time to time as specified
in a Notice of Conversion of Loan Type delivered pursuant to Section 2.1.9. If
on any day a Term Loan is outstanding with respect to which notice has not been
delivered to Administrative Agent in accordance with the terms of this Agreement
specifying the applicable basis for determining the rate of interest, then for
that day such Term Loan shall bear interest determined by reference to the Base
Rate. Borrower shall not request, and the Lenders shall not be obligated to
make, LIBOR Term Loans at any time an Event of Default exists.

            (c) Interest Payment Dates. Borrower shall pay accrued interest on
the unpaid principal amount of each Term Loan (i) on each Interest Payment Date,
and (ii) in all cases, upon repayment or prepayment (to the extent thereof and
including Mandatory Prepayments and, to the extent permitted by this Agreement,
any optional prepayments), upon conversion from one Type of Loan to another Type
of Loan and at maturity (whether by acceleration or otherwise).

            (d) LIBOR Term Loan Interest Periods.

                  (i) The initial Interest Period for all LIBOR Term Loans made
on the Closing Date shall be from the Closing Date through October 29, 2004.
Thereafter, each subsequent Interest Period selected by Borrower for all LIBOR
Term Loans shall be one, two, three or six months or, to the extent that nine or
twelve month Interest Periods are available to all Lenders, nine or twelve
months. Notwithstanding anything to the contrary in the preceding two sentences,
(A) any Interest Period which would otherwise end on a day which is not a
Banking Day shall be extended to the next succeeding Banking Day unless such
next Banking Day falls in another calendar month, in which case such Interest
Period shall end on the immediately preceding Banking Day; (B) any Interest
Period which begins on the last Banking Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Banking Day of a calendar month;
(C) Borrower may not select Interest Periods which would leave a greater
principal amount of

                                        4
<PAGE>

Term Loans subject to Interest Periods ending after a date upon which Term Loans
are or may be required to be repaid (including the Maturity Date and each
Principal Repayment Date) than the principal amount of Term Loans scheduled to
be outstanding after such date; (D) any Interest Period for a Term Loan which
would otherwise end after the Maturity Date shall end on the Maturity Date; (E)
LIBOR Term Loans for each Interest Period shall be in the minimum amount of
$5,000,000 or an integral multiple of $1,000,000 in excess thereof; (F) Borrower
may not at any time have outstanding more than five different Interest Periods
relating to LIBOR Term Loans; and (G) Borrower shall select Types and Interest
Periods for Term Loans corresponding to the "types" and "interest periods" used
for floating rate payments in the Interest Rate Agreements so as to create, to
the greatest extent possible, a complete hedge.

                  (ii) Borrower may contact Administrative Agent at any time
prior to the end of an Interest Period for a quotation of Interest Rates in
effect at such time for given Interest Periods and Administrative Agent shall
promptly provide such quotation. Borrower may select an Interest Period
telephonically or by electronic mail within the time periods specified in
Section 2.1.9, which selection shall be irrevocable on and after commencement of
the applicable Minimum Notice Period. Borrower shall confirm such telephonic or
electronic mail notice to Administrative Agent by facsimile on the day such
notice is given by delivery to Administrative Agent of a written notice in
substantially the form of Exhibit C-2, appropriately completed (a "Confirmation
of Interest Period Selection"). If Borrower fails to notify Administrative Agent
of the next Interest Period for any LIBOR Term Loans in accordance with this
Section 2.1.7(d)(ii), such Term Loans shall automatically convert to Base Rate
Term Loans on the last day of the current Interest Period therefor.
Administrative Agent shall promptly notify Borrower of each determination of the
Interest Rate applicable to each Term Loan.

            (e) Interest Computations. All computations of interest on Base Rate
Term Loans shall be based upon a year of 365 days or, in the case of a leap
year, 366 days, shall be payable for the actual days elapsed (including the
first day but excluding the last day), and shall be adjusted in accordance with
any changes in the Base Rate to take effect on the beginning of the day of such
change in the Base Rate. All computations of interest on LIBOR Term Loans shall
be based upon a year of 360 days and shall be payable for the actual days
elapsed (including the first day but excluding the last day). Borrower agrees
that all computations by Administrative Agent of interest shall be conclusive
and binding in the absence of manifest error.

            2.1.8 Promissory Notes. The obligation of Borrower to repay the Term
Loans made by a Lender and to pay interest thereon at the rates provided herein
shall, upon the written request of such Lender, be evidenced by promissory notes
in the form of Exhibit B (individually, a "Note" and, collectively, the
"Notes"), each payable to the order of such requesting Lender and in the
principal amount of such Lender's Term Loan Commitment. Borrower authorizes each
such requesting Lender to record on the schedule annexed to such Lender's Note,
the date and amount of the Term Loan made by such requesting Lender, and each
payment or prepayment of principal thereunder and agrees that all such notations
shall constitute prima facie evidence of the matters noted; provided that in the
event of any inconsistency between the records or books of Administrative Agent
and any Lender's records or Note, the records of Administrative Agent shall be
conclusive and binding in the absence of manifest error. Borrower further
authorizes each such requesting Lender to attach to and make a part of such
requesting Lender's Note continuations of the schedule attached thereto as
necessary. No failure to make any such

                                       5
<PAGE>

notations, nor any errors in making any such notations, shall affect the
validity of Borrower's obligations to repay the full unpaid principal amount of
the Term Loans or the duties of Borrower hereunder or thereunder. Upon the
payment in full in cash of the aggregate principal amount of, and all accrued
and unpaid interest on, the Term Loans, the Lenders holding such Notes shall
promptly mark the applicable Notes cancelled and return such cancelled Notes to
Borrower.

            2.1.9 Conversion of Loans. Borrower may convert Term Loans from one
Type of Term Loans to another Type of Term Loans; provided, however, that (i)
any conversion of LIBOR Term Loans into Base Rate Term Loans shall be effective
on, and only on, the last day of an Interest Period for such LIBOR Term Loans
and (ii) Term Loans shall be converted only in amounts of $5,000,000 and
increments of $1,000,000 in excess thereof. Borrower shall request such a
conversion by delivering to Administrative Agent a written notice in the form of
Exhibit C-3, appropriately completed (a "Notice of Conversion of Loan Type"),
which contains or specifies, among other things:

            (a) the Term Loans, or portion thereof, which are to be converted;

            (b) the Type of Term Loans into which such Term Loans, or portion
thereof, are to be converted;

            (c) if such Term Loans are to be converted into LIBOR Term Loans,
the initial Interest Period selected by Borrower for such Term Loans (which
Interest Period shall be selected in accordance with Section 2.1.7(d) and if an
Interest Period is not so designated a one month Interest Period shall be deemed
selected by Borrower);

            (d) the proposed date of the requested conversion (which shall be a
Banking Day and otherwise in accordance with this Section 2.1.9; and

            (e) a certification by Borrower that no Event of Default has
occurred and is continuing.

Borrower shall so deliver each Notice of Conversion of Loan Type so as to
provide at least the applicable Minimum Notice Period. Any Notice of Conversion
of Loan Type may be modified or revoked by Borrower through the Banking Day
prior to the Minimum Notice Period, and shall thereafter be irrevocable. Each
Notice of Conversion of Loan Type shall be delivered by first-class mail,
facsimile or electronic mail to Administrative Agent at the office, to the
facsimile number or to the electronic mail address and as otherwise specified in
Section 11.1; provided, however, that Borrower shall promptly deliver to
Administrative Agent the original of any Notice of Conversion of Loan Type
initially delivered by facsimile or electronic mail. Administrative Agent shall
promptly notify each Lender of the contents of each Notice of Conversion of Loan
Type.

            2.1.10 Prepayments.

            (a) Terms of All Prepayments.

                  (i) Upon the prepayment of any Term Loan (whether such
prepayment is an optional prepayment under Section 2.1.10(b) or a Mandatory
Prepayment),

                                        6
<PAGE>

Borrower shall pay to Administrative Agent for the account of the Lender which
made such Term Loan and/or Hedge Lender, as applicable, (A) all accrued interest
to the date of such prepayment on the amount of such Term Loan prepaid, (B) all
accrued fees to the date of such prepayment relating to the amount of such Term
Loan being prepaid, (C) to the extent required by the terms of the applicable
Interest Rate Agreement, all Hedge Breaking Fees owed by Borrower to such Hedge
Lender as a result of such prepayment, and (D) if such prepayment is the
prepayment of a LIBOR Term Loan on a day other than the last day of an Interest
Period for such LIBOR Term Loan, all Liquidation Costs incurred by such Lender
as a result of such prepayment (pursuant to the terms of Section 2.6).

                  (ii) Notwithstanding the foregoing, but only in respect of any
Mandatory Prepayment (other than a Mandatory Prepayment resulting from any
Mandatory Repayment Offer accepted by a Lender), Borrower shall have the right,
by giving three Banking Days' notice to Administrative Agent, in lieu of
prepaying a LIBOR Term Loan on a day other than the last day of an Interest
Period for such LIBOR Term Loan, to deposit or cause Administrative Agent to
deposit into an account to be held by Depositary Agent (which account shall be
subjected to the Lien of the Collateral Documents in a manner reasonably
satisfactory to Collateral Agent) an amount equal to the LIBOR Term Loans to be
prepaid. Such funds shall be held in such account until the expiration of the
Interest Period applicable to the LIBOR Term Loan to be prepaid at which time
the amount deposited in such account shall be used to prepay such LIBOR Term
Loan and any interest accrued on such amount shall be deposited into the Revenue
Account. All Term Loans to be prepaid using the proceeds from such account shall
continue to accrue interest at the then applicable interest rate for such Term
Loans until actually prepaid. All amounts in such account shall only be invested
in Permitted Investments as directed by and at the expense and risk of Borrower.

                  (iii) All prepayments of Term Loans shall be applied to reduce
the remaining payments required under Section 2.1.6 in inverse order of
maturity. Borrower may not re-borrow the principal amount of any Term Loan which
is prepaid.

            (b) Optional Prepayments.

                  (i) Borrower may not voluntarily prepay Term Loans
except as provided in clauses (ii) and (iii) of this Section 2.1.10(b).

                  (ii) In the event any voluntary prepayment is permitted
under this Agreement in accordance with clause (iii) of this Section 2.1.10(b),
Borrower may prepay any such Term Loans on any Banking Day in whole or in part,
in an aggregate minimum amount of $5,000,000 and integral multiples of
$1,000,000 (or the remaining amount outstanding) in excess of that amount. All
such prepayments shall be made upon (A) in the case of Base Rate Term Loans, one
Banking Day's prior written, email or telephonic notice to Administrative Agent
by 1:00 p.m. (New York City time) and (B) in the case of LIBOR Term Loans, three
Banking Days' prior written, email or telephonic notice to Administrative Agent
by 1:00 p.m. (New York City time) and in each case, if given by telephone,
promptly confirmed in writing to Administrative Agent (and Administrative Agent
will promptly notify each Lender of such notice). Upon the giving of any such
notice, the principal amount of the Term Loans specified in such notice shall
become due and payable on the prepayment date specified therein. Any prepayment
of any Term

                                       7
<PAGE>

Loan pursuant to this Section 2.1.10(b) shall be applied in accordance with
Sections 2.4.1 and 9.10. In connection with any optional prepayments under this
Section 2.1.10(b), Borrower shall terminate or partially terminate Hedge
Transactions such that the notional amount under all of the Hedge Transactions
does not exceed, in the aggregate, the principal amount of Terms Loans
outstanding immediately after giving effect to such prepayment.

                  (iii) Borrower shall not voluntarily prepay Term Loans
(a) at any time on or prior to June 24, 2007 or (b) notwithstanding anything to
the contrary in this Section 2.1.10(b)(iii), at any time prior to the date on
which Rocky Mountain Borrower's "Obligations" under the Rocky Mountain Credit
Agreement (other than those "Obligations" of Rocky Mountain Borrower intended to
survive the termination of the Rocky Mountain Credit Agreement) have been paid
in full in cash by Rocky Mountain Borrower. Upon the later of (A) June 24, 2007
and (B) the date on which Rocky Mountain Borrower's "Obligations" under the
Rocky Mountain Credit Agreement (other than those "Obligations" of Rocky
Mountain Borrower intended to survive the termination of the Rocky Mountain
Credit Agreement) have been paid in full in cash by Rocky Mountain Borrower,
Borrower may voluntarily prepay Term Loans pursuant to the applicable provision
below:

                        (1) Subject to clause (ii) of this Section 2.1.10(b),
Borrower may, at its option prepay at any time all, or from time to time any
part of, the Term Loans, if such prepayment is (x) after June 24, 2007 but on or
before June 24, 2008, in an amount equal to 102% of the principal amount of the
Term Loans so prepaid, plus all accrued and unpaid interest thereon and other
amounts owed hereunder in connection with such prepayment (including amounts
payable under Sections 2.5 and 2.6 hereof), or (y) after June 24, 2008 but on or
before June 24, 2009, in an amount equal to 101% of the principal amount so
prepaid, plus all accrued and unpaid interest and other amounts thereon owed
hereunder in connection with such prepayment (including amounts payable under
Sections 2.5 and 2.6 hereof); and

                        (2) Subject to Section 2.1.10(a) and clause (ii) of this
Section 2.1.10(b), Term Loans may be prepaid at any time without premium or
penalty after June 24, 2009.

            (c) Mandatory Prepayments. Borrower shall prepay (or cause to be
prepaid) Term Loans to the extent required by Section 3.2.2(b), 3.2.2(c) or 3.5
of the Depositary Agreement, Section 2.1.10(d) (to the extent any Mandatory
Repayment Offer is accepted by a Lender) or 7.2 of this Agreement or any other
provision of this Agreement or any other Credit Document which requires such
prepayment (such prepayment, a "Mandatory Prepayment").

            (d) Mandatory Repayment Offers.

            In the event that, pursuant to Section 5.13, Borrower shall be
required to offer to prepay Term Loans, then Borrower shall make an offer to
each Lender (a "Mandatory Repayment Offer") in accordance with the following
procedures specified below:

                  (i) Borrower shall make a Mandatory Repayment Offer
under this Agreement within 30 days following a Change of Control and shall keep
such Mandatory

                                        8
<PAGE>

Repayment Offer open until 5:00 p.m. (New York City time) on the date specified
in such Mandatory Repayment Offer, which date shall be no earlier than 30 days
and no later than 60 days from the date such Mandatory Repayment Offer was made,
except to the extent that a longer period is required by applicable law (the
"Offer Period");

                  (ii) Borrower shall make the Mandatory Repayment Offer
by sending a notice to Administrative Agent (for delivery to each Lender) in
accordance with Section 11.1. The notice shall contain all instructions and
materials necessary to enable the Lenders to accept the Mandatory Repayment
Offer for all of their Term Loans pursuant to the Mandatory Repayment Offer. The
Mandatory Repayment Offer shall be made to all Lenders. The notice, which shall
govern the terms of the Mandatory Repayment Offer, shall state:

                        (A) the total amount Borrower is offering to prepay (the
"Offer Amount"), which amount shall be an amount equal to at least 101% of the
aggregate principal amount of Term Loans then outstanding, plus, in each case,
accrued and unpaid interest thereon, to but excluding the date of repayment,
plus, in each case, any other amount then required to be paid hereunder, and the
Mandatory Repayment Date therefor;

                        (B) that Rocky Mountain Borrower is making the same
offer to the Rocky Mountain Lenders to purchase the Rocky Mountain Term Loans;

                        (C) that the Mandatory Repayment Offer is being made
pursuant to this Section 2.1.10(d) and Section 5.13 and the date on which the
Mandatory Repayment Offer shall end;

                        (D) that, unless Borrower defaults in making such
payment, any Term Loan with respect to which a Lender accepts the Mandatory
Repayment Offer shall cease to accrue interest from and after the Mandatory
Repayment Date;

                        (E) that a Lender that accepts a Mandatory Repayment
Offer must accept such Mandatory Repayment Offer with respect to all (but not
part) of its Term Loans and all (but not part) of its Rocky Mountain Term Loans;
and

                        (F) that the Lenders shall be entitled to withdraw their
acceptance of a Mandatory Repayment Offer if Borrower and Administrative Agent
receive, not later than the expiration of the Offer Period, a notice setting
forth the name of the Lender, the principal amount of the Term Loans and Rocky
Mountain Term Loans for which the Lender previously accepted such Mandatory
Repayment Offer and a statement that such Lender is rescinding its acceptance of
such Mandatory Repayment Offer under this Agreement and under the Rocky Mountain
Credit Agreement; and

                  (iii) On or before the fifth day after the termination
of the Offer Period (the "Mandatory Repayment Date"), Borrower shall (A) to the
extent lawful, pay, in accordance with Sections 2.4.1 and 9.10, the amount of
Term Loans with respect to which the Mandatory Repayment Offer was accepted
(together with all accrued and unpaid interest thereon, to but excluding the
date of repayment and any other amount then required to be paid under this
Agreement), and (B) deliver to Administrative Agent (for delivery to the
Lenders) a certificate duly executed by a Responsible Officer stating the amount
of the Term Loans to be repaid in

                                        9
<PAGE>

accordance with the terms of this Section 2.1.10(d). Administrative Agent shall
promptly forward the appropriate amount to each Lender being repaid.

      2.2   FEES.

            Borrower agrees to pay to, as applicable, each Lender and each of
Administrative Agent, Collateral Agent, Depositary Agent and Lead Arranger the
fees and expenses in the amounts and at the times separately agreed upon by
Borrower and such Person in writing, including those fees and expenses set forth
in the Fee Letters.

      2.3   OTHER PAYMENT TERMS.

            2.3.1 Place and Manner. Except as otherwise provided in the Fee
Letters or any other provision contained in any of the Credit Documents,
Borrower shall make all payments due to any Lender, Collateral Agent, or
Administrative Agent hereunder to Administrative Agent, for the account of such
Lender, Collateral Agent, or Administrative Agent (as the case may be), to the
account designated for such purpose from time to time by Administrative Agent to
Borrower, in Dollars and in immediately available funds not later than 1:00 p.m.
on the date on which such payment is due. Any payment made after such time on
any day shall be deemed received on the Banking Day after such payment is
received. Administrative Agent shall disburse to each Lender or Collateral Agent
(as the case may be) each such payment received by Administrative Agent for such
Lender or Collateral Agent (as the case may be), such disbursement to occur on
the day such payment is received if received by 1:00 p.m. or if otherwise
reasonably possible, or otherwise on the next Banking Day.

            2.3.2 Date. Whenever any payment due hereunder shall fall due on a
day other than a Banking Day, such payment shall be made on the next succeeding
Banking Day, and such extension of time shall be included in the computation of
interest or fees, as the case may be, without duplication of any interest or
fees so paid in the next subsequent calculation of interest or fees payable.

            2.3.3 Default Interest. Notwithstanding anything to the contrary
herein, upon the occurrence and during the continuation of any Event of Default,
the outstanding principal amount of all Term Loans and, to the extent permitted
by applicable Legal Requirements, any accrued but unpaid interest payments
thereon and any accrued but unpaid fees and other amounts hereunder, shall
thereafter bear interest (including post-petition interest in any proceeding
under applicable Bankruptcy Laws) payable upon demand at a rate that is (a) 2%
per annum in excess of the interest rate then otherwise payable under this
Agreement with respect to the applicable Term Loans or (b) in the case of any
such fees and other amounts, at a rate that is 2% per annum in excess of the
interest rate then otherwise payable under this Agreement for Base Rate Term
Loans (the "Default Rate"); provided that, in the case of LIBOR Term Loans, upon
the expiration of the Interest Period in effect at the time any such increase in
interest rate is effective, such LIBOR Term Loans shall thereupon become Base
Rate Term Loans and shall thereafter bear interest payable upon demand at a rate
that is 2% per annum in excess of the interest rate then otherwise payable under
this Agreement for Base Rate Term Loans.

                                       10
<PAGE>

            2.3.4 Taxes.

            (a) Payments to Be Free and Clear. Except as otherwise provided in
this Section 2.3.4 and in Section 9.9, all sums payable by or on behalf of
Borrower or any of its Affiliates hereunder and under the other Credit Documents
shall (except to the extent required by any applicable Legal Requirement) be
paid free and clear of, and without any deduction or withholding on account of,
any Tax imposed, levied, collected, withheld or assessed by or within the U.S.
or any political subdivision in or of the U.S. or any other jurisdiction from or
to which a payment is made by or on behalf of Borrower or such Affiliate.

            (b) Withholding of Taxes. If Borrower or any other Person is
required by law to make any deduction or withholding on account of any such Tax
from any sum paid or payable by or on behalf of Borrower to Administrative
Agent, Collateral Agent or any Lender under any of the Credit Documents but
excluding, for purposes of this Section 2.3.4, the Interest Rate Agreements,
including the Hedge Transactions thereunder:

                  (i) Borrower shall notify Administrative Agent of any
such requirement or any change in any such requirement as soon as Borrower
becomes aware of it;

                  (ii) Borrower shall pay any such Tax before the date on
which penalties attach thereto, such payment to be made (if the liability to pay
is imposed on Borrower or such other Person) for its own account or (if that
liability is imposed on such Administrative Agent, Collateral Agent or Lender,
as the case may be) on behalf of and in the name of such Administrative Agent,
Collateral Agent or Lender;

                  (iii) the sum payable by Borrower or such other Person
in respect of which the relevant deduction, withholding or payment is required
shall be increased to the extent necessary to ensure that, after the making of
all deductions, withholding or payments for or with respect to Taxes, such
Administrative Agent, Collateral Agent or Lender, as the case may be, receives
on the due date a net sum equal to what it would have received had no such
deduction, withholding or payment been required or made; and

                  (iv) within 30 days after paying any sum from which it
is required by law to make any deduction or withholding, and within 30 days
after the due date of payment of any Tax which it is required by clause (ii) of
this Section 2.3.4(b) to pay, Borrower shall deliver to Administrative Agent
evidence satisfactory to the other affected parties of such deduction,
withholding or payment and of the remittance thereof to the relevant taxing or
other authority;

provided that no such additional amount shall be required to be paid to any
Lender, Administrative Agent or Collateral Agent under clause (iii) of this
Section 2.3.4(b) except to the extent that any change after the date hereof (in
the case of each Lender, Administrative Agent and Collateral Agent listed on the
signature pages hereof on the Closing Date) or after the effective date of the
Assignment and Acceptance pursuant to which such Lender became a Lender (in the
case of each other Lender), as the case may be, in any such requirement for a
deduction, withholding or payment as is mentioned therein shall result in either
the imposition of deduction, withholding or payment or an increase in the rate
of such deduction, withholding or payment from the rate in effect at the date
hereof or at the date of such Assignment and

                                       11
<PAGE>

Acceptance, as the case may be, in respect of payments to such Lender,
Administrative Agent or Collateral Agent.

            (c) Other Taxes. Borrower shall pay any Other Taxes to the relevant
taxing or other authority in accordance with applicable Legal Requirements, and
shall comply with the requirements of this Section 2.3.4 with respect to such
payments.

            (d) Indemnification. Subject to the provisions below and the
provisions of Section 9.9, Borrower shall indemnify Administrative Agent,
Collateral Agent and each Lender for the full amount of Taxes (to the extent
Borrower would be required to pay additional amounts with respect to such Taxes
pursuant to this Section 2.3.4) or Other Taxes arising in connection with
payments made under any of the Credit Documents (including any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this Section 2.3.4)
paid by such Administrative Agent, Collateral Agent or Lender and any penalties,
additions to tax, interest and expenses arising from or with respect to such
Taxes or Other Taxes, whether or not such Taxes or Other Taxes were correctly or
legally asserted; provided that Borrower shall not be obligated to indemnify
such Administrative Agent, Collateral Agent or Lender for any penalties,
interest or expenses relating to Taxes or Other Taxes arising from such
Administrative Agent's, Collateral Agent's or Lender's gross negligence or
willful misconduct. Each Lender and each of Administrative Agent and Collateral
Agent agrees to give written notice to Borrower of the assertion of any claim
against such Lender, Administrative Agent or Collateral Agent relating to such
Taxes or Other Taxes as promptly as is practicable after being notified of such
assertion, and in no event later than 180 days after the principal officer of
such Lender, Administrative Agent or Collateral Agent responsible for
administering this Agreement obtains knowledge thereof; provided that any
Lender's, Administrative Agent's or Collateral Agent's failure to notify
Borrower of such assertion within such 180 day period shall not relieve Borrower
of its obligation under this Section 2.3.4 with respect to Taxes or Other Taxes,
penalties, interest or expenses arising prior to the end of such period, but
shall relieve Borrower of its obligations under this Section 2.3.4 with respect
to Taxes or Other Taxes, penalties, interest or expenses between the end of such
period and such time as Borrower receives notice from such Lender,
Administrative Agent or Collateral Agent as provided herein. Payment under this
indemnification shall be made within 30 days from the date any Lender,
Administrative Agent or Collateral Agent makes written demand therefor. A
certificate setting forth in reasonable detail the amount of such
indemnification payment and the basis for determining such indemnification
payment, shall be submitted by such Person to Borrower and shall, in the absence
of manifest error, be conclusive and binding on Borrower for purposes of this
Agreement.

            (e) Evidence of Exemption From U.S. Withholding Tax. Administrative
Agent, Collateral Agent and each Lender that is not a United States Person (as
such term is defined in Section 7701(a)(30) of the Code) for U.S. federal income
tax purposes (a "Non-U.S. Lender") shall deliver to the Administrative Agent for
transmission to Borrower, on or prior to the Closing Date (in the case of each
Lender listed on the signature pages hereof on the Closing Date) or on or prior
to the date of the Assignment and Acceptance pursuant to which it becomes a
Lender (in the case of each other Lender), and at such other times as may be
necessary in the determination of Borrower or the Administrative Agent (each in
the reasonable exercise of its discretion):

                                       12
<PAGE>

                  (i) two original copies of Internal Revenue Service Form
W-8BEN or W-8ECI (or any successor forms), properly completed and duly executed
by such Administrative Agent, Collateral Agent or Lender, and such other
documentation required under the Code and reasonably requested by Borrower to
establish that such Administrative Agent, Collateral Agent or Lender is not
subject to deduction or withholding of United States federal income tax with
respect to any payments to such Administrative Agent, Collateral Agent or Lender
of principal, interest, fees or other amounts payable under any of the Credit
Documents or is subject to such deduction or withholding at a reduced rate; or

                  (ii) if such Administrative Agent, Collateral Agent or
Lender is not a "bank" or other Person described in Section 881(c)(3) of the
Code and is claiming exemption from U.S. federal withholding tax under Section
871(h) or 881(c) of the Code with respect to payments of "portfolio interest", a
Certificate Re Non-Bank Status in the form of Exhibit J hereto, together with
two original copies of Internal Revenue Service Form W-8 (or any successor
form), properly completed and duly executed by such Administrative Agent,
Collateral Agent or Lender, and such other documentation required under the Code
and reasonably requested by Borrower to establish that such Administrative
Agent, Collateral Agent or Lender is not subject to deduction or withholding of
United States federal income tax with respect to any payments to such
Administrative Agent, Collateral Agent or Lender of interest payable under any
of the Credit Documents.

Each Person required to deliver any forms, certificates or other evidence with
respect to United States federal income tax withholding matters pursuant to this
Section 2.3.4 hereby agrees, from time to time after the initial delivery by
such Person of such forms, certificates or other evidence, whenever a lapse in
time or change in circumstances renders such forms, certificates or other
evidence obsolete or inaccurate in any material respect, that such Person shall
promptly deliver to Administrative Agent for transmission to Borrower two new
original copies of Internal Revenue Service Form W-8BEN or W-8ECI, or a
Certificate re Non-Bank Status and two original copies of Internal Revenue
Service Form W-8, as the case may be, properly completed and duly executed by
such Person, and such other documentation required under the Code and reasonably
requested by Borrower to confirm or establish that such Person is not subject to
deduction or withholding of United States federal income tax with respect to
payments to such Person under the Credit Documents or is subject to such
deduction or withholding at a reduced rate, or notify Administrative Agent and
Borrower of its inability to deliver any such forms, certificates or other
evidence. Borrower shall not be required to pay any additional amount to
Administrative Agent, Collateral Agent or any Non-U.S. Lender under this Section
2.3.4 or to indemnify Administrative Agent, Collateral Agent or any Non-U.S.
Lender under this Section 2.3.4 if such Person shall have failed (1) to deliver
the forms, certificates or other evidence referred to in the second sentence of
this Section 2.3.4(e), or (2) to notify Administrative Agent and Borrower of its
inability to deliver any such forms, certificates or other evidence, as the case
may be; provided, if such Person shall have satisfied the requirements of the
first sentence of this Section 2.3.4(e) on the Closing Date or on the date of
the Assignment and Acceptance pursuant to which it became a Lender, as
applicable, nothing in this last sentence of this Section 2.3.4(e) shall relieve
Borrower of its obligation to pay any additional amounts pursuant to Section
2.3.4(b) or to indemnify such Non-U.S. Lender under Section 2.3.4(d) in the
event that, as a result of any change in any applicable Legal Requirement, or
any change in the interpretation, administration or application thereof, such
Person is no longer properly entitled to

                                       13
<PAGE>

deliver forms, certificates or other evidence at a subsequent date establishing
the fact that such Person is not subject to withholding as described herein. For
the avoidance of doubt, to the extent the form provided by Administrative Agent,
Collateral Agent or a Lender at the time such Administrative Agent, Collateral
Agent or Lender first becomes a party to this Agreement indicates a U.S.
withholding tax rate in excess of zero, withholding tax at such rate shall be
considered excluded from Taxes.

            2.3.5 Application of Payments. Except as otherwise expressly
provided herein or in the other Credit Documents, payments made under this
Agreement or the other Credit Documents and other amounts received by
Administrative Agent, Collateral Agent, Depositary Agent or the Lenders under
this Agreement or the other Credit Documents shall first be applied to any fees,
costs, charges or expenses payable to Administrative Agent, Collateral Agent,
Depositary Agent or the Lenders hereunder or under the other Credit Documents,
next to any accrued but unpaid interest then due and owing, and then to
outstanding principal then due and owing or otherwise to be prepaid (in each
case, such application to be made on a pro rata basis among such applicable
Persons).

      2.4   PRO RATA TREATMENT.

            2.4.1 Borrowings, Commitment Reductions, Etc. Except as otherwise
provided herein, (a) the Closing Date Borrowing of Term Loans and any reduction
of Total Term Loan Commitment shall be made or allocated among the Lenders pro
rata according to their respective Proportionate Shares of such Term Loans or
Term Loan Commitment, as the case may be, (b) except in the case of a Mandatory
Repayment Offer pursuant to Section 2.1.10(d) whereby payments shall be
allocated to each accepting Lender's Term Loans (and not to all Lenders based on
Proportionate Shares), each payment of principal of and interest on Term Loans
shall be made or shared among the Lenders holding such Term Loans pro rata
according to their respective unpaid principal amounts of such Term Loans held
by such Lenders, and (c) each payment of any fees payable to all Lenders shall
be shared among the Lenders pro rata according to (i) their respective
Proportionate Shares of such fees, and (ii) in the case of each Lender which
becomes a party to this Agreement hereunder after the Closing Date, the date
upon which such Lender so became a party hereunder.

            2.4.2 Sharing of Payments, Etc. Except in the case of a Mandatory
Repayment Offer pursuant to Section 2.1.10(d) whereby payments shall be
allocated to each accepting Lender's Term Loans (and not to all Lenders based on
Proportionate Shares), if any Lender shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of setoff, or
otherwise) on account of Term Loans owed to it, in excess of its Proportionate
Share of payments on account of such Term Loans obtained by all Lenders entitled
to such payments, such Lender shall forthwith purchase from the other Lenders
such participation in the Term Loans, as the case may be, as shall be necessary
to cause such purchasing Lender to share the excess payment ratably with each of
them; provided, however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from such Lender
shall be rescinded and each other Lender shall repay to the purchasing Lender
the purchase price to the extent of such recovery together with an amount equal
to such other Lender's Proportionate Share (according to the proportion of (a)
the amount of such other Lender's required repayment to (b) the total amount so
recovered from the purchasing Lender) of

                                       14
<PAGE>

any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. Borrower agrees that any Lender so purchasing
a participation from another Lender pursuant to this Section 2.4.2 may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of setoff) with respect to such participation as fully as if such
Lender were the direct creditor of Borrower in the amount of such participation.

      2.5   CHANGE OF CIRCUMSTANCES.

            2.5.1 Inability to Determine Rates. If, on or before the first day
of any Interest Period for any LIBOR Term Loans, (a) Administrative Agent
determines that the LIBO Rate for such Interest Period cannot be adequately and
reasonably determined due to the unavailability of funds in or other
circumstances affecting the London interbank market, or (b) Lenders holding
aggregate Proportionate Shares of 33-1/3% or more of the outstanding Term Loans
shall advise Administrative Agent that (i) the rates of interest for such LIBOR
Term Loans do not adequately and fairly reflect the cost to such Lenders of
making or maintaining such Term Loans or (ii) deposits in Dollars in the London
interbank market are not available to such Lenders (as conclusively certified by
each such Lender in good faith in writing to Administrative Agent and to
Borrower) in the ordinary course of business in sufficient amounts to make
and/or maintain their LIBOR Term Loans, then Administrative Agent shall
immediately give notice of such condition to Borrower. After the giving of any
such notice and until Administrative Agent shall otherwise notify Borrower that
the circumstances giving rise to such condition no longer exist, Borrower's
right to request the making of or conversion to, and the Lenders' obligations to
make or convert to, LIBOR Term Loans shall be suspended. Any LIBOR Term Loans
outstanding at the commencement of any such suspension shall be converted at the
end of the then current Interest Period for such Term Loans into Base Rate Term
Loans unless such suspension has then ended.

            2.5.2 Illegality. If, after the date of this Agreement, the adoption
of any Governmental Rule, any change in any Governmental Rule or the application
or requirements thereof (whether such change occurs in accordance with the terms
of such Governmental Rule as enacted, as a result of amendment, or otherwise),
any change in the interpretation or administration of any Governmental Rule by
any Governmental Authority, or compliance by any Lender or Borrower with any
request or directive (whether or not having the force of law, but if not having
the force of law, being of a type with which a Lender customarily complies) of
any Governmental Authority (a "Change of Law") shall make it unlawful or
impossible for any Lender to make or maintain any LIBOR Term Loan, then such
Lender shall immediately notify Administrative Agent and Borrower of such Change
of Law. Upon receipt of such notice, (a) Borrower's right to request the making
of or conversion to, and the Lender's obligations to make or convert to, LIBOR
Term Loans shall be suspended for so long as such condition shall exist, and (b)
Borrower shall, at the request of such Lender, either (i) pursuant to Section
2.1.9, convert any then outstanding LIBOR Term Loans into Base Rate Term Loans
at the end of the current Interest Periods for such Term Loans, or (ii)
immediately repay, to the extent otherwise permitted under this Agreement,
pursuant to Section 2.1.10 or convert LIBOR Term Loans of the affected Type into
Base Rate Term Loans if such Lender shall notify Borrower that such Lender may
not lawfully continue to fund and maintain such Term Loans. Any conversion or
prepayment of LIBOR Term Loans made pursuant to the preceding sentence prior to
the last day

                                       15
<PAGE>

of an Interest Period for such Term Loans shall be deemed a
prepayment thereof for purposes of Section 2.6.

            2.5.3 Increased Costs. If, after the date of this Agreement, any
Change of Law:

            (a) shall subject any Lender to any tax, duty or other charge with
respect to any LIBOR Term Loan or Term Loan Commitment in respect thereof, or
shall change the basis of taxation of payments by Borrower to any Lender on such
a Term Loan or with respect to any such Term Loan Commitment (except for Taxes,
Other Taxes or the imposition of or changes in the rate of taxation on the
overall net income of any Lender); or

            (b) shall impose, modify or hold applicable any reserve, special
deposit or similar requirement (without duplication of any reserve requirement
included within the applicable Interest Rate through the definition of "Reserve
Requirement") against assets held by, deposits or other liabilities in or for
the account of, advances or loans by, or any other acquisition of funds by any
Lender for any LIBOR Term Loan; or

            (c) shall impose on any Lender any other condition directly related
to any LIBOR Term Loan or Term Loan Commitment in respect thereof;

and the effect of any of the foregoing is to increase the cost to such Lender of
making, issuing, creating, renewing, participating in (subject to the
limitations in Section 9.12) or maintaining any such LIBOR Term Loan or Term
Loan Commitment in respect thereof or to reduce any amount receivable by such
Lender hereunder, then Borrower shall from time to time, within ten days after
demand by such Lender, pay to such Lender additional amounts sufficient to
reimburse such Lender for such increased costs or to compensate such Lender for
such reduced amounts. A certificate setting forth in reasonable detail the
amount of such increased costs or reduced amounts and the basis for
determination of such amount, submitted by such Lender to Borrower, shall, in
the absence of manifest error, be conclusive and binding on Borrower for
purposes of this Agreement.

            2.5.4 Capital Requirements. If any Lender determines that (a) any
Change of Law after the date of this Agreement increases the amount of capital
required or expected to be maintained by such Lender, or the Lending Office of
such Lender or any Person controlling such Lender (a "Capital Adequacy
Requirement"), and (b) the amount of capital maintained by such Lender or such
Person which is attributable to or based upon the Term Loans, the Term Loan
Commitment or this Agreement must be increased as a result of such Capital
Adequacy Requirement (taking into account such Lender's or such Person's
policies with respect to capital adequacy), then Borrower shall pay to such
Lender or such Person, within ten days after delivery of demand by such Lender
or such Person, such amounts as such Lender or such Person shall reasonably
determine are necessary to compensate such Lender or such Person for the
increased costs to such Lender or such Person of such increased capital. A
certificate of such Lender or such Person, setting forth in reasonable detail
the computation of any such increased costs, delivered to Borrower by such
Lender or such Person shall, in the absence of manifest error, be conclusive and
binding on Borrower for purposes of this Agreement.

                                       16
<PAGE>

            2.5.5 Notice; Lenders' Rights. Each Lender shall notify Borrower of
any event occurring after the date of this Agreement that will entitle such
Lender to compensation pursuant to this Section 2.5, as promptly as practicable,
and in no event later than 180 days after the principal officer of such Lender
responsible for administering this Agreement obtains knowledge thereof; provided
that any Lender's failure to notify Borrower within such 180 day period shall
not relieve Borrower of its obligation under this Section 2.5 with respect to
claims arising prior to the end of such period, but shall relieve Borrower of
its obligations under this Section 2.5 with respect to the time between the end
of such period and such time as Borrower receives notice from the indemnitee as
provided herein. No Person purchasing from a Lender a participation or
assignment in any Term Loan or Term Loan Commitment shall be entitled to any
payment from or on behalf of Borrower pursuant to Section 2.5.3 or Section 2.5.4
which would be in excess of the applicable proportionate amount (based on the
portion of the Term Loan or Total Term Loan Commitment in which such Person is
participating) which would then be payable to such Lender if such Lender had not
sold a participation or assignment in that portion of the Term Loan or Term Loan
Commitment.

      2.6   FUNDING LOSSES.

            If Borrower shall (a) repay or prepay any LIBOR Term Loans on any
day other than the last day of an Interest Period for such Term Loans (whether
an optional prepayment or a Mandatory Prepayment), (b) fail to borrow any LIBOR
Term Loans in accordance with a Notice of Borrowing delivered to Administrative
Agent (whether as a result of the failure to satisfy any applicable conditions
or otherwise) after such Notice of Borrowing has become irrevocable, (c) fail to
convert any Term Loans into LIBOR Term Loans in accordance with a Notice of
Conversion of Loan Type delivered to Administrative Agent (whether as a result
of the failure to satisfy any applicable conditions or otherwise) after such
Notice of Conversion of Loan Type has become irrevocable, (d) fail to continue a
LIBOR Term Loan in accordance with a Confirmation of Interest Period Selection
delivered to Administrative Agent, or (e) fail to make any prepayment in
accordance with any notice of prepayment delivered to Administrative Agent, then
Borrower shall, within ten days after demand by any Lender, reimburse such
Lender for all reasonable costs and losses incurred by such Lender as a result
of such repayment, prepayment or failure ("Liquidation Costs"). Borrower
understands that such costs and losses may include losses incurred by a Lender
as a result of funding and other contracts entered into by such Lender to fund
LIBOR Term Loans (other than non-receipt of the margin applicable to such LIBOR
Term Loans). Each Lender demanding payment under this Section 2.6 shall deliver
to Borrower a certificate setting forth in reasonable detail the basis for and
the amount of costs and losses for which demand is made. Such a certificate so
delivered to Borrower shall, in the absence of manifest error, be conclusive and
binding as to the amount of such loss for purposes of this Agreement.

      2.7   ALTERNATE OFFICE; MINIMIZATION OF COSTS.

            2.7.1 To the extent reasonably possible, each Lender shall designate
an alternative Lending Office with respect to its LIBOR Term Loans and otherwise
take any reasonable actions to reduce any liability of Borrower to any Lender
under Section 2.3.4, 2.5.3, 2.5.4 or 2.6, or to avoid the unavailability of any
Type of Term Loans under Section 2.5.2 so long as (in the case of the
designation of an alternative Lending Office) such Lender, in its sole

                                       17
<PAGE>

discretion, determines that (a) such designation is not disadvantageous to such
Lender and (b) such actions would eliminate or reduce liability to such Lender.
Borrower hereby agrees to pay all reasonable costs and expenses incurred by any
Lender in connection with any such designation or actions within ten Banking
Days of demand thereof to Borrower.

            2.7.2 Notwithstanding anything to the contrary herein, in the event
that:

            (a) any Lender (an "Increased-Cost Lender") shall give notice to
Borrower that such Lender is a Lender is entitled to receive payments under
Sections 2.3.4 or 2.5, (ii) the circumstances which have caused such Lender to
be an Increased-Cost Lender or which entitle such Lender to receive such
payments shall remain in effect, and (iii) such Lender shall fail to withdraw
such notice within five Business Days after Borrower's request for such
withdrawal; or

            (b) in connection with any proposed amendment, modification,
termination, waiver or consent with respect to any of the provisions hereof as
contemplated by Section 9.8, the consent of Majority Lenders, Supermajority
Lenders or all necessary Lenders, as the case may be, shall have been obtained,
except for one or more of such other Lenders (each a "Non-Consenting Lender")
whose consent is required shall not have been obtained;

then, with respect to each such Increased-Cost Lender or Non-Consenting Lender
(the "Terminated Lender"), Borrower may, by giving written notice to
Administrative Agent and any Terminated Lender of its election to do so, elect
to cause such Terminated Lender (and such Terminated Lender hereby irrevocably
agrees) to assign its outstanding Term Loans in full to one or more Eligible
Assignees who are reasonably acceptable to Administrative Agent (each a
"Replacement Lender") in accordance with the provisions of Section 9.12
(including the requirement that the Terminated Lender assign its outstanding
Rocky Mountain Term Loans to such Replacement Lender in accordance with the
Rocky Mountain Credit Agreement) and Borrower shall pay any fees payable
thereunder in connection with such assignment; provided:

                  (i) on the date of such assignment, the Replacement
Lender and/or Borrower shall pay to such Terminated Lender an amount equal to
the sum of (A) an amount equal to the principal of, and all accrued interest on,
all outstanding Term Loans of the Terminated Lender, and (B) an amount equal to
all accrued, but theretofore unpaid, fees owing to such Terminated Lender
pursuant to Section 2.2;

                  (ii) on the date of such assignment, the Borrower shall
pay any amounts payable to such Terminated Lender pursuant to Section 2.3.4 or
2.5; provided that no premium on such amounts shall be required to be paid;

                  (iii) in the event such Terminated Lender is a
Non-Consenting Lender, each Replacement Lender shall consent, at the time of
such assignment, to each matter in respect of which such Terminated Lender was a
Non-Consenting Lender; and

                  (iv) no Event of Default shall have occurred and be
continuing at the time of such termination and replacement (other than, in the
case of a replacement predicated upon clause (b) above, the Event of Default
that is the subject of the vote referred to in clause (b) above).

                                       18
<PAGE>

Upon the prepayment of all amounts owing to any Terminated Lender, such
Terminated Lender shall no longer constitute a "Lender" under any of the Credit
Documents; provided, any rights of such Terminated Lender to indemnification
hereunder shall survive as to such Terminated Lender.

            2.7.3 Upon written notice to Administrative Agent, any Lender may
designate a Lending Office other than the Lending Office most recently
designated to Administrative Agent and may assign all of its interests under the
Credit Documents and its Notes (if any) to such Lending Office; provided that
such designation and assignment do not at the time of such designation and
assignment increase the reasonably foreseeable liability of Borrower under
Section 2.3.4, 2.5.3 or 2.5.4 or make an Interest Rate option unavailable
pursuant to Section 2.5.2.

                                   ARTICLE 3
                              CONDITIONS PRECEDENT

      3.1   CONDITIONS PRECEDENT TO THE CLOSING DATE.

            The obligation of each Lender to make the Term Loans under this
Agreement is subject to the prior satisfaction of each of the following
conditions (unless waived in writing by Administrative Agent with the consent of
the Lenders) (the date such conditions precedent are so satisfied or waived and
the date the Term Loans are made hereunder being referred to as the "Closing
Date"):

            3.1.1 Resolutions. Delivery to Administrative Agent of a copy of one
or more resolutions or other authorizations, in form and substance reasonably
satisfactory to Administrative Agent, of Borrower, the Pledgor and Operator (the
"Calpine Entities") as of the Closing Date certified by a Responsible Officer of
each such Calpine Entity as being in full force and effect on the Closing Date,
authorizing, as applicable and among other things, the Borrowing herein provided
for, the granting of the Liens under the Collateral Documents and the execution,
delivery and performance of this Agreement and the other Operative Documents and
any instruments or agreements required hereunder or thereunder to which such
Calpine Entity is a party.

            3.1.2 Incumbency. Delivery to Administrative Agent of a certificate,
in form and substance reasonably satisfactory to Administrative Agent, from each
Calpine Entity signed by the appropriate authorized officer or manager of each
such Calpine Entity and dated as of the Closing Date, as to the incumbency of
the natural Persons authorized to execute and deliver this Agreement and the
other Operative Documents and any instruments or agreements required hereunder
or thereunder to which such Calpine Entity is a party.

            3.1.3 Formation Documents. Delivery to Administrative Agent of:

            (a) copies of the articles of incorporation, certificate of
incorporation, charter or other state certified constituent documents of each
Calpine Entity, certified by the secretary of state of such Calpine Entity's
state of incorporation or formation, as applicable; and

            (b) copies of the bylaws, limited liability company operating
agreement or other comparable constituent documents, if applicable, of each
Calpine Entity, certified by a

                                       19
<PAGE>

Responsible Officer of such Calpine Entity as being true, correct and complete
on the Closing Date.

            3.1.4 Good Standing Certificates. Delivery to Administrative Agent
of certificates issued by (a) the secretary of state of the state in which each
Calpine Entity is formed or incorporated, as applicable, and (b) in the case of
Borrower and Operator, the Secretary of State of Wisconsin, in each case (i)
dated a date reasonably close to the Closing Date and (ii) certifying that such
Calpine Entity is in good standing and is qualified to do business in, and has
paid all franchise taxes or similar taxes due to, such states.

            3.1.5 Third Party Approvals. Administrative Agent shall have
received all information and copies of all documents and copies of any approval
by any Person (including any Governmental Authority) reasonably required in
connection with any transaction herein contemplated or contemplated in any other
Credit Document, which Administrative Agent may reasonably have requested in
connection herewith.

            3.1.6 Credit Documents and Project Documents. Delivery to
Administrative Agent of (a) executed originals of this Agreement and each other
Credit Document to be executed on the Closing Date (including the Notes (if
any), the Security Agreement, the Pledge Agreement, the Intercreditor Agreement,
the Mortgage, the Depositary Agreement, the Subordination Agreements, but
excluding the Consents, the delivery of which is provided for under Section
3.1.31) and any supplements or amendments thereto, all of which shall be in form
and substance reasonably satisfactory to the Lenders, and (b) a certified list
of, and true, correct and complete copies of, each Major Project Document
executed on or prior to the Closing Date, each in form and substance reasonably
satisfactory to the Lenders, and, in each case, all of which shall have been
duly authorized, executed and delivered by the parties thereto, and all of which
Major Project Documents shall be certified by a Responsible Officer of Borrower
as being true, complete and correct and in full force and effect on the Closing
Date pursuant to the certificate delivered pursuant to Section 3.1.7 below.

            3.1.7 Certificate of Borrower. Delivery to Administrative Agent of a
certificate, dated as of the Closing Date, duly executed by a Responsible
Officer of Borrower, in substantially the form of Exhibit F-1, which certificate
shall, among other things, (a) state that neither Borrower nor, to Borrower's
knowledge, any other party to any Major Project Document is or, but for the
passage of time or giving of notice or both will be, in breach of any material
obligation thereunder, (b) state that all conditions precedent to the
performance of Borrower, and, to Borrower's knowledge, all conditions precedent
to the performance of the other parties under such Major Project Documents then
required to have been performed shall have been satisfied, (c) state that the
representations and warranties of Borrower in this Agreement and the other
Credit Documents are true and correct as of the Closing Date (except to the
extent such representation or warranty relates to an earlier date), (d) state
that Borrower has complied with all agreements and satisfied all conditions (or
such conditions have been waived) on its part to be performed or satisfied
hereunder at or prior to the Closing Date, (e) state that, subsequent to
December 31, 2003, no Material Adverse Effect has occurred and is continuing
except as set forth in or contemplated by the Bank Book or otherwise disclosed
in writing to Administrative Agent prior to the Closing Date, (f) state that
Borrower is Solvent and (g) contain each other

                                       20
<PAGE>

certification required to be made by a Responsible Officer of Borrower on the
Closing Date pursuant to Sections 3.1.6(b), 3.1.18 and 3.1.36.

            3.1.8 Legal Opinions. Delivery to Administrative Agent of legal
opinions of counsel to the Calpine Entities and, unless otherwise consented to
by Administrative Agent, each Major Project Participant, in each case in form
and substance reasonably satisfactory to the Lenders.

            3.1.9 Certificate and Report of Insurance Consultant. Delivery to
Administrative Agent of the Insurance Consultant's certificate, dated as of the
Closing Date and in substantially the form of Exhibit F-2, together with the
Insurance Consultant's report, in form and substance reasonably satisfactory to
the Lenders, attached thereto.

            3.1.10 Insurance. Insurance complying with terms and conditions set
forth in Exhibit K shall be in full force and effect and Administrative Agent
and the Insurance Consultant shall have received a certificate from Borrower's
insurance broker(s), dated as of the Closing Date and in form and substance
reasonably satisfactory to Administrative Agent, (a) identifying underwriters,
type of insurance, insurance limits and policy terms, (b) listing the special
provisions required as set forth in Exhibit K, (c) describing the insurance
obtained and (d) stating that such insurance is in full force and effect and
that all premiums then due thereon have been paid and that, in the opinion of
such broker(s), such insurance complies with the terms and conditions set forth
in Exhibit K.

            3.1.11 Certificate and Report of the Independent Engineer. Delivery
to Administrative Agent of the Independent Engineer's certificate, dated as of
the Closing Date and in substantially the form of Exhibit F-3, together with the
Independent Engineer's report, in form and substance reasonably satisfactory to
the Lenders, attached thereto.

            3.1.12 Reports of Borrower's Environmental Consultant. Delivery to
Administrative Agent of the Environmental Reports along with the corresponding
reliance letters, each in form and substance reasonably satisfactory to the
Lenders.

            3.1.13 Certificate and Report of Power Market Consultant. Delivery
to Administrative Agent of the Power Market Consultant's certificate, dated as
of the Closing Date and in substantially the form of Exhibit F-4, together with
the Power Market Consultant's report, in form and substance reasonably
satisfactory to the Lenders, attached thereto.

            3.1.14 Schedule of Applicable Permits and Applicable Third Party
Permits.

            (a) Delivery to Administrative Agent of Exhibit G-1, the schedule of
(i) Permits required by Borrower to lease, own and operate the Project and (ii)
all Permits that to Borrower's knowledge are required to be obtained by any
Person (other than Borrower) that is party to any Major Project Document or
Credit Document in order to perform such Person's obligations thereunder (other
than Permits necessary to conduct its business generally and to maintain its
existence and good standing), in form and substance reasonably satisfactory to
Administrative Agent. Borrower shall also deliver to Administrative Agent copies
of each Permit listed in Part I(A) of Exhibit G-1 in form and substance
reasonably satisfactory to the Administrative Agent. Except as disclosed in
Exhibit G-1, each Applicable Permit listed in Part I(A) of

                                       21
<PAGE>

Exhibit G-1 shall (A) constitute in Administrative Agent's reasonable opinion
all of the Applicable Permits as of the Closing Date, (B) have been duly
obtained or been assigned in Borrower's name, (C) be in full force and effect,
(D) not be subject to any current legal proceeding and (E) not be subject to any
Unsatisfied Condition that could reasonably be expected to result in material
modification or revocation of such Applicable Permit, and all applicable appeal
periods with respect to each such Applicable Permit shall have expired.

            (b) Each Major Project Participant shall have duly obtained or have
been assigned in the name of such Major Project Participant each Permit listed
in Part I(B) of Exhibit G-1. Each Applicable Third Party Permit listed in Part
I(B) of Exhibit G-1 shall (i) be in full force and effect, (ii) not be subject
to any current legal proceeding and (iii) not be subject to any Unsatisfied
Condition that could reasonably be expected to result in material modification
or revocation of such Applicable Third Party Permit, and all applicable appeal
periods with respect to each such Applicable Third Party Permit shall have
expired.

            (c) Part II(A) of Exhibit G-1 shall list all other Permits that are
not Applicable Permits (as of the Closing Date) required by Borrower to lease,
own and operate the Project as contemplated by the Operative Documents. Part
II(B) of Exhibit G-1 shall list all other material Permits that to Borrower's
knowledge are required to be obtained by any other Person (other than Borrower)
that is a party to any Major Project Document or Credit Document (other than
Permits necessary to conduct its business generally and maintain its existence
and good standing) to perform its obligations under the Major Project Documents
or Credit Documents to which it is a party. The Permits listed in Part II of
Exhibit G-1 shall, in the Administrative Agent's reasonable opinion, be timely
obtainable (i) on or before the date Borrower or the applicable other Person (as
identified in Exhibit G-1) requires such Permit, and (ii) without expense
materially in excess of the amounts provided therefor in the Base Case Project
Projections by Borrower or such other Person.

            (d) Except as disclosed in Exhibit G-1, the Permits listed in Part I
of Exhibit G-1 shall not be subject to any restriction, condition, limitation or
other provision which could reasonably be expected to have a Material Adverse
Effect or result in the Project being operated in a manner substantially
inconsistent with the assumptions underlying the Base Case Project Projections.

            3.1.15 No Change in Tax Laws. No change shall have occurred, since
the date upon which this Agreement was executed and delivered, in any law or
regulation or interpretation thereof that would subject any Lender to any
material unreimbursed Tax or Other Tax.

            3.1.16 Absence of Litigation. No action, suit, proceeding or
investigation shall have been instituted or threatened in writing against
Borrower. No action, suit, proceeding or investigation shall have been
instituted or threatened in writing against any other Major Project Participant
that (for purposes of this Section 3.1.16, in Administrative Agent's sole
discretion) could reasonably be expected to have a Material Adverse Effect.

            3.1.17 Payment of Fees. All taxes, fees and other costs payable in
connection with the execution, delivery, recordation and filing of the documents
and instruments referred to

                                       22
<PAGE>

in this Section 3.1 and due on the Closing Date shall have been paid in full or,
as approved by the Lenders, provided for. Borrower shall have paid (or caused to
be paid) all outstanding amounts due, as of the Closing Date, and owing to (a)
the Lenders, Administrative Agent, Collateral Agent, or Lead Arranger under any
fee or other letter or pursuant to Section 2.2, (b) the Lenders' attorneys and
consultants (including the Independent Consultants) and the Title Insurer for
all services rendered and billed prior to the Closing Date, (c) the Depositary
Agent under the Depositary Agreement, and (d) Administrative Agent for any other
amounts required to be paid or deposited by Borrower on the Closing Date.

            3.1.18 Financial Statements. Delivery to Administrative Agent of
accurate and complete copies of the most recent (a) audited annual financial
statements of Borrower for the year ended December 31, 2003, (b) audited annual
financial statements or Form 10-K of the Sponsor for the year ended December 31,
2003, (c) unaudited quarterly financial statements or Form 10-Q of Borrower and
the Sponsor for the fiscal quarter ended on March 31, 2004, and (d) unaudited
pro forma balance sheet of Borrower, together with, in the case of Borrower, a
certificate from the appropriate Responsible Officer thereof, dated as of the
Closing Date and in substantially the form of Exhibit F-1, stating that no
material adverse change in the consolidated assets, liabilities, operations or
financial condition of such Person has occurred from those set forth in the most
recent financial statements provided to Administrative Agent.

            3.1.19 Release; Security; UCC Filings.

            (a) Release. Collateral Agent shall have received:

                  (i) certified copies of Uniform Commercial Code Requests
for Information or Copies (Form UCC-11), or a similar search report certified by
a party acceptable to Collateral Agent, dated a date reasonably near to the
Closing Date, listing all effective Financing Statements which name Borrower or
Pledgor (under its present names or any previous name) as the debtor, together
with copies of such Financing Statements (none of which shall cover any
Collateral, other than Financing Statements that evidence (A) Liens granted in
connection with the Existing Riverside Credit Facility or (B) Liens permitted to
exist hereunder after the Closing Date);

                  (ii) appropriately completed copies, which have been
duly authorized for filing by the appropriate Person, of each UCC Financing
Statement Amendment (Form UCC-3) termination statement, if any, necessary to
release all Liens of any Person in any Collateral previously granted by Borrower
or Pledgor to the extent not permitted under the Credit Documents after the
Closing Date (including (A) Liens granted in connection with the Existing
Riverside Credit Facility and (B) other existing Liens which are not permitted
hereunder after the Closing Date);

                  (iii) such releases, reconveyances, satisfactions or
other instruments as it may reasonably request to confirm the release,
satisfaction and discharge in full of all mortgages and deeds of trust at any
time delivered by Borrower or Pledgor to secure any Obligations in respect of
the Existing Riverside Credit Facility, duly executed, delivered and
acknowledged in recordable form by the grantee named therein or its of record
successors or assigns; and

                                       23
<PAGE>

                  (iv) a letter or letters (in form and substance
reasonably satisfactory to Administrative Agent) addressed to Collateral Agent
and Administrative Agent executed and delivered by the Existing Riverside
Administrative Agent, stating the aggregate amount (the "Payout Amount")
required to pay in full in cash on the Closing Date all outstanding Obligations
under or in respect of the Existing Riverside Credit Facility.

            (b) Security. Collateral Agent shall have received:

                  (i) appropriately completed copies, which have been duly
authorized for filing by the appropriate Person, of Uniform Commercial Code
Financing Statements or fixture filings naming, as applicable, Borrower or
Pledgor as a debtor and Collateral Agent as the secured party, or other similar
instruments or documents to be filed under the UCC of all jurisdictions as may
be necessary or, in the reasonable opinion of Collateral Agent and its counsel,
desirable to perfect the security interests of the Secured Parties pursuant to
the Collateral Documents;

                  (ii) subject to the Intercreditor Agreement, (A)
certificates from Pledgor (which certificates shall be accompanied by
irrevocable undated stock powers or transfer documents, duly endorsed in blank
and otherwise satisfactory in form and substance to Collateral Agent)
representing all limited liability company membership interests pledged to the
Secured Parties by Pledgor pursuant to the Collateral Documents and (B) all
promissory notes or other instruments (duly endorsed, where appropriate, in a
manner reasonably satisfactory to Collateral Agent) evidencing any Collateral;
and

                  (iii) such other documents and instruments as Collateral
Agent may reasonably request in order to grant and, subject to the Intercreditor
Agreement, perfect the security interests contemplated by the Collateral
Documents

            (c) Filing. All Uniform Commercial Code Financing Statements (Forms
UCC-1) or other similar Financing Statements and UCC Financing Statement
Amendments (Forms UCC-3) required pursuant to clauses (a) and (b) above
(collectively, the "Financing Statements") shall have been filed or recorded or
delivered to Collateral Agent for filing or recording.

            3.1.20 Annual Operating Budget. Delivery to Administrative Agent of
a budget in substantially the form of Exhibit G-2 (the "Initial Operating
Budget") for all anticipated O&M Costs and Project Revenues for the period from
the Closing Date through December 31, 2004, which Initial Operating Budget shall
be satisfactory to the Lenders.

            3.1.21 Base Case Project Projections. Delivery to Administrative
Agent of the Base Case Project Projections of operating expenses and cash flow
for the Project for the period commencing on the Closing Date and ending on
December 31, 2023, which Base Case Project Projections shall be in substantially
the form of Exhibit G-3 and otherwise in form and substance satisfactory to the
Lenders.

            3.1.22 No Material Adverse Change. Since December 31, 2003, no
Material Adverse Effect has occurred and is continuing.

                                       24
<PAGE>

            3.1.23 A.L.T.A. Surveys. Administrative Agent shall have received:

            (a) as-built A.L.T.A. surveys of the Site and, subject to Section
3.1.23(b), the Easements, in each case in form and substance reasonably
satisfactory to Administrative Agent and the Title Insurer, certified to
Borrower, Administrative Agent and the Title Insurer as to completeness and
accuracy as of a date that is not more than 30 days prior to the Closing Date by
a licensed Wisconsin surveyor reasonably satisfactory to Administrative Agent,
showing, among other things, (i) the location and dimensions of the Site and,
subject to Section 3.1.23(b), the Easements, including the location of all means
of access thereof and all easements and encumbrances relating thereto; (ii) the
location and dimensions of all improvements and encroachments located in or on
the Site and, subject to Section 3.1.23(b), the Easements; (iii) the existing
utility facilities which service the Project and are necessary to its operation
(including, as applicable, water, electricity, fuel, telephone, sanitary sewer
and storm water distribution and detention facilities); (iv) that the location
of the Project and any improvements relating thereto do not encroach on or
interfere in any manner that may be unpermitted or may violate the rights of
third parties with adjacent property or existing easements, encumbrances or
other rights of third parties (whether on, above or below ground), and that
there are no gaps, gores, projections, protrusions or other survey defects
affecting the Site or, subject to Section 3.1.23(b), the Easements; (v) whether
the Site and, subject to Section 3.1.23(b), the Easements, or any portion
thereof, are located in a special earthquake or flood hazard zone; and (vii)
that no other matters constituting a defect in title exist other than relevant
Title Exceptions; and

            (b) in lieu of providing as-built A.L.T.A. surveys of the Easements
(or any portion thereof) and at Borrower's election, one or more certificates
satisfactory to Administrative Agent dated as of a date that is not more than 30
days prior to the Closing Date, from a licensed third party engineering firm or
surveyor satisfactory to Administrative Agent, confirming that the applicable
Easements provide contiguous real property interests sufficient for the
operation and maintenance of all lateral facilities constructed or installed
within such Easements and that all such lateral facilities have been constructed
or installed within the boundaries of such Easements.

            3.1.24 A.L.T.A. Title Policy. Delivery to Administrative Agent of a
lender's A.L.T.A. extended coverage policy of title insurance but without a
creditors' rights or mechanics' lien exception included therein (except where
applicable Governmental Rules prevent the deletion of the mechanics' lien
exception, in which case the Sponsor shall provide the Title Insurer with any
affidavits or indemnities (with respect to which Borrower shall have no
reimbursement obligations) necessary to cause the Title Insurer to issue
affirmative coverage with respect to any risk arising due to mechanics' liens in
form and substance reasonably satisfactory to Administrative Agent), together
with such endorsements thereto as are reasonably required by Administrative
Agent, or the unconditional and irrevocable commitment of the Title Insurer to
issue such a policy, dated as of the Closing Date, in an amount equal to
$200,000,000 (with such reinsurance arrangements as are reasonably satisfactory
to Administrative Agent) issued by the Title Insurer in form and substance
satisfactory to Administrative Agent, insuring (or agreeing to insure) that:

            (a) Borrower has a good, marketable and insurable (i) leasehold
interest in the Site and (ii) easement or other applicable real property
interests in the Easements, in each case

                                       25
<PAGE>

free and clear of Liens, encumbrances or other exceptions to title, other than
(A) the Title Exceptions and (B) such Liens, encumbrances or other exceptions to
title as are reasonably satisfactory to Administrative Agent; and

            (b) the Mortgage is (or will be when recorded) a valid first lien on
Borrower's interest in the Mortgaged Property, free and clear of all Liens,
encumbrances and exceptions to title whatsoever, other than (i) the Title
Exceptions and (ii) such Liens, encumbrances or other exceptions to title as are
reasonably satisfactory to Administrative Agent.

            3.1.25 Real Estate Rights. Borrower and each other Major Project
Participant shall have obtained and shall hold all easements or other possessory
rights in real estate, together with necessary real property permits and
crossing rights (collectively, "Rights of Way") necessary for (a) performance in
full of each such Person's obligations under the Operative Documents to which
such Person is a party and each Permit to which such Person or its assets is
bound by, and (b) the leasing, operation and maintenance of the Project in
accordance with the Base Case Project Projections. The use of such Rights of Way
shall not encroach on or interfere in any manner that may be unpermitted or may
violate the rights of third parties with property adjacent to such Rights of Way
or existing easements or other rights (whether on, above or below ground) and
the full length of the Rights of Way shall be continuous, without break, gap or
interruption.

            3.1.26 Regulatory Status. Delivery to Administrative Agent of (a) an
order issued by FERC confirming that the Project is an Eligible Facility and
that Borrower is an EWG, (b) an order issued by FERC authorizing Borrower to
sell electricity at market-based rates and (c) all necessary approvals from any
Governmental Authority in respect of the ATCo Interconnection Agreement, the
Tolling Agreement and the Power Purchase Agreement, to the extent applicable,
and as to Borrower's acquisition of 100% of the ownership interests of Rocky
Mountain Borrower.

            3.1.27 Establishment of Accounts; Initial Funding. The Accounts
required to be established as of the Closing Date for the Project under the
Depositary Agreement shall have been established to the satisfaction of
Administrative Agent and, on the Closing Date, Borrower shall deposit or cause
to be deposited (a) $2,073,000 in the O&M Account, which amount shall be applied
from time to time after the Closing Date in accordance with Section 3.3.2 of the
Depositary Agreement, and (b) $32,019,865 in the Pre-Funded Punchlist Expense
Account, which amount shall be applied from time to time after the Closing Date
in accordance with Section 3.1.2 of the Depositary Agreement.

            3.1.28 Representations and Warranties. Each representation and
warranty of Borrower and each other Calpine Entity under the Credit Documents
shall be true and correct as of the Closing Date.

            3.1.29 No Default. No Event of Default or Inchoate Default shall
have occurred and be continuing as of the Closing Date.

            3.1.30 Utilities. Delivery to Administrative Agent of reasonably
satisfactory evidence that all potable water, sewer, telephone, electric and all
other utility services necessary

                                       26
<PAGE>

for the ownership, operation and maintenance of the Project are either
contracted for, or readily available on commercially reasonable terms, at the
Project.

            3.1.31 Consents. Delivery to Administrative Agent of executed
Consents from each of the Major Project Participants as set forth on Exhibit
E-2, which Consents shall be reasonably satisfactory to Administrative Agent.

            3.1.32 Process Agents. Delivery to Administrative Agent of evidence
reasonably acceptable to Administrative Agent that each Calpine Entity has
appointed Corporation Service Company as its respective agent for service of
process in the State of New York in respect of each Credit Document to which
such Person is a party which is governed by the laws of the State of New York.

            3.1.33 Ratings. The Term Loans shall have received ratings by S&P
and Moody's.

            3.1.34 Notice of Borrowing. Administrative Agent shall have received
a fully executed and delivered Notice of Borrowing from Borrower at least three
Banking Days prior to the Closing Date.

            3.1.35 Anti-Terrorism Compliance. At least two Banking Days prior to
the Closing Date, Administrative Agent shall have received all documentation and
other information requested by Administrative Agent, which is required by bank
regulatory authorities under applicable "know your customer" and anti-money
laundering rules and regulations, including the U.S.A. Patriot Act.

            3.1.36 Achievement of Commercial Operation. (a) The Project is able
to operate and produce electrical energy for commercial sale in accordance with
Prudent Utility Practices, applicable Legal Requirements and consistent with the
Base Case Project Projections, (b) the "Initial Delivery Date" (as defined in
the Power Purchase Agreement) has occurred, and (c) the "Initial Delivery Date"
(as defined in the Tolling Agreement) has occurred, in each case as certified by
Borrower and verified by the Independent Engineer.

            3.1.37 Conditions Precedent to Closing - Rocky Mountain Project.
Rocky Mountain Borrower shall have concurrently satisfied each of the conditions
set forth in Section 3.1 of the Rocky Mountain Credit Agreement and the Lenders
thereunder shall, concurrent with the funding of the Term Loan hereunder, fund
the "Term Loans" under the Rocky Mountain Credit Agreement.

            3.1.38 Disbursement Authorization Letter. Borrower and
Administrative Agent shall have executed and delivered a disbursement
authorization letter, in form and substance reasonably satisfactory to
Administrative Agent, pursuant to which, among other things, (a) Borrower shall
have authorized the disbursement of the proceeds of the Term Loans in a manner
consistent with Section 2.1.5 and Exhibit G-2, (b) Borrower shall have
authorized Administrative Agent to disburse the Payout Amount directly to the
Existing Riverside Administrative Agent, (c) Borrower shall have authorized
Administrative Agent to deposit the amounts specified in Section 3.1.27 directly
into the applicable Accounts referred to therein and (d) Borrower shall have
authorized Administrative Agent to disburse amounts owing to

                                       27
<PAGE>

Administrative Agent, Collateral Agent, Lead Arranger and each other applicable
Person pursuant to Section 3.1.17.

                                   ARTICLE 4
                         REPRESENTATIONS AND WARRANTIES

            Borrower makes the following representations and warranties to and
in favor of Administrative Agent, Collateral Agent, Lead Arranger and the
Lenders as of the Closing Date (unless such representation and warranty
expressly relates solely to another time), all of which shall survive the
Closing Date and the making of the Term Loans:

      4.1   ORGANIZATION.

            Borrower is (a) a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Wisconsin and (b)
is duly qualified as a foreign limited liability company, and is in good
standing, in each jurisdiction in which such qualification is required by law.
Borrower has all requisite limited liability company power and authority to (i)
own or hold under lease and operate the property it purports to own or hold
under lease, (ii) carry on its business as now being conducted and as now
proposed to be conducted in respect of the Project, (iii) execute, deliver and
perform each Operative Document to which it is a party and (iv) take each action
as may be necessary to consummate the transactions contemplated thereunder. As
of the Closing Date, the Pledgor is the sole member of Borrower.

      4.2   AUTHORIZATION; NO CONFLICT.

            Borrower has duly authorized, executed and delivered each
Operative Document to which Borrower is a party (or such Operative Documents
have been duly and validly assigned to Borrower and Borrower has authorized the
assumption thereof, and has assumed the obligations of the assignor thereunder)
and neither Borrower's execution and delivery thereof nor its consummation of
the transactions contemplated thereby nor its compliance with the terms thereof
(a) does or will contravene the Governing Documents or any other Legal
Requirement applicable to or binding on Borrower or any of its properties which,
in the case of such Legal Requirements, could reasonably be expected to have a
Material Adverse Effect, (b) does or will contravene or result in any breach of
or constitute any default under, or result in or require the creation of any
Lien (other than Permitted Liens) upon any of its property under, any material
agreement or instrument to which it is a party or by which it or any of its
properties may be bound or affected or (c) does or will require the material
consent or approval of any Person, and with respect to any Governmental
Authority, does or will require any material registration with, or notice to, or
any other action of, with or by any applicable Governmental Authority, in each
case which has not already been obtained and disclosed in writing to
Administrative Agent (except as set forth on Exhibit G-1 or otherwise provided
in Sections 4.9.1 and 4.9.2).

      4.3   ENFORCEABILITY.

            Each of the Operative Documents to which Borrower is a party is a
legal, valid and binding obligation of Borrower, enforceable against Borrower in
accordance with its terms, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency,

                                       28
<PAGE>

moratorium, reorganization or other similar laws affecting the enforcement of
creditors' rights or by the effect of general equitable principles (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).

      4.4   COMPLIANCE WITH LAW.

            There are no material violations by Borrower or, to Borrower's
knowledge, any Calpine Entity, of any Legal Requirement (including any Hazardous
Substance Laws). No notices of any material violation of any Legal Requirement
(including any Hazardous Substance Laws) relating to the Project or the Site
have been issued, entered or received by Borrower or, to Borrower's knowledge,
any Calpine Entity.

      4.5   BUSINESS, DEBT, CONTRACTS, JOINT VENTURES ETC.

            4.5.1 Borrower has not conducted any business other than the
business contemplated by the Operative Documents and, through the Closing Date,
the Existing Riverside Credit Agreement, does not have any outstanding Debt or
other material liabilities other than pursuant to or allowed by the Operative
Documents, and Borrower is not a party to or bound by any material contract
other than the Credit Documents and the Major Project Documents to which it is a
party.

            4.5.2 Borrower is not a general partner or a limited partner in any
general or limited partnership or a joint venturer in any joint venture.

            4.5.3 Other than Rocky Mountain Borrower, Borrower does not have any
Subsidiaries.

      4.6   ANTI-TERRORISM LAWS.

            4.6.1 To the best of its knowledge, neither Borrower nor any of its
Affiliates is in violation of (a) any of the foreign assets control regulations
of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as
amended) or any enabling legislation or executive order relating thereto, (b)
Executive Order No. 13,224, 66 Fed Reg 49,079 (2001), issued by the President of
the United States (Executive Order Blocking Property and Prohibiting
Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism)
(the "Executive Order") or (c) the anti-money laundering provisions of the
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, Public Law
107-56 (October 26, 2001) amending the Bank Secrecy Act, 31 U.S.C. Section 5311
et seq (collectively, "Anti-Terrorism Laws").

            4.6.2 To the best of its knowledge, neither Borrower nor any of its
Affiliates is any of the following:

            (a) a Person that is listed in the annex to, or is otherwise subject
to the provisions of, the Executive Order;

            (b) a Person owned or controlled by, or acting for or on behalf of,
any Person that is listed on the Annex to, or is otherwise subject to the
provisions of, the Executive Order;

                                       29
<PAGE>

            (c) a Person with whom Borrower is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law;

            (d) a Person who commits, threatens or conspires to commit or
supports "terrorism" as defined in the Executive Order; or

            (e) a Person that is named as a "specially designated national or
blocked person" on the most current list published by the U.S. Treasury
Department Office of Foreign Asst Control at its official website or any
replacement website or other replacement official publication of such list.

            4.6.3 To the best of its knowledge, neither Borrower nor any of its
Affiliates (a) conducts any business or engages in making or receiving any
contribution of funds, goods or services to or for the benefit of any Person
described in clause (a), (b), (c) or (d) of Section 4.6.2 or clause (d) of
Section 4.6.2; (b) deals in, or otherwise engages in any transaction relating
to, any property or interest in property blocked pursuant to the Executive
Order, or (c) engages in or conspires to engage in any transaction that evades
or avoids, or has the purposes of evading or avoiding, or attempts to violate,
any of the prohibitions set forth in any Anti-Terrorism Law.

            4.6.4 No broker or other similar agent (other than the Lead
Arranger) is acting for the benefit of Borrower or any of its Affiliates, or
benefiting in any capacity, in each case in connection with the Credit
Documents.

      4.7   INVESTMENT COMPANY ACT.

            Neither Borrower nor any other Calpine Entity is an investment
company or a company controlled by an investment company, within the meaning of
the Investment Company Act of 1940, as amended.

      4.8   ERISA.

            Either (a) there are no ERISA Plans or Multiemployer Plans for any
Calpine Entity or any ERISA Affiliate or (b) (i) each Calpine Entity and each
ERISA Affiliate have fulfilled their obligations (if any) under the minimum
funding standards of ERISA and the Code for each ERISA Plan, (ii) each such
ERISA Plan is in compliance in all material respects with the currently
applicable provisions of ERISA and the Code and (iii) neither any Calpine Entity
nor any ERISA Affiliate has incurred any liability to the PBGC or an ERISA Plan
or Multiemployer Plan under Title IV of ERISA (other than liability for premiums
due in the ordinary course). None of any Calpine Entity's assets constitute
assets of an employee benefit plan within the meaning of 29 C.F.R. Section
2510.3-101. Borrower does not maintain or contribute to, and is not obligated to
contribute to, nor has it at any point of its existence maintained or
contributed to, or been obligated to contribute to, any employee-benefit plan
subject to ERISA.

      4.9   PERMITS.

            4.9.1 There are no material Permits under existing Legal
Requirements as the Project is currently designed that are or will become
Applicable Permits other than the Permits

                                       30
<PAGE>

listed in Exhibit G-1 hereto. Except as disclosed in Exhibit G-1 (as so
supplemented), each Permit listed in Part I(A) of Exhibit G-1 is in full force
and effect and is not subject to any current legal proceeding or to any
Unsatisfied Condition that could reasonably be expected to have a Material
Adverse Effect, and all applicable appeal periods with respect thereto have
expired. Each Permit listed in Part II(A) of Exhibit G-1 is of a type that is
routinely granted upon submission of a timely application and demonstration that
the Project complies with applicable standards and Legal Requirements. No Permit
listed in Part II(A) is required under applicable Legal Requirement or Project
Documents to be obtained before the time contemplated to be obtained by
Borrower. No fact or circumstance exists, to Borrower's knowledge, which makes
it likely that any Permit identified in Part II(A) of Exhibit G-1 shall not be
timely obtainable by Borrower before it becomes an Applicable Permit without
expense materially in excess of amounts provided therefor in the Base Case
Project Projections. Borrower is in compliance in all material respects with all
Applicable Permits.

            4.9.2 To Borrower's knowledge, there are no Permits under existing
Legal Requirements as the Project is currently designed that are or will become
Applicable Third Party Permits other than the Permits listed in Exhibit G-1
hereto other than those, the failure of which to obtain could not reasonably be
expected to have a Material Adverse Effect. To Borrower's knowledge, except as
disclosed in Exhibit G-1, each Permit listed in Part I(B) of Exhibit G-1 is in
full force and effect and is not subject to current legal proceeding or to any
Unsatisfied Condition that could reasonably be expected to have a Material
Adverse Effect, and all applicable appeal periods with respect thereto have
expired. No fact or circumstance exists, to Borrower's knowledge, which makes it
likely that any Permit identified in Part II(B) of Exhibit G-1 shall not be
timely obtainable by the applicable Person as identified in Exhibit G-1 at a
cost consistent with the Base Case Project Projections before it becomes an
Applicable Third Party Permit. Except as disclosed in Exhibit G-1, to Borrower's
knowledge, each Person as identified in Exhibit G-1 possesses and is in
compliance in all material respects with its respective Applicable Third Party
Permits.

      4.10  HAZARDOUS SUBSTANCES.

            4.10.1 Except as set forth in Exhibit G-6: (a) Borrower, with
respect to the Site, Improvements or other Mortgaged Property, is not or has not
in the past been in violation of any Hazardous Substance Law which violation
could reasonably be expected to result in a material liability to Borrower or
its properties and assets or in an inability of Borrower to perform its
obligations under the Operative Documents; (b) neither Borrower nor, to
Borrower's knowledge, any other Person has used, Released, generated,
manufactured, produced or stored in, on, under, or about the Site, Improvements
or other Mortgaged Property, or transported thereto or therefrom, any Hazardous
Substances that could reasonably be expected to subject any Secured Party to
liability, or Borrower to material liability, under any Hazardous Substance Law;
(c) to Borrower's knowledge, there are no underground tanks, whether operative
or temporarily or permanently closed, located on the Site, Improvements or other
Mortgaged Property that could reasonably be expected to subject any Secured
Party to liability, or Borrower to material liability, under any Hazardous
Substance Law; (d) there are no Hazardous Substances used, stored or present at
or on the Site, Improvements or other Mortgaged Property, except in compliance
with Hazardous Substance Laws and other Legal Requirements or as disclosed in
the Environmental Reports; (e) to Borrower's knowledge, there are no Hazardous
Substances that

                                       31
<PAGE>

could reasonably be expected to migrate onto the Site, Improvements or other
Mortgaged Property that could reasonably be expected to impose on Borrower a
material liability, except as disclosed in the Environmental Reports; and (f) to
Borrower's knowledge there neither is nor has been any condition, circumstance,
action, activity or event that could reasonably be expected to be, or result in,
a material violation by Borrower of any Hazardous Substance Law, or to result in
liability to any Secured Party or material liability to Borrower under any
Hazardous Substance Law.

            4.10.2 Except as set forth on Exhibit G-5 or Exhibit G-6, there is
no pending or, to Borrower's knowledge, threatened in writing, action or
proceeding by any Governmental Authority (including the Public Service
Commission of Wisconsin, Wisconsin Department of Natural Resources, Wisconsin
Department of Commerce, Town of Beloit, County of Rock, U.S. Army Corps of
Engineers and U.S. Environmental Protection Agency) or any other Person which is
not a Governmental Authority with respect to the presence or Release of
Hazardous Substances in, on, from or to the Site, Improvements or other
Mortgaged Property.

            4.10.3 Except as set forth in the Environmental Reports, to
Borrower's knowledge, there are no past violations that have not been finally
resolved or existing violations of any Hazardous Substances Laws by any Person
affecting the Site, Improvements or other Mortgaged Property, which violations
could reasonably be expected to result in a material liability to Borrower.

      4.11  LITIGATION.

            (a) No action, suit, proceeding or investigation has been instituted
or, to Borrower's knowledge, threatened in writing against Borrower.

            (b) Borrower has no knowledge of (i) any action, suit, proceeding or
investigation that has been instituted or threatened in writing against, the
Pledgor, the Sponsor or any other Major Project Participant, or by which any of
them or their properties are bound, which could reasonably be expected to have a
Material Adverse Effect, or (ii) any order, judgment or decree that has been
issued or proposed to be issued by any Governmental Authority that, as a result
of the ownership or operation of the Project by Borrower, the sale of
electricity therefrom by Borrower or the entering into of any Operative Document
or any transaction contemplated hereby or thereby, could reasonably be expected
to cause or deem the Lenders, Administrative Agent, Collateral Agent, the Lead
Arranger or Borrower or any Affiliate of any of them to be subject to, or not
exempted from, regulation under PUHCA, or treated as a public utility under the
laws of the State of Wisconsin as presently constituted and as construed by the
courts of Wisconsin, respecting the rates or the financial or organizational
regulation of electric utilities. No action, suit or proceeding before or by any
court, arbitrator or other Governmental Authority is pending to which any
Calpine Entity is a party or to which its business, assets or property is
subject and, to Borrower's knowledge, no such action, suit or proceeding is
threatened to which any such Calpine Entity or its business, assets or property
would be subject that, in either case, questions the validity of any of the
Operative Documents.

      4.12  LABOR DISPUTES AND ACTS OF GOD.

                                       32
<PAGE>

            Neither the business nor the properties of Borrower or, to
Borrower's knowledge, any other Major Project Participant are currently affected
by any fire, explosion, accident, strike, lockout or other labor dispute,
drought, storm, hail, earthquake, embargo, act of God or of the public enemy, or
other casualty (whether or not covered by insurance), which could reasonably be
expected to have a Material Adverse Effect.

      4.13  DISCLOSURE.

            None of this Agreement, the Bank Book nor any certificate or other
documentation (other than the Initial Operating Budget or the Base Case Project
Projections or other "forward-looking" statements) furnished to the Lead
Arranger, Administrative Agent, Collateral Agent, or the Lenders, or to any
consultant submitting a report to Administrative Agent, the Lead Arranger or the
Lenders, by or, to Borrower's knowledge, on behalf of Borrower with respect to
the Project, the Sponsor, the Pledgor, Borrower or any other Calpine Entity or
in connection with the transactions contemplated by this Agreement, the other
Credit Documents or the description or operation of the Project, taken as a
whole, contained (at the time of delivery thereof) any untrue statement of a
material fact or omitted (at the time of delivery thereof) to state a material
fact necessary in order to make the statements contained herein or therein not
misleading in any material respect under the circumstances in which they were
made at the time such statements were made (other than any information that was
corrected or updated in writing by Borrower or its Affiliates or representatives
to the Lead Arranger prior to the Closing Date). There is no fact known to
Borrower which has had or could reasonably be expected to have a Material
Adverse Effect which has not been disclosed in writing to Administrative Agent,
the Lead Arranger, Collateral Agent, or the Lenders by or on behalf of Borrower
on or prior to the Closing Date in connection with the transactions contemplated
hereby.

      4.14  FLOOD ZONE DISCLOSURE.

            No material portion of the Collateral includes Improvements that are
or will be located in an area that has been identified by the Federal Emergency
Management Agency as an area having special flood or mudslide hazards and in
which flood insurance has been made available under the National Flood Insurance
Act of 1968, as amended.

      4.15  TAXES.

            (a) Borrower has timely filed, or caused to be filed, all federal,
state and local tax returns and reports that it is required to file, has paid
all material taxes, assessments, utility charges, fees and other governmental
charges it is required to pay to the extent due (other than those taxes that it
is contesting in good faith and by appropriate proceedings in accordance with
the requirements of Section 5.18). Borrower knows of no proposed tax assessment
against the Pledgor, or Borrower which could reasonably be expected to have a
Material Adverse Effect (other than those proposed tax assessments that Borrower
is contesting in good faith and by appropriate proceedings in accordance with
the requirements of Section 5.18). In either case, to the extent such taxes,
assessments, charges and fees are not due, Borrower or the applicable Calpine
Entity has established reserves that are adequate for the payment thereof in
conformity with GAAP.

                                       33
<PAGE>

            (b) At all times since its formation, Borrower has been an entity
with a single owner that is disregarded as separate from its owner for federal
income tax purposes. No Form 8832 has ever been filed with respect to Borrower
as other than a disregarded entity and no such election shall have been made.

            (c) Borrower has no liability for the taxes of any Person (other
than Borrower) (i) under Treasury Regulations Section 1.1502-6 (or any similar
provision of state, local or foreign law), (ii) as a transferee or successor,
(iii) by contract, or (iv) otherwise.

            (d) Borrower does not intend to treat the Term Loans (including the
incurrence thereof) as being a "reportable transaction" (within the meaning of
Treasury Regulation Section 1.6011-4).

      4.16  GOVERNMENTAL REGULATION.

            4.16.1 Borrower is not, and after giving effect to the borrowing of
any Term Loans will not be, subject to regulation (a) under any provision of
PUHCA except Section 32 thereof; or (b) under any state law or regulation with
respect to rates or the financial or organizational regulation of electric
utilities. Borrower is subject to regulation as a "public utility" under the
Federal Power Act, as amended ("FPA").

            4.16.2 The Project is an Eligible Facility within the meaning of
Section 32 of PUHCA, and Borrower has received a determination from the FERC
(not subject to any pending challenge, investigation, or proceeding) that it is
an "exempt wholesale generator" ("EWG"), within the meaning of Section 32 of
PUHCA. Borrower has validly issued orders from the FERC under the FPA, not
subject to any pending challenge, investigation, or proceeding, (a) authorizing
Borrower to engage in wholesale sales of electricity, ancillary services and, to
the extent permitted under its market-based rate tariff, other services at
market-based rates, and (b) granting such waivers and blanket authorizations
(including blanket authorization to issue securities and to assume liabilities
under Section 204 of the FPA and 18 C.F.R. Pt. 34), as are customarily granted
to entities with market-based rate authority. With respect to Borrower, the FERC
has not imposed any rate caps or mitigation measures other than rate caps and
mitigation measures generally applicable to similarly situated marketers or
generators selling electricity, ancillary services or other services at
wholesale in the geographic market where Borrower conducts its business.

            4.16.3 There are no pending complaints filed with the FERC seeking
abrogation or modification of a contract for the sale of power by the Borrower.

      4.17  REGULATION U, ETC.

            Borrower is not engaged principally, or as one of its principal
activities, in the business of extending credit for the purpose of "buying",
"carrying" or "purchasing" margin stock (each as defined in Regulations T, U or
X of the Federal Reserve Board), and no part of the proceeds of the Term Loans
or the Project Revenues will be used by Borrower for the purpose of "buying",
"carrying" or "purchasing" any such margin stock or for any other purpose which
violates the provisions of the regulations of the Federal Reserve Board.

                                       34
<PAGE>

      4.18  INITIAL OPERATING BUDGET; PROJECTIONS.

            Borrower has prepared the Initial Operating Budget and the Base Case
Project Projections and is responsible for developing the assumptions on which
such Initial Operating Budget and the Base Case Project Projections are based;
and such Initial Operating Budget and the Base Case Project Projections (a) as
of the date delivered, updated or supplemented are based on Borrower's good
faith reasonable assumptions (including as to all legal and factual matters
material to the estimates set forth therein) and (b) as of the date delivered,
updated or supplemented are consistent in all material respects with the
provisions of the Project Documents executed on or prior to such date.

      4.19  FINANCIAL STATEMENTS.

            In the case of the financial statements of Borrower delivered
pursuant to Section 3.1.18 (other than the financial statements of Borrower
delivered pursuant to Section 3.1.18(d)), each such financial statement and
information has been prepared in conformity with GAAP and fairly presents, in
all material respects, the financial position (on a consolidated and, where
applicable, consolidating basis) of Borrower described in such financial
statements as at the respective dates thereof and the results of operations and
cash flows (on a consolidated and, where applicable, consolidating basis) of
Borrower described therein for each of the periods then ended, subject, in the
case of any such unaudited financial statements, to changes resulting from audit
and normal year-end adjustments and the absence of footnote disclosure. Except
for obligations under the Operative Documents to which it is a party, Borrower
does not (and will not following the funding of the initial Loans) have any
contingent obligations, unmatured liabilities, contingent liability or liability
for taxes, long-term lease or forward or long-term commitment required to be
shown under GAAP that is not reflected in the foregoing financial statements or
the notes thereto and which in any such case is material in relation to the
business, results of operations, properties, financial condition or prospects of
Borrower.

      4.20  NO DEFAULT.

            No Event of Default or Inchoate Default which has not been disclosed
to Administrative Agent in writing has occurred and is continuing.

      4.21  ORGANIZATIONAL ID NUMBER; LOCATION OF COLLATERAL.

            4.21.1 Borrower's organizational identification number is WI
W041192.

            4.21.2 All of the Collateral (other than the Accounts, the
membership interests in Borrower and general intangibles) is located on the Site
or the Easements or at Borrower's address set forth in Section 11.1; provided
that certain equipment may be temporarily removed from the Site and/or Easements
from time to time in the ordinary course of business.

      4.22  TITLE AND LIENS.

            Borrower has (a) good, marketable and insurable (i) leasehold
interest in the Site and (ii) easement interest in the Easements (except that
title to certain of the Easements which

                                       35
<PAGE>

are licenses may not be insurable), and (b) good, legal and valid title to all
other Collateral, in each case free and clear of all Liens other than Permitted
Liens.

      4.23  INTELLECTUAL PROPERTY.

            Except as disclosed in Exhibit G-5:

            (a) Borrower owns or possesses all licenses, permits, franchises,
authorizations, patents, copyrights, service marks, trademarks and trade names,
or rights thereto, that are necessary for the operation of its business, without
known conflict with the rights of others;

            (b) to the knowledge of Borrower, no product of Borrower infringes
in any material respect any license, permit, franchise, authorization, patent,
copyright, service mark, trademark, trade name or other right owned by any other
Person;

            (c) to the knowledge of Borrower, there is no violation by any
Person of any right of Borrower with respect to any patent, copyright, service
mark, trademark, trade name or other right owned or used by Borrower; and

            (d) to the knowledge of Borrower, there exists no pending or
threatened claim or litigation against or affecting Borrower contesting its
right to sell or use any such product, process, method, substance, part or other
material.

      4.24  COLLATERAL.

            The respective liens and security interests granted to Collateral
Agent (for the benefit of the Secured Parties) pursuant to the Collateral
Documents (a) constitute as to personal property included in the Collateral a
valid security interest and (b) constitute as to the Mortgaged Property included
in the Collateral a valid lien and security interest in the Mortgaged Property,
in each case to the extent contemplated by the Collateral Documents. The
security interest granted to Collateral Agent (for the benefit of the Secured
Parties) pursuant to the Collateral Documents in the Collateral consisting of
personal property will be perfected (i) with respect to any property that can be
perfected by filing, upon the filing of financing statements in the filing
offices identified in Exhibit D-6, (ii) with respect to any property that can be
perfected by control, upon execution of the Control Agreement and the Depositary
Agreement, and (iii) with respect to any property (if any) that can be perfected
by possession, upon Collateral Agent receiving possession thereof, and in each
case such security interest will be, as to Collateral perfected under the UCC or
otherwise as aforesaid, superior and prior to the rights of all third Persons
now existing or hereafter arising whether by way of mortgage, lien, security
interests, encumbrance, assignment or otherwise, except (i) Title Exceptions and
Permitted Liens described in clauses (a) and (e) of the definition of "Permitted
Liens," (ii) to the extent required by Governmental Rule, those matters
described in clauses (b), (c) and (g) of the definition of "Permitted Liens" and
(iii) with respect to Borrower's membership interest in Rocky Mountain Borrower,
the Permitted Liens described in clause (i) of the definition of "Permitted
Liens." Except to the extent possession of portions of the Collateral is
required for perfection, all such action as is necessary has been taken (or will
be taken immediately after the Closing Date) to establish and perfect Collateral
Agent's rights in and to the Collateral in existence on such date to the extent
Collateral Agent's security interest can be perfected by filing, including any
recording, filing, registration, giving of notice

                                       36
<PAGE>

or other similar action. No filing, recordation, re-filing or re-recording other
than those listed on Exhibit D-6 hereto is necessary to perfect and maintain the
perfection of the interest, title or Liens of the Collateral Documents, and on
the Closing Date all such filings or recordings will have been made to the
extent Collateral Agent's security interest can be perfected by filing. Borrower
has properly delivered or caused to be delivered, or provided control, to
Collateral Agent or Depositary Agent all Collateral that permits perfection of
the Lien and security interest described above by possession or control to the
extent contemplated by the Collateral Documents.

      4.25  SUFFICIENCY OF PROJECT DOCUMENTS.

            4.25.1 Other than those that can be reasonably expected to be
commercially available when and as required, the services to be performed, the
materials to be supplied and the real property interests, the Easements and
other rights granted, or to be granted, pursuant to the Project Documents in
effect as of the Closing Date:

            (a) comprise all of the property interests necessary to secure any
right material to the leasing, operation and maintenance of the Project in
accordance with all Legal Requirements, all without reference to any proprietary
information not owned by or available to Borrower;

            (b) are sufficient to enable the Project to be located and operated
on the Site and the Easements; and

            (c) provide adequate ingress and egress from the Site for any
reasonable purpose in connection with the operation of the Project.

            4.25.2 There are no services, materials or rights required for
operation and maintenance of the Project in accordance with the Major Project
Documents and the assumptions that form the basis of Base Case Project
Projections, other than those (a) to be provided under the Project Documents or
(b) that can reasonably be expected to be commercially available at or for
delivery to the Site on commercially reasonable terms consistent with Base Case
Project Projections.

      4.26  UTILITIES.

            All utility services necessary for the operation of the Project
consistent with the Base Case Project Projections are available at the Project
or can reasonably be expected to be so available as and when required upon
commercially reasonable terms consistent with the Base Case Project Projections.

      4.27  OTHER FACILITIES.

            4.27.1 All roads necessary for the full utilization of the Project
for its intended purposes have either been completed or Borrower possesses the
necessary rights of way therefor, other than rights of way that can reasonably
be expected to be available on commercially reasonable terms as and when needed.

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<PAGE>

            4.27.2 Borrower possesses, or the counterparties to the Major
Project Documents (including the Tolling Agreement and Power Purchase Agreement)
pursuant to which interconnection facilities will be operated for the benefit of
the Project, possess and are obligated to provide or make available to Borrower,
all necessary easements, rights of way, licenses, agreements and other rights
for the construction, interconnection and utilization of the interconnection
facilities (including fuel, water, wastewater and electrical).

      4.28  PROPER SUBDIVISION.

            The Site has been subdivided or entitled to exception therefrom, and
for all purposes the Site may be mortgaged, conveyed and otherwise dealt with as
separate legal lots or parcels.

                                   ARTICLE 5
                              AFFIRMATIVE COVENANTS

            Borrower covenants and agrees that until the Termination Date,
Borrower shall:

      5.1   USE OF PROCEEDS AND PROJECT REVENUES.

            5.1.1 Proceeds.

            (a) Unless otherwise applied by Administrative Agent pursuant to
this Agreement and the other Credit Documents, apply the proceeds of the Term
Loans as provided in Section 2.1.5.

            5.1.2 Revenues. Unless otherwise applied by Administrative Agent or
Collateral Agent pursuant to the terms of this Agreement or the other Credit
Documents, apply any Project Revenues, net payments received by Borrower under
the Interest Rate Agreements (including any Hedge Transaction thereunder),
Insurance Proceeds, Eminent Domain Proceeds and damage payments solely for the
purpose, and in the order and manner, provided for in Article 3 of the
Depositary Agreement.

      5.2   PAYMENT.

            5.2.1 Credit Documents. Pay all sums due under this Agreement and
the other Credit Documents to which it is a party according to the terms hereof
and thereof.

            5.2.2 Project Documents. Pay all obligations of Borrower due under
the Project Documents, howsoever arising, as and when due and payable, except
(a) such as may be contested in good faith or as to which a bona fide dispute
may exist; provided that adequate cash reserves have been established in
conformity with GAAP, (b) as could not reasonably be expected to have a Material
Adverse Effect and (c) Borrower's trade payables which shall be paid in the
ordinary course of business.

      5.3   WARRANTY OF TITLE.

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<PAGE>

            Maintain (a) good, marketable and insurable (i) leasehold interest
in the Site and (ii) easement interest in the Easements (except that title to
certain of the Easements which are licenses may not be insurable), and (b) good,
legal and valid title to all of its other respective material properties and
assets (other than properties and assets disposed of in the ordinary course of
business or otherwise disposed of in accordance with Section 6.4), in each case
free and clear of all Liens other than Permitted Liens.

      5.4   NOTICES.

            Promptly, upon acquiring notice or giving notice (except as
otherwise specified below), as the case may be, or obtaining knowledge thereof,
give written notice to Administrative Agent of:

            5.4.1 promptly, but in no event later than five Banking Days after
Borrower has knowledge of the occurrence of any Inchoate Default or Event of
Default, a statement of a Responsible Officer of Borrower setting forth details
of such Inchoate Default or Event of Default and the action which Borrower has
taken and proposes to take with respect thereto (other than litigation strategy
and related documentation subject to the attorney-client privilege);

            5.4.2 promptly, but in no event later than five Banking Days after
Borrower has knowledge or receives notice of (a) any material litigation or
governmental proceeding pending or threatened in writing against Borrower or to
Borrower's knowledge, any Major Project Participant, provided that in the case
of any threatened litigation or governmental proceeding against Borrower, or any
litigation or governmental proceeding pending or threatened in writing against
any Major Project Participant, such threatened litigation or governmental
proceeding or, in the case of a Major Project Participant, actual or threatened
litigation or governmental proceeding could reasonably be expected to have a
Material Adverse Effect, or (b) any other event, act or condition which could
reasonably be expected to result in a Material Adverse Effect;

            5.4.3 copies of all notices of material breach or violation given or
received by Borrower pursuant to any of the Major Project Documents other than
routine correspondences, given or received in the ordinary course of business
relating to routine aspects of financing, operating, maintaining or using the
Project;

            5.4.4 promptly, but in no event later than ten Banking Days after
the existence of any of the following conditions, a duly executed certificate of
a Responsible Officer of Borrower specifying in detail the nature of such
condition and Borrower's proposed response thereto: (a) the receipt by Borrower
of any written communication from a Governmental Authority that alleges that
Borrower is not in compliance in any material respect with applicable Hazardous
Substance Laws or Applicable Permits; or (b) Borrower shall obtain knowledge of
any Release of any Hazardous Substance that could form the basis of an
Environmental Claim against Borrower which could reasonably be expected to have
a Material Adverse Effect;

            5.4.5 copies of any Applicable Permit or Applicable Third Party
Permit obtained by Borrower or any other Person after the Closing Date;

                                       39
<PAGE>

            5.4.6 the existence of a PSCo Security Fund Shortfall (as defined in
the Depositary Agreement) and the amount thereof;

            5.4.7 promptly, but in no event later than ten Banking Days after
the execution thereof, copies of any Project Document Modifications to any Major
Project Documents;

            5.4.8 the occurrence of any ERISA event described in Section 7.1.5
that would result in aggregate liability to all Calpine Entities and all ERISA
Affiliates in excess of $5,000,000; and

            5.4.9 any other information related to Borrower, the Project or the
notices provided above reasonably requested by Administrative Agent.

      5.5   FINANCIAL STATEMENTS.

            5.5.1 Deliver or cause to be delivered to Administrative Agent, in
form and detail reasonably satisfactory to Administrative Agent (except where
GAAP is specifically required):

            (a) as soon as practicable and in any event within 60 days after the
end of the first, second and third quarterly accounting periods of its fiscal
year (commencing with the fiscal quarter ending June 30, 2004), unaudited
quarterly financial statements of Borrower as of the last day of such quarterly
period and the related statements of income, cash flow, and shareholders' or
members' equity (as applicable) for such quarterly period and (in the case of
second and third quarterly periods) for the portion of the fiscal year ending
with the last day of such quarterly period, setting forth in each case in
comparative form corresponding unaudited figures from the preceding fiscal year,
all prepared in accordance with GAAP (subject to changes resulting from audit
and normal year-end adjustments and the absence of footnote disclosure); and

            (b) as soon as practicable and in any event within 120 days after
the close of each applicable fiscal year, audited financial statements of
Borrower. Such financial statements shall include a statement of equity, a
balance sheet as of the close of such year, an income and expense statement,
reconciliation of capital accounts (where applicable), a statement of cash flow
and summary results of hedging and trading activities, all prepared in
accordance with GAAP and certified by an independent certified public accountant
selected by the Person whose financial statements are being prepared. Such
certificate shall not be qualified or limited because of restricted or limited
examination by such accountant of any material portion of the records of
Borrower.

            5.5.2 Cause to be delivered, along with such financial statements of
Borrower, a certificate signed by a Responsible Officer of Borrower, certifying
that (a) such Responsible Officer has made or caused to be made a review of the
transactions and financial condition of such Person during the relevant fiscal
period and that such review has not, to such Responsible Officer's knowledge,
disclosed the existence of any event or condition which constitutes an Event of
Default or Inchoate Default, or if any such event or condition existed or
exists, the nature thereof and the corrective actions that such Person has taken
or proposes to take with respect thereto, (b) such Person is in compliance in
all material respects with the provisions of each Credit Document to which such
Person is a party or, if such is not the case, stating the

                                       40
<PAGE>

nature of such non-compliance and the corrective actions which such Person has
taken or proposes to take with respect thereto, and (c) such financial
statements are true and correct in all material respects and that no material
adverse change in the consolidated assets, liabilities, operations, or financial
condition of such Person has occurred since the date of the immediately
preceding financial statements provided to Administrative Agent or, if a
material adverse change has occurred, the nature of such change. Such
certificate shall also include information demonstrating compliance with Section
5.22.

      5.6   BOOKS, RECORDS, ACCESS.

            (a) Maintain, or cause to be maintained, adequate books, accounts
and records with respect to Borrower and the Project; and (b) subject to
requirements of Governmental Rules, safety requirements and existing
confidentiality restrictions imposed upon Borrower by any other Person, permit
employees or agents of Administrative Agent and the Independent Consultants at
any reasonable times and upon reasonable prior notice to Borrower or Operator,
as applicable, to inspect all of Borrower's properties, including the Site, to
examine or audit all of Borrower's books, accounts and records and make copies
and memoranda thereof, to communicate with Borrower's auditors (with a
representative of Borrower present, if Borrower so requests).

      5.7   COMPLIANCE WITH LAWS, INSTRUMENTS, APPLICABLE PERMITS, ETC.

            Comply, or cause compliance (except where noncompliance could not
reasonably be expected to have a Material Adverse Effect) with all Legal
Requirements (including Legal Requirements and Applicable Permits relating to
pollution control, environmental protection, equal employment opportunity or
employee benefit plans, ERISA Plans and employee safety, with respect to
Borrower or the Project), and make such alterations to the Project and the Site
as may be required for such compliance.

      5.8   REPORTS.

            5.8.1 Deliver to Administrative Agent within 30 days of the end of
each fiscal quarter after the Closing Date, a summary operating report with
respect to the Project, which shall include, with respect to the period most
recently ended, (a) a monthly and year-to-date numerical and narrative
assessment of (i) the Project's compliance with each material category in the
then-current Annual Operating Budget, (ii) electrical production and delivery,
(iii) fuel deliveries and use, including heat rate, and (iv) plant and unit
availability, including trips and scheduled and unscheduled outages; and (b) to
the extent applicable, a comparison of year-to-date figures to corresponding
figures provided in the prior year.

            5.8.2 Within 30 days after each annual policy renewal date, deliver
to Administrative Agent a certificate, substantially in the form of Exhibit L
hereto, and otherwise in form and substance reasonably satisfactory to
Administrative Agent in consultation with the Insurance Consultant, certifying
that the insurance requirements of Exhibit K have been implemented and are being
complied with in all material respects.

      5.9   EXISTENCE, CONDUCT OF BUSINESS, PROPERTIES, ETC.

                                       41
<PAGE>

            Except as otherwise expressly permitted under this Agreement, (a)
maintain and preserve its existence as a Wisconsin limited liability company,
(b) maintain and preserve all its material rights, privileges and franchises
necessary in the normal conduct of its business, (c) subject to Section 5.2.2,
perform (to the extent not excused by force majeure events or the nonperformance
of the other party and not subject to a good faith dispute) all of its
contractual obligations under the Major Project Documents to which it is party
or by which it is bound, except to the extent that any such failure to perform
could not reasonably be expected to have a Material Adverse Effect, (d) maintain
all Applicable Permits and use reasonable efforts to cause all Major Project
Participants to maintain all Applicable Third Party Permits, except to the
extent that any such failure to maintain could not reasonably be expected to
have a Material Adverse Effect, and (e) at or before the time that any Permit
becomes an Applicable Permit, obtain such Permit.

      5.10  DEBT SERVICE COVERAGE RATIO.

            In no event later than fifteen (15) Banking Days after each
Principal Repayment Date, calculate and deliver to Administrative Agent the Debt
Service Coverage Ratio for the Calculation Period for such Principal Repayment
Date. The calculations of Debt Service Coverage Ratios hereunder shall be used
in determining the application and distribution of funds pursuant to Section 6.6
of this Agreement and Section 3.7 of the Depositary Agreement.

      5.11  EXEMPTION FROM REGULATION.

            Take or cause to be taken all necessary or appropriate actions so
that (a) (i) Borrower will be an EWG and (ii) the Project will be an Eligible
Facility at all times hereunder or (b) Borrower and the Project shall not be
subject to, or shall be exempt from, financial or organizational regulation as a
"public utility company" or "public utility holding company" under PUHCA or
financial, organizational or rate regulation as a public utility under the laws
of the State of Wisconsin as presently constituted and as construed by the
courts of Wisconsin, and (c) Borrower will be authorized to sell electricity at
market-based rates, with all waivers of regulations and blanket authorizations
as are customarily granted by the FERC to entities with market-based rate
authority.

      5.12  PUNCHLIST ITEMS.

            Work diligently to complete the Punchlist Items and, upon completion
of all the Punchlist Items, deliver to Administrative Agent a certificate
(verified by the Independent Engineer) certifying that the Punchlist Items have
been completed.

      5.13  OFFER TO PREPAY UPON CHANGE OF CONTROL.

            If a Change of Control occurs, make a Mandatory Repayment Offer on
the terms set forth herein and in Section 2.1.10(d). In such Mandatory Repayment
Offer, Borrower shall offer to prepay each Lender's Term Loans in an amount
equal to at least 101% of the aggregate principal amount of Term Loans then
outstanding, plus, in each case, accrued and unpaid interest thereon, to but
excluding the date of repayment, plus, in each case, any other amount then
required to be paid hereunder. Notwithstanding anything in this Agreement to the
contrary, Borrower shall not be required to make a Mandatory Repayment Offer
upon a Change of Control

                                       42
<PAGE>

if a third party makes the Mandatory Repayment Offer in the manner, at the times
and otherwise in compliance with the requirements set forth in this Agreement
applicable to a Mandatory Repayment Offer required upon a Change of Control and
repays all Term Loans (and the other amounts required to be paid pursuant to
clause (a) above) required to be repaid pursuant thereto.

      5.14  OPERATION AND MAINTENANCE OF PROJECT; ANNUAL OPERATING BUDGET.

            5.14.1 Keep the Project, or cause the same to be kept, in good
operating condition consistent in all material respects with the standard of
care set forth in the O&M Agreement, all Applicable Permits (and, if applicable,
Applicable Third Party Permits), Legal Requirements and the Operative Documents,
and make or cause to be made all repairs (structural and non-structural,
extraordinary or ordinary) necessary to keep the Project in such condition.

            5.14.2 Operate and maintain the Project, or cause the same to be
operated and maintained, in a manner consistent in all material respects with
Prudent Utility Practices and in compliance with the terms of the Tolling
Agreement and the Power Purchase Agreement.

            5.14.3 On the Closing Date and thereafter 60 days prior to the
beginning of each subsequent calendar year, submit an operating plan and a
budget, detailed by month, of anticipated revenues and anticipated expenditures
under all Waterfall Levels, and anticipated expenditures from the Major
Maintenance Reserve Account, such budget to include Debt Service, proposed
dividend distributions, Major Maintenance, reserves and all anticipated O&M
Costs (including reasonable allowance for contingencies) applicable to the
Project for the ensuing calendar year (or, in the case of the Initial Operating
Budget, partial calendar year) (each such annual operating plan and budget,
including the Initial Operating Budget, an "Annual Operating Budget"). Each
Annual Operating Budget (other than the Initial Operating Budget) shall be
deemed approved so long as the aggregate amount of anticipated O&M Costs remains
within 125% of the amount proposed to be expended by Borrower for all such items
during the applicable calendar year (as determined by reference to the
then-current Annual Operating Budget); it being acknowledged that the 125%
limitation shall not apply to any anticipated Variable O&M Costs to the extent
that such anticipated Variable O&M Costs result from the anticipated dispatch of
the Project at levels in excess of the levels contemplated by such Annual
Operating Budget. In the event that such Annual Operating Budget shall not be
deemed approved as provided in the preceding sentence, such Annual Operating
Budget shall be subject to the reasonable approval of Administrative Agent
acting in consultation with the Independent Engineer, such approval not to be
unreasonably withheld. Failure by Administrative Agent to approve or disapprove
such draft Annual Operating Budget within 30 days after receipt thereof shall be
deemed to be an approval by Administrative Agent of such draft as the final
Annual Operating Budget. Borrower shall consider in good faith Administrative
Agent's suggestions in preparation of a final Annual Operating Budget (if not
deemed approved as provided above). Borrower shall prepare a final Annual
Operating Budget no less than 30 days in advance of the anticipated date of
commencement of each subsequent calendar year following the Closing Date. The
O&M Costs in each Annual Operating Budget which are subject to escalation
limitations in the Project Documents shall not, absent extraordinary
circumstances, be increased by more than the amounts provided in such Project
Documents.

                                       43
<PAGE>

            5.14.4 Borrower shall operate and maintain the Project, or cause the
Project to be operated and maintained, within amounts for all Operating Budget
Categories not to exceed 125% (on a year-to-date basis), in each case of the
amounts budgeted therefor as set forth in the then-current Annual Operating
Budget as approved or deemed approved by Administrative Agent; provided,
however, that (a) subject to Section 6.12, Borrower may propose an amendment to
the Annual Operating Budget for Administrative Agent's approval if at any time
Borrower cannot comply with the provisions of this Section 5.14.4 (and
Administrative Agent shall consider each such amendment in good faith and shall
not unreasonably withhold its consent to the approval of any such amendment),
(b) the 125% limitation shall not apply to Variable O&M Costs to the extent that
such Variable O&M Costs result from the dispatch of the Project at levels in
excess of the levels contemplated by the then-current Annual Operating Budget,
and (c) the 125% limitation shall not apply to Emergency Operating Costs to the
extent that, after deducting such Emergency Operating Costs from the applicable
calculation, Borrower otherwise remains in compliance with such 125% limitation.
Pending approval of any Annual Operating Budget or amendment thereto in
accordance with the terms of this Section 5.14.4, Borrower shall use its best
efforts to operate and maintain the Project, or cause the Project to be operated
and maintained, within the then-current Annual Operating Budget (it being
acknowledged that if a particular calendar year's Annual Operating Budget has
not been approved by the time periods provided in Section 5.14.3, then the
then-current Annual Operating Budget shall be deemed to be the Annual Operating
Budget in effect prior to the delivery of the proposed final Annual Operating
Budget pursuant to Section 5.14.3); provided that the amounts specified therein
shall be increased to the extent specified in the Project Documents.

      5.15  PRESERVATION OF RIGHTS; FURTHER ASSURANCES.

            5.15.1 Maintain in full force and effect, perform in all material
respects (subject to Section 5.2) the obligations of Borrower under, preserve,
protect and defend the material rights of Borrower under and, take all
reasonable action necessary to prevent termination (except by expiration in
accordance with its terms) of each and every Major Project Document, including
(where Borrower in the exercise of its business judgment deems it proper)
prosecution of suits to enforce any material right of Borrower thereunder and
enforcement of any material claims with respect thereto; provided, however, that
upon the occurrence and during the continuance of an Event of Default if
Administrative Agent requests that certain actions be taken and Borrower fails
to take the requested actions within five Banking Days, Administrative Agent or
Collateral Agent (as applicable) may enforce in its own name or in Borrower's
name, such rights of Borrower, all as more particularly provided in the Security
Agreement and the other Credit Documents.

            5.15.2 From time to time, execute, acknowledge, record, register,
deliver and/or file all such notices, statements, instruments and other
documents (including any memorandum of lease or other agreement, financing
statement, continuation statement, certificate of title or estoppel
certificate), relating to the Term Loans stating the interest and charges then
due and any known Events of Default or Inchoate Defaults, and take such other
steps as may be necessary or advisable to render fully valid and enforceable
under all applicable laws the rights, liens and priorities of the Secured
Parties with respect to all Collateral and other security from time to time
furnished under this Agreement and the other Credit Documents or intended to be
so furnished, in each case in such form and at such times as shall be reasonably
requested by Collateral Agent,

                                       44
<PAGE>

and pay all reasonable fees and expenses (including reasonable attorneys' fees)
incident to compliance with this Section 5.15.2.

            5.15.3 If Borrower shall at any time acquire any real property or
leasehold or other interest in real property not covered by the Mortgage, then
promptly upon such acquisition, execute, deliver and record a supplement to the
Mortgage, reasonably satisfactory in form and substance to Administrative Agent,
subjecting the real property or leasehold or other interests to the Lien and
security interest created by the Mortgage. If reasonably requested by
Administrative Agent, Borrower shall obtain an appropriate endorsement or
supplement to the Title Policy insuring the Lien of the Secured Parties in such
additional property, subject only to Permitted Liens and other exceptions to
title approved by Administrative Agent.

            5.15.4 Upon the request of Administrative Agent or Collateral Agent,
execute and deliver all documents as shall be necessary or that Administrative
Agent or Collateral Agent (as the case may be) shall reasonably request in
connection with the rights and remedies of Administrative Agent or Collateral
Agent (as the case may be) and the Lenders under the Operative Documents, and
perform, such other reasonable acts as may be necessary to carry out the intent
of this Agreement and the other Credit Documents (including any such acts
necessary to implement a Required HoldCo Transfer).

            5.15.5 Take such action, including the execution and filing of all
such documents and instruments, as may be necessary to effect and continue the
appointment of Corporation Service Company as its agent for service of process
in full force and effect, or if necessary by reason of any fact or condition
relating to such agent, to replace such agent (but only after having given
notice and evidence thereof to Administrative Agent).

            5.15.6 From and after the Support Date (as defined below), if and to
the extent that Rocky Mountain Borrower is unable to satisfy all of its payment
obligations to the Rocky Mountain Secured Parties, then Borrower shall promptly
contribute cash equity which is otherwise available for distribution pursuant to
Waterfall Level 9 of Section 3.2.2(b) of the Depositary Agreement or Waterfall
Level 4 of Section 3.2.2(d) of the Depositary Agreement, as applicable, to Rocky
Mountain Borrower in an amount equal to the amount of such shortfall (the
"Required Cash Contribution"); it being understood that (a) as of the date
hereof, the Support Date has not occurred and will not occur unless certain debt
instruments of Sponsor and its subsidiaries are amended or replaced so as to
permit Borrower's commitment to make the Required Cash Contribution, (b) there
is no reason to believe that the Support Date will occur and (c) neither
Borrower nor any of its Affiliates is under any obligation to use any efforts
cause the Support Date to occur. The "Support Date" is the first date on which
Borrower's commitment to make the Required Cash Contribution is permitted by the
debt instruments of the Sponsor and its subsidiaries (including requirements in
such instruments relating to the non-recourse nature of the Rocky Mountain Term
Loans), as determined in good faith by the managers of Borrower in their sole
discretion.

      5.16  ADDITIONAL CONSENTS.

            With respect to (a) any Major Project Document (including any
Additional Project Document) entered into after the Closing Date and (b) any
Major Project Document

                                       45
<PAGE>

entered into by a Replacement Obligor pursuant to Section 6.15 or Article 7, in
each case cause the applicable counterparty or Replacement Obligor, as
applicable, to execute and deliver to Administrative Agent a Consent in
substantially the form of Exhibit E-1, with such changes as are reasonably
acceptable to Administrative Agent.

      5.17  MAINTENANCE OF INSURANCE.

            Without cost to the Secured Parties, maintain or cause to be
maintained on its behalf in effect at all times the types of insurance required
pursuant to Exhibit K, in the amounts and on the terms and conditions specified
therein, from the quality of insurers specified in such Exhibit or other
insurance companies of recognized responsibility reasonably satisfactory to
Administrative Agent.

      5.18  TAXES, OTHER GOVERNMENT CHARGES AND UTILITY CHARGES.

            Subject to the second sentence of this Section 5.18, timely file all
material tax returns and pay, or cause to be paid, as and when due and prior to
delinquency, all material taxes, assessments and governmental charges of any
kind that may at any time be lawfully assessed or levied against or with respect
to Borrower or the Project, including sales and use taxes and real estate taxes,
all utility and other charges incurred in the operation, maintenance, use,
occupancy and upkeep of the Project, and all assessments and charges lawfully
made by any Governmental Authority for public improvements that may be secured
by a Lien on the Project. Borrower may contest in good faith any such taxes,
assessments and other charges and, in such event, may permit the taxes,
assessments or other charges so contested to remain unpaid during any period,
including appeals, when Borrower is in good faith contesting the same, so long
as (a) reserves to the extent required by GAAP have been established in an
amount sufficient to pay any such taxes, assessments or other charges, accrued
interest thereon and potential penalties or other costs relating thereto, or
other adequate provision for the payment thereof shall have been made and
maintained at all times during such contest, (b) enforcement of the contested
tax, assessment or other charge is effectively stayed for the entire duration of
such contest, and (c) any tax, assessment or other charge determined to be due,
together with any interest or penalties thereon, is promptly paid after
resolution of such contest.

      5.19  EVENT OF EMINENT DOMAIN.

            If an Event of Eminent Domain shall occur with respect to any
Collateral, (a) diligently pursue all its rights to compensation against the
relevant Governmental Authority in respect of such Event of Eminent Domain, (b)
not, without the written consent of Administrative Agent (which consent shall
not be unreasonably withheld or delayed), compromise or settle any claim against
such Governmental Authority if such compromise or settlement could reasonably be
expected to have a Material Adverse Effect, and (c) pay or apply all Eminent
Domain Proceeds in accordance with Section 3.5 of the Depositary Agreement.
Borrower consents to, and agrees not to object to or otherwise impede or impair,
the participation of Administrative Agent in any eminent domain proceedings, and
Borrower shall from time to time deliver to Administrative Agent all documents
and instruments requested by it to permit such participation.

                                       46
<PAGE>

      5.20  INTEREST RATE PROTECTION.

            5.20.1 Compliance With Interest Rate Agreements. Within 45 days
after the Closing Date, enter into one or more Interest Rate Agreements with one
or more banks or financial institutions for a period commencing on such date and
ending on or after June 24, 2009 in a notional amount equal to at least
seventy-five percent (75%) of the anticipated amount of Term Loans projected to
be outstanding during such period (which anticipated amount (a) shall be
determined by reference to the Base Case Project Projections, and (b) shall take
into account any scheduled or projected repayments or prepayments of Term Loans
contemplated thereunder. Furthermore, Borrower shall at all times comply with
and maintain in full force and effect through the end of such period such
Interest Rate Agreements. All such Interest Rate Agreements shall be on terms
and conditions reasonably satisfactory to Administrative Agent.

            5.20.2 Hedge Breaking Fees. To the extent required pursuant to the
terms of the Hedge Transactions, pay all costs, fees and expenses incurred by
Borrower in connection with any unwinding, breach or termination of such Hedge
Transactions ("Hedge Breaking Fees"), all to the extent provided in and as
calculated pursuant to the applicable Interest Rate Agreements.

            5.20.3 Security. Each Interest Rate Agreement provided by a Lender
(or an Affiliate thereof) hereunder, including all Hedge Transactions
thereunder, entered into in accordance with the terms of this Agreement, and all
Hedge Breaking Fees shall be and are hereby secured by any Collateral Documents,
pari passu with the Term Loans. The parties hereto agree that, for purposes of
any sharing of Collateral under the Collateral Documents, any Hedge Lender, in
its capacity as a counterparty or intermediary to the Interest Rate Agreements,
shall be deemed to have made a Term Loan to Borrower in an amount equal to the
unpaid amount of any Hedge Breaking Fees owed by Borrower to such Hedge Lender,
under any such Hedge Transaction on the date that an Early Termination Date (as
defined in the applicable Interest Rate Agreement) occurs. For purposes of any
such Collateral sharing, and for purposes of voting on matters under this
Agreement to the extent specified in the definition of "Proportionate Share,"
such Hedge Lender shall be deemed a Lender under the Collateral Documents to the
extent of such Term Loan.

            5.20.4 Lender Participation. At the election of the counterparty to
any Interest Rate Agreement, the Lenders may participate in such Interest Rate
Agreements and Hedge Transactions thereunder in proportion to their respective
Proportionate Shares by means of a risk sharing agreement in form and substance
satisfactory to such Lenders, provided, that if any such Lender's Lending Office
is in the State of New York, such Lender may designate another branch to enter
into such risk sharing agreement.

      5.21  ROCKY MOUNTAIN DISTRIBUTIONS.

            5.21.1 From and after the Closing Date and until Rocky Mountain
Borrower has repaid in full the outstanding principal amount of the Rocky
Mountain Term Loans (together with all interest thereon and fees related
thereto) under the Rocky Mountain Credit Documents, cause Rocky Mountain
Borrower to distribute to Borrower all amounts on deposit in the Rocky Mountain
Revenue Account following application of Rocky Mountain Waterfall Levels 1
through 9 pursuant to Section 3.2.2(b) of the Rocky Mountain Depositary
Agreement.

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            5.21.2 From and after the date on which Rocky Mountain Borrower has
repaid in full the outstanding principal amount of the Rocky Mountain Term Loans
(together with all interest thereon and fees related thereto) under the Rocky
Mountain Credit Documents, cause Rocky Mountain Borrower to distribute to
Borrower all amounts on deposit in the Rocky Mountain Revenue Account following
application of Rocky Mountain Waterfall Level 1 through 3 pursuant to Section
3.2.2(d) of the Rocky Mountain Depositary Agreement.

      5.22  FINANCIAL COVENANTS.

            5.22.1 As of December 31, 2004, cause the Consolidated Debt Service
Coverage Ratio for the period commencing on the Closing Date and ending on
December 31, 2004 to be equal to or greater than 1.20 to 1.

            5.22.2 As of June 30, 2005, cause the Consolidated Debt Service
Coverage Ratio for the period commencing on the Closing Date and ending on June
30, 2005 to be equal to or greater than 1.20 to 1.

            5.22.3 As of the last day of each fiscal quarter of Borrower
(commencing on September 30, 2005), cause the Consolidated Debt Service Coverage
Ratio for the period of four consecutive fiscal quarters most recently ended on
or prior to such date to be equal to or greater than 1.20 to 1.

            5.22.4 As of December 31, 2004, cause the ratio of (a) the product
of (i) the then aggregate outstanding principal amount of Term Loans and Rocky
Mountain Term Loans and (ii) 0.50 to (b) Consolidated EBITDA for the period
commencing on the Closing Date and ending on December 31, 2004, taken as one
accounting period, to be equal to or less than 9.0 to 1.

            5.22.5 As of the last day of each fiscal quarter of Borrower
(commencing on June 30, 2005), cause the ratio of (a) the then aggregate
outstanding principal amount of Term Loans and Rocky Mountain Term Loans to (b)
Consolidated EBITDA for the period of four consecutive fiscal quarters most
recently ended on or prior to such date, taken as one accounting period, to be
equal to or less than 9.0 to 1.

      5.23  REQUIRED HOLDCO TRANSFER.

            At any time on or after the date on which there has been a default
or breach claimed by any third party under a Major Project Document that could
be cured by the Required HoldCo Transfer, Borrower shall promptly implement the
Required HoldCo Transfer and all related transactions required thereby, unless
the failure to do so could not reasonably be expected to have a Material Adverse
Effect.

      5.24  MAINTENANCE OF RATINGS.

            Promptly, perform all reasonable acts necessary to maintain a rating
with each of S&P and Moody's.

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<PAGE>

                                   ARTICLE 6
                               NEGATIVE COVENANTS

            Borrower covenants and agrees that until the Termination Date,
Borrower shall not:

      6.1   CONTINGENT LIABILITIES.

            Except as provided in this Agreement and the other Credit Documents,
become liable as a surety, guarantor, accommodation endorser or otherwise, for
or upon the obligation of any other Person; provided, however, that this Section
6.1 shall not be deemed to prohibit or otherwise limit the occurrence of (a)
Permitted Debt or (b) other contingent liabilities incident to the ordinary
course of business that are not incurred in connection with the obtaining or
guaranteeing of any Debt and that do not in the aggregate materially impair the
use of the property or assets of Borrower or the value of such property or
assets for the purpose of Borrower's business.

      6.2   LIMITATIONS ON LIENS.

            Create, assume or suffer to exist any Lien, securing a charge or
obligation on the Project or on any of the Collateral, real or personal, whether
now owned or hereafter acquired, except Permitted Liens.

      6.3   INDEBTEDNESS.

            Incur, create, assume or permit to exist any Debt except Permitted
Debt.

      6.4   SALE OR LEASE OF ASSETS.

            Except as provided in this Agreement in connection with a Required
HoldCo Transfer, sell, lease, assign, transfer or otherwise dispose of assets,
whether now owned or hereafter acquired, except (a) in the ordinary course of
its business and as contemplated by the Operative Documents, at fair market
value, (b) to the extent that such asset is unnecessary, worn out or no longer
useful or usable in connection with the operation or maintenance of the Project,
at fair market value, (c) in the case of spare parts, to the extent that such
spare part is sold or transferred for one or more spare parts of equivalent fair
market value, such sold or transferred spare part is otherwise available to
Borrower when and as needed at a cost consistent with the then applicable Annual
Operating Budget and the spare part or parts received by Borrower are free and
clear of all liens and encumbrances, (d) upon any equipment failure, the
replacement of such failed equipment with comparable equipment, (e) the sale,
transfer or release, with or without consideration, of real property or
interests in real property related to the Project to the extent that such real
property or interests in real property is only incidental to the leasing,
ownership or operation of the Project, or (f) the granting of easements or other
interests in real property related to the Project to other Persons if such
granting could not reasonably be expected to have a Material Adverse Effect (it
being acknowledged and agreed that Borrower may not sell, lease, assign,
transfer or dispose of its ownership interests in Rocky Mountain Borrower
(except in connection with disposition of such ownership interests to, or at the
direction of, the Rocky Mountain Secured Parties in accordance with the
Intercreditor Agreement) without the consent

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<PAGE>

of all Lenders). Upon any such sale, lease, assignment, transfer or other
disposition of any such assets, all Liens in favor of any Secured Party relating
to such asset shall be automatically released (and Collateral Agent shall
execute any document reasonably requested by Borrower evidencing such release).

      6.5   CHANGES.

            Change the nature of its business or expand its business beyond the
business contemplated in the Operative Documents.

      6.6   DISTRIBUTIONS.

            From and after the first Principal Repayment Date, directly or
indirectly, make or declare any dividend or other distribution (in cash,
property or obligation) on, or other payment on account of, any interest in
Borrower, unless the following conditions have been satisfied (the "Restricted
Payment Conditions"):

            (a) such dividend or distribution is on a date occurring within 45
days after the immediately preceding Principal Repayment Date.

            (b) no Event of Default or Inchoate Default has occurred and is
continuing as of the date of such applicable dividend or distribution, and such
dividend or distribution would not cause an Event of Default or Inchoate
Default;

            (c) the Debt Service Coverage Ratio for the Calculation Period
relating to the Principal Repayment Date immediately preceding the proposed date
of such dividend or distribution is greater than or equal to 1.40 to 1;

            (d) the funds necessary to make any such dividend or distribution
are on deposit in the Revenue Account as of the Principal Repayment Date to
which the applicable dividend or distribution relates and are otherwise
available to be withdrawn from the Revenue Account or the Distribution Suspense
Account on such date or a later date in accordance with the terms and conditions
of the Depositary Agreement; and

            (e) (i) the amounts on deposit in, or credited to, the Major
Maintenance Reserve Account as of the date of the applicable dividend or
distribution (taking into account the stated amount of the Major Maintenance
Reserve Letter of Credit payable to Administrative Agent on demand for
disbursement to the Major Maintenance Reserve Account) equal or exceed the
amount necessary to fund in full the then-required Major Maintenance Reserve
Requirement, and (ii) the amounts on deposit or credited to the PSCo Security
Fund as of the date of the applicable dividend or distribution equal or exceed
the then-required PSCo Security Reserve Requirement.

Notwithstanding anything to the contrary contained in this Agreement, nothing in
this Section 6.6 shall prohibit, or otherwise limit (1) any Riverside Closing
Date Distribution or any Rocky Mountain Closing Date Distribution made to, or
for the account of, the Sponsor or the Pledgor in accordance with Section 2.1.5
of this Agreement or Section 2.1.5 of the Rocky Mountain Credit Agreement, (2)
the payment of O&M Costs in accordance with Section 3.3 of

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<PAGE>

the Depositary Agreement or (3) the payment of Subordinated Payments in
accordance with Section 3.2.2(b) of the Depositary Agreement.

      6.7   INVESTMENTS.

            Make any investments (whether by purchase of stocks, bonds, notes or
other securities, loan, extension of credit, advance or otherwise) other than
Permitted Investments, cash equity contributions to Rocky Mountain Borrower and
as necessary to consummate any Required HoldCo Transfer.

      6.8   TRANSACTIONS WITH AFFILIATES.

            Borrower shall not directly or indirectly enter into any transaction
or series of transactions relating to the Project with or for the benefit of an
Affiliate without the prior written approval of Administrative Agent, except for
(a) the Project Documents in effect on the Closing Date, and the transactions
permitted thereby, (b) transactions that contain terms no less favorable to
Borrower than would be included in an arm's-length transaction entered into by a
prudent Person with a non-Affiliated third party, (c) any employment,
noncompetition or confidentiality agreement entered into by Borrower with any of
its employees, officers or directors in the ordinary course of business, and (d)
as otherwise expressly permitted or contemplated by this Agreement and the other
Credit Documents.

      6.9   REGULATIONS.

            Directly or indirectly apply any part of the proceeds of any Term
Loan, any cash equity contributions received by Borrower or other funds or
revenues to the "buying", "carrying" or "purchasing" of any margin stock within
the meaning of Regulations T, U or X of the Federal Reserve Board, or any
regulations, interpretations or rulings thereunder.

      6.10  PARTNERSHIPS, ETC.

            Other than as expressly permitted or contemplated by this Agreement
and the other Credit Documents, become a general or limited partner in any
partnership or a joint venturer in any joint venture or create and hold stock in
any subsidiary.

      6.11  DISSOLUTION; MERGER.

            Except as provided in this Agreement in connection with a Required
HoldCo Transfer, liquidate or dissolve, or combine, merge or consolidate with or
into any other entity, or change its legal form, or purchase or otherwise
acquire all or substantially all of the assets of any Person.

      6.12  AMENDMENTS; CHANGE ORDERS.

            6.12.1 Without the prior written consent of (a) in the case of the
Tolling Agreement or the Power Purchase Agreement, the Supermajority Lenders or
(b) in the case of any other Major Project Document, the Majority Lenders (in
each case, acting in consultation with the Independent Engineer), directly or
indirectly, amend, modify, supplement or waive,

                                       51
<PAGE>

accept, or permit or consent to the termination, amendment, modification,
supplement or waiver (including any waiver (or refund) of damages (liquidated or
otherwise) payable by any contractor under any Major Project Document) of, any
of the material provisions of, or give any material consent (each such
termination, amendment, modification, supplement, waiver or consent, inclusive
of any applicable change orders, being referred to herein as a "Project Document
Modification") under any of the Major Project Documents unless such termination,
amendment, modification, supplement or waiver could not reasonably be expected
to have a Material Adverse Effect (as certified to Administrative Agent and
Lenders by Borrower); provided, that the extension of the term of a Major
Project Document on substantially the same terms and conditions then in effect
shall not require the consent or approval of the Supermajority Lenders or the
Majority Lenders.

            6.12.2 Construct, install, or permit the construction or
installation of, shared or joint facilities between the Project and any plants,
facilities, generating stations or other improvements which are not located on
the Site or the Easements (including any such plants, facilities, generating
stations or other improvements owned by WP & L); provided that Borrower shall
have the right to use that portion of the wastewater discharge pipeline from the
Project to Rock River owned by WP&L.

            If applicable, the Supermajority Lenders or Majority Lenders (as the
case may be) shall use good faith efforts to respond to each request for a
Project Document Modification pursuant to this Section 6.12 as soon as possible
and in all events within 30 days of its receipt of written notification thereof.
No Project Document Modification requiring approval by the Supermajority Lenders
or Majority Lenders (as the case may be) hereunder shall be deemed approved by
the Supermajority Lenders or Majority Lenders (as the case may be) until
expressly approved.

      6.13  NAME AND LOCATION; FISCAL YEAR.

            Unless consented to in writing by Administrative Agent, change its
name, its jurisdiction of formation, the location of its principal place of
business, its organization identification number or its fiscal year.

      6.14  USE OF SITE.

            Use, or permit to be used, the Site for any purpose (a) which could
reasonably be expected to constitute a public or private nuisance that could
reasonably be expected to have a Material Adverse Effect, or (b) other than for
the operation and maintenance of the Project as contemplated by the Operative
Documents.

      6.15  ASSIGNMENT.

            Assign its rights hereunder, under the other Credit Documents or
under any Major Project Document to any Person, except as set forth in this
Agreement and the other Credit Documents (including with respect to, as
applicable, any Required HoldCo Transfer).

      6.16  ACCOUNTS.

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<PAGE>

            Maintain, establish or use any account (other than the Accounts)
without the prior written consent of Administrative Agent.

      6.17  HAZARDOUS SUBSTANCES.

            Release into the environment any Hazardous Substances in violation
of any Hazardous Substance Laws, Legal Requirements or Applicable Permits,
except for any Release that could not reasonably be expected to materially
impair the value of the Site and the Collateral, taken as a whole, and could not
otherwise reasonably be expected to have a Material Adverse Effect.

      6.18  ADDITIONAL PROJECT DOCUMENTS.

            Without the consent of the Majority Lenders (which consent shall not
be unreasonably withheld), enter into, or become a party to any Project Document
not in existence on the Closing Date (any such Project Document not subject to
exception as follows, an "Additional Project Document"), except contracts
entered into on an arm's length basis for the purchase by Borrower of goods or
services which:

            (a) provide for the payment by Borrower of, or the provision to
Borrower of such goods and services with a value of, $2,000,000 or less;

            (b) provide for payment of Emergency Operating Costs; or

            (c) replace a Major Project Document as contemplated by the
definition of "Replacement Obligor".

provided that in no event shall Borrower enter into any contract or agreement
without the consent of the Majority Lenders other than those related to
Borrower's owning, leasing, operating, maintaining or using the Project.
Notwithstanding anything contained in this Agreement to the contrary, Borrower
shall not enter into any Project Document with an Affiliate of Borrower unless
Borrower, such Affiliate and Administrative Agent shall have entered into a
Subordination Agreement with respect to such Project Document.

      6.19  ASSIGNMENT BY THIRD PARTIES.

            Without prior written consent of (a) in the case of the Tolling
Agreement or the Power Purchase Agreement, the Supermajority Lenders or (b) in
the case of any other Major Project Document, the Majority Lenders, consent to
the assignment of any obligations under any Major Project Document by any
counterparty thereto other than to a Replacement Obligor.

      6.20  ACQUISITION OF REAL PROPERTY.

            Acquire or lease any real property or other interest in real
property (excluding the acquisition of any easements or the acquisition (but not
the exercise) of any options to acquire any such interests in real property)
other than the Site, Easements and other interests in real property acquired on
or prior to the Closing Date, unless Borrower shall have delivered to
Administrative Agent a "Phase I" environmental report with respect to such real
property and, if

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<PAGE>

a "Phase II" environmental review is warranted (as reasonably determined by the
Administrative Agent upon its review of such "Phase I" environmental report), a
"Phase II" environmental report, in each case, along with a corresponding
reliance letter from the consultant issuing such report(s), confirming, in form
and substance reasonably satisfactory to Administrative Agent, either that (a)
no Hazardous Substances were found in, on or under such real property of a
nature or concentrations that could reasonably be expected to impose on Borrower
or Pledgor a material environmental liability or (b) the conditions and risks
associated with such Hazardous Substances were otherwise being addressed in a
manner satisfactory to Administrative Agent.

      6.21  EMPLOYEE BENEFIT PLANS.

            Maintain any employee benefit plans subject to ERISA.

      6.22  POWER SALES.

            Consent to, or permit, the provision of electrical products to any
Person other than (a) WP&L under the Tolling Agreement, (b) MG&E under the Power
Purchase Agreement, and (c) CES under the CES Power Sales Agreement.

      6.23  GOVERNING DOCUMENT CHANGES.

            Consent to, or permit, (a) the termination or cancellation of the
Governing Documents of Borrower or (b) any material amendment, supplement or
modification of the Governing Documents of Borrower.

                                   ARTICLE 7
                           EVENTS OF DEFAULT; REMEDIES

      7.1   EVENTS OF DEFAULT.

            Until the Termination Date, the occurrence of any of the following
events shall constitute an event of default (each, an "Event of Default")
hereunder:

            7.1.1 Failure to Make Payments. Borrower shall fail to pay, in
accordance with the terms of this Agreement (a) any principal on any Term Loan
on the date that such sum is due, (b) any interest on any Term Loan within five
days after the date such sum is due, (c) any scheduled fee, cost, charge or sum
due hereunder or under any other Credit Documents within five days of the date
that such sum is due, or (d) any other fee, cost, charge or other sum due under
this Agreement or the other Credit Documents within 30 days after written notice
that such sum is due.

            7.1.2 Bankruptcy; Insolvency. The Pledgor, Borrower or any other
Major Project Participant (so long as such Major Project Participant shall have
outstanding or unperformed obligations under the Operative Document to which it
is a party) shall become subject to a Bankruptcy Event; provided that, solely
with respect to a Bankruptcy Event with respect to a Person other than Borrower
or the Pledgor, no Event of Default shall occur as a result of such Bankruptcy
Event if (a) Borrower obtains a Replacement Obligor for the affected party
within 90 days thereafter and such Bankruptcy Event has not had and does not
have, prior

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<PAGE>

to so obtaining such Replacement Obligor, a Borrower Material Adverse Effect,
(b) the applicable Major Project Participant is substantially performing its
remaining obligations with respect to the Project Documents to which it is a
party and has affirmed, within 90 days thereafter, the Operative Document(s) to
which it is a party or (c) with respect to CES, such Bankruptcy Event does not
have a Borrower Material Adverse Effect.

            7.1.3 Defaults Under Other Indebtedness. Borrower shall default for
a period beyond any applicable grace period (a) in the payment of any principal,
interest or other amount due under any agreement involving Debt and the
outstanding amount or amounts payable under any such agreement equals or exceeds
$1,000,000 in the aggregate or (b) in the performance of any obligation due
under any agreement involving Debt if in the case of this clause (b), pursuant
to such default, the holder of the obligation concerned has accelerated the
maturity of any indebtedness evidenced thereby which equals or exceeds
$1,000,000 in the aggregate.

            7.1.4 Judgments. A final judgment or judgments shall be entered
against Borrower in the amount of $1,000,000 or more individually or in the
aggregate, other than, in each case, (a) a judgment which is fully covered by
insurance or discharged within 60 days after its entry, or (b) a judgment, the
execution of which is effectively stayed within 60 days after its entry but only
for 60 days after the date on which such stay is terminated or expires.

            7.1.5 ERISA. If any Calpine Entity or any ERISA Affiliate should
establish, maintain, contribute to or become obligated to contribute to any
ERISA Plan and (a) a Reportable Event (under Section 4043(b) or (c) of ERISA for
which notice to the PBGC is not waived) shall have occurred with respect to any
ERISA Plan and, within 30 days after the reporting of such Reportable Event to
Administrative Agent by Borrower (or Administrative Agent otherwise obtaining
knowledge of such event) and the furnishing of such information as
Administrative Agent may reasonably request with respect thereto, Administrative
Agent shall have notified Borrower in writing that (i) Administrative Agent or
the Majority Lenders has made a determination that, on the basis of such
Reportable Event, there are reasonable grounds for the termination of such ERISA
Plan by the PBGC or for the appointment by the appropriate United States
District Court of a trustee to administer such ERISA Plan and (ii) as a result
thereof, an Event of Default exists hereunder; or (b) a trustee shall be
appointed by a United States District Court to administer any ERISA Plan; or (c)
the PBGC shall institute proceedings to terminate any ERISA Plan; or (d) a
complete or partial withdrawal by Borrower or any ERISA Affiliate from any
Multiemployer Plan shall have occurred and, within 30 days after the reporting
of any such occurrence to Administrative Agent by Borrower (or Administrative
Agent otherwise obtaining knowledge of such event) and the furnishing of such
information as Administrative Agent or Majority Lenders may reasonably request
with respect thereto, Administrative Agent shall have notified Borrower in
writing that Administrative Agent has made a determination that, on the basis of
such occurrence, an Event of Default exists hereunder; or (e) any Calpine Entity
or any ERISA Affiliate shall have failed to fulfill its obligations under the
minimum funding standards of ERISA or the Code with respect to any ERISA Plan;
provided that any of the events described in this Section 7.1.5 shall result in
aggregate liability to all Calpine Entities and all ERISA Affiliates in excess
of $5,000,000.

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<PAGE>

            7.1.6 Breach of Terms of Agreement.

            (a) Defaults Without Cure Periods. Borrower shall fail to perform or
observe any of the covenants set forth in Section 5.1.1, 5.9(a), 5.17 (with
respect to the maintenance of the insurance policies required to be in effect on
the Closing Date (or any replacement policies therefor obtained in compliance
herewith)) or 5.23, or Article 6 (other than Sections 6.1, 6.2, 6.7, 6.8, 6.13,
6.14, 6.16 and 6.17) of this Agreement.

            (b) Defaults With 30 Day Cure Periods. Borrower shall fail to
perform or observe any of the covenants set forth in Section 5.1.2, 5.13, 5.17
(with respect to all matters other than as specifically provided for in clause
(a) of this Section 7.1.6), 5.19, 5.21, 5.22, 5.24, 6.1, 6.2, 6.7, 6.8, 6.13,
6.14, 6.16 or 6.17, and such failure shall continue unremedied for a period of
30 days after Borrower becomes aware that the failure thereof could result in an
Inchoate Default or receives written notice thereof from Administrative Agent.

            (c) Other Defaults. Borrower, the Pledgor or any other Calpine
Entity shall fail to perform or observe any of the covenants set forth hereunder
or any other Credit Document not otherwise specifically provided for in Section
7.1.6(a), Section 7.1.6(b) or elsewhere in this Article 7, and such failure
shall continue unremedied for a period of 30 days after Borrower becomes aware
that the failure thereof could result in an Inchoate Default or receives written
notice thereof from Administrative Agent; provided, however, that, if (i) such
failure cannot be cured within such 30 day period, (ii) such failure is
susceptible of cure within 90 days, (iii) Borrower, the Pledgor or such other
Calpine Entity, as applicable, is proceeding with diligence and in good faith to
cure such failure, (iv) the existence of such failure has not had and could not,
after considering the nature of the cure, be reasonably expected to have a
Material Adverse Effect, and (v) Administrative Agent shall have received an
officer's certificate signed by a Responsible Officer to the effect of clauses
(i), (ii), (iii) and (iv) above and stating what action Borrower, the Pledgor or
such other Calpine Entity, as applicable, is taking to cure such failure, then
such 30 day cure period shall be extended to such date, not to exceed a total of
90 days, as shall be necessary for Borrower, the Pledgor or such other Calpine
Entity, as applicable, diligently to cure such failure.

            7.1.7 Loss of Collateral. Any substantial portion of the Collateral
is damaged, seized or appropriated without appropriate insurance proceeds
(subject to the underlying deductible) or without fair value being paid therefor
so as to allow replacement of such Collateral and/or prepayment of Term Loans
and to allow Borrower to continue satisfying its obligations hereunder and under
the other Operative Documents.

            7.1.8 Rocky Mountain Credit Agreement Event of Default. An "Event of
Default" under, and as defined in, the Rocky Mountain Credit Agreement shall
have occurred and be continuing.

            7.1.9 Regulatory Status.

            (a) If loss of EWG status for Borrower or loss of Eligible Facility
status for the Project could reasonably be expected to have a Material Adverse
Effect, (i) Borrower shall have tendered notice to FERC that Borrower has ceased
to be an EWG or (ii) FERC shall have issued

                                       56
<PAGE>

an order determining that Borrower no longer meets the criteria of an EWG or
takes other action revoking such EWG status.

            (b) Borrower shall suffer an Adverse PUHCA Event or shall otherwise
become subject to, or not exempt from financial, organizational or rate
regulation as an "electric utility company", "public-utility company" or
"holding company" under PUHCA or as a public utility under the laws of the State
of Wisconsin as presently constituted and as construed by the courts of
Wisconsin.

            7.1.10 Abandonment. Borrower shall announce that (a) it is
abandoning the Project or (b) the Project shall be abandoned or operation
thereof shall be suspended for a period of more than 30 consecutive days for any
reason (other than force majeure); provided that none of (i) scheduled
maintenance of the Project, (ii) repairs to the Project, whether or not
scheduled, or (iii) a forced outage or scheduled outage of the Project, shall
constitute abandonment or suspension of the Project, so long as Borrower is
diligently attempting to end such suspension.

            7.1.11 Security. Except as the result of the acts or omissions of
Administrative Agent, Depositary Agent, Collateral Agent or the Secured Parties,
any of the Collateral Documents, once executed and delivered, shall, other than
with respect to an immaterial portion of the Collateral, fail to provide to
Collateral Agent, for the benefit of the Secured Parties, the Liens, first
priority security interest (subject to Permitted Liens in clauses (a), (e) and
(i) of the definition thereof and, to the extent required by Governmental Rule,
clauses (b), (c) and (g) of the definition thereof), rights, titles, interest,
remedies permitted by law, powers or privileges intended to be created thereby
or, except in accordance with its terms, cease to be in full force and effect,
or, as applicable, the first priority, second priority or validity thereof or
the applicability thereof to the Term Loans, the Notes (if any) or any other
obligations purported to be secured or guaranteed thereby or any part thereof
shall be disaffirmed by or on behalf of Borrower.

            7.1.12 Loss of or Failure to Obtain Applicable Permits.

            (a) Borrower shall fail to obtain any Permit on or before the date
that such Permit becomes an Applicable Permit with respect to the Project, and
such failure could reasonably be expected to have a Material Adverse Effect.

            (b) Any Applicable Permit necessary for operation of the Project and
for Borrower's performance of its obligations under the Project Documents shall
be materially modified (other than modifications contemplated in a Project
Document requested by Borrower and approved in writing in advance of such
modification by Administrative Agent acting at the direction of the Majority
Lenders, which approval shall not be unreasonably withheld), revoked, canceled
or not renewed by the issuing agency or other Governmental Authority having
jurisdiction (or otherwise ceases to be in full force and effect) other than any
such modification of, revocation of, cancellation of, failure to renew, or
failure to maintain in full force and effect such Permit that could not
reasonably be expected to have a Material Adverse Effect.

            7.1.13 Unenforceability of Credit Documents. At any time after the
execution and delivery thereof and until the Termination Date, any material
provision of any material

                                       57
<PAGE>

Credit Document shall cease to be in full force and effect (other than following
the Termination Date by reason of the satisfaction in full of the Borrower's
Obligations or any other termination of a Credit Document in accordance with the
terms hereof or thereof) or any material Credit Document shall be declared null
and void by a Governmental Authority of competent jurisdiction.

            7.1.14 Misstatements; Omissions. Any representation or warranty made
or deemed made by any Calpine Entity in this Agreement, or in any other Credit
Document to which such Person is a party, or in any separate statement,
certificate or document delivered to Lead Arranger, Administrative Agent,
Depositary Agent, Collateral Agent, or any Lender hereunder or under any other
Credit Document to which such Person is a party, shall be untrue or misleading
in any material respect as of the time made and such representation or warranty
has not been corrected within 30 days after Borrower becomes aware that such
misstatement or omission could result in an Inchoate Default or receives notice
thereof from Administrative Agent.

            7.1.15 Project Document Defaults.

            (a) Borrower. Borrower shall be in breach of, or in default under, a
Major Project Document which breach or default if not cured could reasonably be
expected to have a Material Adverse Effect and such breach or default shall not
be remediable or, if remediable, shall continue unremedied for the lesser of (i)
the greater of (A) a period of 30 days; provided that if (1) such breach cannot
be cured within such 30 day period (or such lesser period of time, as the case
may be), (2) such breach is susceptible of cure within 90 days after such breach
or default, and (3) Borrower is proceeding with diligence and in good faith to
cure such breach, then such 30 day cure period (or such lesser period of time,
as the case may be) shall be extended to such date, not to exceed a total of 90
days, as shall be necessary for Borrower diligently to cure such breach and (B)
the date that is 30 days prior to the date that Collateral Agent's cure period
under any applicable Consent relating to such Major Project Document expires, or
(ii) such period of time (without giving effect to any extension given to
Collateral Agent under any applicable Consent with respect thereto) under such
Major Project Document which Borrower has available to it in which to remedy
such breach or default.

            (b) Third Party. Any Person other than Borrower shall be in breach
of, or in default under, a Major Project Document which breach or default if not
cured could reasonably be expected to have a Material Adverse Effect and such
breach or default shall not be remediable or, if remediable, shall continue
unremedied for a period of 30 days from the time Borrower obtains knowledge of
such breach; provided that if (i) such breach cannot be cured within such 30 day
period, (ii) such breach or default is susceptible of cure within 90 days, and
(iii) the breaching Person or Borrower is proceeding with diligence and in good
faith to cure such breach, then such 30 day cure period shall be extended to
such date, not to exceed a total of 90 days, as shall be necessary for such
breaching Person diligently to cure such breach; provided, further, that no
Event of Default shall occur as a result of any such action if Borrower obtains
a Replacement Obligor for the affected party within the 90 day cure period
referred to in this paragraph (or within the 30 day cure period, if no extension
is given) and such action does not have prior to so obtaining such Replacement
Obligor a Borrower Material Adverse Effect.

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            (c) Third Party Consents. (i) Any Person other than Borrower shall
disaffirm or repudiate in writing its material obligations under any Consent and
such disaffirmation or repudiation is not rescinded and revoked in writing by
such Person within 60 days thereof, (ii) any representation or warranty made by
any Person other than Borrower in a Consent shall be untrue or misleading in any
material respect as of the time made and such untrue or misleading
representation or warranty could reasonably be expected to materially adversely
affect the rights of the Collateral Agent or the Secured Parties thereunder or
to otherwise result in a Material Adverse Effect, or (iii) a Person other than
Borrower shall breach any material covenant of a Consent and such breach or
default shall not be remediable or, if remediable, shall continue unremedied for
a period of 30 days from the time Borrower obtains knowledge of such breach;
provided that if (A) such breach cannot be cured within such 30 day period, (B)
such breach is susceptible of cure within 90 days, (C) the breaching party or
Borrower is proceeding with diligence and in good faith to cure such breach, and
(D) the existence of such breach has not had and could not after considering the
nature of the cure, be reasonably expected to have a Material Adverse Effect,
then such 30 day cure period shall be extended to such date, not to exceed a
total of 90 days, as shall be necessary for such third party diligently to cure
such breach; provided, further, that no Event of Default shall occur as a result
of any such action if Borrower obtains a Replacement Obligor for the affected
party with respect to the contract or contracts to which such Consent relates,
within the 90 day cure period referred to in this paragraph (or within the 30
day cure period, if no extension is given) and such action does not have prior
to so obtaining such Replacement Obligor a Material Adverse Effect.

            (d) Termination. A Major Project Document shall terminate on or
before its scheduled expiration date except upon fulfillment of such party's
obligations thereunder, or shall be declared null and void; provided that no
Event of Default shall occur as a result of such breach or default if Borrower
obtains a Replacement Obligor for the affected party within 90 days thereafter
and such breach or default has not had and does not have prior to so obtaining
such Replacement Obligor, a Material Adverse Effect.

      7.2   REMEDIES.

            Upon the occurrence and during the continuation of an Event of
Default and, subject to the terms of the Intercreditor Agreement, Administrative
Agent, Collateral Agent, and the Lenders may, at the election of the Majority
Lenders, without further notice of default, presentment or demand for payment,
protest or notice of non-payment or dishonor, or other notices or demands of any
kind, all such notices and demands (other than notices required by the Credit
Documents) being waived, exercise any or all of the following rights and
remedies, in any combination or order that the Majority Lenders may elect, in
addition to such other rights or remedies as the Secured Parties may have
hereunder, under the Collateral Documents or at law or in equity:

            7.2.1 No Further Term Loans. Cancel the Total Term Loan Commitment,
refuse, and Administrative Agent, and the Lenders shall not be obligated, to
continue any Term Loans, or make any payments, or permit the making of payments,
from any Account or any Loss Proceeds or other funds held by Administrative
Agent or Collateral Agent under the Credit Documents or on behalf of Borrower;
provided that in the case of an Event of Default occurring under Section 7.1.2
with respect to Borrower, the Total Term Loan Commitment shall be

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cancelled and terminated without further act of Administrative Agent, Collateral
Agent, or any Secured Party.

            7.2.2 Cure by Agents. Without any obligation to do so, make
disbursements to or on behalf of Borrower or disburse amounts from the Accounts
to cure (a) any Event of Default or Inchoate Default hereunder and (b) any
default and render any performance under any Project Document as the Majority
Lenders in their sole discretion may consider necessary or appropriate, whether
to preserve and protect the Collateral or the Secured Parties' interests therein
or for any other reason. All sums so expended, together with interest on such
total amount at the Default Rate (but in no event shall the rate exceed the
maximum lawful rate), shall be repaid by Borrower to Administrative Agent or
Collateral Agent, as the case may be, on demand and shall be secured by the
Credit Documents, notwithstanding that such expenditures may, together with
amounts advanced under this Agreement, exceed the aggregate amount of the Total
Term Loan Commitment.

            7.2.3 Acceleration. Declare and make all or a portion of the sums of
accrued and outstanding principal and accrued but unpaid interest remaining
under this Agreement, together with all unpaid fees, costs (including
Liquidation Costs and Hedge Breaking Fees) and charges due hereunder or under
any other Credit Document, immediately due and payable and require Borrower
immediately, without presentment, demand, protest or other notice of any kind,
all of which Borrower hereby expressly waives, to pay Administrative Agent or
the Secured Parties an amount in immediately available funds equal to the
aggregate amount of any outstanding Obligations; provided that, in the event of
an Event of Default occurring under Section 7.1.2 with respect to Borrower, all
such amounts shall become immediately due and payable without further act of
Administrative Agent, Collateral Agent, or the Secured Parties.

            7.2.4 Cash Collateral. Apply or execute upon any amounts on deposit
in any Account or any Loss Proceeds or any other moneys of Borrower on deposit
with Administrative Agent, Collateral Agent, Depositary Agent or any Secured
Party in the manner provided in the UCC and other relevant statutes and
decisions and interpretations thereunder with respect to cash collateral.
Without limiting the foregoing, each of Administrative Agent, Collateral Agent
and Depositary Agent shall have all rights and powers with respect to Loss
Proceeds, the Accounts and the contents of the Accounts as it has with respect
to any other Collateral and may apply, or cause the application of, such amounts
to the payment of interest, principal, fees, costs, charges or other amounts due
or payable to Administrative Agent, Collateral Agent, Depositary Agent or the
Secured Parties with respect to the Term Loans or as otherwise provided in the
Depositary Agreement in such order as the Majority Lenders may elect in their
sole discretion. Until such time as the Majority Lenders so elect to exercise
such rights and powers, amounts in the Revenue Account shall be applied as
provided in the Depositary Agreement. Borrower shall not have any rights or
powers with respect to such amounts except as expressly provided in this Section
7.2.4.

            7.2.5 Possession of Project. Enter into possession of the Project
and perform any and all work and labor necessary to operate and maintain the
Project, and all sums expended by Administrative Agent, Collateral Agent or
Depositary Agent in so doing, together with interest on such total amount at the
Default Rate, shall be repaid by Borrower to Administrative Agent, Collateral
Agent or Depositary Agent, as the case may be, upon demand and shall be secured
by the Credit Documents, notwithstanding that such expenditures may, together
with

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amounts advanced under this Agreement, exceed the aggregate amount of the
Total Term Loan Commitment.

            7.2.6 Remedies Under Credit Documents. Subject to the applicable
terms of the Intercreditor Agreement, exercise, and direct Administrative Agent,
Depositary Agent or Collateral Agent (as the case may be) to exercise, any and
all rights and remedies available to it under any of the Credit Documents,
including judicial or non-judicial foreclosure or public or private sale of any
of the Collateral pursuant to the Collateral Documents.

                                   ARTICLE 8
                               SCOPE OF LIABILITY

            Except as set forth in this Article 8, notwithstanding anything in
this Agreement or the other Credit Documents to the contrary, the Lenders shall
have no claims with respect to the transactions contemplated by the Operative
Documents against the Sponsor or any of its Affiliates (other than Borrower and
the Pledgor), shareholders, officers, directors or employees (collectively, the
"Nonrecourse Persons") and the Lenders' recourse against Borrower and the
Pledgor and the Nonrecourse Persons shall be limited to the Collateral, the
Project, all Project Revenues, all Term Loan proceeds, Insurance Proceeds,
Eminent Domain Proceeds, and all income or revenues of the foregoing as and to
the extent provided herein and in the Collateral Documents; provided that the
foregoing provision of this Article 8 shall not (a) constitute a waiver, release
or discharge of any of the indebtedness, or of any of the terms, covenants,
conditions, or provisions of this Agreement or any other Credit Document and the
same shall continue (but without personal liability to the Nonrecourse Persons)
until fully paid, discharged, observed, or performed; (b) limit or restrict the
right of Administrative Agent, Collateral Agent or any Secured Party (or any
assignee, beneficiary or successor to any of them) to name Borrower, the Pledgor
or any other Person as a defendant in any action or suit for a judicial
foreclosure or for the exercise of any other remedy under or with respect to
this Agreement or any other Collateral Document or Credit Document, or for
injunction or specific performance, so long as no judgment in the nature of a
deficiency judgment shall be enforced against any Nonrecourse Person, except as
set forth in this Article 8; (c) in any way limit or restrict any right or
remedy of Administrative Agent, Collateral Agent or any Secured Party (or any
assignee or beneficiary thereof or successor thereto) with respect to, and each
of the Nonrecourse Persons shall remain fully liable to the extent that it would
otherwise be liable for its own actions with respect to, any fraud, willful
misrepresentation (which shall not include innocent or negligent
misrepresentation), or misappropriation of Project Revenues, Term Loan proceeds,
Insurance Proceeds, Eminent Domain Proceeds or any other earnings, revenues,
rents, issues, profits or proceeds from or of the Collateral, that should or
would have been paid as provided herein or paid or delivered to Administrative
Agent, Collateral Agent or any Secured Party (or any assignee or beneficiary
thereof or successor thereto) towards any payment required under this Agreement
or any other Credit Document; (d) affect or diminish or constitute a waiver,
release or discharge of any specific written obligation, covenant, or agreement
in respect of the transactions contemplated by the Operative Documents made by
any of the Nonrecourse Persons or any security granted by the Nonrecourse
Persons in support of the obligations of such Persons under any Collateral
Document (or as security for the obligations of Borrower), or the Pledge
Agreement; and (e) limit the liability of (i) any Person who is a party to any
Project Document or has issued any certificate or other statement in connection
therewith with respect to such

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liability as may arise by reason of the terms and conditions of such Project
Document (but subject to any limitation of liability in such Project Document),
certificate or statement, or (ii) any Person rendering a legal opinion pursuant
to this Agreement (including Section 3.1.8 or the definition of Required HoldCo
Transfer), in each case under this clause (e) relating solely to such liability
of such Person as may arise under such referenced agreement, instrument or
opinion. The limitations on recourse set forth in this Article 8 shall survive
the termination of this Agreement, the termination of the Total Term Loan
Commitment and the Interest Rate Agreements to which any Secured Party is a
party and the indefeasible payment in full in cash and performance in full of
the Obligations hereunder and under the other Operative Documents.

                                   ARTICLE 9
                              AGENTS; SUBSTITUTION

      9.1   APPOINTMENT, POWERS AND IMMUNITIES.

            9.1.1 Each Lender hereby appoints and authorizes (a) Administrative
Agent to act as its agent hereunder and under the other Credit Documents, and
(b) Collateral Agent to act as its collateral agent hereunder and under the
other Credit Documents, in each case with such powers as are expressly delegated
to Administrative Agent or Collateral Agent (as the case may be) by the terms of
this Agreement and the other Credit Documents, together with such other powers
as are reasonably incidental thereto. Neither Administrative Agent nor
Collateral Agent shall have any duties or responsibilities except those
expressly set forth in this Agreement or in any other Credit Document, or be a
trustee or a fiduciary for any Secured Party. Notwithstanding anything to the
contrary contained herein, neither Administrative Agent nor Collateral Agent
shall be required to take any action which is contrary to this Agreement or any
other Credit Documents or any Legal Requirement or exposes Administrative Agent
or Collateral Agent (as the case may be) to any liability. Each of Lead
Arranger, Collateral Agent, Administrative Agent, the Lenders and any of their
respective Affiliates shall not be responsible to any other Secured Party for
(i) any recitals, statements, representations or warranties made by Borrower or
its Affiliates contained in this Agreement, the other Credit Documents or in any
certificate or other document referred to or provided for in, or received by
Lead Arranger, Administrative Agent, Collateral Agent, or any Secured Party
under this Agreement or any other Credit Document, (ii) the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement, the
other Credit Documents, any Notes or any other document referred to or provided
for herein, or (iii) any failure by Borrower or its Affiliates to perform their
respective obligations hereunder or thereunder. Each of Administrative Agent and
Collateral Agent may employ agents and attorneys-in-fact, and neither shall be
responsible for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care.

            9.1.2 None of Collateral Agent, Administrative Agent, Lead Arranger
and their respective directors, officers, employees or agents shall be
responsible for any action taken or omitted to be taken by it or them hereunder
or under any other Credit Document or in connection herewith or therewith,
except for its or their own gross negligence or willful misconduct. Without
limiting the generality of the foregoing, (a) Administrative Agent may treat the
payee of any Note as the holder thereof until Administrative Agent receives
written notice of the assignment or transfer thereof signed by such payee and in
form satisfactory to Administrative

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Agent; (b) each of Administrative Agent and Collateral Agent may consult with
legal counsel, independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken in good
faith by them in accordance with the advice of such counsel, accountants or
experts; (c) none of Collateral Agent, Administrative Agent and Lead Arranger
makes any warranty or representation to any Secured Party for any statements,
warranties or representations made in or in connection with any Operative
Document; (d) none of Collateral Agent, Administrative Agent and Lead Arranger
shall have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of any Operative
Document on the part of any party thereto, to inspect the property (including
the books and records) of Borrower or any other Person or to ascertain or
determine whether a Material Adverse Effect exists or is continuing; and (e)
none of Collateral Agent, Administrative Agent and Lead Arranger shall be
responsible to any Secured Party for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of any Operative Document or
any other instrument or document furnished pursuant hereto. Except as otherwise
provided under this Agreement and the other Credit Documents, each of
Administrative Agent and Collateral Agent shall take such action with respect to
the Credit Documents as shall be directed by the Majority Lenders.

            9.1.3 The Book Runner shall have no right, power, obligation,
liability, responsibility or duty under this Agreement, other than those
applicable to all Secured Parties and those set forth in this Article 9. The
Syndication Agent shall have no right, power, obligation, liability,
responsibility or duty under this Agreement, other than those applicable to all
Secured Parties and those set forth in this Article 9. Lead Arranger shall only
have those rights, powers, obligations, liabilities, responsibilities and duties
set forth in Section 3.1 and this Article 9. Without limiting the foregoing,
none of Lead Arranger, Syndication Agent and the Book Runner shall have or be
deemed to have a fiduciary relationship with any Secured Party. Each Secured
Party hereby makes the same acknowledgments with respect to Lead Arranger,
Syndication Agent and the Book Runner as it makes with respect to the
Administrative Agent or the Collateral Agent in this Article 9. Notwithstanding
the foregoing, the parties hereto acknowledge that the Book Runner and the
Syndication Agent hold such titles in name only, and that such titles confer no
additional rights or obligations relative to those conferred on any Secured
Party hereunder.

      9.2   RELIANCE.

            Each of Administrative Agent and Collateral Agent shall be entitled
to rely upon any certificate, notice or other document (including any cable,
telegram, facsimile, electronic mail or telex) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by it. As to any other matters not
expressly provided for by this Agreement, neither Collateral Agent nor
Administrative Agent shall be required to take any action or exercise any
discretion, but shall be required to act or to refrain from acting upon
instructions of the Majority Lenders or, where expressly provided, the
Supermajority Lenders or all Lenders (except that neither Collateral Agent nor
Administrative Agent shall be required to take any action which exposes
Collateral Agent or Administrative Agent (as the case may be) to personal
liability or which is contrary to this Agreement, any other Credit Document or
any Legal Requirement). Each of Collateral Agent and Administrative

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Agent shall in all cases (including when any action by Collateral Agent or
Administrative Agent (as the case may be) alone is authorized hereunder, if
Collateral Agent or Administrative Agent (as the case may be) elects in its sole
discretion to obtain instructions from the Majority Lenders) be fully protected
in acting, or in refraining from acting, hereunder or under any other Credit
Document in accordance with the instructions of the Majority Lenders (or, where
so expressly stated, the Supermajority Lenders or all Lenders), and such
instructions of the Majority Lenders (or Supermajority Lenders or all Lenders,
where applicable) and any action taken or failure to act pursuant thereto shall
be binding on all of the Secured Parties. In addition, for purposes of
determining compliance with the conditions specified in Section 3.1, each Lender
that has executed this Agreement shall be deemed to have consented to, approved
or accepted or to be satisfied with, each document or other matter either sent
by Administrative Agent to such Lender for consent, approval, acceptance or
satisfaction, or required thereunder to be consented to or approved by or
acceptable or satisfactory to Lender.

      9.3   NON-RELIANCE.

            Each Lender represents that it has, independently and without
reliance on Lead Arranger, Collateral Agent, Administrative Agent, or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of the financial condition and affairs of
the Calpine Entities and its own decision to enter into this Agreement and
agrees that it will, independently and without reliance upon Lead Arranger,
Collateral Agent, Administrative Agent, or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own appraisals and decisions in taking or not taking action under this
Agreement. Each of Administrative Agent, Lead Arranger, Collateral Agent and any
Lender shall not be required to keep informed as to the performance or
observance by any Calpine Entity or its Affiliates under this Agreement or any
other document referred to or provided for herein or to make inquiry of, or to
inspect the properties or books of any Calpine Entity or its Affiliates.

      9.4   DEFAULTS; MATERIAL ADVERSE EFFECT.

            None of Lead Arranger, Collateral Agent and Administrative Agent
shall be deemed to have knowledge or notice of the occurrence of any Inchoate
Default, Event of Default or Material Adverse Effect, unless such Person has
received a notice from a Lender or Borrower, referring to this Agreement,
describing such Inchoate Default, Event of Default or Material Adverse Effect
and indicating that such notice is a notice of the occurrence of such default or
Material Adverse Effect (as the case may be). If Administrative Agent receives
such a notice of the occurrence of an Inchoate Default, Event of Default or
Material Adverse Effect, Administrative Agent shall give notice thereof to the
Lenders. Each of Collateral Agent and Administrative Agent shall take such
action with respect to such Inchoate Default, Event of Default or Material
Adverse Effect as is provided in Article 3, Article 7 or the terms of the Credit
Documents, or if not provided for in Article 3, Article 7 or such Credit
Documents, as Administrative Agent or Collateral Agent shall be reasonably
directed by the Majority Lenders; provided, however, that unless and until
Administrative Agent or Collateral Agent shall have received such directions,
each of Administrative Agent and Collateral Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such

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Inchoate Default, Event of Default or Material Adverse Effect as it shall deem
advisable in the best interest of the Lenders.

      9.5   SUCCESSOR AGENT.

            Each of Collateral Agent and Administrative Agent may resign at any
time by giving fifteen days' written notice thereof to the Secured Parties and
Borrower; provided that the resigning Administrative Agent or Collateral Agent
may only resign hereunder if such Person also resigns in such capacity under the
Rocky Mountain Credit Agreement. Each of Collateral Agent and Administrative
Agent may be removed involuntarily only for a material breach of its respective
duties and obligations hereunder and under the other Credit Documents or for
gross negligence or willful misconduct in connection with the performance of its
respective duties hereunder or under the other Credit Documents and then only
upon the affirmative vote of the Majority Lenders (excluding Administrative
Agent and Collateral Agent (as the case may be) from such vote and
Administrative Agent's and Collateral Agent's (as the case may be) Proportionate
Share (if any) of the Total Term Loan Commitment and Term Loans from the amounts
used to determine the portion of the Total Term Loan Commitment and Term Loans
necessary to constitute the required Proportionate Share of the remaining
Lenders); provided that the removed Administrative Agent or Collateral Agent may
only be removed hereunder if such Person also is removed in such capacity under
the Rocky Mountain Credit Agreement. Upon any such resignation or removal of
Administrative Agent or Collateral Agent, the Majority Lenders shall have the
right, with the consent of Borrower (such consent not to be unreasonably
withheld or delayed) to appoint a successor Administrative Agent or Collateral
Agent (as the case may be) under this Agreement and under the Rocky Mountain
Credit Agreement. If no successor Administrative Agent or Collateral Agent (as
the case may be) shall have been so appointed by the Majority Lenders and shall
have accepted such appointment, within 30 days after the retiring Administrative
Agent's or Collateral Agent's (as the case may be) giving of notice of
resignation or the Lenders' removal of the retiring Administrative Agent or
Collateral Agent (as the case may be), the retiring Administrative Agent and
Collateral Agent (as the case may be) may, on behalf of the Secured Parties,
with the consent of Borrower (such consent not to be unreasonably withheld or
delayed), appoint a successor Administrative Agent or Collateral Agent (as the
case may be) hereunder and under the Rocky Mountain Credit Agreement. Such
successor Administrative Agent or Collateral Agent (as the case may be) shall be
a Lender, if any Lender shall be willing to serve, and otherwise shall be a
commercial bank having a combined capital and surplus of at least $500,000,000.
Upon the acceptance of any appointment as Administrative Agent or Collateral
Agent (as the case may be) under the Operative Documents and the Rocky Mountain
Operative Documents by a successor Administrative Agent or Collateral Agent (as
the case may be), such successor Administrative Agent or Collateral Agent (as
the case may be) shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent or
Collateral Agent (as the case may be), and the retiring Administrative Agent or
Collateral Agent (as the case may be) shall be discharged from its duties and
obligations as Administrative Agent or Collateral Agent (as the case may be)
only under the Credit Documents and the Rocky Mountain Credit Documents. After
any retiring Administrative Agent's or Collateral Agent's resignation or removal
hereunder as Administrative Agent or Collateral Agent (as the case may be), the
provisions of this Article 9 shall inure to its benefit as to any actions taken
or omitted to be taken

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by it while it was Administrative Agent or Collateral Agent (as the case may be)
under the Operative Documents.

      9.6   AUTHORIZATION.

            Each of Administrative Agent and Collateral Agent is hereby
authorized by the Secured Parties to execute, deliver and perform each of the
Credit Documents to which Administrative Agent or Collateral Agent (as the case
may be) is or is intended to be a party, and each Lender agrees to be bound by
all of the agreements of Administrative Agent and Collateral Agent contained in
the Credit Documents. Each of Administrative Agent and Collateral Agent is
further authorized by the Secured Parties to (a) release Liens on property that
Borrower is permitted to sell, transfer or otherwise release pursuant to the
terms of this Agreement or the other Credit Documents, (b) to enter into on
behalf of such Secured Parties any and all amendments to, or other modifications
of, this Agreement and the other Credit Documents necessary to effectuate any
Required HoldCo Transfer, (c) perform all of its obligations under the
Intercreditor Agreement and (d) to enter into agreements supplemental hereto for
the purpose of curing any formal defect, inconsistency, omission or ambiguity in
this Agreement or any Credit Document to which it is a party.

      9.7   OTHER ROLES.

            With respect to its Total Term Loan Commitment, the Term Loans made
by it and any Note issued to it, each of Lead Arranger, Collateral Agent and
Administrative Agent in its individual capacity shall have the same rights and
powers under the Operative Documents as any other Lender and may exercise the
same as though it were not Lead Arranger, Collateral Agent or Administrative
Agent. The term "Lender" or "Lenders" shall, unless otherwise expressly
indicated, include each of Lead Arranger, Collateral Agent and Administrative
Agent in its individual capacity. Each of Lead Arranger, Collateral Agent and
Administrative Agent and their respective Affiliates may accept deposits from,
lend money to, act as trustee under indentures of, and generally engage in any
kind of business with Borrower or any other Person, without any duty to account
therefor to the Lenders. For the avoidance of doubt, Credit Suisse First Boston,
acting through its Cayman Islands Branch (or any permitted successor or assign)
may act as Administrative Agent, Rocky Mountain Administrative Agent, Collateral
Agent, Rocky Mountain Collateral Agent, Lead Arranger, Book Runner and Rocky
Mountain Lead Arranger notwithstanding any potential or actual conflict of
interest presented by the foregoing and Borrower and each of the Lenders hereby
waives any claim against each of Lead Arranger, Book Runner, Collateral Agent
and Administrative Agent and any of their respective Affiliates based upon any
conflict of interest that such Person may have with regard to acting as an agent
or arranger hereunder and acting in such other roles.

      9.8   AMENDMENTS AND WAIVERS.

            9.8.1 Majority Lenders' Consent. Subject to Section 9.8.5 below, no
amendment, modification, termination or waiver of any provision of the Credit
Documents, or consent to any departure by any Calpine Entity therefrom, shall in
any event be effective without the written concurrence of the Majority Lenders
and any additional consents required by this Section 9.8.

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            9.8.2 Affected Lenders' Consent. No amendment, modification,
termination, or consent shall be effective if the effect thereof would:

            (a) extend the scheduled final maturity of any Term Loan or Note
outstanding to any Lender without the prior written consent of that Lender;

            (b) waive, reduce or postpone any scheduled repayment (but not
prepayment) due to any Lender without the prior written consent of that Lender;

            (c) reduce the rate of interest on any Term Loan (other than any
waiver of any increase in the interest rate applicable to any Term Loan pursuant
to Section 2.3.3) payable to any Lender or reduce or extend any fee payable
hereunder to any Lender without the prior written consent of that Lender;

            (d) reduce the principal amount of any Term Loan outstanding to any
Lender without the prior written consent of that Lender;

            (e) amend, modify, terminate or waive any provision of this Section
9.8.2, as it applies to any Lender without the prior written consent of that
Lender;

            (f) amend the definition of "Majority Lenders", "Supermajority
Lenders" or "Proportionate Share" without the prior written consent of all
Lenders;

            (g) release any Collateral (other than immaterial portions thereof)
from the Liens created by the Collateral Documents, except as specifically
provided for in this Agreement and the Collateral Documents, without the prior
written consent of all Lenders; or

            (h) amend or modify any provision which requires pro rata payments
among and as between the Lenders without the prior written consent of all
Lenders.

            9.8.3 Other Consents. No amendment, modification, termination or
waiver of any provision of the Credit Documents, or consent to any departure by
any Calpine Entity therefrom, shall amend, modify, terminate or waive any
provision of Article IX as the same applies to Administrative Agent or
Collateral Agent, or any other provision hereof as the same applies to the
rights or obligations of Administrative Agent or Collateral Agent, in each case
without the consent of Administrative Agent or Collateral Agent (as the case may
be).

            9.8.4 Execution of Amendments, etc. Administrative Agent may, but
shall have no obligation to, with the concurrence of any Lender, execute
amendments, modifications, waivers or consents on behalf of such Lender. Any
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it was given. No notice to or demand on any Calpine
Entity in any case shall entitle any Calpine Entity to any other or further
notice or demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this Section shall be
binding upon each Lender at the time outstanding, each future Lender and, if
signed by a Calpine Entity, on such Calpine Entity.

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            9.8.5 Certain Amendments. Notwithstanding the preceding provisions
of this Section 9.8, Borrower and Administrative Agent may amend or supplement
the Credit Documents without the consent of any Lender:

            (a) to cure any ambiguity, defect or inconsistency;

            (b) to make any change that would provide any additional rights or
benefits to the Lenders or that does not adversely affect the legal rights
hereunder of any Lender; or

            (c) to make, complete or confirm any grant of Collateral permitted
or required by this Agreement or any of the Collateral Documents or any release
of Collateral that becomes effective as set forth in this Agreement or any of
the Collateral Documents.

            9.8.6 Related Funds. For the purposes of this Section 9.8, each of
the Related Funds of a Lender shall exercise its rights in a manner consistent
and collectively with such Lender and each other Related Fund of such Lender.

      9.9   WITHHOLDING TAX.

            If the forms or other documentation required by Section 2.3.4(e) are
not delivered to Administrative Agent, then Administrative Agent may withhold
from any interest payment to any Lender not providing such forms or other
documentation, an amount equivalent to the applicable withholding tax.

            9.9.1 If the Internal Revenue Service or any authority of the United
States or other jurisdiction asserts a claim that Administrative Agent did not
properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify Administrative Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason), then such Lender shall indemnify
Administrative Agent fully for all amounts paid, directly or indirectly, by
Administrative Agent as tax or otherwise, including penalties and interest,
together with all expenses incurred, including legal expenses, allocated staff
costs, and any out of pocket expenses. Borrower shall not be responsible for any
amounts paid or required to be paid by a Lender under this Section 9.9.1.

            9.9.2 If any Lender sells, assigns, grants participation in, or
otherwise transfers its rights under this Agreement, the purchaser, assignee,
participant or transferee, as applicable, shall comply and be bound by the terms
of Section 2.3.4 and this Section 9.9 as though it were such Lender.

      9.10  GENERAL PROVISIONS AS TO PAYMENTS.

            Administrative Agent shall promptly distribute to each Lender,
subject to Section 2.1.10(d) and any accepted Mandatory Repayment Offer whereby
payments shall be allocated to each accepting Lender's Term Loans (and not to
all Lenders based on Proportionate Shares) and the terms of any separate
agreement between Administrative Agent and such Lender, its pro rata share of
each payment of principal and interest payable to the Lenders on the Term

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Loans and of fees hereunder received by Administrative Agent for the account of
the Lenders and of any other amounts owing under the Term Loans. The payments
made for the account of each Lender shall be made, and distributed to it, for
the account of (a) its domestic lending office in the case of payments of
principal of, and interest on, its Base Rate Term Loans, (b) its domestic or
foreign lending office, as each Lender may designate in writing to
Administrative Agent, in the case of LIBOR Term Loans, and (c) its domestic
lending office, or such other lending office as it may designate for the purpose
from time to time, in the case of payments of fees and other amounts payable
hereunder. Lenders shall have the right to alter designated lending offices upon
five Banking Days prior written notice to Administrative Agent and Borrower.

      9.11  EXPENSES; INDEMNITY; DAMAGE WAIVER.

            9.11.1 Borrower shall pay:

            (a) all reasonable out-of-pocket expenses incurred by Administrative
Agent, Collateral Agent, Lead Arranger and their Affiliates (including due
diligence expenses and the reasonable fees, charges and disbursements of Latham
& Watkins LLP, together with a single local counsel retained by Administrative
Agent or Collateral Agent in the State of Wisconsin) in connection with the
arrangement and syndication of the credit facilities provided for herein, the
preparation, execution, delivery and administration of the Credit Documents or
any amendments, modifications or waivers of the provisions thereof (whether or
not the transactions contemplated hereby or thereby shall be consummated);

            (b) all reasonable out-of-pocket expenses and charges of
Administrative Agent, Collateral Agent or their Affiliates incurred in
connection with any evaluations of Collateral conducted by them;

            (c) during the continuation of any Inchoate Default or Event of
Default and provided that Borrower has delivered notice to Administrative Agent
of the occurrence thereof or Borrower has received notice from Administrative
Agent of the occurrence thereof, all reasonable out-of-pocket costs and expenses
(including fees and out-of-pocket expenses of counsel) incurred by
Administrative Agent, Collateral Agent, Lead Arranger and each Lender in
connection with the enforcement or protection of any of their rights in
connection with this Agreement and the other Credit Documents, including any of
their rights under this Section 9.1.11 and including the negotiation of any
restructuring or work-out, whether or not consummated, of any Obligations of
Borrower; and

            (d) all reasonable out-of-pocket costs and expenses (including fees
and out-of-pocket costs and expenses of counsel) incurred by Administrative
Agent, Collateral Agent, Lead Arranger and each Lender in connection with the
enforcement of any Obligations of Borrower after an Event of Default or in
connection with any insolvency proceedings.

            9.11.2 Borrower shall indemnify each of Administrative Agent,
Collateral Agent, Lead Arranger and each Lender, and each Related Party of any
of the foregoing Persons (each such Person being called an "Indemnitee")
against, and hold each Indemnitee harmless from, any and all third party losses,
claims, damages, liabilities and related expenses, including

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the reasonable fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (a) the execution or delivery of any Credit
Document or any agreement or instrument contemplated hereby, the performance by
the parties to the Credit Documents of their respective obligations thereunder
or the consummation of the Term Loans or any other transactions contemplated
thereby or, with respect to Lead Arranger or any Related Party of Lead Arranger,
in connection with the arrangement and syndication of the credit facilities
provided for herein, (b) any Term Loan or the use of the proceeds therefrom, (c)
any actual or alleged presence or release of Hazardous Substances on or from any
property owned or operated by Borrower or any of its Subsidiaries, or any
Environmental Claim related in any way to Borrower or any of its Subsidiaries,
or (d) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other
theory and regardless of whether any Indemnitee is a party thereto; provided
that such indemnity shall not, as to any Indemnitee, be available to the extent
that such losses, claims, damages, liabilities or related expenses are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted primarily from the gross negligence, willful
misconduct or bad faith of such Indemnitee.

            9.11.3 To the extent that Borrower fails to pay any amount required
to be paid by it to Administrative Agent, Collateral Agent or Lead Arranger
under Section 9.11.1 or 9.11.2, each Lender severally agrees to pay to such
Administrative Agent, Collateral Agent or Lead Arranger, as the case may be,
such Lender's Proportionate Share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against such Administrative Agent, Collateral Agent or Lead Arranger in its
capacity as such.

            9.11.4 All amounts due under this Section shall be payable promptly
after written demand therefor.

      9.12  SUCCESSORS AND ASSIGNS.

            9.12.1 The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder other than in accordance
with Section 6.15 without the prior written consent of each Lender (and any
attempted assignment or transfer by Borrower without such consent shall be null
and void). Nothing in this Agreement, expressed or implied; shall be construed
to confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, the Related Parties of each of Administrative Agent,
Collateral Agent, Lead Arranger and the Lenders) any legal or equitable right,
remedy or claim under or by reason of this Agreement.

            9.12.2 Any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Term Loan Commitment and Term Loans at the time owing to it);
provided that: (a) Administrative Agent must give its prior written consent to
such assignment (which consent shall not be unreasonably

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withheld); (b) except in the case of an assignment to a Lender or an Eligible
Assignee, Borrower must provide its prior written consent to such assignment
(which consent shall not be unreasonably withheld); (c) such Lender shall at the
same time assign a pro rata portion of its "Total Term Commitment" and "Term
Loans" under the Rocky Mountain Credit Agreement to the same assignee; (d)
except in the case of an assignment to a Lender or an Eligible Assignee or an
assignment of the entire remaining amount of the assigning Lender's "Total Term
Commitment" and "Term Loans" under this Agreement and the Rocky Mountain Credit
Agreement, the aggregate amount of the Term Loan Commitments and Term Loans of
the assigning Lender under this Agreement subject to each such assignment
(determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to Administrative Agent) shall be in an aggregate amount
of not less than $1,000,000 unless each of Borrower and Administrative Agent
otherwise consent; (e) each partial assignment by a Lender of its Term Loan
Commitment and Term Loans shall be made as an assignment of a proportionate part
of all the assigning Lender's rights and obligations under this Agreement in
respect of its Term Loan Commitment and Term Loans; (f) the parties to each
assignment shall execute and deliver to Administrative Agent an Assignment and
Acceptance (such Assignment and Acceptance to be (i) electronically executed and
delivered to Administrative Agent via an electronic settlement system then
acceptable to Administrative Agent, which shall initially be the settlement
system of ClearPar, LLC, or (ii) manually executed and delivered with a
processing and recordation fee of $3,500); and (g) the assignee, if it shall not
be a Lender, shall deliver to Administrative Agent an Administrative
Questionnaire; and provided further that any consent of Borrower otherwise
required under this paragraph shall not be required (x) if an Event of Default
under this Agreement shall have occurred and is continuing or (y) in connection
with the initial syndication of the Total Term Loan Commitment and Term Loans.
Subject to acceptance and recording thereof pursuant to Section 9.12.4, from and
after the effective date specified in each Assignment and Acceptance the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of a
Lender under this Agreement other than as set forth in Section 2.5.5, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all of the
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.3.4, 2.5, 2.6 and 9.12). Any assignment or transfer by a
Lender of rights or obligations under this Agreement that does not comply with
this Section 9.12.2 shall be treated for purposes of this Agreement as a sale by
such Lender of a participation in such rights and obligations in accordance with
Section 9.12.5.

            9.12.3 Administrative Agent, acting for this purpose as an agent of
Borrower, shall maintain at one of its offices in New York, New York a copy of
each Assignment and Acceptance delivered to it and a register (the "Register")
setting forth: (a) the Term Loan Commitment and the Term Loans from time to time
of each Lender; (b) the interest rates applicable to all Term Loans and the
effective dates of all changes thereto; (c) the Interest Period for each LIBOR
Term Loan; (d) the date and amount of any principal or interest due and payable
or to become due and payable from Borrower to each Lender hereunder; (e) each
repayment or prepayment in respect of the principal amount of the Term Loans of
each Lender; (f) the amount of any sum received by Administrative Agent
hereunder for the account of the Lenders and each Lender's share thereof; (g)
the names and addresses of the Lenders, and (h) such other

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information as Administrative Agent may determine is necessary for the
administering of the Term Loans and this Agreement. The entries in the Register
shall be conclusive, and Borrower, Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding
notice to the contrary. The Register shall be available for inspection by
Borrower and any Lender at any reasonable time and from time to time upon
reasonable prior notice.

            9.12.4 Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee, if any, referred to in
Section 9.12.2 and any written consent to such assignment required by such
Section 9.12.2, Administrative Agent shall accept such Assignment and Acceptance
and record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this Section 9.12.4. Upon any transfer by a Lender
of all or part of its Term Loan Commitment or Term Loans, Exhibit H shall be
automatically updated without any further act by any Person to reflect the
Lenders' Proportionate Shares after giving effect to such transfer.

            9.12.5 Any Lender may, without the consent of Borrower or
Administrative Agent, sell participations to one or more banks or other entities
(a "Participant") in all or a portion of such Lender's rights and obligations
under this Agreement (including all or a portion of its Term Loan Commitment and
Term Loans owing to it); provided that (a) such Lender's obligations under this
Agreement shall remain unchanged, (b) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(c) Borrower, Administrative Agent, Collateral Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and (d) such Lender shall
at the same time sell a participation in a pro rata portion of its "Total Term
Commitment" and "Term Loans" under the Rocky Mountain Credit Agreement to the
same Participant. Any agreement or instrument pursuant to which a Lender sells
such a participation shall provide that such Lender shall retain the sole right
to enforce this Agreement and the other Credit Documents and to approve any
amendment, modification or waiver of any provision of this Agreement or the
other Credit Documents; provided that such agreement or instrument may provide
that such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in clause (a), (b), (c), (d) or (g)
of Section 9.8.2. Subject to Section 9.12.6, Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.3.4, 2.5 and 2.6 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to Section 9.12.2. To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 11.2 as though it
were a Lender, provided such Participant agrees to be subject to Section 2.4.1
as though it were a Lender.

            9.12.6 A Participant shall not be entitled to receive any greater
payment under Section 2.3.4, 2.5 or 2.6 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant. A Participant that would be a non-United States "Lender" under
Section 2.3.4(e) if it were a Lender shall not be entitled to the benefits of
Section 2.3 unless Borrower is notified of the participation sold to such
Participant and such

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Participant agrees, for the benefit of Borrower, to comply with Section 2.3.4(e)
as though it were a Lender.

            9.12.7 Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Lender, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto; provided, further, that the pledgor shall retain the sole
right to enforce this Agreement and the other Credit Documents and to approve
any amendment, modification or waiver of any provision of this Agreement or the
other Credit Documents. In the case of any Lender that is a fund that invests in
bank loans, such Lender may, without the consent of Borrower or Administrative
Agent, assign or pledge all or any portion of its rights under this Agreement,
including the Term Loans and Notes or any other instrument evidencing its rights
as a Lender under this Agreement, to any holder of, trustee for, or any other
representative of holders of, obligations owed or securities issued, by such
fund, as security for such obligations or securities; provided that any
foreclosure or similar action by such trustee or representative shall be subject
to the provisions of Section 9.12.2 concerning assignments.

            9.12.8 Notwithstanding anything to the contrary contained herein,
any Lender (a "Granting Lender") may grant to a special purpose funding vehicle
(an "SPC"), identified as such in writing from time to time by the Granting
Lender to Administrative Agent and Borrower, the option to provide to Borrower
all or any part of any Term Loan that such Granting Lender would otherwise be
obligated to make to Borrower pursuant to this Agreement; provided that (a)
nothing herein shall constitute a commitment by any SPC to make any Term Loan
and (b) if an SPC elects not to exercise such option or otherwise fails to
provide all or any part of such Term Loan, the Granting Lender shall be
obligated to make such Term Loan pursuant to the terms of this Agreement. The
making of a Term Loan by an SPC shall utilize the Term Loan Commitment of the
Granting Lender to the same extent, and as if, such Term Loan were made by such
Granting Lender. Each party hereto hereby agrees that no SPC shall be liable for
any indemnity or similar payment obligation under this Agreement (all liability
for which shall remain with the Granting Lender). In furtherance of the
foregoing, each party hereto hereby agrees (which agreement shall survive the
termination of this Agreement ) that, prior to the date that is one year and one
day after the payment in full of all outstanding commercial paper or other
senior indebtedness of any SPC, it will not institute against, or join any other
person in instituting against, such SPC in connection with its activities as an
SPC hereunder any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under the laws of the United States or any State
thereof. In addition, notwithstanding anything to the contrary in this Section
9.12, any SPC may with notice to, but without the prior written consent of,
Borrower and Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any Term Loans to the
Granting Lender or to any financial institutions (consented to by Borrower and
Administrative Agent) providing liquidity and/or credit support to or for the
account of such SPC to support the funding or maintenance of Term Loans. The
provisions of this Section 9.12.8 relating any SPC may not be amended without
the written consent of such SPC.

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      9.13  LAWS.

            Notwithstanding the foregoing provisions of this Article 9, no sale,
assignment, transfer, negotiation or other disposition of the interests of any
Lender hereunder or under the other Credit Documents shall be allowed if it
would require registration under the federal Securities Act of 1933, as then
amended, any other federal securities laws or regulations or the securities laws
or regulations of any applicable jurisdiction. Borrower shall, from time to time
at the request and expense of Administrative Agent, execute and deliver to
Administrative Agent, or to such party or parties as Administrative Agent may
designate, any and all further instruments as may in the opinion of
Administrative Agent be reasonably necessary or advisable to give full force and
effect to such sale, assignment, transfer, negotiation or disposition which
would not require any such registration.

                                   ARTICLE 10
                             INDEPENDENT CONSULTANTS

      10.1  REMOVAL AND FEES.

            Administrative Agent (acting at the direction of the Majority
Lenders) may remove from time to time, any one or more of the Independent
Consultants and, after consulting with Borrower as to an appropriate Person,
appoint replacements as Administrative Agent may choose. Notice of any
replacement Independent Consultant shall be given by Administrative Agent to
Borrower, the Lenders and to the Independent Consultant being replaced. All
reasonable fees and expenses of the Independent Consultants (whether the
original ones or replacements) shall be paid by Borrower pursuant to agreements
reasonably acceptable to Borrower; provided that no such acceptance shall be
required at any time an Event of Default shall have occurred and be continuing.

      10.2  DUTIES.

            Each Independent Consultant shall be contractually obligated to
Administrative Agent (on behalf of the Lenders) to carry out the activities
required of it in this Agreement and as otherwise requested by Administrative
Agent and shall be responsible solely to Administrative Agent. Borrower
acknowledges that it will not have any cause of action or claim against any
Independent Consultant resulting from any decision made or not made, any action
taken or not taken or any advice given by such Independent Consultant in the due
performance in good faith of its duties to Administrative Agent, except to the
extent arising from such Independent Consultant's gross negligence or willful
misconduct.

      10.3  INDEPENDENT CONSULTANTS' CERTIFICATES.

            Up to and following the Closing Date, Borrower shall provide such
documents and information to the Independent Consultants as they may reasonably
consider necessary in order for the Independent Consultants to deliver to
Administrative Agent the following certificates or information:

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            (a) certificates of the Insurance Consultant, Independent Engineer
and Power Market Consultant delivered on and dated as of the Closing Date as
described in Sections 3.1.9, 3.1.11 and 3.1.13, respectively, and containing the
matters set out therein;

            (b) after the Closing Date, all certificates to be delivered
thereafter pursuant to this Agreement and the other Credit Documents;

            (c) annually, a certificate setting forth a full report on the
status of the Project and such other information; and

            (d) such other information and certifications as Administrative
Agent may reasonably require from the Independent Consultants from time to time.

      10.4  CERTIFICATION OF DATES.

            Administrative Agent will request that the Independent Consultants
act diligently in the issuance of all certificates required to be delivered by
the Independent Consultants hereunder, if their issuance is appropriate.
Borrower shall provide the Independent Consultants with reasonable notice of the
expected occurrence of any such dates or events.

                                   ARTICLE 11
                                  MISCELLANEOUS

      11.1  ADDRESSES.

            Any communications between the parties hereto or notices provided
herein to be given may be given to the following addresses:

       If to Administrative Agent or   Credit Suisse First Boston
       Collateral Agent:               11 Madison Avenue, OMA-2
                                       New York, NY 10010
                                       Attention: Cindy Eng
                                       Tel: (212) 325-7110
                                       Fax: (212) 325-8304
                                       E-mail:  As may be designated by
                                       Administrative Agent

       If to Borrower:                 Riverside Energy Center, LLC
                                       50 West San Fernando Street, Suite 626
                                       San Jose, CA  95113
                                       Telephone: (408) 794-2515
                                       Fax: (408) 794-2516
                                       Attention:  President
                                       E-mail:  As may be designated by Borrower

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          With a copy to:              Riverside Energy Center, LLC
                                       250 Parkway Drive, Suite 380
                                       Lincolnshire, IL 60069
                                       Tel: (847) 484-7700
                                       Fax:  (847) 484-7799
                                       Attention:  Project Manager
                                       E-mail:  As may be designated by Borrower

            All such notices or other communications required or permitted to be
given hereunder shall be in writing and shall be considered as properly given
(a) if delivered in person, (b) if sent by overnight delivery service (including
Federal Express, UPS, ETA, Emery, DHL, AirBorne and other similar overnight
delivery services), (c) if mailed by first class United States Mail, postage
prepaid, registered or certified with return receipt requested, (d) if sent by
facsimile or (e) other electronic means (including electronic mail) confirmed by
facsimile or telephone as agreed by Administrative Agent from time to time.
Notice so given shall be effective upon receipt by the addressee, except that
communication or notice so transmitted by facsimile or other direct written
electronic means shall be deemed to have been validly and effectively given on
the day (if a Banking Day and, if not, on the next following Banking Day) on
which it is transmitted if transmitted before 4:00 p.m., recipient's time, and
if transmitted after that time, on the next following Banking Day; provided,
however, that if any notice is tendered to an addressee and the delivery thereof
is refused by such addressee, such notice shall be effective upon such tender.
Any party shall have the right to change its address for notice hereunder to any
other location within the continental United States by giving of 30 days' notice
to the other parties in the manner set forth above.

      11.2  ADDITIONAL SECURITY; RIGHT TO SET-OFF.

            Any deposits or other sums at any time credited or due from Lenders
and any Project Revenues, securities or other property of Borrower in the
possession of any Secured Party may at all times be treated as collateral
security for the payment of the Term Loans and any Notes and all other
obligations of Borrower to the Lenders under this Agreement and the other Credit
Documents, and Borrower hereby pledges to Collateral Agent for the benefit of
the Secured Parties and grants Collateral Agent for the benefit of the Secured
Parties a security interest in and to all such deposits, sums, securities or
other property. Subject to Section 2.4.2, regardless of the adequacy of any
other collateral, any Secured Party with the prior written consent of the
Collateral Agent may execute or realize on its or the Collateral Agent's
security interest in any such deposits or other sums credited by or due from
Lenders to Borrower, and may apply any such deposits or other sums to or set
them off against Borrower's obligations to Lenders under any Notes and this
Agreement at any time after the occurrence and during the continuance of any
Event of Default.

      11.3  DELAY AND WAIVER.

            No delay or omission to exercise any right, power or remedy accruing
to the Secured Parties upon the occurrence of any Event of Default, Inchoate
Default, Material Adverse Effect or any breach or default of Borrower or any
other Calpine Entity or unsatisfied condition precedent under this Agreement or
any other Credit Document shall impair any such right, power

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or remedy of the Secured Parties, nor shall it be construed to be a waiver of
any such breach or default or unsatisfied condition precedent, or an
acquiescence therein, or of or in any similar breach or default or unsatisfied
condition precedent thereafter occurring, nor shall any waiver of any single
Event of Default, Inchoate Default, Material Adverse Effect or other breach or
default or unsatisfied condition precedent be deemed a waiver of any other Event
of Default, Inchoate Default, Material Adverse Effect or other breach or default
or unsatisfied condition precedent theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of
Administrative Agent, Collateral Agent or the Secured Parties of any Event of
Default, Inchoate Default, Material Adverse Effect or other breach or default or
unsatisfied condition precedent under this Agreement or any other Credit
Document, or any waiver on the part of Administrative Agent, Collateral Agent or
the Secured Parties of any provision or condition of this Agreement or any other
Credit Document, must be in writing and shall be effective only to the extent in
such writing specifically set forth. All remedies, either under this Agreement
or any other Credit Document or by law or otherwise afforded to Administrative
Agent, Collateral Agent and the Secured Parties, shall be cumulative and not
alternative.

      11.4  ENTIRE AGREEMENT.

            This Agreement and any agreement, document or instrument attached
hereto or referred to herein integrate all the terms and conditions mentioned
herein or incidental hereto and supersede all oral negotiations and prior
writings in respect to the subject matter hereof. In the event of any conflict
between the terms, conditions and provisions of this Agreement and any such
agreement, document or instrument, the terms, conditions and provisions of this
Agreement shall prevail.

      11.5  GOVERNING LAW.

            This Agreement and any OTHER CREDIT DOCUMENT (UNLESS otherwise
expressly provided for therein), shall be governed by, and construed under, the
laws of the State of New York, without reference to conflicts of laws (other
than Section 5-1401 AND SECTION 5-1402 of the New York General Obligations Law).

      11.6  SEVERABILITY.

            In case any one or more of the provisions contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

      11.7  HEADINGS.

            Article, Section and Paragraph headings have been inserted in this
Agreement as a matter of convenience for reference only and it is agreed that
such headings are not a part of this Agreement and shall not be used in the
interpretation of any provision of this Agreement.

      11.8  ACCOUNTING TERMS.

                                       77
<PAGE>

            All accounting terms not specifically defined herein shall be
construed in accordance with GAAP and practices consistent with those applied in
the preparation of the financial statements submitted by Borrower to
Administrative Agent, and all financial data submitted pursuant to this
Agreement shall be prepared in accordance with such principles and practices.

      11.9  ADDITIONAL FINANCING.

            The parties hereto acknowledge that as of the Closing Date the
Lenders have made no agreement or commitment to provide any financing or
refinancing to Borrower except as set forth herein.

      11.10 NO PARTNERSHIP, ETC.

            The Lenders and Borrower intend that the relationship between them
shall be solely that of creditor and debtor. Nothing contained in this
Agreement, the Notes or in any of the other Credit Documents shall be deemed or
construed to create a partnership, tenancy-in-common, joint tenancy, joint
venture or co-ownership by or between the Lenders and Borrower or any other
Person. None of Lead Arranger, Administrative Agent, Collateral Agent or the
Lenders shall be in any way responsible or liable for the debts, losses,
obligations or duties of Borrower or any other Person with respect to the
Project or otherwise. All obligations to pay real property or other taxes,
assessments, insurance premiums, and all other fees and charges arising from the
ownership, operation or occupancy of the Project (if any) and to perform all
obligations and other agreements and contracts relating to the Project shall be
the sole responsibility of Borrower.

      11.11 MORTGAGE/COLLATERAL DOCUMENTS.

            The Term Loans are secured in part by the Mortgage encumbering
certain properties in the State of Wisconsin. Reference is hereby made to the
Mortgage and the other Collateral Documents for the provisions, among others,
relating to the nature and extent of the security provided thereunder, the
rights, duties and obligations of Borrower and the rights of Administrative
Agent, Collateral Agent and the other Secured Parties with respect to such
security.

      11.12 LIMITATION ON LIABILITY.

            No claim shall be made by Borrower against Lead Arranger,
Administrative Agent, Collateral Agent, the Lenders or any of their respective
Affiliates, directors, employees, attorneys or agents for any loss of profits,
business or anticipated savings, special or punitive damages or any indirect or
consequential loss whatsoever in respect of any breach or wrongful conduct
(whether or not the claim therefor is based on contract, tort or duty imposed by
law), in connection with, arising out of or in any way related to the
transactions contemplated by this Agreement or the other Operative Documents or
any act or omission or event occurring in connection therewith, and Borrower
hereby waives, releases and agrees not to sue upon any such claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.

                                       78
<PAGE>

      11.13 WAIVER OF JURY TRIAL.

            ADMINISTRATIVE AGENT, COLLATERAL AGENT, THE LENDERS AND BORROWER
HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN), OR ACTIONS OF ADMINISTRATIVE AGENT, COLLATERAL AGENT, THE LENDERS OR
BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR BORROWER, ADMINISTRATIVE
AGENT, COLLATERAL AGENT, AND THE LENDERS TO ENTER INTO THIS AGREEMENT.

      11.14 CONSENT TO JURISDICTION.

            Administrative Agent, Collateral Agent, the Lenders and Borrower
agree that any legal action or proceeding by or against Borrower or with respect
to or arising out of this Agreement, the Notes, or any other Credit Document may
be brought in or removed to the courts of the State of New York, in and for the
County of New York, or of the United States of America for the Southern District
of New York, as Administrative Agent may elect. By execution and delivery of
this Agreement, the Lenders, Administrative Agent, Collateral Agent and Borrower
accept, for themselves and in respect of their property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Administrative Agent,
Collateral Agent, the Lenders and Borrower irrevocably consent to the service of
process out of any of the aforementioned courts in any manner permitted by law.
Nothing herein shall affect the right of Administrative Agent to bring legal
action or proceedings in any other competent jurisdiction, including judicial or
non-judicial foreclosure of the Mortgage. Administrative Agent, Collateral
Agent, the Lenders and Borrower further agree that the aforesaid courts of the
State of New York and of the United States of America shall have exclusive
jurisdiction with respect to any claim or counterclaim of Borrower based upon
the assertion that the rate of interest charged by the Lenders on or under this
Agreement, the Loans or the other Credit Documents is usurious. Administrative
Agent, Collateral Agent, the Lenders and Borrower hereby waive any right to stay
or dismiss any action or proceeding under or in connection with any or all of
the Project, this Agreement or any other Credit Document brought before the
foregoing courts on the basis of forum non-conveniens.

      11.15 KNOWLEDGE AND ATTRIBUTION.

            References in this Agreement and the other Credit Documents to the
"knowledge," "best knowledge" or facts and circumstances "known to" Borrower,
and all like references, mean facts or circumstances of which a Responsible
Officer of the applicable Calpine Entity has actual knowledge.

      11.16 COUNTERPARTS.

            This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in one or more duplicate
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered

                                       79
<PAGE>

shall be deemed an original, but all such counterparts together shall constitute
but one and the same instrument; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so that all signature
pages are physically attached to the same document.

      11.17 USURY.

            Nothing contained in this Agreement or the Notes shall be deemed to
require the payment of interest or other charges by Borrower or any other Person
in excess of the amount which the holders of the Notes may lawfully charge under
applicable usury laws. In the event that the Lenders shall collect moneys which
are deemed to constitute interest which would increase the effective interest
rate to a rate in excess of that permitted to be charged by applicable Legal
Requirements, all such sums deemed to constitute interest in excess of the legal
rate shall, upon such determination, at the option of the Lenders, be returned
to Borrower or credited against the principal balance then outstanding.

      11.18 SURVIVAL.

            All representations, warranties, covenants and agreements made
herein and in the certificates or other instruments delivered in connection with
or pursuant to this Agreement and the other Credit Documents shall be considered
to have been relied upon by the parties hereto and shall survive the execution
and delivery of this Agreement, the other Credit Documents and the making of the
Term Loans. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements and covenants of Borrower set forth in Articles 5, 6
and 7 shall survive through the Termination Date, the agreements of Borrower set
forth in Sections 2.1.4(b), 2.1.6, 2.1.10, 2.2, 2.3.4, 2.5.3, 2.5.4, 2.6, 9.1,
9.7, 9.11 and 9.12 and the agreements of the Lenders set forth in Sections 9.1,
9.5 and 9.9 shall survive the payment and performance of the Term Loans and the
other Obligations and the reimbursement of any amounts drawn hereunder, and the
Termination Date.

      11.19 INTERCREDITOR AGREEMENT.

            EACH LENDER AND EACH OF ADMINISTRATIVE AGENT AND COLLATERAL AGENT
HEREBY ACKNOWLEDGES AND AGREES THAT THEIR RESPECTIVE LIEN PRIORITIES AND OTHER
MATTERS RELATED TO THE CREDIT DOCUMENTS AND THE COLLATERAL ARE SUBJECT TO AND
GOVERNED BY THE INTERCREDITOR AGREEMENT. Each Lender and each of Administrative
Agent and Collateral Agent, by delivering its signature page hereto, funding its
Term Loan on the Closing Date and/or executing an Assignment and Acceptance (as
the case may be), shall be deemed to have (a) acknowledged receipt of, consented
to and approved the Intercreditor Agreement and (b) authorized Administrative
Agent and Collateral Agent to perform their respective obligations thereunder.

      11.20 CONFIDENTIALITY.

            Each Lender shall hold all non-public information regarding Borrower
and its business identified as such by Borrower and obtained by such Lender
pursuant to the requirements hereof in accordance with such Lender's customary
procedures for handling

                                       80
<PAGE>

confidential information of such nature, it being understood and agreed by
Borrower that, in any event, a Lender may make:

            (a) disclosures of such information to Affiliates of such Lender and
to their agents and advisors (and to other Persons authorized by a Lender or
Administrative Agent to organize, present or disseminate such information in
connection with disclosures otherwise made in accordance with this Section
11.20); provided that such Affiliates, agents, advisors and Persons agree to
keep such information confidential in accordance with the requirements of this
Section 11.20;

            (b) disclosures of such information reasonably required by any bona
fide or potential assignee, transferee or participant in connection with the
contemplated assignment, transfer or participation by such Lender of any its
interests herein (including any of its Term Loans) or any participations
therein; provided that such assignees, transferees or participants agree to keep
such information confidential in accordance with the requirements of this
Section 11.20;

            (c) disclosure to any rating agency when required by it; provided
that, prior to any disclosure, such rating agency shall undertake in writing to
preserve the confidentiality of any confidential information relating to
Borrower received by it from Administrative Agent or any Lender, and

            (d) disclosures required or requested by any Governmental Authority
or representative thereof or by the National Association of Insurance
Commissioners or pursuant to legal or judicial process; provided, unless
specifically prohibited by applicable law or court order, each Lender shall make
reasonable efforts to notify Borrower of any request by any Governmental
Authority or representative thereof (other than any such request in connection
with any examination of the financial condition or other routine examination of
such Lender by such Governmental Authority) for disclosure of any such
non-public information prior to disclosure of such information.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       81
<PAGE>

            IN WITNESS WHEREOF, the parties hereto, by their officers duly
authorized, intending to be legally bound, have caused this Credit Agreement to
be duly executed and delivered as of the day and year first above written.

                                       RIVERSIDE ENERGY CENTER, LLC,
                                       a Wisconsin limited liability company

                                       By: /s/ Brian Harenza
                                           _____________________________________
                                           Name:  Brian Harenza
                                           Title: Vice President

                                       CREDIT SUISSE FIRST BOSTON,
                                       acting through its Cayman Islands Branch,
                                       as Lead Arranger, Book Runner, Lender,
                                       Administrative Agent and Collateral Agent

                                       By: /s/ S. William Fox
                                           _____________________________________
                                           Name:  S. William Fox
                                           Title: Director

                                       By: /s/ David J. Dodd
                                           _____________________________________
                                           Name:  David J. Dodd
                                           Title: Associate

                                       COBANK, ACB,
                                       as Syndication Agent and Lender

                                       By: /s/ David Boyce
                                           _____________________________________
                                           Name:  David Boyce
                                           Title: Vice President

                  [RIVERSESIDE CREDIT AGREEMENT SIGNATURE PAGE]

                                       S-1
<PAGE>

                                                                       EXHIBIT A
                                                             to Credit Agreement

                                   DEFINITIONS

            "Accounts" means the Revenue Account, the Distribution Suspense
Account, the O&M Account, the Major Maintenance Reserve Account, the Loss
Proceeds Account, the Pre-Funded Punchlist Expense Account, the Checking
Account, the P&I Payment Account, the PSCo Security Reserve Account and each
cash collateral account referred to in the Credit Documents, including any
sub-accounts within such accounts.

            "Additional Project Documents" has the meaning given in Section 6.18
of the Credit Agreement.

            "Administrative Agent" means Credit Suisse First Boston, acting
through its Cayman Islands Branch, acting in its capacity as administrative
agent for the Secured Parties under the Credit Documents.

            "Administrative Questionnaire" means an administrative questionnaire
in a form supplied from time to time by Administrative Agent.

            "Adverse PUHCA Event" means that Borrower or any of its "affiliates"
(within the meaning of Section 2(a)(11)(B) of PUHCA) becomes an "electric
utility company", "public utility company", or "holding company" required to
register as such within the meaning of PUHCA at a time at which applicable
provisions of PUHCA, or any successor statute thereof, and the rules and
regulations thereunder are in effect and such event or occurrence has, or with
the passage of time will have, a Material Adverse Effect or a material and
adverse effect on Administrative Agent, Collateral Agent or the Lenders.

            "Affiliate" of a specified Person means any other Person that (a)
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the Person specified, or (b) only
with respect to matters relating to PUHCA, holds or beneficially owns 10% or
more of the equity interest in the Person specified or 10% or more of any class
of voting securities of the Person specified. When used with respect to
Borrower, "Affiliate" shall include the Sponsor, the Pledgor, Rocky Mountain
Borrower, Operator and any Affiliate thereof (other than Borrower).

            "Amortization Schedule" means the schedule for repayment of the
principal of the Term Loans as set forth on Exhibit I to the Credit Agreement.

            "Annual Operating Budget" has the meaning given in Section 5.14.3 of
the Credit Agreement.

            "Anti-Terrorism Laws" has the meaning given in Section 4.6.1 of the
Credit Agreement.

                                       1
<PAGE>

      "Applicable Permit" means, at any time, any Permit, including any zoning,
land use, environmental protection, pollution (including air, water or noise),
sanitation, FERC, Public Service Commission of Wisconsin, Wisconsin Department
of Natural Resources, Wisconsin Department of Commerce, import, export, safety,
siting or building Permit (a) that is necessary under applicable Legal
Requirements or any of the Operative Documents to be obtained by or on behalf of
Borrower at such time in light of the stage of ownership or operation of the
Project to operate, maintain, repair, lease, own or use the Project as
contemplated by the Operative Documents, to sell electricity from the Project or
deliver fuel to the Project, or for Borrower to enter into any Operative
Document or to consummate any transaction contemplated thereby, in each case in
accordance with all applicable Legal Requirements, or (b) that is necessary so
that none of Borrower, Administrative Agent, Collateral Agent, the Lead Arranger
or the Secured Parties nor any Affiliate of any of them may be deemed by any
Governmental Authority to be subject to regulation under the FPA (except as
Borrower may be subject to regulation as a public utility) or PUHCA (except as
Borrower may be subject to compliance requirements under Section 32 of PUHCA
applicable to it being an EWG) or treated as a public utility under the
Constitution and the laws of the State of Wisconsin as presently constituted and
as construed by the courts of Wisconsin with respect to the regulation of the
rates of, or the financial or organizational regulation of, electric utilities
as a result of the development and construction or operation of the Project or
the sale of electricity therefrom.

      "Applicable Third Party Permit" means, at any time, any Permit, including
any zoning, environmental protection, pollution, sanitation, FERC, Public
Service Commission of Wisconsin, Wisconsin Department of Natural Resources,
Wisconsin Department of Commerce, export, safety, siting or building Permit or
that is necessary to be obtained by such time by any Person (other than
Borrower) that is a party to a Major Project Document or a Credit Document in
order to perform such Person's obligations thereunder (other than Permits
necessary to conduct its business generally and maintain its existence and good
standing), or in order to consummate any transaction contemplated thereby, in
each case in accordance with all applicable Legal Requirements.

      "Assignment and Acceptance" means an assignment and acceptance agreement,
substantially in the form of Exhibit M to the Credit Agreement, entered into by
a Lender and an assignee (with the consent of any applicable Person as required
by Section 9.12), and accepted by Administrative Agent.

      "ATCo" means American Transmission Company LLC, a Wisconsin limited
liability company.

      "ATCo Interconnection Agreement" means the Generation-Transmission
Interconnection Agreement, dated as of April 4, 2002, by and between ATCo and
Borrower (as filed with FERC on November 27, 2002).

      "Bank Book" means that certain confidential Bank Book titled "Riverside
and Rocky Mountain Project Funding" dated May 2004.

      "Banking Day" means any day other than a Saturday, Sunday or other day on
which banks are or Administrative Agent is authorized or required to be closed
in the State of

                                       2
<PAGE>

Wisconsin or the State of New York and, where such term is used in any respect
relating to a LIBOR Term Loan, which is also a day on which dealings in Dollar
deposits are carried out in the London interbank market.

      "Bankruptcy Event" shall be deemed to occur, with respect to any Person,
if that Person shall institute a voluntary case seeking liquidation or
reorganization under the Bankruptcy Law, or shall consent to the institution of
an involuntary case thereunder against it; or such Person shall file a similar
petition or consent or shall otherwise institute any similar proceeding under
any Bankruptcy Law, or shall consent thereto; or such Person shall apply for, or
consent or acquiesce to, the appointment of, a receiver, administrator,
administrative receiver, liquidator, sequestrator or trustee for itself or any
substantial part of its assets under any Bankruptcy Law; or such Person shall
make a general assignment for the benefit of its creditors; or such Person shall
admit in writing its inability to pay its debts generally as they become due; or
if an involuntary case seeking liquidation or reorganization of such Person
under the Bankruptcy Law shall be commenced against such Person and (a) the
petition commencing the involuntary case is not timely controverted, (b) the
petition commencing the involuntary case is not dismissed within 60 days of its
filing, (c) an interim trustee is appointed to take possession of all or a
portion of the property, and/or to operate all or any part of the business of
such Person and such appointment is not vacated within 60 days, or (d) an order
for relief shall have been issued or entered therein; or a decree or order of a
court having jurisdiction in the premises for the appointment of a receiver,
administrator, administrative receiver, liquidator, sequestrator or trustee
shall have been entered; or any other similar relief shall be granted against
such Person under the Bankruptcy Law.

      "Bankruptcy Law" means Title 11, United States Code, and any other state
or federal insolvency, reorganization, moratorium or similar law for the relief
of debtors, or any successor statute to the aforementioned.

      "Base Case Project Projections" means a projection of operating results
for the Project over a period commencing on the Closing Date and ending on
December 31, 2023, showing at a minimum Borrower's reasonable good faith
estimates, as of the Closing Date, of revenues, operating expenses, the Debt
Service Coverage Ratio (which Debt Service Coverage Ratio shall be calculated on
an annual basis, with the first Principal Repayment Date occurring on July 30,
2004, each other Principal Repayment Date occurring semi-annually thereafter and
the final Principal Repayment Date occurring on the Maturity Date), and sources
and uses of revenues over the forecast period, which projection is attached as
Exhibit G-3 to the Credit Agreement.

      "Base Rate" means the greater of (a) the prime commercial lending rate
established from time to time by Administrative Agent at its New York office or
(b) the Federal Funds Rate plus 0.50%. The Base Rate may not necessarily be the
highest or lowest rate of interest charged by Administrative Agent to its
commercial borrowers.

      "Base Rate Term Loan" means a Term Loan accruing interest at the Base
Rate.

      "Book Runner" means Credit Suisse First Boston, acting through its Cayman
Islands Branch, acting in its capacity as book runner under the Credit
Documents.

                                       3
<PAGE>

      "Borrower" means Riverside Energy Center, LLC, a Wisconsin limited
liability company.

      "Borrower Material Adverse Effect" means (a) a material adverse change in
the current or reasonably anticipated business, property, results of operation
or financial condition of Borrower, (b) any event or occurrence of whatever
nature which could reasonably be expected to materially and adversely affect
Borrower's ability to perform its material obligations under the Credit
Documents (taken as a whole), and (c) any event or occurrence of whatever nature
which could reasonably be expected to materially and adversely affect the value,
validity or priority of the Secured Parties' security interests in the
Collateral, taken as a whole.

      "Borrowing" means a borrowing by Borrower of the Term Loans.

      "Calculation Period" means, as to a particular date, the 12 month period
(or, during the initial 12 months following the Closing Date, the actual number
of calendar months or partial calendar months following the Closing Date)
immediately preceding such date.

      "Calpine Entity(ies)" has the meaning given in Section 3.1.1 of the Credit
Agreement.

      "Capital Adequacy Requirement" has the meaning given in Section 2.5.4 of
the Credit Agreement.

      "CES" means Calpine Energy Services, L.P., a Delaware limited partnership.

      "CES Power Sales Agreement" means, collectively, that certain (a) Master
Power Purchase and Sale Agreement, dated as of June 24, 2004, between Borrower
and CES, (b) Master Power Purchase and Sale Agreement Cover Sheet, dated as of
June 24, 2004, between Borrower and CES, and (c) Master Power Purchase and Sale
Agreement Confirmation Letter, dated as of June 24, 2004, between Borrower and
CES.

      "Change of Control" means:

            (a) with respect to Sponsor, other than in connection with a
Permitted Sponsor Transfer, the Sponsor shall cease to directly or indirectly
own and control at any time more than 50% of (i) the economic interests in
Borrower, and (b) the voting interests (whether by committee, contract or
otherwise) in Borrower; or

            (b) with respect to Borrower, Borrower shall cease to directly (or,
from and after any Required Holdco Transfer, indirectly) own and control at any
time less than 100% of (i) the economic interests in Rocky Mountain Borrower,
and (b) the voting interests (whether by committee, contract or otherwise) in
Rocky Mountain Borrower;

provided, that in connection with any disposition by Pledgor of any of its
ownership interests in Borrower, such disposition shall be deemed to be a Change
of Control unless (i) such disposition is made pursuant to clause (a) above,
(ii) the applicable transferee is a corporation, limited liability company or
limited partnership organized or formed in the United States or a state or
commonwealth therein, (iii) on or before the date of any such disposition, the
applicable

                                       4
<PAGE>

transferee enters into a pledge agreement in substantially the form of Exhibit
D-3, pursuant to which such transferee shall pledge all of its ownership
interests in Borrower to Collateral Agent, for the benefit of the Secured
Parties, and executes and delivers all other applicable Credit Documents
necessary to create and perfect a Lien on such membership interests in a manner
consistent with Section 5.15 of the Credit Agreement and the Intercreditor
Agreement, and (iv) on or before the date of any such disposition, the
applicable transferee delivers to Administrative Agent opinions of counsel with
respect to such transferee, such transfer and such pledge agreement
substantially similar to those opinions delivered pursuant to Section 3.1.8 on
the Closing Date.

      "Change of Law" has the meaning given in Section 2.5.2 of the Credit
Agreement.

      "Checking Account" means that certain checking account established by
Borrower pursuant to Section 3.6.1 of the Depositary Agreement.

      "Checking Account Bank" has the meaning given in Section 3.6.1 of the
Depositary Agreement.

      "Closing Date" has the meaning given in Section 3.1 of the Credit
Agreement.

      "CoBank Fee Letter" means that certain letter agreement regarding fees,
dated as of June 24, 2004, by and between Borrower and CoBank, ACB.

      "Code" means the Internal Revenue Code of 1986, as amended.

      "Collateral" means all property which is subject or is intended to become
subject to the security interests or liens granted by any of the Collateral
Documents.

      "Collateral Agent" means Credit Suisse First Boston, acting through its
Cayman Islands Branch, acting in its capacity as collateral agent for the
Secured Parties under the Credit Documents.

      "Collateral Documents" means the Mortgage, the Pledge Agreement, the
Security Agreement, the Intercreditor Agreement, the Depositary Agreement, any
Control Agreement, each Consent, and any fixture filings, financing statements,
or other similar documents filed, recorded or delivered in connection with the
foregoing.

      "Commitments" means, with respect to each Lender, such Lender's Term Loan
Commitment, and with respect to all Lenders, the Total Term Loan Commitment.

      "Confirmation of Interest Period Selection" has the meaning given in
Section 2.1.7(d)(ii) of the Credit Agreement.

      "Consents" means the consents specified on Exhibit E-2 to the Credit
Agreement and any other third party consents to the assignments contemplated by
the Credit Documents.

                                       5
<PAGE>

      "Consolidated Debt Service" means, for any period, the sum of (a) all fees
(other than fees paid on the Closing Date) payable during such period to any of
the Secured Parties under the Credit Agreement and to any of the Rocky Mountain
Secured Parties under the Rocky Mountain Credit Agreement, (b) interest on the
Term Loans and Rocky Mountain Term Loans less net payments, if any, received
during such period pursuant to Hedge Transactions and Rocky Mountain Hedge
Transactions, (c) scheduled Term Loan and Rocky Mountain Term Loan principal
payments (as reduced to reflect actual prepayments through the date of such
calculation) payable during such period, (d) net payments, if any, payable
during such period pursuant to Hedge Transactions and Rocky Mountain Hedge
Transactions and (e) amounts payable by Rocky Mountain Borrower to any of the
Rocky Mountain Secured Parties under the Rocky Mountain Credit Agreement in
respect of Rocky Mountain Funded LC Disbursements and Rocky Mountain Funded LC
Credit-Linked Deposits.

      "Consolidated Debt Service Coverage Ratio" means, for any period, the
ratio of (a) Consolidated Operating Cash Available for Debt Service for such
period to (b) Consolidated Debt Service for such period.

      "Consolidated EBITDA" means, with respect to any period, Consolidated Net
Income for such period plus (a) without duplication and to the extent deducted
in determining such Consolidated Net Income, the sum of (i) any and all interest
expense for such period, (ii) all amounts attributable to depreciation and
amortization for such period, (iii) any extraordinary or non-recurring non-cash
charges (other than the write-down of current assets) for such period (including
any such non-cash charges for such period relating to the application of fresh
start accounting principals), (iv) any non-cash goodwill or other intangible
asset impairment charges incurred after the date hereof resulting from the
application of Statement Number 142 of the Financial Accounting Standards Board,
and (v) any non-recurring expenses incurred in connection with the transactions
contemplated by the Credit Documents and the Rocky Mountain Credit Documents,
plus (b) without duplication, the cash amount of prepayments received by
Borrower under any Major Project Document or Rocky Mountain Borrower under any
Rocky Mountain Major Project Document during such period, and minus (c) without
duplication (i) all cash payments made during such period on account of
reserves, restructuring charges and other non-cash charges added to Consolidated
Net Income pursuant to clause (a) above in a previous period and (ii) to the
extent included in determining such Consolidated Net Income, any extraordinary
gains and all non-cash items of income for such period, all determined on a
consolidated basis in accordance with GAAP.

      "Consolidated Net Income" means, with respect to any period and without
duplication, the consolidated net income of Borrower and Rocky Mountain Borrower
for such period, determined in accordance with GAAP; provided, that the
cumulative effect of a change in accounting principles will be excluded.

      "Consolidated Operating Cash Available for Debt Service" means, for any
period, the sum of (a) the positive difference (if any) between (i) Operating
Cash Available for Debt Service for such period and (ii) amounts distributed or
dividended to Borrower constituting Project Revenues by Rocky Mountain Borrower
during such period and (b) Rocky Mountain Operating Cash Available for Debt
Service for such period.

                                       6
<PAGE>

      "Construction Easement" means the Grant of Temporary Construction
Easement, dated as of August 21, 2003, by WP&L for the benefit of Borrower.

      "Control Agreement" means that certain control agreement to be entered
into among Borrower, Collateral Agent and Checking Account Bank regarding the
perfection of Collateral Agent's Lien on the Checking Account.

      "Credit Agreement" means the Credit Agreement, dated as of June 24, 2004,
by and among Borrower, Administrative Agent, Collateral Agent, Book Runner, Lead
Arranger, the other agents and arrangers listed on the signature pages thereto
and the Lenders.

      "Credit Documents" means the Credit Agreement, the Notes, the Collateral
Documents, the Interest Rate Agreements (including all Hedge Transactions
thereunder), the Fee Letters, the Subordination Agreement and any other loan
intercreditor or security agreements or letter agreement or similar document,
entered into by Administrative Agent, Collateral Agent, Depositary Agent, Lead
Arranger or any Secured Party, on the one hand, and the Borrower or one or more
Affiliates of Borrower, on the other hand, in connection with the transactions
contemplated by the Credit Documents.

      "CSFB Fee Letter" means that certain letter agreement regarding fees,
dated as of June 24, 2004, by and among Lead Arranger, Administrative Agent,
Collateral Agent and Borrower.

      "Debt" of any Person at any date means, without duplication, (a) all
obligations (including contingent obligations) of such Person for borrowed
money, (b) all obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments, (c) all obligations of such Person to pay the
deferred purchase price of property or services, except trade accounts payable
and other accrued expenses arising in the ordinary course of business which in
accordance with GAAP would be shown on the liability side of the balance sheet
of such Person, (d) all obligations of such Person under leases which are or
should be, in accordance with GAAP, recorded as capital leases in respect of
which such Person is liable, (e) all obligations of such Person to purchase
securities (or other property) which arise out of or in connection with the sale
of the same or substantially similar securities (or property), (f) all deferred
obligations of such Person to reimburse any bank or other Person in respect of
amounts paid or advanced under a letter of credit or other instrument, (g) all
Debt of others secured by a Lien on any asset of such Person, whether or not
such Debt is assumed by such Person, (h) all Debt of others guaranteed directly
or indirectly by such Person or as to which such Person has an obligation
substantially the economic equivalent of a guarantee, (i) all monetary
obligations of such Person under a so-called synthetic, off-balance sheet or tax
retention lease and (j) obligations in respect of Hedge Transactions.

      "Debt Service" means, for any period, the sum of (a) all fees (other than
fees paid on the Closing Date) payable during such period to Administrative
Agent, Collateral Agent, Depositary Agent and the Lenders, (b) interest on the
Term Loans less (for purposes of calculating the Debt Service Coverage Ratio)
net payments, if any, received during such period pursuant to Hedge
Transactions, (c) scheduled Term Loan principal payments (as reduced to

                                       7
<PAGE>

reflect actual prepayments through the date of such calculation) payable during
such period and (d) net payments, if any, payable during such period pursuant to
Hedge Transactions.

      "Debt Service Coverage Ratio" means, for any period, the ratio of (a)
Operating Cash Available for Debt Service for such period to (b) Debt Service
for such period.

      "Default Rate" has the meaning given in Section 2.3.3 of the Credit
Agreement.

      "Depositary Agent" means The Bank of New York, not in its individual
capacity but solely as depositary agent, bank and securities intermediary under
the Depositary Agreement.

      "Depositary Agreement" means the Depositary Agreement, dated as of the
Closing Date, in substantially the form of Exhibit D-4 to the Credit Agreement,
among Borrower, Administrative Agent, Collateral Agent and Depositary Agent.

      "Distribution Suspense Account" has the meaning given in Section 1.1 of
the Depositary Agreement.

      "Dollars" and "$" means United States dollars or such coin or currency of
the United States of America as at the time of payment shall be legal tender for
the payment of public and private debts in the United States of America.

      "Easements" shall have the meaning given in the Mortgage.

      "Eligible Assignee" means (a) any Lender, any Affiliate of any Lender and
any Related Fund (any two or more Related Funds being treated as a single
Eligible Assignee for all purposes hereof), and (b) any commercial bank,
insurance company, investment or mutual fund or other entity that is an
"accredited investor" (as defined in Regulation D under the Securities Act) and
which extends credit or buys loans as one of its businesses.

      "Eligible Facility" means an "eligible facility" within the meaning of
PUHCA and FERC's implementing regulations pertaining thereto.

      "Emergency Operating Costs" means those amounts required to be expended
for the purchase of goods and services in order to prevent or mitigate an
unforeseeable event or circumstances that, in the good faith judgment of
Borrower or Operator, necessitates the taking of immediate measures to prevent
or mitigate injury to Persons or injury to or loss of property.

      "Eminent Domain Proceeds" has the meaning given in Section 3.5.1 of the
Depositary Agreement.

      "Environmental Claim" means any and all liabilities, losses,
administrative, regulatory or judicial actions, suits, demands, decrees, claims,
liens, judgments, warning notices, notices of noncompliance or violation,
investigations, proceedings, removal or remedial actions or orders, or damages
(foreseeable and unforeseeable, including consequential and punitive damages),
penalties, fees, out-of-pocket costs, expenses, disbursements or attorneys' or
consultants' fees, relating in any way to (a) a violation or alleged violation
of any Hazardous Substance Law or Permit issued under any Hazardous Substance
Law, (b) a Release or

                                       8
<PAGE>

threatened Release of Hazardous Substances, or (c) any legal or administrative
proceedings relating to any of the above.

      "Environmental Reports" means that certain R.W. Beck, Inc., Phase I
Environmental Site Assessment Update Letter Report, Riverside Energy Center,
1401 West B-R Townline Road, Beloit, Wisconsin, 53511, dated as of June 22,
2004.

      "Equipment" has the meaning given in the Mortgage.

      "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

      "ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with Borrower under
Section 414 of the Code.

      "ERISA Plan" means any employee benefit plan (a) maintained by Borrower or
any ERISA Affiliate, or to which any of them contributes or is obligated to
contribute, for its employees and (b) covered by Title IV of ERISA or to which
Section 412 of the Code applies.

      "Event of Default" has the meaning given in Article 7 of the Credit
Agreement.

      "Event of Eminent Domain" means any compulsory transfer or taking by
condemnation, eminent domain or exercise of a similar power, or transfer under
threat of such compulsory transfer or taking, of any part of the Collateral or
any of the Mortgaged Property, by any agency, department, authority, commission,
board, instrumentality or political subdivision of the State of Wisconsin, the
United States or another Governmental Authority having jurisdiction.

      "EWG" has the meaning given in Section 4.16.1 of the Credit Agreement.

      "Executive Order" has the meaning given in Section 4.6.1 of the Credit
Agreement.

      "Existing Riverside Administrative Agent" means Calyon New York Branch, in
its capacity as administrative agent under the Existing Riverside Credit
Facility.

      "Existing Riverside Credit Facility" means the Credit Agreement, dated as
of August 22, 2003, by and among Borrower, Existing Riverside Administrative
Agent, the financial institutions party thereto from time to time as lenders and
the other agents and arrangers party thereto.

      "Federal Funds Rate" means, for any day, the weighted average of the per
annum rates on overnight Federal funds transactions with member banks of the
Federal Reserve System arranged by Federal funds brokers as published by the
Federal Reserve Bank of New York for such day (or, if such rate is not so
published for any day, the average rate charged by Administrative Agent on such
day on such transactions as determined by Administrative Agent).

      "Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.

                                       9
<PAGE>

      "Fee Letters" means, collectively, the CSFB Fee Letter and the CoBank Fee
Letter.

      "FERC" means the Federal Energy Regulatory Commission and its successors.

      "Financing Statements" has the meaning given in Section 3.1.19(c) of the
Credit Agreement.

      "FPA" has the meaning given in Section 4.16.1 of the Credit Agreement.

      "GAAP" means generally accepted accounting principles in the United States
of America.

      "GEI" means General Electric International, Inc.

      "Governing Documents" means, with respect to any Person, the certificate
or articles of incorporation, bylaws, operating agreement or other
organizational or governing documents of such Person.

      "Governmental Authority" means any national, state or local government
(whether domestic or foreign), any political subdivision thereof or any other
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority, body, agency, bureau or entity, (including any zoning authority,
FERC, the Securities Exchange Commission, the Comptroller of the Currency or the
Federal Reserve Board, any central bank or any comparable authority) or any
arbitrator with authority to bind a party at law.

      "Governmental Rule" means any law, rule, regulation, ordinance, order,
code interpretation, treaty, judgment, decree, directive, guidelines, policy or
similar form of decision of any Governmental Authority.

      "Granting Lender" has the meaning given in Section 9.12.8 of the Credit
Agreement.

      "Ground Lease" means the Land Lease, dated as of September 24, 2002,
between WP&L and Borrower.

      "Hazardous Substances" means (statutory acronyms and abbreviations having
the meaning given them in the definition of "Hazardous Substances Laws")
substances defined as "hazardous substances," "pollutants" or "contaminants" in
Section 101 of the CERCLA; those substances defined as "hazardous waste,"
"hazardous materials" or "regulated substances" by the RCRA; those substances
designated as a "hazardous substance" pursuant to Section 311 of the CWA; those
substances defined as "hazardous materials" in Section 103 of the HMTA; those
substances regulated as a hazardous chemical substance or mixture or as an
imminently hazardous chemical substance or mixture pursuant to Section 6 or 7 of
the TSCA; those substances defined as "contaminants" by Section 1401 of the
SDWA, if present in excess of permissible levels; those substances regulated by
the Oil Pollution Act; those substances defined as a pesticide pursuant to
Section 2(u) of the FIFRA; those substances defined as a source, special nuclear
or by-product material by Section 11 of the AEA; those substances defined as

                                       10
<PAGE>

"toxic materials" or "harmful physical agents" pursuant to Section 6 of the
OSHA); those substances defined as hazardous wastes in 40 C.F.R. Part 261.3;
those substances defined as hazardous waste constituents in 40 C.F.R. Part
260.10, specifically including Appendix VII and VIII of Subpart D of 40 C.F.R.
Part 261; those substances designated as hazardous substances in 40 C.F.R. Parts
116.4 and 302.4; those substances defined as hazardous substances or hazardous
materials in 49 C.F.R. Part 171.8; those substances regulated as hazardous
materials, hazardous substances, or toxic substances in 40 C.F.R. Part 1910;
those substances regulated as hazardous materials, hazardous substances, or
toxic substances in any other Hazardous Substances Laws; and those substances
regulated as hazardous materials, hazardous substances, or toxic substances in
the regulations adopted and publications promulgated pursuant to said laws,
whether or not such regulations or publications are specifically referenced
herein.

      "Hazardous Substances Law" means any of:

      (i) the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended (42 U.S.C. Section 9601 et seq.) ("CERCLA");


      (ii) the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et
seq.) ("Clean Water Act" or "CWA");

      (iii) the Resource Conservation and Recovery Act (42 U.S.C. Section 6901
et seq.) ("RCRA");

      (iv) the Atomic Energy Act of 1954 (42 U.S.C. Section 2011 et seq.)
("AEA");

      (v) the Clean Air Act (42 U.S.C. Section 7401 et seq.) ("CAA");


      (vi) the Emergency Planning and Community Right to Know Act (42 U.S.C.
Section 11001 et seq.) ("EPCRA");


      (vii) the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
Section 136 et seq.) ("FIFRA");


      (viii) the Oil Pollution Act of 1990 (P.L. 101-380, 104 Stat. 486);

      (ix) the Safe Drinking Water Act (42 U.S.C. Section 300f et seq.)
("SDWA");

      (x) the Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.)
("TSCA");

      (xi) the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et
seq.) ("HMTA");

      (xii) the Occupational Safety and Health Act (29 U.S.C. Section 651 et
seq.) ("OSHA");

      (xiii) the Wisconsin statutes set forth in Chapter 101, 160, 280, 281,
283, 285, 287, 289, 291, 292 or 299 thereof;

                                       11
<PAGE>

      (xiv) the Code of Ordinances, Town of Beloit; and

      (xv) all other Federal, state and local Governmental Rules relating to the
protection of human health or the environment or which otherwise govern
Hazardous Substances, and the regulations adopted and publications promulgated
pursuant to all such foregoing laws.

      "Hedge Breaking Fees" has the meaning given in Section 5.20.2 of the
Credit Agreement.

      "Hedge Lender" means a Lender, or any Affiliate thereof which, in any
case, is party to an Interest Rate Agreement with Borrower, in its capacity as
counterparty to such Interest Rate Agreement.

      "Hedge Transaction" means any "Transaction" (such as swaps, caps, collars
or floors) entered into under an Interest Rate Agreement.

      "HoldCo" means a wholly owned subsidiary of Borrower which is a limited
liability company (and a disregarded entity for federal tax purposes) formed as
of the date required by Section 5.23 of the Credit Agreement and solely for the
purpose of owning the ownership interests of Rocky Mountain Borrower.

      "Improvements" has the meaning given in the Mortgage.

      "Inchoate Default" or "Default" means any occurrence, circumstance or
event, or any combination thereof, which, with the lapse of time or the giving
of notice or both, would constitute an Event of Default.

      "Increased-Cost Lender" has the meaning given in Section 2.7.2(a) of the
Credit Agreement.

      "Indemnitee" has the meaning given in Section 9.11.2 of the Credit
Agreement.

      "Independent Consultants" means, collectively, the Insurance Consultant,
the Power Market Consultant and the Independent Engineer.

      "Independent Engineer" means R.W. Beck, Inc.

      "Initial Operating Budget" has the meaning given in Section 3.1.20 of the
Credit Agreement.

      "Insurance Consultant" means Marsh USA, Inc.

      "Insurance Proceeds" has the meaning given in Section 3.5.1 of the
Depositary Agreement.

      "Intercreditor Agreement" means that certain Intercreditor Agreement,
dated as of the Closing Date, in substantially the form of Exhibit D-7 to the
Credit Agreement, among

                                       12
<PAGE>

Borrower, Rocky Mountain Borrower, Administrative Agent, Rocky Mountain
Administrative Agent, Collateral Agent and Rocky Mountain Collateral Agent.

      "Interest Payment Dates" means (a) October 29, 2004, (b) the last Banking
Day of each January, April, July and October of each calendar year thereafter
until the Maturity Date and (c) the Maturity Date.

      "Interest Period" means, with respect to any LIBOR Term Loan, the time
period selected by Borrower or provided for pursuant to the Credit Agreement
which commences on and includes the first day of such Term Loan, or the
effective date of any conversion (as the case may be) and ends on and excludes
the last day of such time period.

      "Interest Rate" means the Base Rate or the LIBO Rate, as the case may be.

      "Interest Rate Agreements" means one or more interest rate swap
agreements, caps, collars, or other master interest rate hedging mechanisms, in
each case having a term that does not extend beyond the Maturity Date and
otherwise in form and substance reasonably satisfactory to Administrative Agent.

      "Interest Rate Determination Date" means, with respect to any Interest
Period, two Banking Days prior to the first day of such Interest Period.

      "Lead Arranger" means Credit Suisse First Boston, acting through its
Cayman Islands Branch, in its capacity as lead arranger under the Credit
Agreement.

      "Legal Requirements" means, as to any Person, the Governing Documents of
such Person, any requirement under a Permit, and any Governmental Rule in each
case applicable to or binding upon such Person or any of its properties or to
which such Person or any of its property is subject.

      "Lender" or "Lenders" means each financial institution listed on the
signature pages hereto as a Lender, and any other Person that becomes a party
hereto pursuant to an Assignment and Acceptance. For purposes of determining
Obligations secured by the Collateral, each Hedge Lender shall be deemed a
"Lender" party to the Credit Agreement and Credit Documents to the extent so
specified in Section 5.20.3 of the Credit Agreement.

      "Lending Office" means, with respect to any Lender, the office designated
in writing as such to Administrative Agent and Borrower from time to time.

      "LIBO Rate" means, with respect to any LIBOR Term Loan for any Interest
Period, the rate per annum determined by Administrative Agent at approximately
11:00 a.m. (London time) on the Interest Rate Determination Date by reference to
the British Bankers' Association Interest Settlement Rates for deposits in
Dollars (as set forth by any service selected by Administrative Agent which has
been nominated by the British Bankers' Association as an authorized information
vendor for the purpose of displaying such rates) for a period equal to such
Interest Period; provided that, to the extent that an interest rate is not
ascertainable pursuant to the foregoing provisions of this definition, the "LIBO
Rate" shall be the interest rate per annum determined by Administrative Agent to
be the average of the rates per annum at which

                                       13
<PAGE>

deposits in Dollars are offered for such Interest Period to major banks in the
London interbank market in London, England by Administrative Agent at
approximately 11:00 a.m. (London time) on the Interest Rate Determination Date.
Each determination by Administrative Agent pursuant to this definition shall be
conclusive in the absence of manifest error.

      "LIBOR Term Loan" means a Term Loan accruing interest at the LIBO Rate.

      "Lien" means, with respect to any property or asset, any mortgage, deed of
trust, lien, pledge, charge, security interest, or encumbrance of any kind in
respect of such asset, whether or not filed, recorded or otherwise perfected or
effective under applicable law, as well as the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement relating to such asset.

      "Liquidation Costs" has the meaning given in Section 2.6 of the Credit
Agreement.

      "Loss Proceeds" has the meaning given in Section 3.5.1 of the Depositary
Agreement.

      "Loss Proceeds Account" has the meaning given in Section 1.1 of the
Depositary Agreement.

      "Major Casualty Event" has the meaning given in Section 3.5.2 of the
Depositary Agreement.

      "Major Maintenance" means labor, materials and other direct expenses for
any overhaul of, or major maintenance procedure for, the Project which requires
significant disassembly or shutdown of the Project, (a) in accordance with
Prudent Utility Practices, (b) pursuant to manufacturers' requirements to avoid
voiding any such manufacturer's warranty or (c) pursuant to any applicable Legal
Requirement.

      "Major Maintenance Reserve Account" has the meaning given in Section 1.1
of the Depositary Agreement.

      "Major Maintenance Reserve Letter of Credit" has the meaning given in
Section 1.1 of the Depositary Agreement.

      "Major Maintenance Reserve Requirement" has the meaning given in Section
1.1 of the Depositary Agreement.

      "Major Project Documents" means the the Tolling Agreement, the Power
Purchase Agreement, the O&M Agreement, the ATCo Interconnection Agreement, the
Ground Lease, the Wastewater Construction Contract, the Parts Discount
Agreement, the CES Power Sales Agreement, any guaranty agreements (other than
the Sponsor O&M Agreement Guaranty), related to the foregoing executed by
Persons in favor of Borrower and, unless otherwise agreed by Administrative
Agent prior to its execution and delivery, any Additional Project Documents.

                                       14
<PAGE>

      "Major Project Participants" means, without duplication, Borrower,
Operator, WP&L, MG&E, ATCo, GEI, CES and any other Person which provides any
guaranty agreement which is a Major Project Document, and any counterparty to
any Additional Project Document which is a Major Project Document.

      "Majority Lenders" means, at any time, Lenders having Proportionate Shares
which in the aggregate exceed 50%.

      "Mandatory Prepayment" has the meaning given in Section 2.1.10(c) of the
Credit Agreement.

      "Mandatory Repayment Date" has the meaning given in Section 2.1.10(d)(iii)
of the Credit Agreement.

      "Mandatory Repayment Offer" has the meaning given in Section 2.1.10(d) of
the Credit Agreement.

      "Material Adverse Effect" means (a) a material adverse change in the
current or reasonably anticipated business, property, results of operation or
financial condition of Borrower, (b) any event or occurrence of whatever nature
which could reasonably be expected to materially and adversely affect Borrower
or any other Major Project Participant's ability to perform its material
obligations under the Credit Documents (taken as a whole) or Major Project
Documents, as the case may be, and (c) any event or occurrence of whatever
nature which could reasonably be expected to materially and adversely affect the
value, validity or priority of the Secured Parties' security interests in the
Collateral, taken as a whole.

      "Maturity" or "maturity" means, with respect to any Term Loan, Borrowing,
interest, fee or other amount payable by Borrower under the Credit Agreement or
the other Credit Documents, the date such Term Loan, Borrowing, interest, fee or
other amount becomes due, whether upon the stated maturity or due date, upon
acceleration or otherwise.

      "Maturity Date" means the earlier of (a) the seventh anniversary of the
Closing Date, and (b) the date on which the entire outstanding principal balance
of the Term Loans, together with all unpaid interest, fees, charges and costs,
becomes due and payable under the Credit Agreement.

      "MG&E" means Madison Gas and Electric Company, a Wisconsin corporation.

      "Minimum Notice Period" means (a) at least three Banking Days before the
Closing Date or any continuation or conversion of a Type of Term Loan resulting
in whole or in part in one or more LIBOR Term Loans, and (b) at least one
Banking Day before any conversion of a Type of Term Loan resulting in whole or
in part in one or more Base Rate Term Loans.

      "MMBtu" means one million British Thermal Units.

      "Moody's" means Moody's Investors Service, Inc.

                                       15
<PAGE>

      "Mortgage" means the Mortgage, Security Agreement and Fixture Filing,
dated as of the Closing Date, in substantially the form of Exhibit D-1 to the
Credit Agreement, by Borrower to Collateral Agent (for the benefit of the
Secured Parties).

      "Mortgaged Property" has the meaning given in the Mortgage.

      "Multiemployer Plan" means any ERISA Plan that is a "multiemployer plan"
(as such term is defined in Section 3(37) of ERISA).

      "Mutual Consent" means the Mutual Consent to Encroachment, dated as of
August 21, 2003, between WP&L and Borrower.

      "Mutual Easement" means the Mutual Consent to Grant of Easements, dated as
of August 21, 2003, between WP&L and Borrower.

      "Non-Consenting Lender" has the meaning given in Section 2.7.2(b) of the
Credit Agreement.

      "Nonrecourse Persons" has the meaning given in Article 8 of the Credit
Agreement.

      "Non-U.S. Lender" has the meaning given in Section 2.3.4(e) of the Credit
Agreement.

      "Notes" has the meaning given in Section 2.1.8 of the Credit Agreement.

      "Notice of Borrowing" has the meaning given in Section 2.1.3(a) of the
Credit Agreement.

      "Notice of Conversion of Loan Type" has the meaning given in Section 2.1.9
of the Credit Agreement.

      "O&M Account" has the meaning given in Section 1.1 of the Depositary
Agreement.

      "O&M Agreement" means the Operating and Maintenance Agreement, dated as of
August 21, 2003, between Borrower and Operator.

      "O&M Costs" means, for any period, cash amounts incurred and paid by
Borrower for the operation and maintenance of the Project or any portion thereof
(other than as funded from the Major Maintenance Reserve Account) and for the
purchase of goods and services in connection therewith, including (a) premiums
for insurance policies, (b) fuel supply and fuel transportation costs (to the
extent incurred in connection with the sale of electrical products under the
Power Purchase Agreement or the CES Power Sales Agreement) and the cost of other
consumables, (c) costs of obtaining any other materials, supplies, utilities or
services for the Project, (d) costs of maintaining, renewing and amending
Permits, (e) franchise, licensing, property, real estate, sales and excise
taxes, (f) general and administrative expenses, (g) employee salaries, wages and
other employment-related costs, (h) business management and

                                       16
<PAGE>

administrative service fees, (i) costs required to be paid by the Project under
any Project Document or Credit Document (other than scheduled Debt Service) or
to satisfy any Legal Requirement or obtain or maintain any Permit, (j) legal,
accounting and consulting fees and other transaction costs and all other fees
payable to the Lenders (other than amounts constituting scheduled Debt Service),
(k) necessary capital expenditures (other than capital expenditures made in
connection with the repair or restoration of any casualty suffered by the
Project to the extent funded with insurance or similar proceeds applied pursuant
to Section 3.5 of the Depositary Agreement or infusions of equity), (l) all
other fees and expenses necessary for the continued operation and maintenance of
the Project and the conduct of the business of the Project, and (m) Emergency
Operating Costs (except for Emergency Operating Costs in connection with the
repair or restoration of any casualty suffered by the Project to the extent
funded with insurance or similar proceeds applied pursuant to Section 3.5 of the
Depositary Agreement or infusions of equity), but exclusive in all cases of
non-cash charges, including depreciation or obsolescence charges or reserves
therefor, amortization of intangibles or other bookkeeping entries of a similar
nature, and also exclusive of all interest charges and charges for the payment
or amortization of principal of indebtedness of Borrower. O&M Costs shall not
include (i) costs of Major Maintenance to the extent paid with funds on deposit
in the Major Maintenance Reserve Account, (ii) Subordinated Payments, (iii)
depreciation, (iv) payments for restoration or repair of the Project from the
Loss Proceeds Account in accordance with the terms of the Depositary Agreement
or (v) amounts to be paid in respect of any federal or state income tax.

      "Obligations" means and includes, with respect to any Person (and, if not
specified and the context so requires, Borrower or any applicable Calpine
Entity), all loans, advances, debts, liabilities, and obligations, howsoever
arising, owed by such Person to Lead Arranger, Administrative Agent, Depositary
Agent, Collateral Agent, the Hedge Lenders or the Lenders of every kind and
description (whether or not evidenced by any note or instrument and whether or
not for the payment of money), direct or indirect, absolute or contingent, due
or to become due, now existing or hereafter arising, pursuant to the terms of
the Credit Agreement or any of the other Credit Documents, including all
interest, fees, charges, expenses, attorneys' fees and accountants fees
chargeable to such Person and payable by such Person hereunder or thereunder.

      "Offer Amount" has the meaning given in Section 2.1.10(d)(ii)(B) of the
Credit Agreement.

      "Offer Period" has the meaning given in Section 2.1.10(d)(i) of the Credit
Agreement.

      "Operating Cash Available for Debt Service" means, for any period, Project
Revenues during such period minus (a) O&M Costs during such period and (b)
deposits into the Major Maintenance Reserve Account during such period.

      "Operative Documents" means, collectively, the Credit Documents and the
Project Documents.

                                       17
<PAGE>

      "Operator" means Calpine Operating Services Company, Inc., a Delaware
corporation.

      "Other Taxes" means any and all present and future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any of the Credit Documents other than the Interest
Rate Agreements (including all Hedge Transactions thereunder) or from the
execution, delivery or enforcement of, or otherwise with respect to, any of the
Credit Documents other than the Interest Rate Agreements (including all Hedge
Transactions thereunder).

      "P&I Payment Account" has the meaning given in Section 1.1 of the
Depositary Agreement.

      "Participant" has the meaning given in Section 9.12.5 of the Credit
Agreement.

      "Parts" means any part, appliance, instrument, appurtenance, accessory or
other property of any nature necessary or useful to the operation, maintenance,
service or repair of the Project.

      "Parts Discount Agreement" means that certain Parts Discount Agreement,
dated March 31, 2004, by and between Borrower and GEI.

      "Payout Amount" has the meaning given in Section 3.1.19(a)(iv) of the
Credit Agreement.

      "PBGC" means the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.

      "Permit" means any action, approval, consent, waiver, exemption, variance,
franchise, order, permit, authorization, right or license of or from a
Governmental Authority.

      "Permitted Debt" means (a) Debt incurred under the Credit Documents, (b)
Debt pursuant to the terms of a Project Document (but not for borrowed money),
either not more than 90 days past due or being contested in good faith, (c)
trade or other similar Debt incurred in the ordinary course of business (but not
for borrowed money), either not more than 90 days past due or being contested in
good faith, (d) contingent liabilities, to the extent otherwise constituting
Debt, including those relating to (i) the acquisition of goods, supplies or
merchandise in the normal course of business or normal trade credit, (ii) the
endorsement of negotiable instruments received in the normal course of its
business, and (iii) contingent liabilities incurred with respect to any
Applicable Permit or Operative Document, (e) purchase money obligations incurred
to finance the purchase price of discrete items of equipment not comprising an
integral part of the Project that extend only to the equipment being financed in
an aggregate amount of secured principal and capital lease obligations not
exceeding $3,000,000 at any one time outstanding, and (f) obligations in respect
of surety bonds or similar instruments in an aggregate amount not exceeding
$3,000,000 at any one time outstanding.

      "Permitted Investments" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof

                                       18
<PAGE>

(provided that the full faith and credit of the United States of America is
pledged in support thereof) having a maturity not exceeding one year from the
date of issuance, (b) interest-bearing deposit accounts, including time deposits
and certificates of deposit, of any Lender or any domestic or foreign commercial
bank whose outstanding long-term debt is rated at least A-1 or the equivalent
thereof by S&P or at least P-1 or the equivalent thereof by Moody's having
capital and surplus in excess of $500,000,000 having a maturity not exceeding 90
days from the date of acquisition, (c) commercial paper issued by any domestic
corporation rated at least A-1 or the equivalent thereof by S&P or at least P-1
or the equivalent thereof by Moody's and, in each case, having a maturity not
exceeding 90 days from the date of acquisition, (d) fully secured repurchase
obligations with a term of not more than seven days for underlying securities of
the types described in clause (a) above entered into with any bank meeting the
qualifications established in clause (b) above, (e) high-grade corporate bonds
rated at least AA or the equivalent thereof by S&P or at least Aa2 or the
equivalent thereof by Moody's having a maturity not exceeding 90 days from the
date of acquisition, (f) banker's acceptances drawn on and accepted by any
domestic or foreign commercial bank whose long-term senior unsecured debt is
rated at least A or the equivalent thereof by S&P or at least A2 or the
equivalent thereof by Moody's, (g) money market mutual funds whose investment
criteria are substantially similar to items (a) through (f) of this definition,
(h) instruments issued by an investment company rated at least A or the
equivalent thereof by S&P or at least A2 or the equivalent thereof by Moody's
having a portfolio consisting of 95% or more of the securities described in
items (a) through (g) of this definition, and (i) investment contracts pursuant
to which moneys are deposited (to bear interest at an agreed rate) with a bank,
insurance company or other financial institution whose long-term senior
unsecured debt is rated at least A or the equivalent thereof by S&P or at least
A2 or the equivalent thereof by Moody's.

      "Permitted Liens" means (a) the rights and interests of Collateral Agent
and any other Secured Party as provided in the Credit Documents; (b) Liens for
any tax, assessment or other governmental charge, either secured by a bond or
other security reasonably acceptable to Administrative Agent or not yet due or
being contested in good faith and by appropriate proceedings, so long as (i)
such proceedings shall not involve any substantial danger of the sale,
forfeiture or loss of the Project, the Site or any Easements, as the case may
be, title thereto or any interest therein and shall not interfere in any
material respect with the use or disposition of the Project, the Site or any
Easements, (ii) a bond or other security reasonably acceptable to Administrative
Agent has been posted or provided in such manner and amount as to assure
Administrative Agent that any taxes, assessments or other charges determined to
be due will be promptly paid in full when such contest is determined, or (iii)
adequate cash reserves have been provided therefor; (c) materialmen's,
mechanics', workers', repairmen's, employees' or other like Liens, arising in
the ordinary course of business, either for amounts not yet due or for amounts
being contested in good faith and by appropriate proceedings, so long as (i)
such proceedings shall not involve any substantial danger of the sale,
forfeiture or loss of the Project, the Site or any Easements, as the case may
be, title thereto or any interest therein and shall not interfere in any
material respect with the use or disposition of the Project, the Site or any
Easements, (ii) a bond or other security reasonably acceptable to Administrative
Agent has been posted or provided in such manner and amount as to assure
Administrative Agent that any amounts determined to be due will be promptly paid
in full when such contest is determined, or (iii) adequate cash reserves have
been provided therefor; (d) Liens arising out of judgments or awards so long as
an appeal or proceeding for review is being prosecuted in good faith and for

                                       19
<PAGE>

the payment of which adequate reserves, bonds or other security reasonably
acceptable to Administrative Agent have been provided or are fully covered by
insurance; (e) Title Exceptions; (f) Liens, deposits or pledges to secure
statutory obligations or performance of bids, tenders, contracts (other than for
the repayment of borrowed money) or leases, or for purposes of like general
nature in the ordinary course of its business, not to exceed $1,500,000 in the
aggregate at any time, and with any such Lien to be released as promptly as
practicable; (g) other Liens incident to the ordinary course of business that
are not incurred in connection with the obtaining of any loan, advance or credit
and that do not in the aggregate materially impair the use of the property or
assets of Borrower or the value of such property or assets for the purposes of
such business; (h) involuntary Liens as contemplated by the Operative Documents
(including a lien of an attachment, judgment or execution) securing a charge or
obligation, on any of Borrower's property, either real or personal, whether now
or hereafter owned in the aggregate sum of less than $1,500,000; and (i) the
rights and interests of the Rocky Mountain Collateral Agent and the other Rocky
Mountain Secured Parties in Borrower's ownership interests in Rocky Mountain
Borrower.

      "Permitted Sponsor Transfer" means a transfer by the Sponsor of greater
than 50% of its economic and voting interests in Borrower where (a) the electric
energy generation business is the principal line of business of the applicable
transferee; and (b) immediately after giving effect to the direct or indirect
transfer by the Sponsor, the ratings given to the Term Loans and the Rocky
Mountain Term Loans by S&P and Moody's shall be at least equal to the higher of
(i) the ratings given to the Term Loans and the Rocky Mountain Term Loans by S&P
and Moody's as of the Closing Date and (ii) the ratings given to the Term Loans
and the Rocky Mountain Term Loans by S&P and Moody's immediately preceding such
transfer by the Sponsor.

      "Person" means any natural person, corporation, partnership, limited
liability company, firm, association, Governmental Authority or any other entity
whether acting in an individual, fiduciary or other capacity.

      "Pipeline Easement" means the Grant of Pipeline, Pumping Facilities and
Access Easement, dated as of August 21, 2003, by WP&L for the benefit of
Borrower.

      "Pledge Agreement" means, the Pledge and Security Agreement, dated as of
the Closing Date, in substantially the form of Exhibit D-3 to the Credit
Agreement, among the Pledgor, Borrower, Rocky Mountain Borrower and Collateral
Agent.

      "Pledgor" means Calpine Riverside Holdings, LLC, a Delaware limited
liability company and, from and after any permitted disposition of Calpine
Riverside Holdings, LLC's ownership interests in Borrower, the applicable
transferee(s).

      "Power Market Consultant" means R.W. Beck, Inc.

      "Power Purchase Agreement" means the Power Purchase Agreement, dated as of
March 5, 2001, between MG&E and CES, as amended by the Amendment No. 1 to Power
Purchase Agreement dated March 5, 2001 between MG&E and CES, and as assigned by
CES to Borrower pursuant to the Assignment, dated as of September 26, 2002.

                                       20
<PAGE>

      "Pre-Funded Punchlist Expense Account" has the meaning given in Section
1.1 of the Depositary Agreement.

      "Principal Repayment Dates" means (a) January 31, 2005, July 29, 2005 and
the last Banking Day of each January and July of each calendar year thereafter
until the Maturity Date, and (b) the Maturity Date.

      "Project" means the approximately 617 MW natural gas fired combined cycle
power generation plant located on the Site and the Easements.

      "Project Documents" means, without duplication, the Major Project
Documents, the Construction Easement, the Pipeline Easement, the Mutual Consent,
the Mutual Easement, the Staging Lease and any other agreement or document
relating to the construction, leasing, ownership or operation of the Project to
which Borrower is a party.

      "Project Revenues" means, without duplication, all income and cash
receipts of Borrower derived from the ownership or operation of the Project,
including payments received by Borrower under the Tolling Agreement, Power
Purchase Agreement, the O&M Agreement and the other Project Documents (including
damages, liquidated damages and any other payments, reimbursements or refunds
received by Borrower under a Project Document), proceeds of any business
interruption or liability insurance (to the extent such liability insurance
proceeds represent reimbursement of third party claims previously paid by
Borrower), income derived from the sale or use of electric capacity or energy
transmitted or distributed or ancillary services produced by the Project,
payments for remarketing of fuel or transportation rights relating thereto and
investment income on amounts in the Accounts (solely to the extent deposited in
the applicable Account), distributions or dividends by Rocky Mountain Borrower
to Borrower but excluding (a) net payments, if any, received by Borrower under
Hedge Transactions, as determined in conformity with cash accounting principles,
(b) any receipts derived from the sale of any property pertaining to the Project
or incidental to the operation of the Project, as determined in conformity with
cash accounting principles (other than sales of electricity, gas and related
services or commodities), (c) proceeds of casualty insurance, (d) the proceeds
of any condemnation awards relating to the Project, (e) proceeds from the
Collateral Documents and (f) the proceeds of any Permitted Debt.

      "Proportionate Share" means:

            (a) in the context of voting in matters requiring the vote of all or
a percentage of the Lenders, with respect to each Lender at any time, a
percentage equal to the quotient of (i) the sum of (A) the percentage interest
of such Lender in the Total Term Loan Commitment, as set forth on Exhibit H to
the Credit Agreement (as updated to reflect any permitted assignments)
multiplied by the Total Term Loan Commitment plus (B) the percentage interest of
such Lender in the Interest Rate Agreements, as set forth on Exhibit H to the
Credit Agreement (as updated to reflect any permitted assignments) multiplied by
the Hedge Breaking Fees actually payable (and not on a "marked to market" basis)
at such time (determined upon the close of the applicable voting period) or, if
no Hedge Breaking Fees are outstanding at such time, 5% of the aggregate
notional amount of those Hedge Transactions which could result in Hedge Breaking
Fees if they were terminated at such time, divided by (ii) the sum of (A) the
Total Term

                                       21
<PAGE>

Loan Commitment plus (B) the Hedge Breaking Fees actually payable (and not on a
"marked to market" basis) at such time (determined upon the close of the
applicable voting period) or, if no Hedge Breaking Fees are outstanding at such
time, 5% of the aggregate notional amount of those Hedge Transactions which
could result in Hedge Breaking Fees if they were terminated at such time;

            (b) with respect to each Lender in the context of funding Term Loans
on the Closing Date, the percentage participation of such Lender in the Total
Term Loan Commitment as set forth on Exhibit H to the Credit Agreement (as
updated to reflect any permitted assignments); and

            (c) with respect to each Hedge Lender at any time, the percentage
participation of such Hedge Lender in the credit exposure under the Hedge
Transactions, as set forth on Exhibit H to the Credit Agreement (as updated to
reflect any permitted assignments).

      "Prudent Utility Practices" means those practices, methods, equipment,
specifications and standards of safety and performance, as the same may change
from time to time, as are commonly used by natural gas fired electric generation
stations in the Mid-America Interconnected Network of a type and size similar to
the Project as good, safe and prudent engineering practices in connection with
the operation, maintenance, repair and use of electrical and other equipment,
facilities and improvements of such electrical station, with commensurate
standards of safety, performance, dependability, efficiency and economy.
"Prudent Utility Practices" does not necessarily mean one particular practice,
method, equipment specification or standard in all cases, but is instead
intended to encompass a broad range of acceptable practices, methods, equipment
specifications and standards.

      "PSCo" has the meaning given in the Rocky Mountain Credit Agreement.

      "PSCo Security Fund" has the meaning given in Section 1.1 of the
Depositary Agreement.

      "PSCo Security Reserve Account" has the meaning given in Section 1.1 of
the Depositary Agreement.

      "PSCo Security Reserve Requirement" has the meaning given in Section 1.1
of the Depositary Agreement.

      "PUHCA" means the Public Utility Holding Company Act of 1935, as amended.

      "Punchlist Items" means those items under the Project's construction,
engineering and equipment procurement contracts which have not been completed as
of the Closing Date.

      "Qualified Letter of Credit" means one or more unconditional, irrevocable
letters of credit on terms and conditions, and in form and substance, reasonably
satisfactory to Administrative Agent and shall (a) name Administrative Agent on
behalf of the Secured Parties as the beneficiary thereof, (b) have an aggregate
amount available to be drawn at all times greater than or equal to the amount
being secured by such letter of credit, (c) be issued from a bank, banks, trust
company or trust companies not a party to the Credit Agreement (and

                                       22
<PAGE>

otherwise reasonably acceptable to Administrative Agent) which bank, banks,
trust company or trust companies shall have a combined capital and surplus of at
least $1,000,000,000 and whose long-term senior unsecured indebtedness is rated
at least A by S&P and A2 by Moody's, (d) not be secured by any of the
Collateral, and (e) not impose on Borrower any obligation to reimburse drawing
payments thereunder; provided that such letter of credit shall provide that it
shall (i) automatically renew upon the expiration thereof unless, at least 60
days prior to such expiration, the issuer thereof shall provide Administrative
Agent with a notice of non-renewal of such letter of credit, (ii) have an
initial expiration date of at least one year after issuance, and (iii) have a
stated amount equal from time to time to (or, to the extent of cash deposited,
less than) amounts required to be issued as set forth in the Credit Documents.

      "Register" has the meaning given in Section 9.12.3 of the Credit
Agreement.

      "Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System (or any successor).

      "Regulatory Change" means any change after the Closing Date in federal,
state, local or foreign laws, regulations, Legal Requirements or requirements
under Applicable Permits, or the adoption or making after such date of any
interpretations, directives or requests of or under any federal, state, local or
foreign laws, regulations, Legal Requirements or requirements under Applicable
Permits (whether or not having the force of law) by any Governmental Authority
charged with the interpretation or administration thereof.

      "Related Fund" means, with respect to any Lender that is an investment
fund, any other investment fund that invests in commercial loans similar to the
Term Loans and that is managed or advised by the same investment advisor as such
Lender or by an Affiliate of such investment advisor.

      "Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, trustees, officers, employees,
agents and advisors of such Person and such Person's Affiliates.

      "Release" means disposing, discharging, injecting, spilling, leaking,
leaching, dumping, pumping, pouring, emitting, escaping, emptying, seeping,
placing or the like, into or upon any land or water or air, or otherwise
entering into the environment.

      "Repayment Period" means the sixth month period commencing on a Principal
Repayment Date and ending on the next Principal Repayment Date.

      "Replacement Lender" has the meaning given in Section 2.7.2(c) of the
Credit Agreement.

      "Replacement Obligor" means either (a) a Person (including any guarantor
of such Person's obligations) (i) having, on the date of such replacement,
credit, or acceptable credit support, and experience equal to or greater than
that of the party to the Major Project Document (including any guaranty thereof)
being replaced and (ii) entering into a contract with Borrower with economic
terms no less favorable to Borrower than those in the Major Project Document
(including any guaranty thereof) being replaced and other terms and conditions
no

                                       23
<PAGE>

less favorable to Borrower in any material respect than those in the Major
Project Document (including any guaranty thereof) being replaced (provided that
if such Replacement Obligor is for an Affiliate of Borrower, such replacement
Major Project Document may be on market terms rather than on terms and
conditions no less favorable to Borrower and a replacement O&M Agreement need
not provide that the fee payable thereunder be subordinated) or (b) a Person
acceptable to (i) if the affected Major Project Document is the Tolling
Agreement or the Power Purchase Agreement, the Supermajority Lenders or (ii) if
the affected Major Project Document is any other Major Project Document, the
Majority Lenders, in either case which Person enters into a contract with
Borrower on terms and conditions acceptable to the Supermajority Lenders or the
Majority Lenders (as the case may be) (which acceptance shall not be
unreasonably withheld in the case of the replacement of a Major Project
Participant that is an Affiliate of Borrower); provided that in each case, such
Person enters into a Consent, in substantially the form of Exhibit E-1 to the
Credit Agreement, on the date such replacement contract is entered into.

      "Reportable Event" means any of the events set forth in Section 4043(b) or
(c) of ERISA for which notice to the PBGC has not been waived.

      "Required Cash Contribution" has the meaning given in Section 5.15.6 of
the Credit Agreement.

      "Required HoldCo Transfer" means any transfer to HoldCo (including by way
of equity contribution) of Borrower's ownership interests in Rocky Mountain
Borrower; provided that (a) Borrower shall have granted to Rocky Mountain
Collateral Agent, for the benefit of the Rocky Mountain Secured Parties, a first
priority Lien on its ownership interests in HoldCo (to the same extent provided
by Borrower in the Pledge Agreement entered into on the Closing Date), (b)
Borrower shall have granted to Collateral Agent, for the benefit of the Secured
Parties, a second priority Lien on its ownership interests in HoldCo, (c) the
pledge agreement pursuant to which such Liens will be created shall (i) provide
that HoldCo is a special purpose vehicle established solely to own the ownership
interests of Rocky Mountain Borrower, and (ii) include covenants customary for
such a special purpose vehicle (including, negative covenants prohibiting HoldCo
from incurring any indebtedness, any obligations and the granting by HoldCo of
any Liens (other than those expressly contemplated hereby), (d) Collateral
Agent, on behalf of the Secured Parties, shall take such actions as are
necessary (and is hereby authorized by the Lenders) to release the Secured
Parties interests in and to the Borrower's ownership interests in Rocky Mountain
Borrower and to enter into an amendment and restatement or other replacement of
the Pledge Agreement to effectuate the foregoing, and (e) Administrative Agent
shall have received documentation and evidence (reasonably satisfactory to
Administrative Agent) that the conditions set forth in Sections 3.1.1 through
3.1.5 of the Credit Agreement have been satisfied in respect of HoldCo, together
with legal opinions of counsel to the Calpine Entities (including, as applicable
for purposes of this definition, HoldCo) involved in such transfer, which
opinions shall cover or confirm, with respect to such transfer, (i) the due
formation or incorporation, as applicable, of each such Calpine Entities, (ii)
the due authorization and enforceability of each Operative Document to which any
such Calpine Entities is a party as of the date of such transfer, (iii)
permitting, and federal and state energy regulatory matters, (iv) the continued
validity, perfection and priority of the Liens under the Collateral Documents
(including any new Liens granted in connection with any such transfer), (v)
Investment Company Act of 1940 matters, (vi) no violations of law and no
conflicts with certain agreements,

                                       24
<PAGE>

court orders and Governing Documents, (vii) receipt of all necessary consents
and governmental approvals and (viii) such other matters as Administrative Agent
may reasonably request.

      "Reserve Requirement" means, for LIBOR Term Loans, the maximum rate
(expressed as a percentage) at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained during the
Interest Period therefor under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding $1,000,000,000 against
"Eurocurrency liabilities" (as such term is used in Regulation D). Without
limiting the effect of the foregoing, the Reserve Requirement shall reflect any
other reserves required to be maintained by such member banks by reason of any
Regulatory Change against (a) any category of liabilities which includes
deposits by reference to which the LIBO Rate or LIBOR Term Loans is to be
determined, (b) any category of liabilities or extensions of credit or other
assets which include LIBOR Term Loans or (c) any category of liabilities or
extensions of credit which are considered irrevocable commitments to lend.

      "Responsible Officer" means, as to any Person, its president, chief
executive officer, any vice president, treasurer, or secretary or any natural
Person who is a managing general partner or manager or managing member of a
limited liability company (or any of the preceding with regard to any such
managing general partner, manager or managing member).

      "Restricted Payment Conditions" has the meaning given in Section 6.6 of
the Credit Agreement.

      "Revenue Account" has the meaning given in Section 1.1 of the Depositary
Agreement.

      "Rights of Way" has the meaning given in Section 3.1.25 of the Credit
Agreement.

      "Riverside Closing Date Distribution" has the meaning given in Section
2.1.5 of the Credit Agreement.

      "Rocky Mountain Accounts" has the meaning given to the term "Accounts" in
Exhibit A to the Rocky Mountain Credit Agreement.

      "Rocky Mountain Administrative Agent" has the meaning given to the term
"Administrative Agent" in Exhibit A to the Rocky Mountain Credit Agreement.

      "Rocky Mountain Applicable Permits" has the meaning given to the term
"Applicable Permits" in Exhibit A to the Rocky Mountain Credit Agreement.

      "Rocky Mountain Borrower" means Rocky Mountain Energy Center, LLC, a
Delaware limited liability company.

      "Rocky Mountain Closing Date Distribution" has the meaning given in
Section 2.1.5 of the Rocky Mountain Credit Agreement.

                                       25
<PAGE>

      "Rocky Mountain Collateral Agent" has the meaning given to the term
"Collateral Agent" in Exhibit A to the Rocky Mountain Credit Agreement.

      "Rocky Mountain Collateral Documents" has the meaning given to the term
"Collateral Documents" in Exhibit A to the Rocky Mountain Credit Agreement.

      "Rocky Mountain Credit Documents" has the meaning given to the term
"Credit Documents" in Exhibit A to the Rocky Mountain Credit Agreement.

      "Rocky Mountain Credit Agreement" means that certain Credit Agreement,
dated as of June 24, 2004, by and among Rocky Mountain Borrower, Rocky Mountain
Administrative Agent, Rocky Mountain Collateral Agent, the Rocky Mountain
Lenders and the other agents, issuing bank and arrangers party thereto.

      "Rocky Mountain Depositary Agreement" has the meaning given to the term
"Depositary Agreement" in Exhibit A to the Rocky Mountain Credit Agreement.

      "Rocky Mountain Funded LC Credit-Linked Deposits" has the meaning given to
the term "Funded LC Credit-Linked Deposits" in Exhibit A to the Rocky Mountain
Credit Agreement.

      "Rocky Mountain Funded LC Disbursements" has the meaning given to the term
"Funded LC Disbursements" in Exhibit A to the Rocky Mountain Credit Agreement.

      "Rocky Mountain Hedge Transactions" has the meaning given to the term
"Hedge Transactions" in Exhibit A to the Rocky Mountain Credit Agreement.

      "Rocky Mountain Lead Arranger" has the meaning given to the term "Lead
Arranger" in Exhibit A to the Rocky Mountain Credit Agreement.

      "Rocky Mountain Lenders" has the meaning given to the term "Lenders" in
Exhibit A to the Rocky Mountain Credit Agreement.

      "Rocky Mountain Major Project Document" has the meaning given to the term
"Major Project Document" in Exhibit A to the Rocky Mountain Credit Agreement.

      "Rocky Mountain Obligations" means the "Obligations" of Rocky Mountain
Borrower under the Rocky Mountain Credit Documents.

      "Rocky Mountain Operating Cash Available for Debt Service" has the meaning
given to the term "Operating Cash Available for Debt Service" in Exhibit A to
the Rocky Mountain Credit Agreement.

      "Rocky Mountain Operative Documents" has the meaning given to the term
"Operative Documents" in Exhibit A to the Rocky Mountain Credit Agreement.

      "Rocky Mountain Power Purchase Agreement" has the meaning given to the
term "Power Purchase Agreement" in Exhibit A to the Rocky Mountain Credit
Agreement.

                                       26
<PAGE>

      "Rocky Mountain Project Revenues" has the meaning given to the term
"Project Revenues" in Exhibit A to the Rocky Mountain Credit Agreement.

      "Rocky Mountain Revenue Account" has the meaning given to the term
"Revenue Account" in Exhibit A to the Rocky Mountain Credit Agreement.

      "Rocky Mountain Secured Parties" has the meaning given to the term
"Secured Parties" in Exhibit A to the Rocky Mountain Credit Agreement.

      "Rocky Mountain Term Loans" has the meaning given to the term "Term Loans"
in Exhibit A to the Rocky Mountain Credit Agreement.

      "Rocky Mountain Total Term Loan Commitment" has the meaning given to the
term "Total Term Loan Commitment" in Exhibit A to the Rocky Mountain Credit
Agreement.

      "Rocky Mountain Waterfall Level" has the meaning given to the term
"Waterfall Level" in Exhibit A to the Rocky Mountain Credit Agreement.

      "S&P" means Standard & Poor's Corporation and its successors and assigns.

      "Secured Obligations" has the meaning given in the Mortgage.

      "Secured Parties" means Administrative Agent, the Lead Arranger, the
Collateral Agent, the Depositary Agent, Syndication Agent, any Lender (or
Affiliate of any Lender) which is a counterparty to an Interest Rate Agreement
entered into by Borrower in accordance with the Credit Agreement, each Lender
and each of their respective successors, transferees and assigns; provided, that
no Affiliate of Sponsor shall be a "Secured Party" hereunder or under any other
Credit Document.

      "Security Agreement" means the Security Agreement, dated as of the Closing
Date, in substantially the form of Exhibit D-2 to the Credit Agreement, between
Borrower and Collateral Agent.

      "Site" has the meaning given in the Mortgage.

      "Solvent" means (a) the present fair saleable value of the assets of
Borrower exceeds the amount required to pay the probable liability on its
existing debts, respectively (whether matured or unmatured, liquidated or
unliquidated, absolute, fixed or contingent), as they become absolute and
matured, and as a result of the consummation of the transactions contemplated
herein and in the Bank Book, will continue to exceed such amount; (b) Borrower
does not, and, as a result of the consummation of the transactions contemplated
in the Credit Agreement, the other Credit Documents and the Bank Book, will not,
have unreasonably small capital for it to carry on its business as proposed to
be conducted; and (c) Borrower is not incurring obligations or making transfers
under any evidence of indebtedness (including indebtedness under the Credit
Agreement) with the intent to hinder, delay or defraud any entity to which it is
or will become indebted.

      "SPC" has the meaning given in Section 9.12.8 of the Credit Agreement.

                                       27
<PAGE>

      "Sponsor" means Calpine Corporation, a Delaware corporation.

      "Sponsor O&M Agreement Guaranty" means that certain Sponsor O&M Agreement
Guaranty, dated as of the Closing Date, by the Sponsor for the benefit of
Borrower.

      "Staging Lease" means the Staging Area Lease, dated as of September 23,
2002, between WP&L and Borrower.

      "Subordinated Payments" means any fees, bonuses, profits and any other
amounts which are not in the nature of reimbursable costs or expenses, payable
by Borrower to any Affiliate under any Project Document and which are subject to
the Subordination Agreement applicable to such Project Document.

      "Subordination Agreement" means a subordination agreement substantially in
the form of Exhibit D-5 to the Credit Agreement.

      "Subsidiary" means, as to any Person, a corporation, partnership, limited
liability company or other entity of which such Person: (a) owns 10% or more of
the shares of stock or other ownership interests having ordinary voting power
(other than stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity
and/or (b) controls the management, directly or indirectly through one or more
intermediaries. Unless otherwise qualified, all references to a "Subsidiary" or
to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries
of a Person. When used with respect to Borrower, "Subsidiary" shall include
Rocky Mountain Borrower and, from and after a Required HoldCo Transfer, HoldCo.

      "Supermajority Lenders" means, at any time, Lenders having Proportionate
Shares which in the aggregate exceed 66.67%.

      "Support Date" has the meaning given in Section 5.15.6 of the Credit
Agreement.

      "Syndication Agent" means CoBank, ACB, in its capacity as syndication
agent under the Credit Agreement.

      "Tax" means any present or future tax, levy, impost, charge, deduction or
withholding of any nature and whatever called, by whomsoever, on whomsoever and
wherever imposed, levied, collected, withheld or assessed by a taxing authority
other than a "Tax on the overall net income" of any Person. A "Tax on the
overall net income" of a Person shall be construed as a reference to a tax
(including U.S. backup withholding taxes and branch profit taxes) imposed by the
jurisdiction in which that Person is organized or in which that Person's
applicable principal office (and/or, in the case of a Lender, its Lending
Office) is located or in which that Person (and/or, in the case of a Lender, its
Lending Office) is deemed to be doing business on all or part of the net income,
profits, capital or gains (whether worldwide, or only insofar as such income,
profits, capital or gains are considered to arise in or to relate to a
particular jurisdiction, or otherwise) of that Person (and/or, in the case of a
Lender, its applicable Lending Office).

                                       28
<PAGE>

      "Term" means the entire period that any Term Loans shall be outstanding.

      "Term Loan" has the meaning given in Section 2.1.2 of the Credit
Agreement.

      "Term Loan Commitment" means, at any time with respect to each Lender,
such Bank's Proportionate Share of the Total Term Loan Commitment at such time.

      "Terminated Lender" has the meaning given in Section 2.7.2(c) of the
Credit Agreement.

      "Termination Date" means the date on which both (a) all Obligations of
Borrower (other than such Obligations which, by their terms, survive the
termination of the Credit Agreement) to the Secured Parties shall have been paid
in full in cash, each of the Interest Rate Agreements to which any Secured Party
is a party shall have terminated and all obligations of the Secured Parties
under the Credit Documents have terminated (other than such obligations which,
by their terms, survive the termination of the Credit Documents), and (b) all
Rocky Mountain Obligations (other than such Rocky Mountain Obligations which, by
their terms, survive the termination of the Rocky Mountain Credit Agreement) to
the Rocky Mountain Secured Parties shall have been paid in full in cash, each of
the Rocky Mountain Interest Rate Agreements to which any Rocky Mountain Secured
Party is a party shall have terminated and all obligations of the Rocky Mountain
Secured Parties under the Rocky Mountain Credit Documents have terminated (other
than such obligations which, by their terms, survive the termination of the
Rocky Mountain Credit Documents).

      "Title Exception" has the meaning given in the Mortgage.

      "Title Insurer" means Stewart Title Guaranty Company.

      "Title Policy" means that certain policy of the title insurance issued by
the Title Insurer dated as of the Closing Date, as provided in Section 3.1.24 of
the Credit Agreement, including all amendments thereto, endorsements thereof and
substitutions or replacements therefor.

      "Tolling Agreement" means the Tolling Agreement, dated as of February 6,
2001, between WP&L and Borrower.

      "Total Term Loan Commitment" has the meaning given in Section 2.1.1 of the
Credit Agreement.

      "Type" means the type of Term Loan, whether a Base Rate Term Loan or LIBOR
Term Loan.

      "UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York; provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the perfection or
priority of the security interest in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State of New York
the term "UCC" shall mean the Uniform Commercial Code as in effect in

                                       29
<PAGE>

such other jurisdiction for purposes of the provisions hereof and of the other
Credit Documents relating to such perfection or priority and for purposes of
definitions related to such provisions.

      "Unsatisfied Condition" means a condition in a Permit that has not been
satisfied and that either (a) must be satisfied before such Permit can be come
effective, (b) must be satisfied as of the date on which a representation is
made or a condition precedent must be satisfied under the Credit Agreement, or
(c) must be satisfied as of a future date but with respect to which facts or
circumstances exist which, to Borrower's knowledge, could reasonably be expected
to result in a failure to satisfy such Permit condition.

      "Variable O&M Costs" means those O&M Costs described in the line-items of
the Base Case Project Projections entitled "Fuel", "Reverse Osmosis - Water
Treatment", "Demineralizer/EDI/Polishing - Water Treatment", "Boiler/Steam
Chemicals - Water Treatment", "Cooling Tower - Water Treatment", "Gas Turbine
Gasses/Chemicals", "Waste Water Disposal", "Amnonia (SCR)" and "Electricity
Usage Cost".

      "Wastewater Construction Contract" means the Construction, Operation,
Maintenance and Indemnification Agreement, dated as of August 21, 2003, between
WP&L and Borrower.

      "Waterfall Level" has the meaning given in Section 1.1 of the Depositary
Agreement.

      "WP&L" means Wisconsin Power and Light Company, a Wisconsin corporation.

                                       30
<PAGE>

                             RULES OF INTERPRETATION

      1. The singular includes the plural and the plural includes the singular.

      2. "or" is not exclusive.

      3. A reference to a Governmental Rule includes any amendment or
modification to such Governmental Rule, and all regulations, rulings and other
Governmental Rules promulgated under such Governmental Rule.

      4. A reference to a Person includes its permitted successors, permitted
replacements and permitted assigns.

      5. Accounting terms have the meanings assigned to them by GAAP, as applied
by the accounting entity to which they refer.

      6. The words "include", "includes" and "including" are not limiting.

      7. A reference in a document to an Article, Section, Exhibit, Schedule,
Annex or Appendix is to the Article, Section, Exhibit, Schedule, Annex or
Appendix of such document unless otherwise indicated. Exhibits, Schedules,
Annexes or Appendices to any document shall be deemed incorporated by reference
in such document. In the event of any conflict between the provisions of the
Credit Agreement (exclusive of the Exhibits, Schedules, Annexes and Appendices
thereto) and any Exhibit, Schedule, Annex or Appendix thereto, the provisions of
the Credit Agreement shall control.

      8. References to any document, instrument or agreement (a) shall include
all exhibits, schedules and other attachments thereto, (b) shall include all
documents, instruments or agreements issued or executed in replacement thereof,
and (c) shall mean such document, instrument or agreement, or replacement or
predecessor thereto, as amended, amended and restated, modified and supplemented
from time to time and in effect at any given time.

      9. The words "hereof", "herein" and "hereunder" and words of similar
import when used in any document shall refer to such document as a whole and not
to any particular provision of such document.

      10. References to "days" shall mean calendar days, unless the term
"Banking Days" shall be used. References to a time of day shall mean such time
in New York, New York, unless otherwise specified.

      11. If, at any time after the Closing Date, Moody's or S&P shall change
its respective system of classifications, then any Moody's or S&P "rating"
referred to herein shall be considered to be at or above a specified level if it
is at or above the new rating which most closely corresponds to the specified
level under the old rating system.

      12. The Credit Documents are the result of negotiations between, and have
been reviewed by Borrower, each Affiliate of Borrower party thereto,
Administrative Agent, the Lead Arranger, each Lender and their respective
counsel. Accordingly, the Credit Documents

                                       31
<PAGE>

shall be deemed to be the product of all parties thereto, and no ambiguity shall
be construed in favor of or against Borrower, any Affiliate of Borrower party
thereto, Administrative Agent or any Lender solely as a result of any such party
having drafted or proposed the ambiguous provision.

                                       32
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1.10
<SEQUENCE>3
<FILENAME>f05222exv10w1w10.txt
<DESCRIPTION>EXHIBIT 10.1.10
<TEXT>
<PAGE>

                                                                 Exhibit 10.1.10

                                                               EXECUTION VERSION

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

                                CREDIT AGREEMENT

                                      among

                       ROCKY MOUNTAIN ENERGY CENTER, LLC,
                      a Delaware limited liability company
                                   (Borrower)

                                       and

                           CREDIT SUISSE FIRST BOSTON,
                    acting through its Cayman Islands Branch
     (Lead Arranger, Book Runner, Administrative Agent and Collateral Agent)

                                       and

                         UNION BANK OF CALIFORNIA, N.A.
                                (as Issuing Bank)

                                       and

                                   COBANK, ACB
                               (Syndication Agent)

                                       and

                    THE FINANCIAL INSTITUTIONS PARTIES HERETO
                                    (Lenders)

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

                  601 MW Combined Cycle Power Generation Plant
                                   located in
                              Weld County, Colorado

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                        ----
<S>                                                                                     <C>
ARTICLE 1 DEFINITIONS.............................................................         1

         1.1      Definitions.....................................................         1
         1.2      Rules of Interpretation.........................................         1

ARTICLE 2 CREDIT FACILITIES.......................................................         2

         2.1      Term Loan Facility..............................................         2
         2.2      Fees............................................................        10
         2.3      Other Payment Terms.............................................        11
         2.4      Pro Rata Treatment..............................................        15
         2.5      Change of Circumstances.........................................        16
         2.6      Funding Losses..................................................        19
         2.7      Alternate Office; Minimization of Costs.........................        20
         2.8      Credit-Linked Deposit Account; PSCo Letter of Credit............        21

ARTICLE 3 CONDITIONS PRECEDENT....................................................        26

         3.1      Conditions Precedent to the Closing Date........................        26

ARTICLE 4 REPRESENTATIONS AND WARRANTIES..........................................        36

         4.1      Organization....................................................        36
         4.2      Authorization; No Conflict......................................        36
         4.3      Enforceability..................................................        36
         4.4      Compliance with Law.............................................        37
         4.5      Business, Debt, Contracts, Joint Ventures Etc...................        37
         4.6      Anti-Terrorism Laws.............................................        37
         4.7      Investment Company Act..........................................        38
         4.8      ERISA...........................................................        38
         4.9      Permits.........................................................        38
         4.10     Hazardous Substances............................................        39
         4.11     Litigation......................................................        40
         4.12     Labor Disputes and Acts of God..................................        40
         4.13     Disclosure......................................................        41
         4.14     Flood Zone Disclosure...........................................        41
         4.15     Taxes...........................................................        41
         4.16     Governmental Regulation.........................................        42
         4.17     Regulation U, Etc...............................................        42
         4.18     Initial Operating Budget; Projections...........................        43
         4.19     Financial Statements............................................        43
         4.20     No Default......................................................        43
         4.21     Organizational ID Number; Location of Collateral................        43
         4.22     Title and Liens.................................................        43
</TABLE>

                                        i

<PAGE>

<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                        ----
<S>                                                                                     <C>
         4.23     Intellectual Property...........................................        44
         4.24     Collateral......................................................        44
         4.25     Sufficiency of Project Documents................................        45
         4.26     Utilities.......................................................        45
         4.27     Other Facilities................................................        45
         4.28     Proper Subdivision..............................................        46

ARTICLE 5 AFFIRMATIVE COVENANTS...................................................        46

         5.1      Use of Proceeds and Project Revenues............................        46
         5.2      Payment.........................................................        46
         5.3      Warranty of Title...............................................        46
         5.4      Notices.........................................................        47
         5.5      Financial Statements............................................        48
         5.6      Books, Records, Access..........................................        49
         5.7      Compliance with Laws, Instruments, Applicable Permits, Etc......        49
         5.8      Reports.........................................................        49
         5.9      Existence, Conduct of Business, Properties, Etc.................        49
         5.10     Debt Service Coverage Ratio.....................................        50
         5.11     Exemption from Regulation.......................................        50
         5.12     Punchlist Items.................................................        50
         5.13     Offer to Prepay Upon Change of Control..........................        50
         5.14     Operation and Maintenance of Project; Annual Operating Budget...        51
         5.15     Preservation of Rights; Further Assurances......................        52
         5.16     Additional Consents.............................................        53
         5.17     Maintenance of Insurance........................................        53
         5.18     Taxes, Other Government Charges and Utility Charges.............        53
         5.19     Event of Eminent Domain.........................................        54
         5.20     Interest Rate Protection........................................        54
         5.21     Distributions...................................................        55
         5.22     Financial Covenants.............................................        55
         5.23     Required HoldCo Transfer........................................        56
         5.24     Maintenance of Ratings..........................................        56

ARTICLE 6 NEGATIVE COVENANTS......................................................        56

         6.1      Contingent Liabilities..........................................        56
         6.2      Limitations on Liens............................................        56
         6.3      Indebtedness....................................................        56
         6.4      Sale or Lease of Assets.........................................        57
         6.5      Changes.........................................................        57
         6.6      Distributions...................................................        57
         6.7      Investments.....................................................        58
         6.8      Transactions With Affiliates....................................        58
         6.9      Regulations.....................................................        58
         6.10     Partnerships, etc...............................................        59
         6.11     Dissolution; Merger.............................................        59
         6.12     Amendments; Change Orders.......................................        59
</TABLE>

                                       ii

<PAGE>

<TABLE>
<CAPTION>
                                                                                        PAGE
                                                                                        ----
<S>                                                                                     <C>
         6.13     Name and Location; Fiscal Year..................................        59
         6.14     Use of Site.....................................................        60
         6.15     Assignment......................................................        60
         6.16     Accounts........................................................        60
         6.17     Hazardous Substances............................................        60
         6.18     Additional Project Documents....................................        60
         6.19     Assignment By Third Parties.....................................        61
         6.20     Acquisition of Real Property....................................        61
         6.21     Employee Benefit Plans..........................................        61
         6.22     Power Sales.....................................................        61
         6.23     Governing Document Changes......................................        61

ARTICLE 7 EVENTS OF DEFAULT; REMEDIES.............................................        62

         7.1      Events of Default...............................................        62
         7.2      Remedies........................................................        67

ARTICLE 8 SCOPE OF LIABILITY......................................................        69

ARTICLE 9 AGENTS; SUBSTITUTION....................................................        70

         9.1      Appointment, Powers and Immunities..............................        70
         9.2      Reliance........................................................        71
         9.3      Non-Reliance....................................................        72
         9.4      Defaults; Material Adverse Effect...............................        72
         9.5      Successor Agent & Issuing Bank..................................        72
         9.6      Authorization...................................................        74
         9.7      Other Roles.....................................................        74
         9.8      Amendments and Waivers..........................................        75
         9.9      Withholding Tax.................................................        76
         9.10     General Provisions as to Payments...............................        77
         9.11     Expenses; Indemnity; Damage Waiver..............................        77
         9.12     Successors and Assigns..........................................        79
         9.13     Laws............................................................        82

ARTICLE 10 INDEPENDENT CONSULTANTS................................................        82

         10.1     Removal and Fees................................................        82
         10.2     Duties..........................................................        83
         10.3     Independent Consultants' Certificates...........................        83
         10.4     Certification of Dates..........................................        83

ARTICLE 11 MISCELLANEOUS..........................................................        84

         11.1     Addresses.......................................................        84
         11.2     Additional Security; Right to Set-Off...........................        85
         11.3     Delay and Waiver................................................        85
         11.4     Entire Agreement................................................        86
         11.5     Governing Law...................................................        86
</TABLE>

                                      iii

<PAGE>

<TABLE>
<CAPTION>
                                                                               PAGE
                                                                               ----
<S>                                                                            <C>
11.6     Severability....................................................        86
11.7     Headings........................................................        86
11.8     Accounting Terms................................................        86
11.9     Additional Financing............................................        86
11.10    No Partnership, Etc.............................................        86
11.11    Mortgage/Collateral Documents...................................        87
11.12    Limitation on Liability.........................................        87
11.13    Waiver of Jury Trial............................................        87
11.14    Consent to Jurisdiction.........................................        88
11.15    Knowledge and Attribution.......................................        88
11.16    Counterparts....................................................        88
11.17    Usury...........................................................        88
11.18    Survival........................................................        89
11.19    Intercreditor Agreement.........................................        89
11.20    Confidentiality.................................................        89
</TABLE>

                                       iv

<PAGE>

                                   INDEX OF EXHIBITS

Exhibit A           Definitions and Rules of Interpretation

                    NOTES

Exhibit B           Form of Note
                    LOAN DISBURSEMENT PROCEDURES
Exhibit C-1         Form of Notice of Borrowing and LC Activity
Exhibit C-2         Form of Confirmation of Interest Period Selection
Exhibit C-3         Form of Notice of Conversion of Loan Type

                    SECURITY-RELATED DOCUMENTS

Exhibit D-1         Form of Mortgage
Exhibit D-2         Form of Security Agreement
Exhibit D-3         Form of Pledge Agreement
Exhibit D-4         Form of Depositary Agreement
Exhibit D-5         Form of Subordination Agreement
Exhibit D-6         Schedule of Security Filings
Exhibit D-7         Form of Intercreditor Agreement
Exhibit D-8         Assignment of Rents
Exhibit D-9         Assignment of Water Lease
Exhibit D-10        PSCo Acknowledgment of Subordination

                    CONSENTS

Exhibit E-1         Form of Consent for Contracting Party
Exhibit E-2         Schedule of Closing Date Consents

                    CLOSING CERTIFICATES

Exhibit F-1         Form of Borrower's Closing Certificate
Exhibit F-2         Form of Insurance Consultant's Certificate
Exhibit F-3         Form of Independent Engineer's Certificate
Exhibit F-4         Form of Power Market Consultant's Certificate

                    PROJECT DESCRIPTION EXHIBITS

Exhibit G-1         Schedule of Applicable Permits
Exhibit G-2         Sources and Uses
Exhibit G-3         Base Case Project Projections
Exhibit G-4         Initial O&M Budget
Exhibit G-5         Pending Litigation

                                        v

<PAGE>

Exhibit G-6         Hazardous Substances Disclosure

                    OTHER

Exhibit H           Lenders Proportionate Shares
Exhibit I           Amortization Schedule
Exhibit J           Form of Non-Bank Certificate
Exhibit K           Insurance Requirements
Exhibit L           Form of Annual Insurance Certificate
Exhibit M           Form of Assignment and Acceptance
Exhibit N           Form of PSCo Letter of Credit

                                       vi

<PAGE>

            This CREDIT AGREEMENT, dated as of June 24, 2004 (this "Agreement"),
is entered into among ROCKY MOUNTAIN ENERGY CENTER, LLC, a limited liability
company formed under the laws of the State of Delaware, as borrower
("Borrower"), the financial institutions listed on Exhibit H or who later become
a party hereto, as lenders (the financial institutions party to this Agreement
being collectively referred to as the "Lenders"), UNION BANK OF CALIFORNIA,
N.A., as issuer of the PSCo Letter of Credit hereunder ("Issuing Bank"), CREDIT
SUISSE FIRST BOSTON, acting through its Cayman Islands Branch, as lead arranger
(in such capacity, "Lead Arranger"), as book runner (in such capacity, "Book
Runner"), as administrative agent for the Lenders (in such capacity,
"Administrative Agent"), and as collateral agent for the Secured Parties (in
such capacity, "Collateral Agent"), and COBANK, ACB, as syndication agent (in
such capacity, "Syndication Agent").

                                    RECITALS

            A. Borrower leases, owns, operates, maintains and uses the Project
referred to herein, consisting of an approximately 601 megawatt natural gas
fired combined cycle electric generating facility located near the town of
Hudson in unincorporated Weld County, Colorado, and, in connection therewith,
Borrower has requested that the Lenders provide senior secured credit facilities
in order to repay certain existing indebtedness under the Existing Rocky
Mountain Credit Facility, fund certain reserves, fund a distribution to the
direct or indirect owners of Borrower representing the repayment of capital
initially provided to finance the construction or purchase of, or repairs,
improvements or additions to, the Site and/or the Project, fund a portion of
Borrower's working capital requirements, provide security in the form of a
letter of credit to support Borrower's obligations under the Power Purchase
Agreement and for such other purposes set forth herein; and

            B. The Lenders are willing to provide such financing upon the terms
and subject to the conditions set forth herein and in the other Credit
Documents.

                                    AGREEMENT

            NOW, THEREFORE, in consideration of the agreements herein and in the
other Credit Documents and in reliance upon the representations and warranties
set forth herein and therein, the parties hereto agree as follows:

                                   ARTICLE 1
                                   DEFINITIONS

      1.1   DEFINITIONS.

            Except as otherwise expressly provided, capitalized terms used in
this Agreement (including its exhibits and schedules) shall have the meanings
given to such terms in Exhibit A.

      1.2   RULES OF INTERPRETATION.

            Except as otherwise expressly provided, the rules of interpretation
set forth in Exhibit A shall apply to this Agreement and the other Credit
Documents.

<PAGE>

                                   ARTICLE 2
                                CREDIT FACILITIES

      2.1   TERM LOAN FACILITY.

            2.1.1 Total Term Loan Commitment. Notwithstanding anything that may
be construed to the contrary in this Agreement, the aggregate principal amount
of all Term Loans made by the Lenders shall not exceed $264,900,000 (the "Total
Term Loan Commitment").

            2.1.2 Availability; Term Loans. Subject to the terms and conditions
set forth in this Agreement, in reliance upon the representations and warranties
of Borrower set forth herein and without limiting each Lender's several
obligation to pay Administrative Agent its Funded LC Credit-Linked Deposit on
the Closing Date as provided in Section 2.8.2(c) below, each Lender severally
agrees to make, on the Closing Date, a term loan under this Section 2.1.2
(individually a "Term Loan" and, collectively, the "Term Loans") to Borrower in
an amount equal to such Lender's Proportionate Share of the Total Term Loan
Commitment. Borrower may make only one borrowing under the Total Term Loan
Commitment, which shall be on the Closing Date. Any amount borrowed under this
Agreement and subsequently repaid or prepaid may not be reborrowed. All amounts
owed hereunder with respect to the Term Loans shall be paid in full no later
than the Maturity Date.

            2.1.3 Borrowing Mechanics for Term Loans.

            (a) Notice of Borrowing and LC Activity. On or before the date which
is three Banking Days prior to the Closing Date, Borrower shall deliver to
Administrative Agent a written notice in the form of Exhibit C-1, appropriately
completed (the "Notice of Borrowing and LC Activity"). Such Notice of Borrowing
and LC Activity shall be delivered by first-class mail, facsimile or electronic
mail to Administrative Agent at the office, to the facsimile number or to the
electronic mail address and during the hours specified in Section 11.1.
Administrative Agent shall promptly notify each Lender of the contents of such
Notice of Borrowing and LC Activity.

            (b) Lender Funding. Each Lender shall make the Term Loan to be made
by it hereunder available to Administrative Agent not later than 12:00 noon (New
York City time) on the Closing Date, by wire transfer of same day funds in
Dollars, to the account designated for such purpose from time to time by
Administrative Agent. Upon satisfaction or waiver of the conditions precedent
specified in Article 3 and subject to Sections 2.1.4(b) and 2.1.5,
Administrative Agent shall make the proceeds of the Term Loans available to
Borrower on the Closing Date by causing an amount of same day funds in Dollars
equal to the proceeds of all such Term Loans received by Administrative Agent
from the Lenders to be credited to one or more accounts as may be designated in
writing to Administrative Agent by Borrower.

            2.1.4 Amount of Term Loans; Availability of Funds.

            (a) Amount of Term Loans. All Term Loans shall be made by the
Lenders simultaneously in the amount of their respective Term Loan Commitment,
it being understood that no Lender shall be responsible for any default by any
other Lender in such other Lender's obligation to make a Term Loan hereunder nor
shall any Term Loan Commitment of any Lender

                                       2

<PAGE>

be increased or decreased as a result of a default by any other Lender in such
other Lender's obligation to make a Term Loan hereunder.

            (b) Availability of Funds. Unless Administrative Agent shall have
been notified by any Lender prior to the Closing Date that such Lender does not
intend to make available to Administrative Agent the amount of such Lender's
Proportionate Share of the Total Term Loan Commitment, Administrative Agent may
assume that such Lender has made such amount available to Administrative Agent
on such date in accordance with the prior paragraph and Administrative Agent
may, in its sole discretion and in reliance upon such assumption, make available
to Borrower a corresponding amount on such date. If such corresponding amount is
not in fact made available to Administrative Agent by such Lender,
Administrative Agent shall be entitled to recover such corresponding amount on
demand (and, in any event, within three Banking Days from the Closing Date) from
such Lender together with interest thereon, for each day from the Closing Date
until the date such amount is paid to Administrative Agent, at the Federal Funds
Rate for the first three Banking Days after the Closing Date. If such Lender
pays such amount to Administrative Agent, then such amount shall constitute such
Lender's Proportionate Share of the Total Term Loan Commitment. If such Lender
does not pay such corresponding amount forthwith upon Administrative Agent's
demand therefore or within three Banking Days from the Closing Date,
Administrative Agent shall promptly notify Borrower and Borrower shall
immediately pay such corresponding amount to Administrative Agent together with
interest thereon (but no penalty or premium), for each day from the Closing Date
until the date such amount is paid to Administrative Agent, at the rate then
payable under this Agreement for Base Rate Term Loans. Nothing in this Section
2.1.4(b) shall be deemed to relieve any Lender from its obligation to fulfill
its obligations hereunder or to prejudice any rights that Borrower may have
against any Lender as a result of any default by such Lender hereunder.

            2.1.5 Use of Proceeds. Borrower shall apply the proceeds of the Term
Loans on the Closing Date as follows: (a) $220,269,515.28 shall be applied to
indefeasibly fund the Payout Amount, (b) $1,304,000 shall be applied to fund the
anticipated O&M Costs to be incurred by Borrower during the 30 days immediately
following the Closing Date, (c) $17,511,000 shall be applied to fund the
Pre-Funded Punchlist Expense Account, (d) to pay the fees and expenses then due
under this Agreement and the other Credit Documents, (e) $19,287,403.76 shall be
applied to fund a distribution to Sponsor representing the repayment of capital
initially provided to finance the construction or purchase of, or repairs,
improvements or additions to, the Site and/or the Project (such distribution,
the "Rocky Mountain Closing Date Distribution") and (f) as otherwise set forth
on Exhibit G-2. Borrower shall not use any portion of the proceeds of any Term
Loan in any manner that causes or might cause the funding of the Term Loans or
the application of such proceeds to violate Regulation T, Regulation U or
Regulation X or any other regulation of the Federal Reserve Board.

            2.1.6 Term Loan Principal Payment. Borrower shall repay to
Administrative Agent, for the account of each Lender, the aggregate unpaid
principal amount of the Term Loan made by such Lender (as reduced in connection
with any voluntary prepayment or Mandatory Prepayments of, or any accepted
Mandatory Repayment Offers on, the Term Loans, in accordance with Section
2.1.10) in installments payable on each Principal Repayment Date following the
Closing Date in accordance with the repayment schedule set forth on Exhibit I,

                                       3

<PAGE>

with any remaining unpaid principal, interest, fees and costs due and payable on
the Maturity Date.

            2.1.7 Interest Provisions Relating to Term Loans.

            (a) Term Loan Interest. Except as otherwise set forth herein,
Borrower shall pay interest on the unpaid principal amount of each Term Loan
from the Closing Date until the maturity or prepayment thereof at one of the
following rates per annum:

                  (i) With respect to the principal portion of such Term Loan
which is, and during such periods as such Term Loan is, a Base Rate Term Loan,
at a rate per annum equal to the Base Rate (such rate to change from time to
time as the Base Rate shall change) plus 3.25%.

                  (ii) With respect to the principal portion of such Term Loan
which is, and during such periods as such Term Loan is, a LIBOR Term Loan, at a
rate per annum during each Interest Period for such LIBOR Term Loan equal to the
LIBO Rate for such Interest Period plus 4.25%.

            (b) Applicable Interest Rate. Subject to Section 2.3.3, the
applicable basis for determining the rate of interest with respect to any Term
Loan shall be selected by Borrower initially at the time the Notice of Borrowing
and LC Activity is given pursuant to Section 2.1.3(a). The basis for determining
the interest rate with respect to any Term Loan may be changed from time to time
as specified in a Notice of Conversion of Loan Type delivered pursuant to
Section 2.1.9. If on any day a Term Loan is outstanding with respect to which
notice has not been delivered to Administrative Agent in accordance with the
terms of this Agreement specifying the applicable basis for determining the rate
of interest, then for that day such Term Loan shall bear interest determined by
reference to the Base Rate. Borrower shall not request, and the Lenders shall
not be obligated to make, LIBOR Term Loans at any time an Event of Default
exists.

            (c) Interest Payment Dates. Borrower shall pay accrued interest on
the unpaid principal amount of each Term Loan (i) on each Interest Payment Date,
and (ii) in all cases, upon repayment or prepayment (to the extent thereof and
including Mandatory Prepayments and, to the extent permitted by this Agreement,
any optional prepayments), upon conversion from one Type of Loan to another Type
of Loan and at maturity (whether by acceleration or otherwise).

            (d) LIBOR Term Loan Interest Periods.

                  (i) The initial Interest Period for all LIBOR Term Loans made
on the Closing Date shall be from the Closing Date through October 29, 2004.
Thereafter, each subsequent Interest Period selected by Borrower for all LIBOR
Term Loans shall be one, two, three or six months or, to the extent that nine or
twelve month Interest Periods are available to all Lenders, nine or twelve
months. Notwithstanding anything to the contrary in the preceding two sentences,
(A) any Interest Period for LIBOR Term Loans which would otherwise end on a day
which is not a Banking Day shall be extended to the next succeeding Banking Day
unless such next Banking Day falls in another calendar month, in which case such
Interest Period shall end on the immediately preceding Banking Day; (B) any
Interest Period for LIBOR Term Loans

                                       4

<PAGE>

which begins on the last Banking Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Banking Day of a calendar month; (C)
Borrower may not select Interest Periods for LIBOR Term Loans which would leave
a greater principal amount of Term Loans subject to Interest Periods for LIBOR
Term Loans ending after a date upon which Term Loans are or may be required to
be repaid (including the Maturity Date and each Principal Repayment Date) than
the principal amount of Term Loans scheduled to be outstanding after such date;
(D) any Interest Period for a Term Loan which would otherwise end after the
Maturity Date shall end on the Maturity Date; (E) LIBOR Term Loans for each
Interest Period shall be in the minimum amount of $5,000,000 or an integral
multiple of $1,000,000 in excess thereof; (F) Borrower may not at any time have
outstanding more than five different Interest Periods relating to LIBOR Term
Loans; and (G) Borrower shall select Types and Interest Periods for Term Loans
corresponding to the "types" and "interest periods" used for floating rate
payments in the Interest Rate Agreements so as to create, to the greatest extent
possible, a complete hedge.

                  (ii) Borrower may contact Administrative Agent at any time
prior to the end of an Interest Period for LIBOR Term Loans for a quotation of
Interest Rates in effect at such time for given Interest Periods and
Administrative Agent shall promptly provide such quotation. Borrower may select
an Interest Period for LIBOR Term Loans telephonically or by electronic mail
within the time periods specified in Section 2.1.9, which selection shall be
irrevocable on and after commencement of the applicable Minimum Notice Period.
Borrower shall confirm such telephonic or electronic mail notice to
Administrative Agent by facsimile on the day such notice is given by delivery to
Administrative Agent of a written notice in substantially the form of Exhibit
C-2, appropriately completed (a "Confirmation of Interest Period Selection"). If
Borrower fails to notify Administrative Agent of the next Interest Period for
any LIBOR Term Loans in accordance with this Section 2.1.7(d)(ii), such Term
Loans shall automatically convert to Base Rate Term Loans on the last day of the
current Interest Period therefor. Administrative Agent shall promptly notify
Borrower of each determination of the Interest Rate applicable to each Term
Loan.

            (e) Interest Computations. All computations of interest on Base Rate
Term Loans shall be based upon a year of 365 days or, in the case of a leap
year, 366 days, shall be payable for the actual days elapsed (including the
first day but excluding the last day), and shall be adjusted in accordance with
any changes in the Base Rate to take effect on the beginning of the day of such
change in the Base Rate. All computations of interest on LIBOR Term Loans shall
be based upon a year of 360 days and shall be payable for the actual days
elapsed (including the first day but excluding the last day). Borrower agrees
that all computations by Administrative Agent of interest shall be conclusive
and binding in the absence of manifest error.

            2.1.8 Promissory Notes. The obligation of Borrower to repay the Term
Loans made by a Lender and to pay interest thereon at the rates provided herein
shall, upon the written request of such Lender, be evidenced by promissory notes
in the form of Exhibit B (individually, a "Note" and, collectively, the
"Notes"), each payable to the order of such requesting Lender and in the
principal amount of such Lender's Term Loan Commitment. Borrower authorizes each
such requesting Lender to record on the schedule annexed to such Lender's Note,
the date and amount of the Term Loan made by such requesting Lender, and each
payment or prepayment of principal thereunder and agrees that all such notations
shall constitute prima facie evidence of

                                       5

<PAGE>

the matters noted; provided that in the event of any inconsistency between the
records or books of Administrative Agent and any Lender's records or Note, the
records of Administrative Agent shall be conclusive and binding in the absence
of manifest error. Borrower further authorizes each such requesting Lender to
attach to and make a part of such requesting Lender's Note continuations of the
schedule attached thereto as necessary. No failure to make any such notations,
nor any errors in making any such notations, shall affect the validity of
Borrower's obligations to repay the full unpaid principal amount of the Term
Loans or the duties of Borrower hereunder or thereunder. Upon the payment in
full in cash of the aggregate principal amount of, and all accrued and unpaid
interest on, the Term Loans, the Lenders holding such Notes shall promptly mark
the applicable Notes cancelled and return such cancelled Notes to Borrower.

            2.1.9 Conversion of Loans. Borrower may convert Term Loans from one
Type of Term Loans to another Type of Term Loans; provided, however, that (i)
any conversion of LIBOR Term Loans into Base Rate Term Loans shall be effective
on, and only on, the last day of an Interest Period for such LIBOR Term Loans
and (ii) Term Loans shall be converted only in amounts of $5,000,000 and
increments of $1,000,000 in excess thereof. Borrower shall request such a
conversion by delivering to Administrative Agent a written notice in the form of
Exhibit C-3, appropriately completed (a "Notice of Conversion of Loan Type"),
which contains or specifies, among other things:

            (a) the Term Loans, or portion thereof, which are to be converted;

            (b) the Type of Term Loans into which such Term Loans, or portion
thereof, are to be converted;

            (c) if such Term Loans are to be converted into LIBOR Term Loans,
the initial Interest Period selected by Borrower for such Term Loans (which
Interest Period shall be selected in accordance with Section 2.1.7(d) and if an
Interest Period is not so designated a one month Interest Period shall be deemed
selected by Borrower);

            (d) the proposed date of the requested conversion (which shall be a
Banking Day and otherwise in accordance with this Section 2.1.9; and

            (e) a certification by Borrower that no Event of Default has
occurred and is continuing.

Borrower shall so deliver each Notice of Conversion of Loan Type so as to
provide at least the applicable Minimum Notice Period. Any Notice of Conversion
of Loan Type may be modified or revoked by Borrower through the Banking Day
prior to the Minimum Notice Period, and shall thereafter be irrevocable. Each
Notice of Conversion of Loan Type shall be delivered by first-class mail,
facsimile or electronic mail to Administrative Agent at the office, to the
facsimile number or to the electronic mail address and as otherwise specified in
Section 11.1; provided, however, that Borrower shall promptly deliver to
Administrative Agent the original of any Notice of Conversion of Loan Type
initially delivered by facsimile or electronic mail. Administrative Agent shall
promptly notify each Lender of the contents of each Notice of Conversion of Loan
Type.

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<PAGE>

            2.1.10 Prepayments.

            (a) Terms of All Prepayments.

                  (i) Upon the prepayment of any Term Loan (whether such
prepayment is an optional prepayment under Section 2.1.10(b) or a Mandatory
Prepayment), Borrower shall pay to Administrative Agent for the account of the
Lender which made such Term Loan and/or Hedge Lender, as applicable, (A) all
accrued interest to the date of such prepayment on the amount of such Term Loan
prepaid, (B) all accrued fees to the date of such prepayment relating to the
amount of such Term Loan being prepaid, (C) to the extent required by the terms
of the applicable Interest Rate Agreement, all Hedge Breaking Fees owed by
Borrower to such Hedge Lender as a result of such prepayment, and (D) if such
prepayment is the prepayment of a LIBOR Term Loan on a day other than the last
day of an Interest Period for such LIBOR Term Loan, all Liquidation Costs
incurred by such Lender as a result of such prepayment (pursuant to the terms of
Section 2.6).

                  (ii) Notwithstanding the foregoing, but only in respect of any
Mandatory Prepayment of Term Loans (other than a Mandatory Prepayment resulting
from any Mandatory Repayment Offer accepted by a Lender), Borrower shall have
the right, by giving three Banking Days' notice to Administrative Agent, in lieu
of prepaying a LIBOR Term Loan on a day other than the last day of an Interest
Period for such LIBOR Term Loan, to deposit or cause Administrative Agent to
deposit into an account to be held by Depositary Agent (which account shall be
subjected to the Lien of the Collateral Documents in a manner reasonably
satisfactory to Collateral Agent) an amount equal to the LIBOR Term Loans to be
prepaid. Such funds shall be held in such account until the expiration of the
Interest Period applicable to the LIBOR Term Loan to be prepaid at which time
the amount deposited in such account shall be used to prepay such LIBOR Term
Loan and any interest accrued on such amount shall be deposited into the Revenue
Account. All Term Loans to be prepaid using the proceeds from such account shall
continue to accrue interest at the then applicable interest rate for such Term
Loans until actually prepaid. All amounts in such account shall only be invested
in Permitted Investments as directed by and at the expense and risk of Borrower.

                  (iii) All prepayments of Term Loans shall be applied to reduce
the remaining payments required under Section 2.1.6 in inverse order of
maturity. Borrower may not re-borrow the principal amount of any Term Loan which
is prepaid.

                  (iv) Other than with respect to any Mandatory Prepayment of
Funded LC Credit-Linked Deposits as provided in Section 2.8.2(b)(i) and any
repayment required or permitted on or before the Maturity Date in connection
with a Funded LC Disbursement, the aggregate amount to be prepaid or returned on
any date pursuant to the Credit Documents (including this Section 2.1.10 and
Section 3.2.2 of the Depositary Agreement) shall be applied first to the
prepayment (to the extent of funds required to be so applied) of Term Loans
outstanding on such date and thereafter (to the extent of any residual and
subject at all times to the following sentence) to the reimbursement of Funded
LC Credit-Linked Deposits. Notwithstanding anything to the contrary in this
Agreement, in the event that any prepayment under the Credit Documents would
result in the aggregate stated amount of the PSCo Letter of Credit exceeding the
aggregate amount on deposit in or credited to the Credit-Linked Deposit

                                       7

<PAGE>

Account, Borrower shall (on or before the date of such prepayment) deposit cash
with Administrative Agent for ultimate credit to the Credit-Linked Deposit
Account in an amount equal to such excess and Borrower authorizes Administrative
Agent to apply such amounts in the manner provided in Section 2.8.2.

            (b) Optional Prepayments.

                  (i) Borrower may not voluntarily prepay Term Loans except as
provided in clauses (ii) and (iii) of this Section 2.1.10(b).

                  (ii) In the event any voluntary prepayment is permitted under
this Agreement in accordance with clause (iii) of this Section 2.1.10(b),
Borrower may prepay any such Term Loans on any Banking Day in whole or in part,
in an aggregate minimum amount of $5,000,000 and integral multiples of
$1,000,000 (or the remaining amount outstanding) in excess of that amount. All
such prepayments shall be made upon (A) in the case of Base Rate Term Loans, one
Banking Day's prior written, email or telephonic notice to Administrative Agent
by 1:00 p.m. (New York City time) and (B) in the case of LIBOR Term Loans, three
Banking Days' prior written, email or telephonic notice to Administrative Agent
by 1:00 p.m. (New York City time) and in each case, if given by telephone,
promptly confirmed in writing to Administrative Agent (and Administrative Agent
will promptly notify each Lender of such notice). Upon the giving of any such
notice, the principal amount of the Term Loans specified in such notice shall
become due and payable on the prepayment date specified therein. Any prepayment
of any Term Loan pursuant to this Section 2.1.10(b) shall be applied in
accordance with Sections 2.4.1 and 9.10. In connection with any optional
prepayments under this Section 2.1.10(b), Borrower shall terminate or partially
terminate Hedge Transactions such that the notional amount under all of the
Hedge Transactions does not exceed, in the aggregate, the principal amount of
Terms Loans outstanding immediately after giving effect to such prepayment.

                  (iii) Borrower shall not voluntarily prepay Term Loans at any
time on or prior to June 24, 2007. At any time after June 24, 2007, Borrower may
voluntarily prepay Term Loans pursuant to the applicable provision below:

                        (1) Subject to clause (ii) of this Section 2.1.10(b),
Borrower may, at its option prepay at any time all, or from time to time any
part of, the Term Loans, if such prepayment is (x) after June 24, 2007 but on or
before June 24, 2008, in an amount equal to 102% of the principal amount of the
Term Loans so prepaid, plus all accrued and unpaid interest thereon and other
amounts owed hereunder in connection with such prepayment (including amounts
payable under Sections 2.5 and 2.6 hereof), or (y) after June 24, 2008 but on or
before June 24, 2009, in an amount equal to 101% of the principal amount so
prepaid, plus all accrued and unpaid interest and other amounts thereon owed
hereunder in connection with such prepayment (including amounts payable under
Sections 2.5 and 2.6 hereof); and

                        (2) Subject to Section 2.1.10(a) and clause (ii) of this
Section 2.1.10(b), Term Loans may be prepaid at any time without premium or
penalty after June 24, 2009.

                                       8

<PAGE>

            (c) Mandatory Prepayments. Borrower shall prepay (or cause to be
prepaid) Term Loans to the extent required by Section 3.2.2(b), 3.2.2(c) or 3.5
of the Depositary Agreement, Section 2.1.10(d) (to the extent any Mandatory
Repayment Offer is accepted by a Lender), Section 2.8.2(b)(i) or 7.2 of this
Agreement or any other provision of this Agreement or any other Credit Document
which requires such prepayment (such prepayment, a "Mandatory Prepayment").

            (d) Mandatory Repayment Offers. In the event that, pursuant to
Section 5.13, Borrower shall be required to offer to prepay Term Loans and
Funded LC Disbursements and return Funded LC Credit-Linked Deposits, then
Borrower shall make an offer to each Lender (a "Mandatory Repayment Offer") in
accordance with the following procedures specified below:

                  (i) Borrower shall make a Mandatory Repayment Offer under this
Agreement within 30 days following a Change of Control and shall keep such
Mandatory Repayment Offer open until 5:00 p.m. (New York City time) on the date
specified in such Mandatory Repayment Offer, which date shall be no earlier than
30 days and no later than 60 days from the date such Mandatory Repayment Offer
was made, except to the extent that a longer period is required by applicable
law (the "Offer Period");

                  (ii) Borrower shall make the Mandatory Repayment Offer by
sending a notice to Administrative Agent (for delivery to each Lender) in
accordance with Section 11.1. The notice shall contain all instructions and
materials necessary to enable the Lenders to accept the Mandatory Repayment
Offer for all of their Term Loans, Funded LC Disbursements and Funded LC
Credit-Linked Deposits pursuant to the Mandatory Repayment Offer. The Mandatory
Repayment Offer shall be made to all Lenders. The notice, which shall govern the
terms of the Mandatory Repayment Offer, shall state:

                        (A) the total amount Borrower is offering to prepay (the
"Offer Amount"), which amount shall be an amount equal to at least the sum of
(1) 101% of the aggregate principal amount of Term Loans and Funded LC
Disbursements then outstanding, plus (2) 1% of the amount of Funded LC
Credit-Linked Deposits, plus (3) in each case, accrued and unpaid interest
thereon, to but excluding the date of repayment, plus (4) in each case, any
other amount then required to be paid hereunder, and the Mandatory Repayment
Date therefor;

                        (B) that Riverside Borrower is making the same offer to
the Riverside Lenders to purchase the Riverside Term Loans;

                        (C) that the Mandatory Repayment Offer is being made
pursuant to this Section 2.1.10(d) and Section 5.13 and the date on which the
Mandatory Repayment Offer shall end;

                        (D) that, unless Borrower defaults in making such
payment, any Term Loan with respect to which a Lender accepts the Mandatory
Repayment Offer shall cease to accrue interest from and after the Mandatory
Repayment Date;

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<PAGE>

                        (E) that Borrower shall, on the Mandatory Repayment
Date, deposit cash in an aggregate amount equal to the Funded LC Credit-Linked
Deposits of all Lender's accepting such Mandatory Repayment Offer;

                        (F) that a Lender that accepts a Mandatory Repayment
Offer must accept such Mandatory Repayment Offer with respect to all (but not
part) of its Term Loans, Funded LC Disbursements and Funded LC Credit-Linked
Deposits and all (but not part) of its Riverside Term Loans; and

                        (G) that the Lenders shall be entitled to withdraw their
acceptance of a Mandatory Repayment Offer if Borrower and Administrative Agent
receive, not later than the expiration of the Offer Period, a notice setting
forth the name of the Lender, the principal amount of the Funded LC
Credit-Linked Deposit, Term Loans and Funded LC Disbursements and Riverside Term
Loans for which the Lender previously accepted such Mandatory Repayment Offer
and a statement that such Lender is rescinding its acceptance of such Mandatory
Repayment Offer under this Agreement and under the Riverside Credit Agreement;
and

                  (iii) On or before the fifth day after the termination of the
Offer Period (the "Mandatory Repayment Date"), Borrower shall (A) to the extent
lawful, pay, in accordance with Sections 2.4.1 and 9.10, the amount of Term
Loans and Funded LC Disbursements with respect to which the Mandatory Repayment
Offer was accepted (together with all accrued and unpaid interest thereon, to
but excluding the date of repayment and any other amount then required to be
paid under this Agreement), (B) unless such Mandatory Repayment Offer is
accepted by all Lenders and Riverside Lenders, deposit cash in an aggregate
amount equal to all Funded LC Credit-Linked Deposits returned as part of such
Mandatory Payment Offer with Administrative Agent for ultimate deposit in the
Credit-Linked Deposit Account for application as provided in Section 2.8.2, and
(C) deliver to Administrative Agent (for delivery to the Lenders) a certificate
duly executed by a Responsible Officer stating the amount of the Term Loans and
Funded LC Disbursements to be repaid and the Funded LC Credit-Linked Deposits to
be returned by Administrative Agent to the Lender's accepting such Mandatory
Repayment Offer in accordance with the terms of this Section 2.1.10(d).
Administrative Agent shall promptly forward the appropriate amount to each
Lender being repaid. Issuing Bank and each Lender hereby authorize
Administrative Agent to release to the Lender accepting any such Mandatory
Repayment Offer on the Mandatory Repayment Date an aggregate amount of funds on
deposit in or credited to the Credit-Linked Deposit Account equal to the amount
of cash deposited by Borrower with Administrative Agent in respect of the
replacement of such Funded LC Credit-Linked Deposits as set forth in Borrower's
Mandatory Repayment Offer and as contemplated by this Section 2.1.10(d).

      2.2 FEES.

            2.2.1 Borrower agrees to pay to, as applicable, each Lender and each
of Administrative Agent, Collateral Agent, Depositary Agent and Lead Arranger
the fees and expenses in the amounts and at the times separately agreed upon by
Borrower and such Person in writing, including those fees and expenses set forth
in the Fee Letters.

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<PAGE>

            2.2.2 Borrower agrees to pay (a) to Administrative Agent for the
account of each Lender a participation fee with respect to its participations in
the PSCo Letter of Credit, which participation fee shall accrue at a rate equal
to the sum of (i) a rate per annum equal to 4.25% on the Funded LC Credit-Linked
Deposits plus (ii) 0.10% on the average daily amount of such Lender's
Proportionate Share of the Total Funded LC Credit-Linked Deposits (excluding any
portion thereof attributable to unreimbursed Funded LC Disbursements) during the
period from and including the Closing Date to but excluding the later of the
date on which such Lender's Funded LC Credit-Linked Deposit is returned to it
and the Maturity Date and (b) to Issuing Bank a fronting fee, which shall accrue
at a rate per annum equal to .20% on the average daily aggregate face amount of
the PSCo Letter of Credit during the period from and including the Closing Date
to but excluding the date the PSCo Letter of Credit is cancelled, expires or
drawn in full, as well as such Issuing Bank's standard fees with respect to the
issuance or amendment of the PSCo Letter of Credit or processing of drawings
thereunder. Accrued participation fees in respect of the PSCo Letter of Credit
shall be due and payable on the each Interest Payment Date and accrued fronting
fees in respect of the PSCo Letter of Credit shall be due and payable monthly;
provided that all such fees shall be payable on the date on which the Funded LC
Credit-Linked Deposits are returned to the Lenders and any such fees accruing
after the date on which the Funded LC Credit-Linked Deposits are returned to the
Lenders shall be payable on demand. Any other fees payable to Issuing Bank
pursuant to this Section 2.2.2 shall be payable within ten days after demand.
All participation fees and fronting fees shall be computed on the basis of a
year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).

      2.3 OTHER PAYMENT TERMS.

            2.3.1 Place and Manner. Except as otherwise provided in the Fee
Letters or any other provision contained in any of the Credit Documents,
Borrower shall make all payments due to any Lender, Collateral Agent, Issuing
Bank or Administrative Agent hereunder to Administrative Agent, for the account
of such Lender, Collateral Agent, Issuing Bank or Administrative Agent (as the
case may be), to the account designated for such purpose from time to time by
Administrative Agent to Borrower, in Dollars and in immediately available funds
not later than 1:00 p.m. on the date on which such payment is due. Any payment
made after such time on any day shall be deemed received on the Banking Day
after such payment is received. Administrative Agent shall disburse to each
Lender, Issuing Bank or Collateral Agent (as the case may be) each such payment
received by Administrative Agent for such Lender, Issuing Bank or Collateral
Agent (as the case may be), such disbursement to occur on the day such payment
is received if received by 1:00 p.m. or if otherwise reasonably possible, or
otherwise on the next Banking Day.

            2.3.2 Date. Whenever any payment due hereunder shall fall due on a
day other than a Banking Day, such payment shall be made on the next succeeding
Banking Day, and such extension of time shall be included in the computation of
interest or fees, as the case may be, without duplication of any interest or
fees so paid in the next subsequent calculation of interest or fees payable.

            2.3.3 Default Interest. Notwithstanding anything to the contrary
herein, upon the occurrence and during the continuation of any Event of Default,
the outstanding principal

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<PAGE>

amount of all Term Loans and Funded LC Disbursements and, to the extent
permitted by applicable Legal Requirements, any accrued but unpaid interest
payments thereon and any accrued but unpaid fees and other amounts hereunder,
shall thereafter bear interest (including post-petition interest in any
proceeding under applicable Bankruptcy Laws) payable upon demand at a rate that
is (a) 2% per annum in excess of the interest rate then otherwise payable under
this Agreement with respect to the applicable Term Loans or Funded LC
Disbursements or (b) in the case of any such fees and other amounts, at a rate
that is 2% per annum in excess of the interest rate then otherwise payable under
this Agreement for Base Rate Term Loans (the "Default Rate"); provided that, in
the case of LIBOR Term Loans, upon the expiration of the Interest Period in
effect at the time any such increase in interest rate is effective, such LIBOR
Term Loans shall thereupon become Base Rate Term Loans and shall thereafter bear
interest payable upon demand at a rate that is 2% per annum in excess of the
interest rate then otherwise payable under this Agreement for Base Rate Term
Loans.

            2.3.4 Taxes.

            (a) Payments to Be Free and Clear. Except as otherwise provided in
this Section 2.3.4 and in Section 9.9, all sums payable by or on behalf of
Borrower or any of its Affiliates hereunder and under the other Credit Documents
shall (except to the extent required by any applicable Legal Requirement) be
paid free and clear of, and without any deduction or withholding on account of,
any Tax imposed, levied, collected, withheld or assessed by or within the U.S.
or any political subdivision in or of the U.S. or any other jurisdiction from or
to which a payment is made by or on behalf of Borrower or such Affiliate.

            (b) Withholding of Taxes. If Borrower or any other Person is
required by law to make any deduction or withholding on account of any such Tax
from any sum paid or payable by or on behalf of Borrower to Administrative
Agent, Collateral Agent, Issuing Bank or any Lender under any of the Credit
Documents but excluding, for purposes of this Section 2.3.4, the Interest Rate
Agreements, including the Hedge Transactions thereunder:

                  (i) Borrower shall notify Administrative Agent of any such
requirement or any change in any such requirement as soon as Borrower becomes
aware of it;

                  (ii) Borrower shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability to pay is
imposed on Borrower or such other Person) for its own account or (if that
liability is imposed on such Administrative Agent, Collateral Agent, Issuing
Bank or Lender, as the case may be) on behalf of and in the name of such
Administrative Agent, Collateral Agent, Issuing Bank or Lender;

                  (iii) the sum payable by Borrower or such other Person in
respect of which the relevant deduction, withholding or payment is required
shall be increased to the extent necessary to ensure that, after the making of
all deductions, withholding or payments for or with respect to Taxes, such
Administrative Agent, Collateral Agent, Issuing Bank or Lender, as the case may
be, receives on the due date a net sum equal to what it would have received had
no such deduction, withholding or payment been required or made; and

                                       12

<PAGE>

                  (iv) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within 30 days after
the due date of payment of any Tax which it is required by clause (ii) of this
Section 2.3.4(b) to pay, Borrower shall deliver to Administrative Agent evidence
satisfactory to the other affected parties of such deduction, withholding or
payment and of the remittance thereof to the relevant taxing or other authority;

provided that no such additional amount shall be required to be paid to any
Lender, Administrative Agent, Issuing Bank or Collateral Agent under clause
(iii) of this Section 2.3.4(b) except to the extent that any change after the
date hereof (in the case of each Lender, Administrative Agent, Issuing Bank and
Collateral Agent listed on the signature pages hereof on the Closing Date) or
after the effective date of the Assignment and Acceptance pursuant to which such
Lender became a Lender (in the case of each other Lender), as the case may be,
in any such requirement for a deduction, withholding or payment as is mentioned
therein shall result in either the imposition of deduction, withholding or
payment or an increase in the rate of such deduction, withholding or payment
from the rate in effect at the date hereof or at the date of such Assignment and
Acceptance, as the case may be, in respect of payments to such Lender,
Administrative Agent, Issuing Bank or Collateral Agent.

            (c) Other Taxes. Borrower shall pay any Other Taxes to the relevant
taxing or other authority in accordance with applicable Legal Requirements, and
shall comply with the requirements of this Section 2.3.4 with respect to such
payments.

            (d) Indemnification. Subject to the provisions below and the
provisions of Section 9.9, Borrower shall indemnify Administrative Agent,
Collateral Agent, Issuing Bank and each Lender for the full amount of Taxes (to
the extent Borrower would be required to pay additional amounts with respect to
such Taxes pursuant to this Section 2.3.4) or Other Taxes arising in connection
with payments made under any of the Credit Documents (including any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section
2.3.4) paid by such Administrative Agent, Collateral Agent, Issuing Bank or
Lender and any penalties, additions to tax, interest and expenses arising from
or with respect to such Taxes or Other Taxes, whether or not such Taxes or Other
Taxes were correctly or legally asserted; provided that Borrower shall not be
obligated to indemnify such Administrative Agent, Collateral Agent, Issuing Bank
or Lender for any penalties, interest or expenses relating to Taxes or Other
Taxes arising from such Administrative Agent's, Collateral Agent's, Issuing
Bank's or Lender's gross negligence or willful misconduct. Each Lender and each
of Administrative Agent, Issuing Bank and Collateral Agent agrees to give
written notice to Borrower of the assertion of any claim against such Lender,
Administrative Agent, Issuing Bank or Collateral Agent relating to such Taxes or
Other Taxes as promptly as is practicable after being notified of such
assertion, and in no event later than 180 days after the principal officer of
such Lender, Administrative Agent, Issuing Bank or Collateral Agent responsible
for administering this Agreement obtains knowledge thereof; provided that any
Lender's, Administrative Agent's, Issuing Bank's or Collateral Agent's failure
to notify Borrower of such assertion within such 180 day period shall not
relieve Borrower of its obligation under this Section 2.3.4 with respect to
Taxes or Other Taxes, penalties, interest or expenses arising prior to the end
of such period, but shall relieve Borrower of its obligations under this Section
2.3.4 with respect to Taxes or Other Taxes, penalties, interest or expenses
between the end of such period and such time as Borrower receives notice from
such Lender, Administrative Agent, Issuing Bank or Collateral Agent as

                                       13

<PAGE>

provided herein. Payment under this indemnification shall be made within 30 days
from the date any Lender, Administrative Agent, Issuing Bank or Collateral Agent
makes written demand therefor. A certificate setting forth in reasonable detail
the amount of such indemnification payment and the basis for determining such
indemnification payment, shall be submitted by such Person to Borrower and
shall, in the absence of manifest error, be conclusive and binding on Borrower
for purposes of this Agreement.

            (e) Evidence of Exemption From U.S. Withholding Tax. Administrative
Agent, Collateral Agent, Issuing Bank and each Lender that is not a United
States Person (as such term is defined in Section 7701(a)(30) of the Code) for
U.S. federal income tax purposes (a "Non-U.S. Lender") shall deliver to the
Administrative Agent for transmission to Borrower, on or prior to the Closing
Date (in the case of each Lender listed on the signature pages hereof on the
Closing Date) or on or prior to the date of the Assignment and Acceptance
pursuant to which it becomes a Lender (in the case of each other Lender), and at
such other times as may be necessary in the determination of Borrower or the
Administrative Agent (each in the reasonable exercise of its discretion):

                  (i) two original copies of Internal Revenue Service Form
W-8BEN or W-8ECI (or any successor forms), properly completed and duly executed
by such Administrative Agent, Collateral Agent, Issuing Bank or Lender, and such
other documentation required under the Code and reasonably requested by Borrower
to establish that such Administrative Agent, Collateral Agent, Issuing Bank or
Lender is not subject to deduction or withholding of United States federal
income tax with respect to any payments to such Administrative Agent, Collateral
Agent, Issuing Bank or Lender of principal, interest, fees or other amounts
payable under any of the Credit Documents or is subject to such deduction or
withholding at a reduced rate; or

                  (ii) if such Administrative Agent, Collateral Agent, Issuing
Bank or Lender is not a "bank" or other Person described in Section 881(c)(3) of
the Code and is claiming exemption from U.S. federal withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of "portfolio
interest", a Certificate Re Non-Bank Status in the form of Exhibit J hereto,
together with two original copies of Internal Revenue Service Form W-8 (or any
successor form), properly completed and duly executed by such Administrative
Agent, Collateral Agent, Issuing Bank or Lender, and such other documentation
required under the Code and reasonably requested by Borrower to establish that
such Administrative Agent, Collateral Agent, Issuing Bank or Lender is not
subject to deduction or withholding of United States federal income tax with
respect to any payments to such Administrative Agent, Collateral Agent, Issuing
Bank or Lender of interest payable under any of the Credit Documents.

Each Person required to deliver any forms, certificates or other evidence with
respect to United States federal income tax withholding matters pursuant to this
Section 2.3.4 hereby agrees, from time to time after the initial delivery by
such Person of such forms, certificates or other evidence, whenever a lapse in
time or change in circumstances renders such forms, certificates or other
evidence obsolete or inaccurate in any material respect, that such Person shall
promptly deliver to Administrative Agent for transmission to Borrower two new
original copies of Internal Revenue Service Form W-8BEN or W-8ECI, or a
Certificate re Non-Bank Status and two original copies of Internal Revenue
Service Form W-8, as the case may be, properly completed and duly executed by
such Person, and such other documentation required under the Code and

                                       14

<PAGE>

reasonably requested by Borrower to confirm or establish that such Person is not
subject to deduction or withholding of United States federal income tax with
respect to payments to such Person under the Credit Documents or is subject to
such deduction or withholding at a reduced rate, or notify Administrative Agent
and Borrower of its inability to deliver any such forms, certificates or other
evidence. Borrower shall not be required to pay any additional amount to
Administrative Agent, Collateral Agent, Issuing Bank or any Non-U.S. Lender
under this Section 2.3.4 or to indemnify Administrative Agent, Collateral Agent,
Issuing Bank or any Non-U.S. Lender under this Section 2.3.4 if such Person
shall have failed (1) to deliver the forms, certificates or other evidence
referred to in the second sentence of this Section 2.3.4(e), or (2) to notify
Administrative Agent and Borrower of its inability to deliver any such forms,
certificates or other evidence, as the case may be; provided, if such Person
shall have satisfied the requirements of the first sentence of this Section
2.3.4(e) on the Closing Date or on the date of the Assignment and Acceptance
pursuant to which it became a Lender, as applicable, nothing in this last
sentence of this Section 2.3.4(e) shall relieve Borrower of its obligation to
pay any additional amounts pursuant to Section 2.3.4(b) or to indemnify such
Non-U.S. Lender under Section 2.3.4(d) in the event that, as a result of any
change in any applicable Legal Requirement, or any change in the interpretation,
administration or application thereof, such Person is no longer properly
entitled to deliver forms, certificates or other evidence at a subsequent date
establishing the fact that such Person is not subject to withholding as
described herein. For the avoidance of doubt, to the extent the form provided by
Administrative Agent, Collateral Agent, Issuing Bank or a Lender at the time
such Administrative Agent, Collateral Agent, Issuing Bank or Lender first
becomes a party to this Agreement indicates a U.S. withholding tax rate in
excess of zero, withholding tax at such rate shall be considered excluded from
Taxes.

            2.3.5 Application of Payments. Except as otherwise expressly
provided herein or in the other Credit Documents, payments made under this
Agreement or the other Credit Documents and other amounts received by
Administrative Agent, Collateral Agent, Depositary Agent, Issuing Bank or the
Lenders under this Agreement or the other Credit Documents shall first be
applied to any fees, costs, charges or expenses payable to Administrative Agent,
Collateral Agent, Depositary Agent, Issuing Bank or the Lenders hereunder or
under the other Credit Documents, next to any accrued but unpaid interest then
due and owing, and then to outstanding principal then due and owing or otherwise
to be prepaid (in each case, such application to be made on a pro rata basis
among such applicable Persons).

      2.4 PRO RATA TREATMENT.

            2.4.1 Borrowings, Commitment Reductions, Etc. Except as otherwise
provided herein, (a) the Closing Date Borrowing of Term Loans and any reduction
of Total Term Loan Commitment and the Closing Date funding of the Total Funded
LC Credit-Linked Deposits shall be made or allocated among the Lenders pro rata
according to their respective Proportionate Shares of the Total Term Loan
Commitment or Total Funded LC Credit-Linked Deposits, as the case may be, (b)
except in the case of a Mandatory Repayment Offer pursuant to Section 2.1.10(d)
whereby payments shall be allocated to each accepting Lender's Term Loans,
Funded LC Disbursements and Funded LC Credit-Linked Deposits (and not to all
Lenders based on Proportionate Shares) and subject to Section 2.1.10(a)(iv),
each payment of principal of and interest on Term Loans or Funded LC
Disbursements (as the case may be) or return of Funded LC Credit-Linked Deposits
shall be made or shared among the Lenders holding such Term

                                       15

<PAGE>

Loans or Funded LC Disbursements or Funded LC Credit-Linked Deposits (as the
case may be) pro rata according to their respective unpaid principal amounts of
such Term Loans or Funded LC Disbursements or amounts of Funded LC Credit-Linked
Deposits (as the case may be) held by such Lenders, and (c) each payment of any
fees payable to all Lenders shall be shared among the Lenders pro rata according
to (i) their respective Proportionate Shares of such fees, and (ii) in the case
of each Lender which becomes a party to this Agreement hereunder after the
Closing Date, the date upon which such Lender so became a party hereunder.

            2.4.2 Sharing of Payments, Etc. Except in the case of a Mandatory
Repayment Offer pursuant to Section 2.1.10(d) whereby payments shall be
allocated to each accepting Lender's Term Loans, Funded LC Disbursements and
Funded LC Credit-Linked Deposits (and not to all Lenders based on Proportionate
Shares), if any Lender shall obtain any payment (whether voluntary, involuntary,
through the exercise of any right of setoff, or otherwise) on account of Term
Loans or Funded LC Disbursements owed to it or Funded LC Credit-Linked Deposits
to be returned to it, in excess of its Proportionate Share of payments on
account of such Term Loans or Funded LC Disbursements or Funded LC Credit-Linked
Deposits obtained by all Lenders entitled to such payments, such Lender shall
forthwith purchase from the other Lenders such participation in the Term Loans
or Funded LC Disbursements or Funded LC Credit-Linked Deposits, as the case may
be, as shall be necessary to cause such purchasing Lender to share the excess
payment ratably with each of them; provided, however, that if all or any portion
of such excess payment is thereafter recovered from such purchasing Lender, such
purchase from such Lender shall be rescinded and each other Lender shall repay
to the purchasing Lender the purchase price to the extent of such recovery
together with an amount equal to such other Lender's Proportionate Share
(according to the proportion of (a) the amount of such other Lender's required
repayment to (b) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. Borrower agrees that any Lender so purchasing
a participation from another Lender pursuant to this Section 2.4.2 may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of setoff) with respect to such participation as fully as if such
Lender were the direct creditor of Borrower in the amount of such participation.

      2.5 CHANGE OF CIRCUMSTANCES.

            2.5.1 Inability to Determine Rates. If, on or before the first day
of any Interest Period for any LIBOR Term Loans, Funded LC Disbursements or
Funded LC Credit-Linked Deposits, (a) Administrative Agent determines that the
LIBO Rate for such Interest Period cannot be adequately and reasonably
determined due to the unavailability of funds in or other circumstances
affecting the London interbank market, or (b) Lenders holding aggregate
Proportionate Shares of 33-1/3% or more of the outstanding Term Loans, Funded LC
Disbursements or Total Funded LC Credit-Linked Deposits shall advise
Administrative Agent that (i) the rates of interest for such LIBOR Term Loans,
Funded LC Disbursements or Funded LC Credit-Linked Deposits do not adequately
and fairly reflect the cost to such Lenders of making or maintaining such Term
Loans, Funded LC Disbursements or Funded LC Credit-Linked Deposit or (ii)
deposits in Dollars in the London interbank market are not available to such
Lenders (as conclusively certified by each such Lender in good faith in writing
to Administrative Agent and to Borrower) in the ordinary course of business in
sufficient amounts to make and/or maintain their LIBOR Term Loans, Funded LC
Disbursements or Funded LC

                                       16

<PAGE>

Credit-Linked Deposit, then Administrative Agent shall immediately give notice
of such condition to Borrower. After the giving of any such notice and until
Administrative Agent shall otherwise notify Borrower that the circumstances
giving rise to such condition no longer exist, (x) Borrower's right to request
the making of or conversion to, and the Lenders' obligations to make or convert
to, LIBOR Term Loans shall be suspended, (y) any LIBOR Term Loans outstanding at
the commencement of any such suspension shall be converted at the end of the
then current Interest Period for such Term Loans into Base Rate Term Loans
unless such suspension has then ended and (z) the Funded LC Credit-Linked
Deposits shall be invested so as to earn a return equal to the greater of the
Federal Funds Rate and a rate determined by Administrative Agent in accordance
with banking industry rules on interbank compensation.

            2.5.2 Illegality. If, after the date of this Agreement, the adoption
of any Governmental Rule, any change in any Governmental Rule or the application
or requirements thereof (whether such change occurs in accordance with the terms
of such Governmental Rule as enacted, as a result of amendment, or otherwise),
any change in the interpretation or administration of any Governmental Rule by
any Governmental Authority, or compliance by any Lender or Borrower with any
request or directive (whether or not having the force of law, but if not having
the force of law, being of a type with which a Lender customarily complies) of
any Governmental Authority (a "Change of Law") shall make it unlawful or
impossible for any Lender to make or maintain any LIBOR Term Loan, then such
Lender shall immediately notify Administrative Agent and Borrower of such Change
of Law. Upon receipt of such notice, (a) Borrower's right to request the making
of or conversion to, and the Lender's obligations to make or convert to, LIBOR
Term Loans shall be suspended for so long as such condition shall exist, and (b)
Borrower shall, at the request of such Lender, either (i) pursuant to Section
2.1.9, convert any then outstanding LIBOR Term Loans into Base Rate Term Loans
at the end of the current Interest Periods for such Term Loans, or (ii)
immediately repay, to the extent otherwise permitted under this Agreement,
pursuant to Section 2.1.10 or convert LIBOR Term Loans of the affected Type into
Base Rate Term Loans if such Lender shall notify Borrower that such Lender may
not lawfully continue to fund and maintain such Term Loans. Any conversion or
prepayment of LIBOR Term Loans made pursuant to the preceding sentence prior to
the last day of an Interest Period for such Term Loans shall be deemed a
prepayment thereof for purposes of Section 2.6.

            2.5.3 Increased Costs. If, after the date of this Agreement, any
Change of Law:

            (a) shall subject any Lender to any tax, duty or other charge with
respect to any LIBOR Term Loan or Term Loan Commitment in respect thereof, or
shall change the basis of taxation of payments by Borrower to any Lender on such
a Term Loan or with respect to any such Term Loan Commitment (except for Taxes,
Other Taxes or the imposition of or changes in the rate of taxation on the
overall net income of any Lender); or

            (b) shall impose, modify or hold applicable any reserve, special
deposit or similar requirement (without duplication of any reserve requirement
included within the applicable Interest Rate through the definition of "Reserve
Requirement") against assets held by, deposits or other liabilities in or for
the account of, advances or loans by, or any other acquisition of funds by any
Lender for any LIBOR Term Loan; or

                                       17

<PAGE>

            (c) shall impose on any Lender any other condition directly related
to any LIBOR Term Loan or Term Loan Commitment in respect thereof;

and the effect of any of the foregoing is to increase the cost to such Lender of
making, issuing, creating, renewing, participating in (subject to the
limitations in Section 9.12) or maintaining any such LIBOR Term Loan or Term
Loan Commitment in respect thereof or to reduce any amount receivable by such
Lender hereunder, then Borrower shall from time to time, within ten days after
demand by such Lender, pay to such Lender additional amounts sufficient to
reimburse such Lender for such increased costs or to compensate such Lender for
such reduced amounts. A certificate setting forth in reasonable detail the
amount of such increased costs or reduced amounts and the basis for
determination of such amount, submitted by such Lender to Borrower, shall, in
the absence of manifest error, be conclusive and binding on Borrower for
purposes of this Agreement.

            2.5.4 Capital Requirements. If any Lender determines that (a) any
Change of Law after the date of this Agreement increases the amount of capital
required or expected to be maintained by such Lender, or the Lending Office of
such Lender or any Person controlling such Lender (a "Capital Adequacy
Requirement"), and (b) the amount of capital maintained by such Lender or such
Person which is attributable to or based upon the Term Loans, the Term Loan
Commitment or this Agreement must be increased as a result of such Capital
Adequacy Requirement (taking into account such Lender's or such Person's
policies with respect to capital adequacy), then Borrower shall pay to such
Lender or such Person, within ten days after delivery of demand by such Lender
or such Person, such amounts as such Lender or such Person shall reasonably
determine are necessary to compensate such Lender or such Person for the
increased costs to such Lender or such Person of such increased capital. A
certificate of such Lender or such Person, setting forth in reasonable detail
the computation of any such increased costs, delivered to Borrower by such
Lender or such Person shall, in the absence of manifest error, be conclusive and
binding on Borrower for purposes of this Agreement.

            2.5.5 Notice; Lenders' Rights. Issuing Bank, Administrative Agent
and each Lender shall notify Borrower of any event occurring after the date of
this Agreement that will entitle Issuing Bank, Administrative Agent or such
Lender to compensation pursuant to this Section 2.5, as promptly as practicable,
and in no event later than 180 days after the principal officer of Issuing Bank
or such Lender responsible for administering this Agreement obtains knowledge
thereof; provided that Issuing Bank's, Administrative Agent's or any Lender's
failure to notify Borrower within such 180 day period shall not relieve Borrower
of its obligation under this Section 2.5 with respect to claims arising prior to
the end of such period, but shall relieve Borrower of its obligations under this
Section 2.5 with respect to the time between the end of such period and such
time as Borrower receives notice from the indemnitee as provided herein. No
Person purchasing from a Lender a participation or assignment in any Term Loan,
Term Loan Commitment, Funded LC Disbursement or Funded LC Credit-Linked Deposit
shall be entitled to any payment from or on behalf of Borrower pursuant to
Section 2.5.3 or Section 2.5.4 which would be in excess of the applicable
proportionate amount (based on the portion of the Term Loan, Total Term Loan
Commitment, Funded LC Disbursement or Funded LC Credit-Linked Deposit in which
such Person is participating) which would then be payable to such Lender if such
Lender had not sold a participation or assignment in that portion of the Term
Loan, Term Loan Commitment, Funded LC Disbursement or Funded LC Credit-Linked
Deposit.

                                       18

<PAGE>

      2.6 FUNDING LOSSES.

            If (x) Borrower shall (a) repay or prepay any LIBOR Term Loans or
Funded LC Disbursement or reduce any Funded LC Credit-Linked Deposit (other than
in connection with the funding of a Funded LC Disbursement) on any day other
than the last day of an Interest Period for such Term Loans, Funded LC
Disbursement or Funded LC Credit-Linked Deposit (whether an optional prepayment
or a Mandatory Prepayment), (b) fail to borrow any LIBOR Term Loans in
accordance with the Notice of Borrowing and LC Activity delivered to
Administrative Agent (whether as a result of the failure to satisfy any
applicable conditions or otherwise) after such Notice of Borrowing and LC
Activity has become irrevocable, (c) fail to convert any Term Loans into LIBOR
Term Loans in accordance with a Notice of Conversion of Loan Type delivered to
Administrative Agent (whether as a result of the failure to satisfy any
applicable conditions or otherwise) after such Notice of Conversion of Loan Type
has become irrevocable, (d) fail to continue a LIBOR Term Loan in accordance
with a Confirmation of Interest Period Selection delivered to Administrative
Agent, or (e) fail to make any prepayment in accordance with any notice of
prepayment delivered to Administrative Agent, or (y) Issuing Bank makes a Funded
LC Disbursement from amounts on deposit in the Credit-Linked Deposit Account on
any day other than the last day of an Interest Period for such Funded LC
Credit-Linked Deposits, then Borrower shall, within ten days after demand by
Administrative Agent or any Lender, reimburse Administrative Agent or such
Lender for all reasonable costs and losses incurred by Administrative Agent or
such Lender as a result of such repayment, prepayment or failure or making of a
Funded LC Disbursement ("Liquidation Costs"). Borrower understands that such
costs and losses may include losses incurred by Administrative Agent or a Lender
as a result of funding and other contracts entered into by Administrative Agent
or such Lender to fund LIBOR Term Loans (other than non-receipt of the margin
applicable to such LIBOR Term Loans). In the case of a Funded LC Disbursement
bearing interest by reference to the LIBO Rate or a Funded LC Credit-Linked
Deposit, such loss, cost or expense to any applicable Lender or Administrative
Agent shall be deemed to include an amount determined by such Lender or
Administrative Agent, as the case may be, to be the excess, if any, of (x) the
amount of interest which would have accrued on the principal amount of such
Funded LC Disbursement or on the Funded LC Credit-Linked Deposit had such event
not occurred, at the LIBO Rate that would have been applicable to such Funded LC
Disbursement or Funded LC Credit-Linked Deposit, for the period from the date of
such event to the last day of the then current Interest Period therefor (or, in
the case of a failure to borrow, convert or continue, for the period that would
have been the Interest Period for such Funded LC Disbursement or Funded LC
Credit-Linked Deposit), over (ii) the amount of interest which would accrue on
such principal amount for such period at the interest rate which such Lender
would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the London
interbank market. Administrative Agent or a Lender demanding payment under this
Section 2.6 shall deliver to Borrower a certificate setting forth in reasonable
detail the basis for and the amount of costs and losses for which demand is
made. Such a certificate so delivered to Borrower shall, in the absence of
manifest error, be conclusive and binding as to the amount of such loss for
purposes of this Agreement.

                                       19

<PAGE>

      2.7 ALTERNATE OFFICE; MINIMIZATION OF COSTS.

            2.7.1 To the extent reasonably possible, each Lender shall designate
an alternative Lending Office with respect to its LIBOR Term Loans, Funded LC
Disbursement and Funded LC Credit-Linked Deposit and otherwise take any
reasonable actions to reduce any liability of Borrower to any Lender under
Section 2.3.4, 2.5.3, 2.5.4 or 2.6, or to avoid the unavailability of any Type
of Term Loans, Funded LC Disbursement or Funded LC Credit-Linked Deposit under
Section 2.5.2 so long as (in the case of the designation of an alternative
Lending Office) such Lender, in its sole discretion, determines that (a) such
designation is not disadvantageous to such Lender and (b) such actions would
eliminate or reduce liability to such Lender. Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or actions within ten Banking Days of demand thereof to Borrower.

            2.7.2 Notwithstanding anything to the contrary herein, in the event
that:

            (a) any Lender (an "Increased-Cost Lender") shall give notice to
Borrower that such Lender is a Lender is entitled to receive payments under
Sections 2.3.4 or 2.5, (ii) the circumstances which have caused such Lender to
be an Increased-Cost Lender or which entitle such Lender to receive such
payments shall remain in effect, and (iii) such Lender shall fail to withdraw
such notice within five Business Days after Borrower's request for such
withdrawal; or

            (b) in connection with any proposed amendment, modification,
termination, waiver or consent with respect to any of the provisions hereof as
contemplated by Section 9.8, the consent of Majority Lenders, Supermajority
Lenders or all necessary Lenders, as the case may be, shall have been obtained,
except for one or more of such other Lenders (each a "Non-Consenting Lender")
whose consent is required shall not have been obtained;

then, with respect to each such Increased-Cost Lender or Non-Consenting Lender
(the "Terminated Lender"), Borrower may, by giving written notice to
Administrative Agent and any Terminated Lender of its election to do so, elect
to cause such Terminated Lender (and such Terminated Lender hereby irrevocably
agrees) to assign its outstanding Term Loans, Funded LC Disbursements and Funded
LC Credit Linked Deposit in full to one or more Eligible Assignees who are
reasonably acceptable to Administrative Agent (each a "Replacement Lender") in
accordance with the provisions of Section 9.12 (including the requirement that
the Terminated Lender assign its outstanding Riverside Term Loans to such
Replacement Lender in accordance with the Riverside Credit Agreement) and
Borrower shall pay any fees payable thereunder in connection with such
assignment; provided:

                  (i) on the date of such assignment, the Replacement Lender
and/or Borrower shall pay to such Terminated Lender an amount equal to the sum
of (A) an amount equal to the principal of, and all accrued interest on, all
outstanding Term Loans and Funded LC Disbursements of the Terminated Lender, and
(B) an amount equal to all accrued, but theretofore unpaid, fees owing to such
Terminated Lender pursuant to Section 2.2;

                                       20

<PAGE>

                  (ii) on the date of such assignment, the Borrower shall pay
any amounts payable to such Terminated Lender pursuant to Section 2.3.4 or 2.5;
provided that no premium on such amounts shall be required to be paid;

                  (iii) in the event such Terminated Lender is a Non-Consenting
Lender, each Replacement Lender shall consent, at the time of such assignment,
to each matter in respect of which such Terminated Lender was a Non-Consenting
Lender; and

                  (iv) no Event of Default shall have occurred and be continuing
at the time of such termination and replacement (other than, in the case of a
replacement predicated upon clause (b) above, the Event of Default that is the
subject of the vote referred to in clause (b) above).

Upon the prepayment of all amounts owing to any Terminated Lender, such
Terminated Lender shall no longer constitute a "Lender" under any of the Credit
Documents; provided, any rights of such Terminated Lender to indemnification
hereunder shall survive as to such Terminated Lender.

            2.7.3 Upon written notice to Administrative Agent, any Lender may
designate a Lending Office other than the Lending Office most recently
designated to Administrative Agent and may assign all of its interests under the
Credit Documents and its Notes (if any) to such Lending Office; provided that
such designation and assignment do not at the time of such designation and
assignment increase the reasonably foreseeable liability of Borrower under
Section 2.3.4, 2.5.3 or 2.5.4 or make an Interest Rate option unavailable
pursuant to Section 2.5.2.

      2.8 CREDIT-LINKED DEPOSIT ACCOUNT; PSCO LETTER OF CREDIT.

            2.8.1 Credit-Linked Deposit Account.

            (a) The Funded LC Credit-Linked Deposits shall be held by Issuing
Bank in the Credit-Linked Deposit Account, and no party other than Issuing Bank
shall have a right of withdrawal from the Credit-Linked Deposit Account or any
other right or power with respect to the Funded LC Credit-Linked Deposits.
Notwithstanding anything herein to the contrary, the funding obligation of each
Lender in respect of its participation in the PSCo Letter of Credit shall be
satisfied in full upon the funding of its Funded LC Credit-Linked Deposit.

            (b) Each of Administrative Agent, Issuing Bank and each Lender
hereby acknowledges and agrees that each Lender is funding its Funded LC
Credit-Linked Deposit to Issuing Bank for application in the manner contemplated
by Section 2.8.2(c) and that Issuing Bank shall invest the Funded LC
Credit-Linked Deposits in LIBO Rate investments so as to earn a return (except
during periods when such Funded LC Credit-Linked Deposits, or funds advanced by
Issuing Bank against such Funded LC Credit-Linked Deposits, are used to cover
unreimbursed Funded LC Disbursements, and subject to Sections 2.4, 2.5 and 2.6)
for the Lenders equal at any time to (i) the LIBO Rate for the Interest Period
in effect for the Funded LC Credit-Linked Deposits at such time minus (ii)
0.10%. Such earned amount minus 0.10% will be

                                       21

<PAGE>

paid to the Lenders by Issuing Bank, who shall accomplish the same by paying
such amounts to Administrative Agent in arrears on each Interest Payment Date.
Upon Administrative Agent's receipt of such amounts from Issuing Bank,
Administrative Agent shall promptly pay all amounts it receives from Issuing
Bank to the Lenders.

            (c) Borrower shall have no right, title or interest in or to the
Funded LC Credit-Linked Deposits and no obligations with respect thereto (except
to refund portions thereof used to fund Funded LC Disbursements as provided in
Section 2.8.2(d) and pay other amounts provided herein related thereto), it
being acknowledged and agreed by the parties hereto that the making of the
Funded LC Credit-Linked Deposits by the Lenders, the provisions of this Section
2.8.1 and the application of the Funded LC Credit-Linked Deposits in the manner
contemplated by Section 2.8.2(c) constitute agreements among Administrative
Agent, Issuing Bank and each Lender with respect to the funding obligations of
each Lender in respect of its participation in PSCo Letter of Credit and do not
constitute any loan or extension of credit to Borrower.

            (d) Issuing Bank shall promptly provide to Administrative Agent such
information as Administrative Agent may require to provide such information to
Borrower and/or the Lenders as is required hereunder.

            2.8.2 PSCo Letter of Credit.

            (a) Request for Issuance. Subject to the terms and conditions
hereof, on or before the date which is three Banking Days prior to the Closing
Date, Borrower shall deliver to Administrative Agent the Notice of Borrowing and
LC Activity referred to in Section 2.1.3(a) requesting that Issuing Bank issue
the PSCo Letter of Credit as of the Closing Date. The PSCo Letter of Credit
shall be issued to PSCo in accordance with the terms of the Power Purchase
Agreement, shall have an expiration date of June 24, 2011 and shall have an
aggregate stated amount on the Closing Date equal to $28,100,000.

            (b) Reduction of Stated Amount of PSCo Letter of Credit; Immaterial
Changes.

                  (i) Upon at least three Banking Days' prior written notice to
Administrative Agent and Issuing Bank delivered in accordance with Section 11.1,
Borrower may permanently reduce the stated amount of the PSCo Letter of Credit;
provided, however, that (A) such notice shall include a statement executed by
each of Borrower and PSCo confirming that the aggregate amount of the PSCo
Security Fund has been permanently reduced by an amount equal to such reduction
in the stated amount and that Borrower shall have no further obligation to
increase the stated amount of such PSCo Letter of Credit at any time following
any such reduction, and (B) after giving effect to such reduction, Funded LC
Credit-Linked Deposits on deposit in or credited to the Credit-Linked Deposit
Account (together with any other amounts on deposit in or credited to the
Credit-Linked Deposit Account in replacement thereof) shall equal the
then-current stated amount of the PSCo Letter of Credit. In the event the stated
amount of the PSCo Letter of Credit shall be reduced as provided in the
immediately preceding sentence, Issuing Bank shall return, in accordance with
Section 2.1.10(c), all such amounts on deposit in or credited to the
Credit-Linked Deposit Account in excess of the stated amount of the PSCo Letter

                                       22

<PAGE>

of Credit (as so reduced) to Administrative Agent who shall promptly return the
same to the Lenders ratably in accordance with their Proportionate Share of the
Total Funded LC Credit-Linked Deposit Commitment.

                  (ii) Borrower may request immaterial amendments to or
modifications of the PSCo Letter of Credit by delivering to Administrative Agent
and Issuing Bank in accordance with Section 11.1, (A) a written notice
describing the terms of the PSCo Letter of Credit to be amended or modified and
such other information as shall be necessary to prepare such amended PSCo Letter
of Credit and (B) a certificate from a Responsible Officer of Borrower stating
that such amendment or modification is required by the terms of the Power
Purchase Agreement. Issuing Bank shall have the right, but shall have no
obligation, to make such immaterial modifications to the PSCo Letter of Credit
as Borrower may from time to time request in writing as provided above. Issuing
Bank shall promptly provide Administrative Agent with a copy of any such
amendment or modification to the PSCo Letter of Credit.

            (c) Participation. On the Closing Date, without any further action
on the part of Issuing Bank or the Lenders, Issuing Bank hereby grants to each
Lender, and each Lender hereby acquires from Issuing Bank, a participation in
the PSCo Letter of Credit equal to such Lender's Proportionate Share of the
aggregate amount available to be drawn under such PSCo Letter of Credit. The
aggregate purchase price for the participations of each Lender in the PSCo
Letter of Credit shall equal the amount of the Funded LC Credit-Linked Deposit
of such Lender. Each Lender shall pay to Administrative Agent its Funded LC
Credit-Linked Deposit in full on the Closing Date. Administrative Agent shall
promptly pay the same to Issuing Bank. The Funded LC Credit-Linked Deposit made
by such Lender on the Closing Date pursuant to this Section 2.8.2 (as such
deposit may be reduced from time to time pursuant to the Credit Documents and
reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 9.12) is set forth on Exhibit H, or in the Assignment
and Acceptance pursuant to which such Lender shall have acquired its Funded LC
Credit-Linked Deposit, as applicable. The aggregate amount of the Funded LC
Credit-Linked Deposits on the Closing Date is $28,100,000. Each Lender hereby
absolutely and unconditionally agrees that if Issuing Bank makes a Funded LC
Disbursement which is not reimbursed by Borrower as provided in Section
2.8.2(d), or is required to refund any reimbursement payment in respect of a
Funded LC Disbursement to Borrower for any reason, Issuing Bank may withdraw an
amount from the Credit-Linked Deposit Account equal to the amount of such Funded
LC Disbursement, ratably as among the Lenders in accordance with their
Proportionate Share of the Total Funded LC Credit-Linked Deposit, from such
Lender's Funded LC Credit-Linked Deposit on deposit in the Credit-Linked Deposit
Account. In the event the Credit-Linked Deposit Account is charged by Issuing
Bank to reimburse itself for an unreimbursed Funded LC Disbursement, Borrower
shall have the right, at any time prior to the Maturity Date, to pay over to
Administrative Agent in reimbursement thereof an amount equal to the amount so
charged for deposit in the Credit-Linked Deposit Account, and in such event
Administrative Agent shall promptly pay the same to Issuing Bank. In the event
that any reimbursement shall be due to Issuing Bank under the preceding
provisions of this Section on a day other than the last day of an Interest
Period in effect for the Funded LC Credit-Linked Deposits, Issuing Bank shall
have the right, but not the obligation, to advance its own funds to cover the
amount due to Issuing Bank, in which case (i) title to an amount of each
Lender's Funded LC Credit-Linked Deposit equal to its Proportionate Share of the
amount so advanced by Issuing Bank (together with the interest accruing thereon)

                                       23

<PAGE>

shall automatically be transferred to Issuing Bank, which shall reimburse itself
for the amount advanced by it through the liquidation of such amounts of the
Funded LC Credit-Linked Deposits at the end of the applicable Interest Period,
and (ii) Borrower shall pay to Administrative Agent for the benefit of Issuing
Bank, upon Administrative Agent's or Issuing Bank's request therefor, the
amount, if any, by which Issuing Bank's cost of funds for the period from the
date of such reimbursement of Issuing Bank through the end of the applicable
Interest Period shall exceed the interest accrued on a like amount of the Funded
LC Credit-Linked Deposits at the LIBO Rate for such Interest Period. A
certificate setting forth in reasonable detail the amount of such costs and the
basis for determination of such amount, submitted by Issuing Bank to Borrower,
shall, in the absence of manifest error, be conclusive and binding on Borrower
for purposes of this Agreement. In the event Borrower shall fail to pay any
amount due under clause (ii) of the preceding sentence, the interest payable by
Issuing Bank to the Lenders on their Funded LC Credit-Linked Deposits under
Section 2.8.1(b) shall be correspondingly reduced and the Lenders shall without
further act succeed, ratably in accordance with their Proportionate Share, to
the rights of Issuing Bank with respect to such amount. Each Lender acknowledges
and agrees that its obligation to acquire and fund participations in respect of
the PSCo Letter of Credit pursuant to this clause (ii) is absolute,
unconditional and irrevocable and shall not be affected by any circumstance
whatsoever, including any amendment or extension of the PSCo Letter of Credit or
the occurrence and continuance of an Inchoate Default or Event of Default or the
return of the Funded LC Credit-Linked Deposits, and that each such payment shall
be made without any offset, abatement, withholding or reduction whatsoever.
Without limiting the foregoing, each Lender irrevocably authorizes Issuing Bank
to apply the Funded LC Credit-Linked Deposits as provided in this Section 2.8.2.
In addition, each Lender hereby grants to Issuing Bank a security interest in
such Lender's Funded LC Credit-Linked Deposit to secure its obligations under
this Section 2.8.2.

            (d) Reimbursement.

                  (i) If Issuing Bank shall make any Funded LC Disbursement,
Borrower shall pay or cause to be paid to Administrative Agent an amount equal
to the entire amount of such Funded LC Disbursements on the Maturity Date. If
Borrower does not so reimburse Issuing Bank for any such Funded LC Disbursement,
without limiting any other right or remedy of any Lender hereunder,
reimbursement of Issuing Bank shall be made in accordance with the provisions of
this Section 2.8.2(d).

                  (ii) Except in connection with any repayment of Funded LC
Disbursements prior to the Maturity Date pursuant to Section 2.1.10, if any
Funded LC Disbursement that shall have been funded from the Funded LC
Credit-Linked Deposits shall be reimbursed other than on the last day of an
Interest Period applicable to the Funded LC Credit-Linked Deposits, Issuing Bank
shall invest the amount so reimbursed in overnight or short-term cash equivalent
investments until the end of the Interest Period at the time in effect and
Borrower shall pay to Administrative Agent for the benefit of Issuing Bank upon
Administrative Agent's or Issuing Bank's request therefor, the amount, if any,
by which the interest accrued on a like amount of the Funded LC Credit-Linked
Deposits at the LIBO Rate for the Interest Period in effect therefor shall
exceed the interest earned through the investment of the amount so reimbursed
for the period from the date of such reimbursement through the end of the
applicable Interest Period. A certificate setting forth in reasonable detail the
amount of such costs and the

                                       24
<PAGE>

basis for determination of such amount, submitted by Issuing Bank to Borrower,
shall, in the absence of manifest error, be conclusive and binding on Borrower
for purposes of this Agreement. In the event Borrower shall fail to pay any
amount due under this Section, the interest payable by Issuing Bank to the
Lenders on their Funded LC Credit-Linked Deposits under Section 2.8.2(b) shall
be correspondingly reduced and the Lenders shall without further act succeed,
ratably in accordance with their Proportionate Shares, to the rights of Issuing
Bank with respect to such amount.

                  (iii) If Issuing Bank shall make any Funded LC Disbursement,
and Borrower has not reimbursed Issuing Bank for such Funded LC Disbursement by
1:00 p.m. on the date that is two Banking Days after the date such Funded LC
Disbursement is made (it being acknowledged and agreed that Borrower is
obligated to make such reimbursement only on the Maturity Date), on such date,
Administrative Agent shall notify each Lender of the applicable unreimbursed
Funded LC Disbursement and such Lender's Proportionate Share thereof, and
Issuing Bank shall promptly withdraw amounts from the Credit-Linked Deposit
Account to reimburse itself each Lender's Proportionate Share of such Funded LC
Disbursement from such Lender's Funded LC Credit-Linked Deposit (or from funds
of Issuing Bank as contemplated by the sixth sentence of Section 2.8.2(c)(ii)).
Promptly following receipt by Administrative Agent of any payment pursuant to
Sections 2.8.2(d) (i) or (ii) in respect of any Funded LC Disbursement,
Administrative Agent shall distribute such payment to Issuing Bank or, to the
extent payments have been made from the Funded LC Credit-Linked Deposits or from
funds of Issuing Bank to reimburse itself in connection with an unreimbursed
Funded LC Disbursement, to the Credit-Linked Deposit Account to be added to the
Funded LC Credit-Linked Deposits of the Lenders in accordance with their
respective Proportionate Share or to reimburse Issuing Bank, as the case may be.
Any payment made from the Credit-Linked Deposit Account, or from funds of
Issuing Bank, pursuant to this Section to reimburse Issuing Bank for any Funded
LC Disbursement shall not constitute a Term Loan and shall not relieve Borrower
of its obligation, if any, to reimburse such Funded LC Disbursement.

            (e) Obligations Absolute. Borrower's obligation to reimburse Funded
LC Disbursements as provided in Section 2.8.2(d) shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of the Power Purchase
Agreement, the PSCo Letter of Credit or this Agreement, or any term or provision
therein, (ii) any draft or other document presented under the PSCo Letter of
Credit proving to be forged, fraudulent or invalid in any respect or any
statement therein being untrue or inaccurate in any respect, (iii) payment by
Issuing Bank under the PSCo Letter of Credit against presentation of a draft or
other document that does not comply with the terms of such PSCo Letter of
Credit, or (iv) any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions of this
Section 2.8.2(e), constitute a legal or equitable discharge of, or provide a
right of setoff against, Borrower's obligations hereunder. None of
Administrative Agent, the Lenders, Issuing Bank or any of their Related Parties
shall have any liability or responsibility by reason of or in connection with
the issuance or transfer of the PSCo Letter of Credit or any payment or failure
to make any payment thereunder (irrespective of any of the circumstances
referred to in the preceding sentence), or any error, omission, interruption,
loss or delay in transmission or delivery of any draft, notice or other
communication under or relating to the PSCo Letter of Credit (including any
document required

                                       25

<PAGE>

to make a drawing thereunder), any error in interpretation of technical terms or
any consequence arising from causes beyond the control of Issuing Bank; provided
that the foregoing shall not be construed to excuse Issuing Bank from liability
to Borrower to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrower to the
extent permitted by applicable law) suffered by Borrower that are caused by
Issuing Bank's failure to exercise care when determining whether drafts and
other documents presented under the PSCo Letter of Credit comply with the terms
thereof. The parties hereto expressly agree that, in the absence of gross
negligence or wilful misconduct on the part of Issuing Bank (as finally
determined by a court of competent jurisdiction), Issuing Bank shall be deemed
to have exercised care in each such determination. In furtherance of the
foregoing and without limiting the generality thereof, the parties agree that,
with respect to documents presented which appear on their face to be in
substantial compliance with the terms of the PSCo Letter of Credit, Issuing Bank
may, in its sole discretion, either accept and make payment upon such documents
without responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
PSCo Letter of Credit.

            (f) Disbursement Procedures. Issuing Bank shall, promptly following
its receipt thereof, examine all documents purporting to represent a demand for
payment under the PSCo Letter of Credit. Issuing Bank shall promptly notify, in
accordance with Section 11.1, Administrative Agent and Borrower by telephone
(confirmed by telecopy) of such demand for payment and whether Issuing Bank has
made or will make a Funded LC Disbursement thereunder; provided that any failure
to give or delay in giving such notice shall not relieve Borrower of its
obligation to reimburse Issuing Bank and the Lenders with respect to any such
Funded LC Disbursement.

            (g) Interim Interest. If Issuing Bank shall make any Funded LC
Disbursement, then, unless Borrower shall reimburse such Funded LC Disbursement
in full on the date such Funded LC Disbursement is made, in each case the unpaid
amount thereof shall bear interest, for each day from and including the date
such Funded LC Disbursement is made to but excluding the date that Borrower
reimburses such Funded LC Disbursement or Issuing Bank reimburses such Funded LC
Disbursement with funds held in the Credit-Linked Deposit Account, at the LIBO
Rate for the Interest Period at the time in effect for the Funded LC
Credit-Linked Deposits plus 4.25% per annum; provided that, if Borrower fails to
reimburse such Funded LC Disbursement when due pursuant to Section 2.8.2(d),
then Section 2.3.3 shall apply. Interest accrued pursuant to this Section
2.8.2(g) shall be for the account of Issuing Bank, except that interest accrued
on and after the date of payment from the Funded LC Credit-Linked Deposit of any
Lender (or with funds of Administrative Agent pending the application of such
Funded LC Credit-Linked Deposit) to reimburse Issuing Bank shall be for the
account of such Lender or Administrative Agent, as applicable, to the extent of
such payment.

                                   ARTICLE 3
                              CONDITIONS PRECEDENT

      3.1 CONDITIONS PRECEDENT TO THE CLOSING DATE.

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<PAGE>

            The obligation of each Lender to make its Term Loans and to fund its
Funded LC Credit-Linked Deposits under this Agreement, and the obligation of
Issuing Bank to issue the PSCo Letter of Credit, is subject to the prior
satisfaction of each of the following conditions (unless waived in writing by
Administrative Agent with the consent of the Lenders) (the date such conditions
precedent are so satisfied or waived and the date the Term Loans and Funded LC
Credit-Linked Deposits are made hereunder and the PSCo Letter of Credit is
issued by Issuing Bank herewith being referred to as the "Closing Date"):

            3.1.1 Resolutions. Delivery to Administrative Agent of a copy of one
or more resolutions or other authorizations, in form and substance reasonably
satisfactory to Administrative Agent, of Borrower, Riverside Borrower and
Operator (the "Calpine Entities") as of the Closing Date certified by a
Responsible Officer of each such Calpine Entity as being in full force and
effect on the Closing Date, authorizing, as applicable and among other things,
the Borrowing herein provided for, the granting of the Liens under the
Collateral Documents and the execution, delivery and performance of this
Agreement and the other Operative Documents and any instruments or agreements
required hereunder or thereunder to which such Calpine Entity is a party.

            3.1.2 Incumbency. Delivery to Administrative Agent of a certificate,
in form and substance reasonably satisfactory to Administrative Agent, from each
Calpine Entity signed by the appropriate authorized officer or manager of each
such Calpine Entity and dated as of the Closing Date, as to the incumbency of
the natural Persons authorized to execute and deliver this Agreement and the
other Operative Documents and any instruments or agreements required hereunder
or thereunder to which such Calpine Entity is a party.

            3.1.3 Formation Documents. Delivery to Administrative Agent of:

            (a) copies of the articles of incorporation, certificate of
incorporation, charter or other state certified constituent documents of each
Calpine Entity, certified by the secretary of state of such Calpine Entity's
state of incorporation or formation, as applicable; and

            (b) copies of the bylaws, limited liability company operating
agreement or other comparable constituent documents, if applicable, of each
Calpine Entity, certified by a Responsible Officer of such Calpine Entity as
being true, correct and complete on the Closing Date.

            3.1.4 Good Standing Certificates. Delivery to Administrative Agent
of certificates issued by (a) the secretary of state of the state in which each
Calpine Entity is formed or incorporated, as applicable, and (b) in the case of
Borrower and Operator, the Secretary of State of Colorado, in each case (i)
dated a date reasonably close to the Closing Date and (ii) certifying that such
Calpine Entity is in good standing and is qualified to do business in, and has
paid all franchise taxes or similar taxes due to, such states.

            3.1.5 Third Party Approvals. Administrative Agent shall have
received all information and copies of all documents and copies of any approval
by any Person (including any Governmental Authority) reasonably required in
connection with any transaction herein

                                       27

<PAGE>

contemplated or contemplated in any other Credit Document, which Administrative
Agent may reasonably have requested in connection herewith.

            3.1.6 Credit Documents and Project Documents. Delivery to
Administrative Agent of (a) executed originals of this Agreement and each other
Credit Document to be executed on the Closing Date (including the Notes (if
any), the Security Agreement, the Pledge Agreement, the Intercreditor Agreement,
the Mortgage, the Depositary Agreement, the Assignment of Rents, the Assignment
of Water Lease, the PSCo Acknowledgment of Subordination, the Subordination
Agreements, but excluding the Consents, the delivery of which is provided for
under Section 3.1.31), any supplements or amendments thereto and a copy of the
issued PSCo Letter of Credit, all of which shall be in form and substance
reasonably satisfactory to the Lenders, and (b) a certified list of, and true,
correct and complete copies of, each Major Project Document executed on or prior
to the Closing Date, each in form and substance reasonably satisfactory to the
Lenders, and, in each case, all of which shall have been duly authorized,
executed and delivered by the parties thereto, and all of which Major Project
Documents shall be certified by a Responsible Officer of Borrower as being true,
complete and correct and in full force and effect on the Closing Date pursuant
to the certificate delivered pursuant to Section 3.1.7 below.

            3.1.7 Certificate of Borrower. Delivery to Administrative Agent of a
certificate, dated as of the Closing Date, duly executed by a Responsible
Officer of Borrower, in substantially the form of Exhibit F-1, which certificate
shall, among other things, (a) state that neither Borrower nor, to Borrower's
knowledge, any other party to any Major Project Document is or, but for the
passage of time or giving of notice or both will be, in breach of any material
obligation thereunder, (b) state that all conditions precedent to the
performance of Borrower, and, to Borrower's knowledge, all conditions precedent
to the performance of the other parties under such Major Project Documents then
required to have been performed shall have been satisfied, (c) state that the
representations and warranties of Borrower in this Agreement and the other
Credit Documents are true and correct as of the Closing Date (except to the
extent such representation or warranty relates to an earlier date), (d) state
that Borrower has complied with all agreements and satisfied all conditions (or
such conditions have been waived) on its part to be performed or satisfied
hereunder at or prior to the Closing Date, (e) state that, subsequent to
December 31, 2003, no Material Adverse Effect has occurred and is continuing
except as set forth in or contemplated by the Bank Book or otherwise disclosed
in writing to Administrative Agent prior to the Closing Date, (f) state that
Borrower is Solvent and (g) contain each other certification required to be made
by a Responsible Officer of Borrower on the Closing Date pursuant to Sections
3.1.6(b), 3.1.18 and 3.1 36.

            3.1.8 Legal Opinions. Delivery to Administrative Agent of legal
opinions of counsel to the Calpine Entities and, unless otherwise consented to
by Administrative Agent, each Major Project Participant, in each case in form
and substance reasonably satisfactory to the Lenders.

            3.1.9 Certificate and Report of Insurance Consultant. Delivery to
Administrative Agent of the Insurance Consultant's certificate, dated as of the
Closing Date and in substantially the form of Exhibit F-2, together with the
Insurance Consultant's report, in form and substance reasonably satisfactory to
the Lenders, attached thereto.

                                       28

<PAGE>

            3.1.10 Insurance. Insurance complying with terms and conditions set
forth in Exhibit K shall be in full force and effect and Administrative Agent
and the Insurance Consultant shall have received a certificate from Borrower's
insurance broker(s), dated as of the Closing Date and in form and substance
reasonably satisfactory to Administrative Agent, (a) identifying underwriters,
type of insurance, insurance limits and policy terms, (b) listing the special
provisions required as set forth in Exhibit K, (c) describing the insurance
obtained and (d) stating that such insurance is in full force and effect and
that all premiums then due thereon have been paid and that, in the opinion of
such broker(s), such insurance complies with the terms and conditions set forth
in Exhibit K.

            3.1.11 Certificate and Report of the Independent Engineer. Delivery
to Administrative Agent of the Independent Engineer's certificate, dated as of
the Closing Date and in substantially the form of Exhibit F-3, together with the
Independent Engineer's report, in form and substance reasonably satisfactory to
the Lenders, attached thereto.

            3.1.12 Reports of Borrower's Environmental Consultant. Delivery to
Administrative Agent of the Environmental Reports along with the corresponding
reliance letters, each in form and substance reasonably satisfactory to the
Lenders.

            3.1.13 Certificate and Report of Power Market Consultant. Delivery
to Administrative Agent of the Power Market Consultant's certificate, dated as
of the Closing Date and in substantially the form of Exhibit F-4, together with
the Power Market Consultant's report, in form and substance reasonably
satisfactory to the Lenders, attached thereto.

            3.1.14 Schedule of Applicable Permits and Applicable Third Party
Permits.

            (a) Delivery to Administrative Agent of Exhibit G-1, the schedule of
(i) Permits required by Borrower to lease, own and operate the Project and (ii)
all Permits that to Borrower's knowledge are required to be obtained by any
Person (other than Borrower) that is party to any Major Project Document or
Credit Document in order to perform such Person's obligations thereunder (other
than Permits necessary to conduct its business generally and to maintain its
existence and good standing), in form and substance reasonably satisfactory to
Administrative Agent. Borrower shall also deliver to Administrative Agent copies
of each Permit listed in Part I(A) of Exhibit G-1 in form and substance
reasonably satisfactory to the Administrative Agent. Except as disclosed in
Exhibit G-1, each Applicable Permit listed in Part I(A) of Exhibit G-1 shall (A)
constitute in Administrative Agent's reasonable opinion all of the Applicable
Permits as of the Closing Date, (B) have been duly obtained or been assigned in
Borrower's name, (C) be in full force and effect, (D) not be subject to any
current legal proceeding and (E) not be subject to any Unsatisfied Condition
that could reasonably be expected to result in material modification or
revocation of such Applicable Permit, and all applicable appeal periods with
respect to each such Applicable Permit shall have expired.

            (b) Each Major Project Participant shall have duly obtained or have
been assigned in the name of such Major Project Participant each Permit listed
in Part I(B) of Exhibit G-1. Each Applicable Third Party Permit listed in Part
I(B) of Exhibit G-1 shall (i) be in full force and effect, (ii) not be subject
to any current legal proceeding and (iii) not be subject to any Unsatisfied
Condition that could reasonably be expected to result in material modification
or

                                       29

<PAGE>

revocation of such Applicable Third Party Permit, and all applicable appeal
periods with respect to each such Applicable Third Party Permit shall have
expired.

            (c) Part II(A) of Exhibit G-1 shall list all other Permits that are
not Applicable Permits (as of the Closing Date) required by Borrower to lease,
own and operate the Project as contemplated by the Operative Documents. Part
II(B) of Exhibit G-1 shall list all other material Permits that to Borrower's
knowledge are required to be obtained by any other Person (other than Borrower)
that is a party to any Major Project Document or Credit Document (other than
Permits necessary to conduct its business generally and maintain its existence
and good standing) to perform its obligations under the Major Project Documents
or Credit Documents to which it is a party. The Permits listed in Part II of
Exhibit G-1 shall, in the Administrative Agent's reasonable opinion, be timely
obtainable (i) on or before the date Borrower or the applicable other Person (as
identified in Exhibit G-1) requires such Permit, and (ii) without expense
materially in excess of the amounts provided therefor in the Base Case Project
Projections by Borrower or such other Person.

            (d) Except as disclosed in Exhibit G-1, the Permits listed in Part I
of Exhibit G-1 shall not be subject to any restriction, condition, limitation or
other provision which could reasonably be expected to have a Material Adverse
Effect or result in the Project being operated in a manner substantially
inconsistent with the assumptions underlying the Base Case Project Projections.

            3.1.15 No Change in Tax Laws. No change shall have occurred, since
the date upon which this Agreement was executed and delivered, in any law or
regulation or interpretation thereof that would subject any Lender to any
material unreimbursed Tax or Other Tax.

            3.1.16 Absence of Litigation. No action, suit, proceeding or
investigation shall have been instituted or threatened in writing against
Borrower. No action, suit, proceeding or investigation shall have been
instituted or threatened in writing against any other Major Project Participant
that (for purposes of this Section 3.1.16, in Administrative Agent's sole
discretion) could reasonably be expected to have a Material Adverse Effect.

            3.1.17 Payment of Fees. All taxes, fees and other costs payable in
connection with the execution, delivery, recordation and filing of the documents
and instruments referred to in this Section 3.1 and due on the Closing Date
shall have been paid in full or, as approved by the Lenders, provided for.
Borrower shall have paid (or caused to be paid) all outstanding amounts due, as
of the Closing Date, and owing to (a) the Lenders, Administrative Agent, Issuing
Bank, Collateral Agent, or Lead Arranger under any fee or other letter or
pursuant to Section 2.2, (b) the Lenders' attorneys and consultants (including
the Independent Consultants) and the Title Insurer for all services rendered and
billed prior to the Closing Date, (c) the Depositary Agent under the Depositary
Agreement, and (d) Administrative Agent for any other amounts required to be
paid or deposited by Borrower on the Closing Date.

            3.1.18 Financial Statements. Delivery to Administrative Agent of
accurate and complete copies of the most recent (a) audited annual financial
statements or Form 10-K of the Sponsor for the year ended December 31, 2003, (b)
unaudited quarterly financial statements or

                                       30

<PAGE>

Form 10-Q of Borrower and the Sponsor for the fiscal quarter ended on March 31,
2004, and (c) unaudited pro forma balance sheet of Borrower, together with, in
the case of Borrower, a certificate from the appropriate Responsible Officer
thereof, dated as of the Closing Date and in substantially the form of Exhibit
F-1, stating that no material adverse change in the consolidated assets,
liabilities, operations or financial condition of such Person has occurred from
those set forth in the most recent financial statements provided to
Administrative Agent.

            3.1.19 Release; Security; UCC Filings.

            (a) Release. Collateral Agent shall have received:

                  (i) certified copies of Uniform Commercial Code Requests for
Information or Copies (Form UCC-11), or a similar search report certified by a
party acceptable to Collateral Agent, dated a date reasonably near to the
Closing Date, listing all effective Financing Statements which name Borrower,
Pledgor or Riverside Borrower (under its present names or any previous name) as
the debtor, together with copies of such Financing Statements (none of which
shall cover any Collateral, other than Financing Statements that evidence (A)
Liens granted in connection with the Existing Rocky Mountain Credit Facility or
(B) Liens permitted to exist hereunder after the Closing Date);

                  (ii) appropriately completed copies, which have been duly
authorized for filing by the appropriate Person, of each UCC Financing Statement
Amendment (Form UCC-3) termination statement, if any, necessary to release all
Liens of any Person in any Collateral previously granted by Borrower, Pledgor or
Riverside Borrower to the extent not permitted under the Credit Documents after
the Closing Date (including (A) Liens granted in connection with the Existing
Rocky Mountain Credit Facility and (B) other existing Liens which are not
permitted hereunder after the Closing Date);

                  (iii) such releases, reconveyances, satisfactions or other
instruments as it may reasonably request to confirm the release, satisfaction
and discharge in full of all mortgages and deeds of trust at any time delivered
by Borrower, Pledgor or Riverside Borrower to secure any Obligations in respect
of the Existing Rocky Mountain Credit Facility, duly executed, delivered and
acknowledged in recordable form by the grantee named therein or its of record
successors or assigns; and

                  (iv) a letter or letters (in form and substance reasonably
satisfactory to Administrative Agent) addressed to Collateral Agent and
Administrative Agent executed and delivered by the Existing Rocky Mountain
Administrative Agent, stating the aggregate amount (the "Payout Amount")
required to pay in full in cash on the Closing Date all outstanding Obligations
under or in respect of the Existing Rocky Mountain Credit Facility.

            (b) Security. Collateral Agent shall have received:

                  (i) appropriately completed copies, which have been duly
authorized for filing by the appropriate Person, of Uniform Commercial Code
Financing Statements or fixture filings naming, as applicable, Borrower or
Riverside Borrower as a debtor and Collateral Agent as the secured party, or
other similar instruments or documents to be filed under the UCC of all
jurisdictions as may be necessary or, in the reasonable opinion of Collateral
Agent and its

                                       31

<PAGE>

counsel, desirable to perfect the security interests of the Secured Parties
pursuant to the Collateral Documents;

                  (ii) (A) certificates from Riverside Borrower (which
certificates shall be accompanied by irrevocable undated stock powers or
transfer documents, duly endorsed in blank and otherwise satisfactory in form
and substance to Collateral Agent) representing all limited liability company
membership interests pledged to the Secured Parties by Riverside Borrower
pursuant to the Collateral Documents and (B) all promissory notes or other
instruments (duly endorsed, where appropriate, in a manner reasonably
satisfactory to Collateral Agent) evidencing any Collateral; and

                  (iii) such other documents and instruments as Collateral Agent
may reasonably request in order to grant and, subject to the Intercreditor
Agreement, perfect the security interests contemplated by the Collateral
Documents

            (c) Filing. All Uniform Commercial Code Financing Statements (Forms
UCC-1) or other similar Financing Statements and UCC Financing Statement
Amendments (Forms UCC-3) required pursuant to clauses (a) and (b) above
(collectively, the "Financing Statements") shall have been filed or recorded or
delivered to Collateral Agent for filing or recording.

            3.1.20 Annual Operating Budget. Delivery to Administrative Agent of
a budget in substantially the form of Exhibit G-2 (the "Initial Operating
Budget") for all anticipated O&M Costs and Project Revenues for the period from
the Closing Date through December 31, 2004, which Initial Operating Budget shall
be satisfactory to the Lenders.

            3.1.21 Base Case Project Projections. Delivery to Administrative
Agent of the Base Case Project Projections of operating expenses and cash flow
for the Project for the period commencing on the Closing Date and ending on
December 31, 2023, which Base Case Project Projections shall be in substantially
the form of Exhibit G-3 and otherwise in form and substance satisfactory to the
Lenders.

            3.1.22 No Material Adverse Change. Since December 31, 2003, no
Material Adverse Effect has occurred and is continuing.

            3.1.23 A.L.T.A. Surveys. Administrative Agent shall have received:

            (a) as-built A.L.T.A. surveys of the Site and, subject to Section
3.1.23(b), the Easements, in each case in form and substance reasonably
satisfactory to Administrative Agent and the Title Insurer, certified to
Borrower, Administrative Agent and the Title Insurer as to completeness and
accuracy as of a date that is not more than 30 days prior to the Closing Date by
a licensed Colorado surveyor reasonably satisfactory to Administrative Agent,
showing, among other things, (i) the location and dimensions of the Site and,
subject to Section 3.1.23(b), the Easements, including the location of all means
of access thereof and all easements and encumbrances relating thereto; (ii) the
location and dimensions of all improvements and encroachments located in or on
the Site and, subject to Section 3.1.23(b), the Easements; (iii) the existing
utility facilities which service the Project and are necessary to its operation
(including, as applicable, water, electricity, fuel, telephone, sanitary sewer
and storm water distribution and detention facilities); (iv) that the location
of the Project and any improvements relating thereto do

                                       32
<PAGE>

not encroach on or interfere in any manner that may be unpermitted or may
violate the rights of third parties with adjacent property or existing
easements, encumbrances or other rights of third parties (whether on, above or
below ground), and that there are no gaps, gores, projections, protrusions or
other survey defects affecting the Site or, subject to Section 3.1.23(b), the
Easements; (v) whether the Site and, subject to Section 3.1.23(b), the
Easements, or any portion thereof, are located in a special earthquake or flood
hazard zone; and (vii) that no other matters constituting a defect in title
exist other than relevant Title Exceptions; and

            (b) in lieu of providing as-built A.L.T.A. surveys of the Easements
(or any portion thereof) and at Borrower's election, one or more certificates
satisfactory to Administrative Agent dated as of a date that is not more than 30
days prior to the Closing Date, from a licensed third party engineering firm or
surveyor satisfactory to Administrative Agent, confirming that the applicable
Easements provide contiguous real property interests sufficient for the
operation and maintenance of all lateral facilities constructed or installed
within such Easements and that all such lateral facilities have been constructed
or installed within the boundaries of such Easements.

            3.1.24 A.L.T.A. Title Policy. Delivery to Administrative Agent of a
lender's A.L.T.A. extended coverage policy of title insurance (with, in the case
of the Easements, which were not included in the A.L.T.A. survey, standard
coverage exceptions reasonably acceptable to Administrative Agent) but without a
creditors' rights or mechanics' lien exception included therein (except where
applicable Governmental Rules prevent the deletion of the mechanics' lien
exception, in which case the Sponsor shall provide the Title Insurer with any
affidavits or indemnities (with respect to which Borrower shall have no
reimbursement obligations) necessary to cause the Title Insurer to issue
affirmative coverage with respect to any risk arising due to mechanics' liens in
form and substance reasonably satisfactory to Administrative Agent), together
with such endorsements thereto as are reasonably required by Administrative
Agent, or the unconditional and irrevocable commitment of the Title Insurer to
issue such a policy, dated as of the Closing Date, in an amount equal to
$200,000,000 (with such reinsurance arrangements as are reasonably satisfactory
to Administrative Agent) issued by the Title Insurer in form and substance
satisfactory to Administrative Agent, insuring (or agreeing to insure) that:

            (a) Borrower has a good, marketable and insurable (i) fee simple
interest in the Site and (ii) easement or other applicable real property
interests in the Easements (except that title to certain of the Easements that
are licenses may not be insurable), in each case free and clear of Liens,
encumbrances or other exceptions to title, other than (A) the Title Exceptions
and (B) such Liens, encumbrances or other exceptions to title as are reasonably
satisfactory to Administrative Agent; and

            (b) the Mortgage is (or will be when recorded) a valid first lien on
Borrower's interest in the Mortgaged Property, free and clear of all Liens,
encumbrances and exceptions to title whatsoever, other than (i) the Title
Exceptions and (ii) such Liens, encumbrances or other exceptions to title as are
reasonably satisfactory to Administrative Agent.

            3.1.25 Real Estate Rights. Borrower and each other Major Project
Participant shall have obtained and shall hold all easements or other possessory
rights in real estate, together with necessary real property permits and
crossing rights (collectively, "Rights of Way")

                                       33

<PAGE>

necessary for (a) performance in full of each such Person's obligations under
the Operative Documents to which such Person is a party and each Permit to which
such Person or its assets is bound by, and (b) the leasing, operation and
maintenance of the Project in accordance with the Base Case Project Projections.
The use of such Rights of Way shall not encroach on or interfere in any manner
that may be unpermitted or may violate the rights of third parties with property
adjacent to such Rights of Way or existing easements or other rights (whether
on, above or below ground) and the full length of the Rights of Way shall be
continuous, without break, gap or interruption.

            3.1.26 Regulatory Status. Delivery to Administrative Agent of (a) an
order issued by FERC confirming that the Project is an Eligible Facility and
that Borrower is an EWG, (b) an order issued by FERC authorizing Borrower to
sell electricity at market-based rates and (c) all necessary approvals from any
Governmental Authority in respect of the PSCo Interconnection Agreement and the
Power Purchase Agreement, to the extent applicable, and as to Riverside
Borrower's acquisition of 100% of the ownership interests of Borrower.

            3.1.27 Establishment of Accounts; Initial Funding. The Accounts
required to be established as of the Closing Date for the Project under the
Depositary Agreement shall have been established to the satisfaction of
Administrative Agent, Administrative Agent shall have established the
Credit-Linked Deposit Account and, on the Closing Date, (a) Borrower shall
deposit or cause to be deposited (i) $1,304,000 in the O&M Account, which amount
shall be applied from time to time after the Closing Date in accordance with
Section 3.3.2 of the Depositary Agreement, (ii) $17,511,000 in the Pre-Funded
Punchlist Expense Account, which amount shall be applied from time to time after
the Closing Date in accordance with Section 3.1.2 of the Depositary Agreement
and (b) the Lenders shall have deposited with Administrative Agent $28,100,000
in the Credit-Linked Deposit Account for application in accordance with Section
2.8.2.

            3.1.28 Representations and Warranties. Each representation and
warranty of Borrower and each other Calpine Entity under the Credit Documents
shall be true and correct as of the Closing Date.

            3.1.29 No Default. No Event of Default or Inchoate Default shall
have occurred and be continuing as of the Closing Date.

            3.1.30 Utilities. Delivery to Administrative Agent of reasonably
satisfactory evidence that all potable water, sewer, telephone, electric and all
other utility services necessary for the ownership, operation and maintenance of
the Project are either contracted for, or readily available on commercially
reasonable terms, at the Project.

            3.1.31 Consents. Delivery to Administrative Agent of executed
Consents from each of the Major Project Participants as set forth on Exhibit
E-2, which Consents shall be reasonably satisfactory to Administrative Agent.

            3.1.32 Process Agents. Delivery to Administrative Agent of evidence
reasonably acceptable to Administrative Agent that each Calpine Entity has
appointed Corporation Service Company as its respective agent for service of
process in the State of New

                                       34

<PAGE>

York in respect of each Credit Document to which such Person is a party which is
governed by the laws of the State of New York.

            3.1.33 Ratings. The credit facilities set forth herein shall have
received ratings by S&P and Moody's.

            3.1.34 Notice of Borrowing and LC Activity. Administrative Agent
shall have received a fully executed and delivered Notice of Borrowing and LC
Activity from Borrower at least three Banking Days prior to the Closing Date.

            3.1.35 Anti-Terrorism Compliance. At least two Banking Days prior to
the Closing Date, Administrative Agent shall have received all documentation and
other information requested by Administrative Agent, which is required by bank
regulatory authorities under applicable "know your customer" and anti-money
laundering rules and regulations, including the U.S.A. Patriot Act.

            3.1.36 Achievement of Commercial Operation. (a) The Project is able
to operate and produce electrical energy for commercial sale in accordance with
Prudent Utility Practices, applicable Legal Requirements and consistent with the
Base Case Project Projections, and (b) the "Commercial Operation Date" (as
defined in the Power Purchase Agreement) has occurred.

            3.1.37 Conditions Precedent to Closing - Riverside Project.
Riverside Borrower shall have concurrently satisfied each of the conditions set
forth in Section 3.1 of the Riverside Credit Agreement and the Lenders
thereunder shall, concurrent with the funding of the Term Loan hereunder, fund
the "Term Loans" under the Riverside Credit Agreement.

            3.1.38 Disbursement Authorization Letter. Borrower and
Administrative Agent shall have executed and delivered a disbursement
authorization letter, in form and substance reasonably satisfactory to
Administrative Agent, pursuant to which, among other things, (a) Borrower shall
have authorized the disbursement of the proceeds of the Term Loans in a manner
consistent with Section 2.1.5 and Exhibit G-2, (b) Borrower shall have
authorized Administrative Agent to disburse the Payout Amount directly to the
Existing Rocky Mountain Administrative Agent, (c) Borrower shall have authorized
Administrative Agent to deposit the amounts specified in Section 3.1.27 directly
into the applicable Accounts referred to therein and (d) Borrower shall have
authorized Administrative Agent to disburse amounts owing to Administrative
Agent, Collateral Agent, Lead Arranger and each other applicable Person pursuant
to Section 3.1.17.

            3.1.39 PSCo Security Fund. The PSCo Security Fund shall have been
provided to PSCo in compliance with all applicable requirements under the Power
Purchase Agreement and shall be in full force and effect.

            3.1.40 Colorado Recordation. In addition to the filings and
recordings contemplated by Exhibit D-6, the PSCo Acknowledgement of
Subordination shall have been recorded with the recording office of Weld County,
Colorado to the satisfaction of Administrative Agent.

                                       35

<PAGE>

                                   ARTICLE 4
                         REPRESENTATIONS AND WARRANTIES

            Borrower makes the following representations and warranties to and
in favor of Administrative Agent, Collateral Agent, Issuing Bank, Lead Arranger
and the Lenders as of the Closing Date (unless such representation and warranty
expressly relates solely to another time), all of which shall survive the
Closing Date and the making of the Term Loans, the funding of the Funded LC
Credit-Linked Deposits and the issuance of the PSCo Letter of Credit:

      4.1   ORGANIZATION.

            Borrower is (a) a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware and (b) is
duly qualified as a foreign limited liability company, and is in good standing,
in each jurisdiction in which such qualification is required by law. Borrower
has all requisite limited liability company power and authority to (i) own or
hold under lease and operate the property it purports to own or hold under
lease, (ii) carry on its business as now being conducted and as now proposed to
be conducted in respect of the Project, (iii) execute, deliver and perform each
Operative Document to which it is a party and (iv) take each action as may be
necessary to consummate the transactions contemplated thereunder. As of the
Closing Date, the Riverside Borrower is the sole member of Borrower.

      4.2   AUTHORIZATION; NO CONFLICT.

            Borrower has duly authorized, executed and delivered each Operative
Document to which Borrower is a party (or such Operative Documents have been
duly and validly assigned to Borrower and Borrower has authorized the assumption
thereof, and has assumed the obligations of the assignor thereunder) and neither
Borrower's execution and delivery thereof nor its consummation of the
transactions contemplated thereby nor its compliance with the terms thereof (a)
does or will contravene the Governing Documents or any other Legal Requirement
applicable to or binding on Borrower or any of its properties which, in the case
of such Legal Requirements, could reasonably be expected to have a Material
Adverse Effect, (b) does or will contravene or result in any breach of or
constitute any default under, or result in or require the creation of any Lien
(other than Permitted Liens) upon any of its property under, any material
agreement or instrument to which it is a party or by which it or any of its
properties may be bound or affected or (c) does or will require the material
consent or approval of any Person, and with respect to any Governmental
Authority, does or will require any material registration with, or notice to, or
any other action of, with or by any applicable Governmental Authority, in each
case which has not already been obtained and disclosed in writing to
Administrative Agent (except as set forth on Exhibit G-1 or otherwise provided
in Sections 4.9.1 and 4.9.2).

      4.3   ENFORCEABILITY.

            Each of the Operative Documents to which Borrower is a party is a
legal, valid and binding obligation of Borrower, enforceable against Borrower in
accordance with its terms, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency,

                                       36

<PAGE>

moratorium, reorganization or other similar laws affecting the enforcement of
creditors' rights or by the effect of general equitable principles (regardless
of whether such enforceability is considered in a proceeding in equity or at
law).

      4.4   COMPLIANCE WITH LAW.

            There are no material violations by Borrower or, to Borrower's
knowledge, any Calpine Entity, of any Legal Requirement (including any Hazardous
Substance Laws). No notices of any material violation of any Legal Requirement
(including any Hazardous Substance Laws) relating to the Project or the Site
have been issued, entered or received by Borrower or, to Borrower's knowledge,
any Calpine Entity.

      4.5   BUSINESS, DEBT, CONTRACTS, JOINT VENTURES ETC.

            4.5.1 Borrower has not conducted any business other than the
business contemplated by the Operative Documents and, through the Closing Date,
the Existing Rocky Mountain Credit Agreement, does not have any outstanding Debt
or other material liabilities other than pursuant to or allowed by the Operative
Documents, and Borrower is not a party to or bound by any material contract
other than the Credit Documents and the Major Project Documents to which it is a
party.

            4.5.2 Borrower is not a general partner or a limited partner in any
general or limited partnership or a joint venturer in any joint venture.

            4.5.3 Borrower does not have any Subsidiaries.

      4.6   ANTI-TERRORISM LAWS.

            4.6.1 To the best of its knowledge, neither Borrower nor any of its
Affiliates is in violation of (a) any of the foreign assets control regulations
of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as
amended) or any enabling legislation or executive order relating thereto, (b)
Executive Order No. 13,224, 66 Fed Reg 49,079 (2001), issued by the President of
the United States (Executive Order Blocking Property and Prohibiting
Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism)
(the "Executive Order") or (c) the anti-money laundering provisions of the
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, Public Law
107-56 (October 26, 2001) amending the Bank Secrecy Act, 31 U.S.C. Section 5311
et seq (collectively, "Anti-Terrorism Laws").

            4.6.2 To the best of its knowledge, neither Borrower nor any of its
Affiliates is any of the following:

            (a) a Person that is listed in the annex to, or is otherwise subject
to the provisions of, the Executive Order;

            (b) a Person owned or controlled by, or acting for or on behalf of,
any Person that is listed on the Annex to, or is otherwise subject to the
provisions of, the Executive Order;

                                       37

<PAGE>

            (c) a Person with whom Borrower is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law;

            (d) a Person who commits, threatens or conspires to commit or
supports "terrorism" as defined in the Executive Order; or

            (e) a Person that is named as a "specially designated national or
blocked person" on the most current list published by the U.S. Treasury
Department Office of Foreign Asst Control at its official website or any
replacement website or other replacement official publication of such list.

            4.6.3 To the best of its knowledge, neither Borrower nor any of its
Affiliates (a) conducts any business or engages in making or receiving any
contribution of funds, goods or services to or for the benefit of any Person
described in clause (a), (b), (c) or (d) of Section 4.6.2 or clause (d) of
Section 4.6.2; (b) deals in, or otherwise engages in any transaction relating
to, any property or interest in property blocked pursuant to the Executive
Order, or (c) engages in or conspires to engage in any transaction that evades
or avoids, or has the purposes of evading or avoiding, or attempts to violate,
any of the prohibitions set forth in any Anti-Terrorism Law.

            4.6.4 No broker or other similar agent (other than the Lead
Arranger) is acting for the benefit of Borrower or any of its Affiliates, or
benefiting in any capacity, in each case in connection with the Credit
Documents.

      4.7   INVESTMENT COMPANY ACT.

            Neither Borrower nor any other Calpine Entity is an investment
company or a company controlled by an investment company, within the meaning of
the Investment Company Act of 1940, as amended.

      4.8   ERISA.

            Either (a) there are no ERISA Plans or Multiemployer Plans for any
Calpine Entity or any ERISA Affiliate or (b) (i) each Calpine Entity and each
ERISA Affiliate have fulfilled their obligations (if any) under the minimum
funding standards of ERISA and the Code for each ERISA Plan, (ii) each such
ERISA Plan is in compliance in all material respects with the currently
applicable provisions of ERISA and the Code and (iii) neither any Calpine Entity
nor any ERISA Affiliate has incurred any liability to the PBGC or an ERISA Plan
or Multiemployer Plan under Title IV of ERISA (other than liability for premiums
due in the ordinary course). None of any Calpine Entity's assets constitute
assets of an employee benefit plan within the meaning of 29 C.F.R. Section
2510.3-101. Borrower does not maintain or contribute to, and is not obligated to
contribute to, nor has it at any point of its existence maintained or
contributed to, or been obligated to contribute to, any employee-benefit plan
subject to ERISA.

      4.9   PERMITS.

            4.9.1 There are no material Permits under existing Legal
Requirements as the Project is currently designed that are or will become
Applicable Permits other than the Permits

                                       38

<PAGE>

listed in Exhibit G-1 hereto. Except as disclosed in Exhibit G-1 (as so
supplemented), each Permit listed in Part I(A) of Exhibit G-1 is in full force
and effect and is not subject to any current legal proceeding or to any
Unsatisfied Condition that could reasonably be expected to have a Material
Adverse Effect, and all applicable appeal periods with respect thereto have
expired. Each Permit listed in Part II(A) of Exhibit G-1 is of a type that is
routinely granted upon submission of a timely application and demonstration that
the Project complies with applicable standards and Legal Requirements. No Permit
listed in Part II(A) is required under applicable Legal Requirement or Project
Documents to be obtained before the time contemplated to be obtained by
Borrower. No fact or circumstance exists, to Borrower's knowledge, which makes
it likely that any Permit identified in Part II(A) of Exhibit G-1 shall not be
timely obtainable by Borrower before it becomes an Applicable Permit without
expense materially in excess of amounts provided therefor in the Base Case
Project Projections. Borrower is in compliance in all material respects with all
Applicable Permits.

            4.9.2 To Borrower's knowledge, there are no Permits under existing
Legal Requirements as the Project is currently designed that are or will become
Applicable Third Party Permits other than the Permits listed in Exhibit G-1
hereto other than those, the failure of which to obtain could not reasonably be
expected to have a Material Adverse Effect. To Borrower's knowledge, except as
disclosed in Exhibit G-1, each Permit listed in Part I(B) of Exhibit G-1 is in
full force and effect and is not subject to current legal proceeding or to any
Unsatisfied Condition that could reasonably be expected to have a Material
Adverse Effect, and all applicable appeal periods with respect thereto have
expired. No fact or circumstance exists, to Borrower's knowledge, which makes it
likely that any Permit identified in Part II(B) of Exhibit G-1 shall not be
timely obtainable by the applicable Person as identified in Exhibit G-1 at a
cost consistent with the Base Case Project Projections before it becomes an
Applicable Third Party Permit. Except as disclosed in Exhibit G-1, to Borrower's
knowledge, each Person as identified in Exhibit G-1 possesses and is in
compliance in all material respects with its respective Applicable Third Party
Permits.

      4.10  HAZARDOUS SUBSTANCES.

            4.10.1 Except as set forth in Exhibit G-6: (a) Borrower, with
respect to the Site, Improvements or other Mortgaged Property, is not or has not
in the past been in violation of any Hazardous Substance Law which violation
could reasonably be expected to result in a material liability to Borrower or
its properties and assets or in an inability of Borrower to perform its
obligations under the Operative Documents; (b) neither Borrower nor, to
Borrower's knowledge, any other Person has used, Released, generated,
manufactured, produced or stored in, on, under, or about the Site, Improvements
or other Mortgaged Property, or transported thereto or therefrom, any Hazardous
Substances that could reasonably be expected to subject any Secured Party to
liability, or Borrower to material liability, under any Hazardous Substance Law;
(c) to Borrower's knowledge, there are no underground tanks, whether operative
or temporarily or permanently closed, located on the Site, Improvements or other
Mortgaged Property that could reasonably be expected to subject any Secured
Party to liability, or Borrower to material liability, under any Hazardous
Substance Law; (d) there are no Hazardous Substances used, stored or present at
or on the Site, Improvements or other Mortgaged Property, except in compliance
with Hazardous Substance Laws and other Legal Requirements or as disclosed in
the Environmental Reports; (e) to Borrower's knowledge, there are no Hazardous
Substances that

                                       39

<PAGE>

could reasonably be expected to migrate onto the Site, Improvements or other
Mortgaged Property that could reasonably be expected to impose on Borrower a
material liability, except as disclosed in the Environmental Reports; and (f) to
Borrower's knowledge there neither is nor has been any condition, circumstance,
action, activity or event that could reasonably be expected to be, or result in,
a material violation by Borrower of any Hazardous Substance Law, or to result in
liability to any Secured Party or material liability to Borrower under any
Hazardous Substance Law.

            4.10.2 Except as set forth on Exhibit G-5 or Exhibit G-6, there is
no pending or, to Borrower's knowledge, threatened in writing, action or
proceeding by any Governmental Authority (including the Colorado Public
Utilities Commission, Colorado Department of Natural Resources, Colorado
Department of Public Health and Environment, County of Weld, U.S. Army Corps of
Engineers and U.S. Environmental Protection Agency) or any other Person which is
not a Governmental Authority with respect to the presence or Release of
Hazardous Substances in, on, from or to the Site, Improvements or other
Mortgaged Property.

            4.10.3 Except as set forth in the Environmental Reports, to
Borrower's knowledge, there are no past violations that have not been finally
resolved or existing violations of any Hazardous Substances Laws by any Person
affecting the Site, Improvements or other Mortgaged Property, which violations
could reasonably be expected to result in a material liability to Borrower.

      4.11  LITIGATION.

            (a) No action, suit, proceeding or investigation has been instituted
or, to Borrower's knowledge, threatened in writing against Borrower.

            (b) Borrower has no knowledge of (i) any action, suit, proceeding or
investigation that has been instituted or threatened in writing against, the
Riverside Borrower, the Sponsor or any other Major Project Participant, or by
which any of them or their properties are bound, which could reasonably be
expected to have a Material Adverse Effect, or (ii) any order, judgment or
decree that has been issued or proposed to be issued by any Governmental
Authority that, as a result of the ownership or operation of the Project by
Borrower, the sale of electricity therefrom by Borrower or the entering into of
any Operative Document or any transaction contemplated hereby or thereby, could
reasonably be expected to cause or deem the Lenders, Administrative Agent,
Collateral Agent, Issuing Bank, the Lead Arranger or Borrower or any Affiliate
of any of them to be subject to, or not exempted from, regulation under PUHCA,
or treated as a public utility under the laws of the State of Colorado as
presently constituted and as construed by the courts of Colorado, respecting the
rates or the financial or organizational regulation of electric utilities. No
action, suit or proceeding before or by any court, arbitrator or other
Governmental Authority is pending to which any Calpine Entity is a party or to
which its business, assets or property is subject and, to Borrower's knowledge,
no such action, suit or proceeding is threatened to which any such Calpine
Entity or its business, assets or property would be subject that, in either
case, questions the validity of any of the Operative Documents.

      4.12  LABOR DISPUTES AND ACTS OF GOD.

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<PAGE>

            Neither the business nor the properties of Borrower or, to
Borrower's knowledge, any other Major Project Participant are currently affected
by any fire, explosion, accident, strike, lockout or other labor dispute,
drought, storm, hail, earthquake, embargo, act of God or of the public enemy, or
other casualty (whether or not covered by insurance), which could reasonably be
expected to have a Material Adverse Effect.

      4.13  DISCLOSURE.

            None of this Agreement, the Bank Book nor any certificate or other
documentation (other than the Initial Operating Budget or the Base Case Project
Projections or other "forward-looking" statements) furnished to the Lead
Arranger, Administrative Agent, Collateral Agent, Issuing Bank, or the Lenders,
or to any consultant submitting a report to Administrative Agent, the Lead
Arranger or the Lenders, by or, to Borrower's knowledge, on behalf of Borrower
with respect to the Project, the Sponsor, the Pledgor, Borrower or any other
Calpine Entity or in connection with the transactions contemplated by this
Agreement, the other Credit Documents or the description or operation of the
Project, taken as a whole, contained (at the time of delivery thereof) any
untrue statement of a material fact or omitted (at the time of delivery thereof)
to state a material fact necessary in order to make the statements contained
herein or therein not misleading in any material respect under the circumstances
in which they were made at the time such statements were made (other than any
information that was corrected or updated in writing by Borrower or its
Affiliates or representatives to the Lead Arranger prior to the Closing Date).
There is no fact known to Borrower which has had or could reasonably be expected
to have a Material Adverse Effect which has not been disclosed in writing to
Administrative Agent, the Lead Arranger, Collateral Agent, Issuing Bank or the
Lenders by or on behalf of Borrower on or prior to the Closing Date in
connection with the transactions contemplated hereby.

      4.14  FLOOD ZONE DISCLOSURE.

            No material portion of the Site includes Improvements that are or
will be located in an area that has been identified by the Federal Emergency
Management Agency as an area having special flood or mudslide hazards and in
which flood insurance has been made available under the National Flood Insurance
Act of 1968, as amended.

      4.15  TAXES.

            (a) Borrower has timely filed, or caused to be filed, all federal,
state and local tax returns and reports that it is required to file, has paid
all material taxes, assessments, utility charges, fees and other governmental
charges it is required to pay to the extent due (other than those taxes that it
is contesting in good faith and by appropriate proceedings in accordance with
the requirements of Section 5.18). Borrower knows of no proposed tax assessment
against the Riverside Borrower, or Borrower which could reasonably be expected
to have a Material Adverse Effect (other than those proposed tax assessments
that Borrower is contesting in good faith and by appropriate proceedings in
accordance with the requirements of Section 5.18). In either case, to the extent
such taxes, assessments, charges and fees are not due, Borrower or the
applicable Calpine Entity has established reserves that are adequate for the
payment thereof in conformity with GAAP.

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<PAGE>

            (b) At all times since its formation, Borrower has been an entity
with a single owner that is disregarded as separate from its owner for federal
income tax purposes. No Form 8832 has ever been filed with respect to Borrower
as other than a disregarded entity and no such election shall have been made.

            (c) Borrower has no liability for the taxes of any Person (other
than Borrower) (i) under Treasury Regulations Section 1.1502-6 (or any similar
provision of state, local or foreign law), (ii) as a transferee or successor,
(iii) by contract, or (iv) otherwise.

            (d) Borrower does not intend to treat the Term Loans (including the
incurrence thereof) as being a "reportable transaction" (within the meaning of
Treasury Regulation Section 1.6011-4).

      4.16  GOVERNMENTAL REGULATION.

            4.16.1 Borrower is not, and after giving effect to the borrowing of
any Term Loans or the issuance of the PSCo Letter of Credit will not be, subject
to regulation (a) under any provision of PUHCA except Section 32 thereof; or (b)
under any state law or regulation with respect to rates or the financial or
organizational regulation of electric utilities. Borrower is subject to
regulation as a "public utility" under the Federal Power Act, as amended
("FPA").

            4.16.2 The Project is an Eligible Facility within the meaning of
Section 32 of PUHCA, and Borrower has received a determination from the FERC
(not subject to any pending challenge, investigation, or proceeding) that it is
an "exempt wholesale generator" ("EWG"), within the meaning of Section 32 of
PUHCA. Borrower has validly issued orders from the FERC under the FPA, not
subject to any pending challenge, investigation, or proceeding, (a) authorizing
Borrower to engage in wholesale sales of electricity, ancillary services and, to
the extent permitted under its market-based rate tariff, other services at
market-based rates, and (b) granting such waivers and blanket authorizations
(including blanket authorization to issue securities and to assume liabilities
under Section 204 of the FPA and 18 C.F.R. Pt. 34), as are customarily granted
to entities with market-based rate authority. With respect to Borrower, the FERC
has not imposed any rate caps or mitigation measures other than rate caps and
mitigation measures generally applicable to similarly situated marketers or
generators selling electricity, ancillary services or other services at
wholesale in the geographic market where Borrower conducts its business.

            4.16.3 There are no pending complaints filed with the FERC seeking
abrogation or modification of a contract for the sale of power by the Borrower.

      4.17  REGULATION U, ETC.

            Borrower is not engaged principally, or as one of its principal
activities, in the business of extending credit for the purpose of "buying",
"carrying" or "purchasing" margin stock (each as defined in Regulations T, U or
X of the Federal Reserve Board), and no part of the proceeds of the Term Loans,
the PSCo Letter of Credit or the Project Revenues will be used by Borrower for
the purpose of "buying", "carrying" or "purchasing" any such margin stock or for
any other purpose which violates the provisions of the regulations of the
Federal Reserve Board.

                                       42

<PAGE>

      4.18  INITIAL OPERATING BUDGET; PROJECTIONS.

            Borrower has prepared the Initial Operating Budget and the Base Case
Project Projections and is responsible for developing the assumptions on which
such Initial Operating Budget and the Base Case Project Projections are based;
and such Initial Operating Budget and the Base Case Project Projections (a) as
of the date delivered, updated or supplemented are based on Borrower's good
faith reasonable assumptions (including as to all legal and factual matters
material to the estimates set forth therein) and (b) as of the date delivered,
updated or supplemented are consistent in all material respects with the
provisions of the Project Documents executed on or prior to such date.

      4.19  FINANCIAL STATEMENTS.

            In the case of the financial statements of Borrower delivered
pursuant to Section 3.1.18 (other than the financial statements of Borrower
delivered pursuant to Section 3.1.18(c)), each such financial statement and
information has been prepared in conformity with GAAP and fairly presents, in
all material respects, the financial position (on a consolidated and, where
applicable, consolidating basis) of Borrower described in such financial
statements as at the respective dates thereof and the results of operations and
cash flows (on a consolidated and, where applicable, consolidating basis) of
Borrower described therein for each of the periods then ended, subject, in the
case of any such unaudited financial statements, to changes resulting from audit
and normal year-end adjustments and the absence of footnote disclosure. Except
for obligations under the Operative Documents to which it is a party, Borrower
does not (and will not following the funding of the initial Loans) have any
contingent obligations, unmatured liabilities, contingent liability or liability
for taxes, long-term lease or forward or long-term commitment required to be
shown under GAAP that is not reflected in the foregoing financial statements or
the notes thereto and which in any such case is material in relation to the
business, results of operations, properties, financial condition or prospects of
Borrower.

      4.20  NO DEFAULT.

            No Event of Default or Inchoate Default which has not been disclosed
to Administrative Agent in writing has occurred and is continuing.

      4.21  ORGANIZATIONAL ID NUMBER; LOCATION OF COLLATERAL.

            4.21.1 Borrower's organizational identification number is 3309088.

            4.21.2 All of the Collateral (other than the Accounts, the
membership interests in Borrower and general intangibles) is located on the Site
or the Easements or at Borrower's address set forth in Section 11.1; provided
that certain equipment may be temporarily removed from the Site and/or Easements
from time to time in the ordinary course of business.

      4.22  TITLE AND LIENS.

            Borrower has (a) good, marketable and insurable (i) fee simple
interest in the Site and (ii) easement interest in the Easements (except that
title to certain of the Easements

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<PAGE>

which are licenses may not be insurable), and (b) good, legal and valid title to
all other Collateral, in each case free and clear of all Liens other than
Permitted Liens.

      4.23  INTELLECTUAL PROPERTY.

            Except as disclosed in Exhibit G-5:

            (a) Borrower owns or possesses all licenses, permits, franchises,
authorizations, patents, copyrights, service marks, trademarks and trade names,
or rights thereto, that are necessary for the operation of its business, without
known conflict with the rights of others;

            (b) to the knowledge of Borrower, no product of Borrower infringes
in any material respect any license, permit, franchise, authorization, patent,
copyright, service mark, trademark, trade name or other right owned by any other
Person;

            (c) to the knowledge of Borrower, there is no violation by any
Person of any right of Borrower with respect to any patent, copyright, service
mark, trademark, trade name or other right owned or used by Borrower; and

            (d) to the knowledge of Borrower, there exists no pending or
threatened claim or litigation against or affecting Borrower contesting its
right to sell or use any such product, process, method, substance, part or other
material.

      4.24  COLLATERAL.

            The respective liens and security interests granted to Collateral
Agent (for the benefit of the Secured Parties) pursuant to the Collateral
Documents (a) constitute as to personal property included in the Collateral a
valid security interest and (b) constitute as to the Mortgaged Property included
in the Collateral a valid lien and security interest in the Mortgaged Property,
in each case to the extent contemplated by the Collateral Documents. The
security interest granted to Collateral Agent (for the benefit of the Secured
Parties) pursuant to the Collateral Documents in the Collateral consisting of
personal property will be perfected (i) with respect to any property that can be
perfected by filing, upon the filing of financing statements in the filing
offices identified in Exhibit D-6, (ii) with respect to any property that can be
perfected by control, upon execution of the Control Agreement and the Depositary
Agreement, and (iii) with respect to any property (if any) that can be perfected
by possession, upon Collateral Agent receiving possession thereof, and in each
case such security interest will be, as to Collateral perfected under the UCC or
otherwise as aforesaid, superior and prior to the rights of all third Persons
now existing or hereafter arising whether by way of mortgage, lien, security
interests, encumbrance, assignment or otherwise, except (i) Title Exceptions and
Permitted Liens described in clauses (a) and (e) of the definition of "Permitted
Liens," and (ii) to the extent required by Governmental Rule, those matters
described in clauses (b), (c) and (g) of the definition of "Permitted Liens."
Except to the extent possession of portions of the Collateral is required for
perfection, all such action as is necessary has been taken (or will be taken
immediately after the Closing Date) to establish and perfect Collateral Agent's
rights in and to the Collateral in existence on such date to the extent
Collateral Agent's security interest can be perfected by filing, including any
recording, filing, registration, giving of notice or other similar action. No
filing, recordation, re-filing or re-recording other than those listed on
Exhibit D-6 hereto is necessary to perfect and maintain the

                                       44

<PAGE>

perfection of the interest, title or Liens of the Collateral Documents, and on
the Closing Date all such filings or recordings will have been made to the
extent Collateral Agent's security interest can be perfected by filing. Borrower
has properly delivered or caused to be delivered, or provided control, to
Collateral Agent or Depositary Agent all Collateral that permits perfection of
the Lien and security interest described above by possession or control to the
extent contemplated by the Collateral Documents.

      4.25  SUFFICIENCY OF PROJECT DOCUMENTS.

            4.25.1 Other than those that can be reasonably expected to be
commercially available when and as required, the services to be performed, the
materials to be supplied and the real property interests, the Easements and
other rights granted, or to be granted, pursuant to the Project Documents in
effect as of the Closing Date:

            (a) comprise all of the property interests necessary to secure any
right material to the leasing, operation and maintenance of the Project in
accordance with all Legal Requirements, all without reference to any proprietary
information not owned by or available to Borrower;

            (b) are sufficient to enable the Project to be located and operated
on the Site and the Easements; and

            (c) provide adequate ingress and egress from the Site for any
reasonable purpose in connection with the operation of the Project.

            4.25.2 There are no services, materials or rights required for
operation and maintenance of the Project in accordance with the Major Project
Documents and the assumptions that form the basis of Base Case Project
Projections, other than those (a) to be provided under the Project Documents or
(b) that can reasonably be expected to be commercially available at or for
delivery to the Site on commercially reasonable terms consistent with Base Case
Project Projections.

      4.26  UTILITIES.

            All utility services necessary for the operation of the Project
consistent with the Base Case Project Projections are available at the Project
or can reasonably be expected to be so available as and when required upon
commercially reasonable terms consistent with the Base Case Project Projections.

      4.27  OTHER FACILITIES.

            4.27.1 All roads necessary for the full utilization of the Project
for its intended purposes have either been completed or Borrower possesses the
necessary rights of way therefor, other than rights of way that can reasonably
be expected to be available on commercially reasonable terms as and when needed.

            4.27.2 Borrower possesses, or the counterparties to the Major
Project Documents (including the Power Purchase Agreement) pursuant to which
interconnection facilities will be operated for the benefit of the Project,
possess and are obligated to provide or

                                       45

<PAGE>

make available to Borrower, all necessary easements, rights of way, licenses,
agreements and other rights for the construction, interconnection and
utilization of the interconnection facilities (including fuel, water, wastewater
and electrical).

      4.28  PROPER SUBDIVISION.

            The Site has been subdivided or entitled to exception therefrom, and
for all purposes the Site may be mortgaged, conveyed and otherwise dealt with as
separate legal lots or parcels.

                                   ARTICLE 5
                              AFFIRMATIVE COVENANTS

            Borrower covenants and agrees that until the Termination Date,
Borrower shall:

      5.1   USE OF PROCEEDS AND PROJECT REVENUES.

            5.1.1 Proceeds.

            (a) Unless otherwise applied by Administrative Agent pursuant to
this Agreement and the other Credit Documents, apply the proceeds of the Term
Loans as provided in Section 2.1.5 and use the PSCo Letter of Credit solely for
the purpose of supporting its obligations under and as contemplated by the Power
Purchase Agreement.

            5.1.2 Revenues. Unless otherwise applied by Administrative Agent or
Collateral Agent pursuant to the terms of this Agreement or the other Credit
Documents, apply any Project Revenues, net payments received by Borrower under
the Interest Rate Agreements (including any Hedge Transaction thereunder),
Insurance Proceeds, Eminent Domain Proceeds and damage payments solely for the
purpose, and in the order and manner, provided for in Article 3 of the
Depositary Agreement.

      5.2   PAYMENT.

            5.2.1 Credit Documents. Pay all sums due under this Agreement and
the other Credit Documents to which it is a party according to the terms hereof
and thereof.

            5.2.2 Project Documents. Pay all obligations of Borrower due under
the Project Documents, howsoever arising, as and when due and payable, except
(a) such as may be contested in good faith or as to which a bona fide dispute
may exist; provided that adequate cash reserves have been established in
conformity with GAAP, (b) as could not reasonably be expected to have a Material
Adverse Effect and (c) Borrower's trade payables which shall be paid in the
ordinary course of business.

      5.3   WARRANTY OF TITLE.

            Maintain (a) good, marketable and insurable (i) fee simple interest
in the Site and (ii) easement interest in the Easements (except that title to
certain of the Easements which are licenses may not be insurable), and (b) good,
legal and valid title to all of its other respective

                                       46

<PAGE>

material properties and assets (other than properties and assets disposed of in
the ordinary course of business or otherwise disposed of in accordance with
Section 6.4), in each case free and clear of all Liens other than Permitted
Liens.

      5.4   NOTICES.

            Promptly, upon acquiring notice or giving notice (except as
otherwise specified below), as the case may be, or obtaining knowledge thereof,
give written notice to Administrative Agent of:

            5.4.1 promptly, but in no event later than five Banking Days after
Borrower has knowledge of the occurrence of any Inchoate Default or Event of
Default, a statement of a Responsible Officer of Borrower setting forth details
of such Inchoate Default or Event of Default and the action which Borrower has
taken and proposes to take with respect thereto (other than litigation strategy
and related documentation subject to the attorney-client privilege);

            5.4.2 promptly, but in no event later than five Banking Days after
Borrower has knowledge or receives notice of (a) any material litigation or
governmental proceeding pending or threatened in writing against Borrower or to
Borrower's knowledge, any Major Project Participant, provided that in the case
of any threatened litigation or governmental proceeding against Borrower, or any
litigation or governmental proceeding pending or threatened in writing against
any Major Project Participant, such threatened litigation or governmental
proceeding or, in the case of a Major Project Participant, actual or threatened
litigation or governmental proceeding could reasonably be expected to have a
Material Adverse Effect, or (b) any other event, act or condition which could
reasonably be expected to result in a Material Adverse Effect;

            5.4.3 copies of all notices of material breach or violation given or
received by Borrower pursuant to any of the Major Project Documents other than
routine correspondences, given or received in the ordinary course of business
relating to routine aspects of financing, operating, maintaining or using the
Project;

            5.4.4 promptly, but in no event later than ten Banking Days after
the existence of any of the following conditions, a duly executed certificate of
a Responsible Officer of Borrower specifying in detail the nature of such
condition and Borrower's proposed response thereto: (a) the receipt by Borrower
of any written communication from a Governmental Authority that alleges that
Borrower is not in compliance in any material respect with applicable Hazardous
Substance Laws or Applicable Permits; or (b) Borrower shall obtain knowledge of
any Release of any Hazardous Substance that could form the basis of an
Environmental Claim against Borrower which could reasonably be expected to have
a Material Adverse Effect;

            5.4.5 copies of any Applicable Permit or Applicable Third Party
Permit obtained by Borrower or any other Person after the Closing Date;

            5.4.6 the existence of a PSCo Security Fund Shortfall (as defined in
the Depositary Agreement) and the amount thereof;

                                       47

<PAGE>

            5.4.7 promptly, but in no event later than ten Banking Days after
the execution thereof, copies of any Project Document Modifications to any Major
Project Documents;

            5.4.8 the occurrence of any ERISA event described in Section 7.1.5
that would result in aggregate liability to all Calpine Entities and all ERISA
Affiliates in excess of $5,000,000; and

            5.4.9 any other information related to Borrower, the Project or the
notices provided above reasonably requested by Administrative Agent.

      5.5   FINANCIAL STATEMENTS.

            5.5.1 Deliver or cause to be delivered to Administrative Agent, in
form and detail reasonably satisfactory to Administrative Agent (except where
GAAP is specifically required):

            (a) as soon as practicable and in any event within 60 days after the
end of the first, second and third quarterly accounting periods of its fiscal
year (commencing with the fiscal quarter ending June 30, 2004), unaudited
quarterly financial statements of Borrower as of the last day of such quarterly
period and the related statements of income, cash flow, and shareholders' or
members' equity (as applicable) for such quarterly period and (in the case of
second and third quarterly periods) for the portion of the fiscal year ending
with the last day of such quarterly period, setting forth in each case in
comparative form corresponding unaudited figures from the preceding fiscal year,
all prepared in accordance with GAAP (subject to changes resulting from audit
and normal year-end adjustments and the absence of footnote disclosure); and

            (b) as soon as practicable and in any event within 120 days after
the close of each applicable fiscal year, audited financial statements of
Borrower. Such financial statements shall include a statement of equity, a
balance sheet as of the close of such year, an income and expense statement,
reconciliation of capital accounts (where applicable), a statement of cash flow
and summary results of hedging and trading activities, all prepared in
accordance with GAAP and certified by an independent certified public accountant
selected by the Person whose financial statements are being prepared. Such
certificate shall not be qualified or limited because of restricted or limited
examination by such accountant of any material portion of the records of
Borrower.

            5.5.2 Cause to be delivered, along with such financial statements of
Borrower, a certificate signed by a Responsible Officer of Borrower, certifying
that (a) such Responsible Officer has made or caused to be made a review of the
transactions and financial condition of such Person during the relevant fiscal
period and that such review has not, to such Responsible Officer's knowledge,
disclosed the existence of any event or condition which constitutes an Event of
Default or Inchoate Default, or if any such event or condition existed or
exists, the nature thereof and the corrective actions that such Person has taken
or proposes to take with respect thereto, (b) such Person is in compliance in
all material respects with the provisions of each Credit Document to which such
Person is a party or, if such is not the case, stating the nature of such
non-compliance and the corrective actions which such Person has taken or
proposes to take with respect thereto, and (c) such financial statements are
true and correct in all

                                       48

<PAGE>

material respects and that no material adverse change in the consolidated
assets, liabilities, operations, or financial condition of such Person has
occurred since the date of the immediately preceding financial statements
provided to Administrative Agent or, if a material adverse change has occurred,
the nature of such change. Such certificate shall also include information
demonstrating compliance with Section 5.22.

      5.6   BOOKS, RECORDS, ACCESS.

            (a) Maintain, or cause to be maintained, adequate books, accounts
and records with respect to Borrower and the Project; and (b) subject to
requirements of Governmental Rules, safety requirements and existing
confidentiality restrictions imposed upon Borrower by any other Person, permit
employees or agents of Administrative Agent and the Independent Consultants at
any reasonable times and upon reasonable prior notice to Borrower or Operator,
as applicable, to inspect all of Borrower's properties, including the Site, to
examine or audit all of Borrower's books, accounts and records and make copies
and memoranda thereof, to communicate with Borrower's auditors (with a
representative of Borrower present, if Borrower so requests).

      5.7   COMPLIANCE WITH LAWS, INSTRUMENTS, APPLICABLE PERMITS, ETC.

            Comply, or cause compliance (except where noncompliance could not
reasonably be expected to have a Material Adverse Effect) with all Legal
Requirements (including Legal Requirements and Applicable Permits relating to
pollution control, environmental protection, equal employment opportunity or
employee benefit plans, ERISA Plans and employee safety, with respect to
Borrower or the Project), and make such alterations to the Project and the Site
as may be required for such compliance.

      5.8   REPORTS.

            5.8.1 Deliver to Administrative Agent within 30 days of the end of
each fiscal quarter after the Closing Date, a summary operating report with
respect to the Project, which shall include, with respect to the period most
recently ended, (a) a monthly and year-to-date numerical and narrative
assessment of (i) the Project's compliance with each material category in the
then-current Annual Operating Budget, (ii) electrical production and delivery,
(iii) fuel deliveries and use, including heat rate, and (iv) plant and unit
availability, including trips and scheduled and unscheduled outages; and (b) to
the extent applicable, a comparison of year-to-date figures to corresponding
figures provided in the prior year.

            5.8.2 Within 30 days after each annual policy renewal date, deliver
to Administrative Agent a certificate, substantially in the form of Exhibit L
hereto, and otherwise in form and substance reasonably satisfactory to
Administrative Agent in consultation with the Insurance Consultant, certifying
that the insurance requirements of Exhibit K have been implemented and are being
complied with in all material respects.

      5.9   EXISTENCE, CONDUCT OF BUSINESS, PROPERTIES, ETC.

            Except as otherwise expressly permitted under this Agreement, (a)
maintain and preserve its existence as a Delaware limited liability company, (b)
maintain and preserve all its

                                       49

<PAGE>

material rights, privileges and franchises necessary in the normal conduct of
its business, (c) subject to Section 5.2.2, perform (to the extent not excused
by force majeure events or the nonperformance of the other party and not subject
to a good faith dispute) all of its contractual obligations under the Major
Project Documents to which it is party or by which it is bound, except to the
extent that any such failure to perform could not reasonably be expected to have
a Material Adverse Effect, (d) maintain all Applicable Permits and use
reasonable efforts to cause all Major Project Participants to maintain all
Applicable Third Party Permits, except to the extent that any such failure to
maintain could not reasonably be expected to have a Material Adverse Effect, and
(e) at or before the time that any Permit becomes an Applicable Permit, obtain
such Permit.

      5.10  DEBT SERVICE COVERAGE RATIO.

            In no event later than fifteen (15) Banking Days after each
Principal Repayment Date, calculate and deliver to Administrative Agent the Debt
Service Coverage Ratio for the Calculation Period for such Principal Repayment
Date. The calculations of Debt Service Coverage Ratios hereunder shall be used
in determining the application and distribution of funds pursuant to Section 6.6
of this Agreement and Section 3.7 of the Depositary Agreement.

      5.11  EXEMPTION FROM REGULATION.

            Take or cause to be taken all necessary or appropriate actions so
that (a) (i) Borrower will be an EWG and (ii) the Project will be an Eligible
Facility at all times hereunder or (b) Borrower and the Project shall not be
subject to, or shall be exempt from, financial or organizational regulation as a
"public utility company" or "public utility holding company" under PUHCA or
financial, organizational or rate regulation as a public utility under the laws
of the State of Colorado as presently constituted and as construed by the courts
of Colorado, and (c) Borrower will be authorized to sell electricity at
market-based rates, with all waivers of regulations and blanket authorizations
as are customarily granted by the FERC to entities with market-based rate
authority.

      5.12  PUNCHLIST ITEMS.

            Work diligently to complete the Punchlist Items and, upon completion
of all the Punchlist Items, deliver to Administrative Agent a certificate
(verified by the Independent Engineer) certifying that the Punchlist Items have
been completed.

      5.13  OFFER TO PREPAY UPON CHANGE OF CONTROL.

            If a Change of Control occurs, make a Mandatory Repayment Offer on
the terms set forth herein and in Section 2.1.10(d). In such Mandatory Repayment
Offer, Borrower shall offer to (a) prepay each Lender's Term Loans and Funded LC
Disbursements in an amount equal to at least 101% of the aggregate principal
amount of Term Loans and Funded LC Disbursements then outstanding, plus (b) pay
at least 1% of the Funded LC Credit-Linked Deposits, plus (c) in each case,
accrued and unpaid interest thereon, to but excluding the date of repayment,
plus (d) in each case, any other amount then required to be paid hereunder.
Notwithstanding anything in this Agreement to the contrary, Borrower shall not
be required to make a Mandatory Repayment Offer upon a Change of Control if a
third party makes the

                                       50

<PAGE>

Mandatory Repayment Offer in the manner, at the times and otherwise in
compliance with the requirements set forth in this Agreement applicable to a
Mandatory Repayment Offer required upon a Change of Control and repays all Term
Loans and Funded LC Disbursements (and the other amounts required to be paid
pursuant to clause (a) above) required to be repaid pursuant thereto (including
the reimbursement of all Funded LC Credit-Linked Deposits).

      5.14  OPERATION AND MAINTENANCE OF PROJECT; ANNUAL OPERATING BUDGET.

            5.14.1 Keep the Project, or cause the same to be kept, in good
operating condition consistent in all material respects with the standard of
care set forth in the O&M Agreement, all Applicable Permits (and, if applicable,
Applicable Third Party Permits), Legal Requirements and the Operative Documents,
and make or cause to be made all repairs (structural and non-structural,
extraordinary or ordinary) necessary to keep the Project in such condition.

            5.14.2 Operate and maintain the Project, or cause the same to be
operated and maintained, in a manner consistent in all material respects with
Prudent Utility Practices and in compliance with the terms of the Power Purchase
Agreement.

            5.14.3 On the Closing Date and thereafter 60 days prior to the
beginning of each subsequent calendar year, submit an operating plan and a
budget, detailed by month, of anticipated revenues and anticipated expenditures
under all Waterfall Levels, and anticipated expenditures from the Major
Maintenance Reserve Account, such budget to include Debt Service, proposed
dividend distributions, Major Maintenance, reserves and all anticipated O&M
Costs (including reasonable allowance for contingencies) applicable to the
Project for the ensuing calendar year (or, in the case of the Initial Operating
Budget, partial calendar year) (each such annual operating plan and budget,
including the Initial Operating Budget, an "Annual Operating Budget"). Each
Annual Operating Budget (other than the Initial Operating Budget) shall be
deemed approved so long as the aggregate amount of anticipated O&M Costs remains
within 125% of the amount proposed to be expended by Borrower for all such items
during the applicable calendar year (as determined by reference to the
then-current Annual Operating Budget); it being acknowledged that the 125%
limitation shall not apply to any anticipated Variable O&M Costs to the extent
that such anticipated Variable O&M Costs result from the anticipated dispatch of
the Project at levels in excess of the levels contemplated by such Annual
Operating Budget. In the event that such Annual Operating Budget shall not be
deemed approved as provided in the preceding sentence, such Annual Operating
Budget shall be subject to the reasonable approval of Administrative Agent
acting in consultation with the Independent Engineer, such approval not to be
unreasonably withheld. Failure by Administrative Agent to approve or disapprove
such draft Annual Operating Budget within 30 days after receipt thereof shall be
deemed to be an approval by Administrative Agent of such draft as the final
Annual Operating Budget. Borrower shall consider in good faith Administrative
Agent's suggestions in preparation of a final Annual Operating Budget (if not
deemed approved as provided above). Borrower shall prepare a final Annual
Operating Budget no less than 30 days in advance of the anticipated date of
commencement of each subsequent calendar year following the Closing Date. The
O&M Costs in each Annual Operating Budget which are subject to escalation
limitations in the Project Documents shall not, absent extraordinary
circumstances, be increased by more than the amounts provided in such Project
Documents.

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            5.14.4 Borrower shall operate and maintain the Project, or cause the
Project to be operated and maintained, within amounts for all Operating Budget
Categories not to exceed 125% (on a year-to-date basis), in each case of the
amounts budgeted therefor as set forth in the then-current Annual Operating
Budget as approved or deemed approved by Administrative Agent; provided,
however, that (a) subject to Section 6.12, Borrower may propose an amendment to
the Annual Operating Budget for Administrative Agent's approval if at any time
Borrower cannot comply with the provisions of this Section 5.14.4 (and
Administrative Agent shall consider each such amendment in good faith and shall
not unreasonably withhold its consent to the approval of any such amendment),
(b) the 125% limitation shall not apply to Variable O&M Costs to the extent that
such Variable O&M Costs result from the dispatch of the Project at levels in
excess of the levels contemplated by the then-current Annual Operating Budget,
and (c) the 125% limitation shall not apply to Emergency Operating Costs to the
extent that, after deducting such Emergency Operating Costs from the applicable
calculation, Borrower otherwise remains in compliance with such 125% limitation.
Pending approval of any Annual Operating Budget or amendment thereto in
accordance with the terms of this Section 5.14.4, Borrower shall use its best
efforts to operate and maintain the Project, or cause the Project to be operated
and maintained, within the then-current Annual Operating Budget (it being
acknowledged that if a particular calendar year's Annual Operating Budget has
not been approved by the time periods provided in Section 5.14.3, then the
then-current Annual Operating Budget shall be deemed to be the Annual Operating
Budget in effect prior to the delivery of the proposed final Annual Operating
Budget pursuant to Section 5.14.3); provided that the amounts specified therein
shall be increased to the extent specified in the Project Documents.

      5.15  PRESERVATION OF RIGHTS; FURTHER ASSURANCES.

            5.15.1 Maintain in full force and effect, perform in all material
respects (subject to Section 5.2) the obligations of Borrower under, preserve,
protect and defend the material rights of Borrower under and, take all
reasonable action necessary to prevent termination (except by expiration in
accordance with its terms) of each and every Major Project Document, including
(where Borrower in the exercise of its business judgment deems it proper)
prosecution of suits to enforce any material right of Borrower thereunder and
enforcement of any material claims with respect thereto; provided, however, that
upon the occurrence and during the continuance of an Event of Default if
Administrative Agent requests that certain actions be taken and Borrower fails
to take the requested actions within five Banking Days, Administrative Agent or
Collateral Agent (as applicable) may enforce in its own name or in Borrower's
name, such rights of Borrower, all as more particularly provided in the Security
Agreement and the other Credit Documents.

            5.15.2 From time to time, execute, acknowledge, record, register,
deliver and/or file all such notices, statements, instruments and other
documents (including any memorandum of lease or other agreement, financing
statement, continuation statement, certificate of title or estoppel
certificate), relating to the Term Loans stating the interest and charges then
due and any known Events of Default or Inchoate Defaults, and take such other
steps as may be necessary or advisable to render fully valid and enforceable
under all applicable laws the rights, liens and priorities of the Secured
Parties with respect to all Collateral and other security from time to time
furnished under this Agreement and the other Credit Documents or intended to be
so furnished, in each case in such form and at such times as shall be reasonably
requested by Collateral Agent,

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and pay all reasonable fees and expenses (including reasonable attorneys' fees)
incident to compliance with this Section 5.15.2.

            5.15.3 If Borrower shall at any time acquire any real property or
leasehold or other interest in real property not covered by the Mortgage, then
promptly upon such acquisition, execute, deliver and record a supplement to the
Mortgage, reasonably satisfactory in form and substance to Administrative Agent,
subjecting the real property or leasehold or other interests to the Lien and
security interest created by the Mortgage. If reasonably requested by
Administrative Agent, Borrower shall obtain an appropriate endorsement or
supplement to the Title Policy insuring the Lien of the Secured Parties in such
additional property, subject only to Permitted Liens and other exceptions to
title approved by Administrative Agent.

            5.15.4 Upon the request of Administrative Agent or Collateral Agent,
execute and deliver all documents as shall be necessary or that Administrative
Agent or Collateral Agent (as the case may be) shall reasonably request in
connection with the rights and remedies of Administrative Agent or Collateral
Agent (as the case may be) and the Lenders under the Operative Documents, and
perform, such other reasonable acts as may be necessary to carry out the intent
of this Agreement and the other Credit Documents (including any such acts
necessary to implement a Required HoldCo Transfer).

            5.15.5 Take such action, including the execution and filing of all
such documents and instruments, as may be necessary to effect and continue the
appointment of Corporation Service Company as its agent for service of process
in full force and effect, or if necessary by reason of any fact or condition
relating to such agent, to replace such agent (but only after having given
notice and evidence thereof to Administrative Agent).

      5.16  ADDITIONAL CONSENTS.

            With respect to (a) any Major Project Document (including any
Additional Project Document) entered into after the Closing Date and (b) any
Major Project Document entered into by a Replacement Obligor pursuant to Section
6.15 or Article 7, in each case cause the applicable counterparty or Replacement
Obligor, as applicable, to execute and deliver to Administrative Agent a Consent
in substantially the form of Exhibit E-1, with such changes as are reasonably
acceptable to Administrative Agent.

      5.17  MAINTENANCE OF INSURANCE.

            Without cost to the Secured Parties, maintain or cause to be
maintained on its behalf in effect at all times the types of insurance required
pursuant to Exhibit K, in the amounts and on the terms and conditions specified
therein, from the quality of insurers specified in such Exhibit or other
insurance companies of recognized responsibility reasonably satisfactory to
Administrative Agent.

      5.18  TAXES, OTHER GOVERNMENT CHARGES AND UTILITY CHARGES.

            Subject to the second sentence of this Section 5.18, timely file all
material tax returns and pay, or cause to be paid, as and when due and prior to
delinquency, all material taxes, assessments and governmental charges of any
kind that may at any time be lawfully assessed or

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levied against or with respect to Borrower or the Project, including sales and
use taxes and real estate taxes, all utility and other charges incurred in the
operation, maintenance, use, occupancy and upkeep of the Project, and all
assessments and charges lawfully made by any Governmental Authority for public
improvements that may be secured by a Lien on the Project. Borrower may contest
in good faith any such taxes, assessments and other charges and, in such event,
may permit the taxes, assessments or other charges so contested to remain unpaid
during any period, including appeals, when Borrower is in good faith contesting
the same, so long as (a) reserves to the extent required by GAAP have been
established in an amount sufficient to pay any such taxes, assessments or other
charges, accrued interest thereon and potential penalties or other costs
relating thereto, or other adequate provision for the payment thereof shall have
been made and maintained at all times during such contest, (b) enforcement of
the contested tax, assessment or other charge is effectively stayed for the
entire duration of such contest, and (c) any tax, assessment or other charge
determined to be due, together with any interest or penalties thereon, is
promptly paid after resolution of such contest.

      5.19  EVENT OF EMINENT DOMAIN.

            If an Event of Eminent Domain shall occur with respect to any
Collateral, (a) diligently pursue all its rights to compensation against the
relevant Governmental Authority in respect of such Event of Eminent Domain, (b)
not, without the written consent of Administrative Agent (which consent shall
not be unreasonably withheld or delayed), compromise or settle any claim against
such Governmental Authority if such compromise or settlement could reasonably be
expected to have a Material Adverse Effect, and (c) pay or apply all Eminent
Domain Proceeds in accordance with Section 3.5 of the Depositary Agreement.
Borrower consents to, and agrees not to object to or otherwise impede or impair,
the participation of Administrative Agent in any eminent domain proceedings, and
Borrower shall from time to time deliver to Administrative Agent all documents
and instruments requested by it to permit such participation.

      5.20  INTEREST RATE PROTECTION.

            5.20.1 Compliance With Interest Rate Agreements. Within 45 days
after the Closing Date, enter into one or more Interest Rate Agreements with one
or more banks or financial institutions for a period commencing on such date and
ending on or after June 24, 2009 in a notional amount equal to at least
seventy-five percent (75%) of the anticipated amount of Term Loans projected to
be outstanding during such period (which anticipated amount (a) shall be
determined by reference to the Base Case Project Projections, and (b) shall take
into account any scheduled or projected repayments or prepayments of Term Loans
contemplated thereunder. Furthermore, Borrower shall at all times comply with
and maintain in full force and effect through the end of such period such
Interest Rate Agreements. All such Interest Rate Agreements shall be on terms
and conditions reasonably satisfactory to Administrative Agent.

            5.20.2 Hedge Breaking Fees. To the extent required pursuant to the
terms of the Hedge Transactions, pay all costs, fees and expenses incurred by
Borrower in connection with any unwinding, breach or termination of such Hedge
Transactions ("Hedge Breaking Fees"), all to the extent provided in and as
calculated pursuant to the applicable Interest Rate Agreements.

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            5.20.3 Security. Each Interest Rate Agreement provided by a Lender
(or an Affiliate thereof) hereunder, including all Hedge Transactions
thereunder, entered into in accordance with the terms of this Agreement, and all
Hedge Breaking Fees shall be and are hereby secured by any Collateral Documents,
pari passu with the Term Loans. The parties hereto agree that, for purposes of
any sharing of Collateral under the Collateral Documents, any Hedge Lender, in
its capacity as a counterparty or intermediary to the Interest Rate Agreements,
shall be deemed to have made a Term Loan to Borrower in an amount equal to the
unpaid amount of any Hedge Breaking Fees owed by Borrower to such Hedge Lender,
under any such Hedge Transaction on the date that an Early Termination Date (as
defined in the applicable Interest Rate Agreement) occurs. For purposes of any
such Collateral sharing, and for purposes of voting on matters under this
Agreement to the extent specified in the definition of "Proportionate Share,"
such Hedge Lender shall be deemed a Lender under the Collateral Documents to the
extent of such Term Loan.

            5.20.4 Lender Participation. At the election of the counterparty to
any Interest Rate Agreement, the Lenders may participate in such Interest Rate
Agreements and Hedge Transactions thereunder in proportion to their respective
Proportionate Shares by means of a risk sharing agreement in form and substance
satisfactory to such Lenders, provided, that if any such Lender's Lending Office
is in the State of New York, such Lender may designate another branch to enter
into such risk sharing agreement.

      5.21  DISTRIBUTIONS.

            5.21.1 From and after the Closing Date and until the Satisfaction
Date, distribute to Riverside Borrower all amounts on deposit in the Revenue
Account following application of Waterfall Levels 1 through 9 pursuant to
Section 3.2.2(b) of the Depositary Agreement.

            5.21.2 From and after the Satisfaction Date, distribute to Riverside
Borrower all amounts on deposit in the Revenue Account following application of
Waterfall Levels 1 through 3 pursuant to Section 3.2.2(d) of the Depositary
Agreement.

      5.22  FINANCIAL COVENANTS.

            5.22.1 As of December 31, 2004, cause the Consolidated Debt Service
Coverage Ratio for the period commencing on the Closing Date and ending on
December 31, 2004 to be equal to or greater than 1.20 to 1.

            5.22.2 As of June 30, 2005, cause the Consolidated Debt Service
Coverage Ratio for the period commencing on the Closing Date and ending on June
30, 2005 to be equal to or greater than 1.20 to 1.

            5.22.3 As of the last day of each fiscal quarter of Borrower
(commencing on September 30, 2005), cause the Consolidated Debt Service Coverage
Ratio for the period of four consecutive fiscal quarters most recently ended on
or prior to such date to be equal to or greater than 1.20 to 1.

            5.22.4 As of December 31, 2004, cause the ratio of (a) the product
of (i) the then aggregate outstanding principal amount of Term Loans and
Riverside Term Loans and (ii) 0.50

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to (b) Consolidated EBITDA for the period commencing on the Closing Date and
ending on December 31, 2004, taken as one accounting period, to be equal to or
less than 9.0 to 1.

            5.22.5 As of the last day of each fiscal quarter of Borrower
(commencing on June 30, 2005), cause the ratio of (a) the then aggregate
outstanding principal amount of Term Loans and Riverside Term Loans to (b)
Consolidated EBITDA for the period of four consecutive fiscal quarters most
recently ended on or prior to such date, taken as one accounting period, to be
equal to or less than 9.0 to 1.

      5.23  REQUIRED HOLDCO TRANSFER.

            At any time on or after the date on which there has been a default
or breach claimed by any third party under a Major Project Document that could
be cured by the Required HoldCo Transfer, Borrower shall promptly implement the
Required HoldCo Transfer and all related transactions required thereby, unless
the failure to do so could not reasonably be expected to have a Material Adverse
Effect.

      5.24  MAINTENANCE OF RATINGS.

            Promptly, perform all reasonable acts necessary to maintain a rating
with each of S&P and Moody's.

                                   ARTICLE 6
                               NEGATIVE COVENANTS

            Borrower covenants and agrees that until the Termination Date,
Borrower shall not:

      6.1   CONTINGENT LIABILITIES.

            Except as provided in this Agreement and the other Credit Documents,
become liable as a surety, guarantor, accommodation endorser or otherwise, for
or upon the obligation of any other Person; provided, however, that this Section
6.1 shall not be deemed to prohibit or otherwise limit the occurrence of (a)
Permitted Debt or (b) other contingent liabilities incident to the ordinary
course of business that are not incurred in connection with the obtaining or
guaranteeing of any Debt and that do not in the aggregate materially impair the
use of the property or assets of Borrower or the value of such property or
assets for the purpose of Borrower's business.

      6.2   LIMITATIONS ON LIENS.

            Create, assume or suffer to exist any Lien, securing a charge or
obligation on the Project or on any of the Collateral, real or personal, whether
now owned or hereafter acquired, except Permitted Liens.

      6.3   INDEBTEDNESS.

            Incur, create, assume or permit to exist any Debt except Permitted
Debt.

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      6.4   SALE OR LEASE OF ASSETS.

            Sell, lease, assign, transfer or otherwise dispose of assets,
whether now owned or hereafter acquired, except (a) in the ordinary course of
its business and as contemplated by the Operative Documents, at fair market
value, (b) to the extent that such asset is unnecessary, worn out or no longer
useful or usable in connection with the operation or maintenance of the Project,
at fair market value, (c) in the case of spare parts, to the extent that such
spare part is sold or transferred for one or more spare parts of equivalent fair
market value, such sold or transferred spare part is otherwise available to
Borrower when and as needed at a cost consistent with the then applicable Annual
Operating Budget and the spare part or parts received by Borrower are free and
clear of all liens and encumbrances, (d) upon any equipment failure, the
replacement of such failed equipment with comparable equipment, (e) the sale,
transfer or release, with or without consideration, of real property or
interests in real property related to the Project to the extent that such real
property or interests in real property is only incidental to the leasing,
ownership or operation of the Project, or (f) the granting of easements or other
interests in real property related to the Project to other Persons if such
granting could not reasonably be expected to have a Material Adverse Effect.
Upon any such sale, lease, assignment, transfer or other disposition of any such
assets, all Liens in favor of any Secured Party relating to such asset shall be
automatically released (and Collateral Agent shall execute any document
reasonably requested by Borrower evidencing such release).

      6.5   CHANGES.

            Change the nature of its business or expand its business beyond the
business contemplated in the Operative Documents.

      6.6   DISTRIBUTIONS.

            From and after the first Principal Repayment Date following
Riverside Borrower's indefeasible satisfaction in full of all Riverside
Obligations to the Riverside Secured Parties (other than those contingent
Riverside Obligations that are intended to survive the termination of the
Riverside Credit Documents), directly or indirectly, make or declare any
dividend or other distribution (in cash, property or obligation) on, or other
payment on account of, any interest in Borrower, unless the following conditions
have been satisfied (the "Restricted Payment Conditions"):

            (a) such dividend or distribution is on a date occurring within 45
days after the immediately preceding Principal Repayment Date.

            (b) no Event of Default or Inchoate Default has occurred and is
continuing as of the date of such applicable dividend or distribution, and such
dividend or distribution would not cause an Event of Default or Inchoate
Default;

            (c) the Debt Service Coverage Ratio for the Calculation Period
relating to the Principal Repayment Date immediately preceding the proposed date
of such dividend or distribution is greater than or equal to 1.40 to 1;

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            (d) the funds necessary to make any such dividend or distribution
are on deposit in the Revenue Account as of the Principal Repayment Date to
which the applicable dividend or distribution relates and are otherwise
available to be withdrawn from the Revenue Account or the Distribution Suspense
Account on such date or a later date in accordance with the terms and conditions
of the Depositary Agreement; and

            (e) (i) the amounts on deposit in, or credited to, the Major
Maintenance Reserve Account as of the date of the applicable dividend or
distribution (taking into account the stated amount of the Major Maintenance
Reserve Letter of Credit payable to Administrative Agent on demand for
disbursement to the Major Maintenance Reserve Account) equal or exceed the
amount necessary to fund in full the then-required Major Maintenance Reserve
Requirement, and (ii) the amounts on deposit or credited to the PSCo Security
Fund as of the date of the applicable dividend or distribution equal or exceed
the then-required PSCo Security Reserve Requirement.

Notwithstanding anything to the contrary contained in this Agreement, nothing in
this Section 6.6 shall prohibit, or otherwise limit (1) any Riverside Closing
Date Distribution or any Rocky Mountain Closing Date Distribution made to, or
for the account of, the Sponsor or the Pledgor in accordance with Section 2.1.5
of this Agreement or Section 2.1.5 of the Riverside Credit Agreement, (2) the
payment of O&M Costs in accordance with Section 3.3 of the Depositary Agreement,
(3) the payment of Subordinated Payments in accordance with Section 3.2.2(b) of
the Depositary Agreement, or (4) the distribution of amounts on deposit in the
Revenue Account to Riverside Borrower in accordance with Section 3.2.2(b) or (d)
of the Depositary Agreement.

      6.7   INVESTMENTS.

            Make any investments (whether by purchase of stocks, bonds, notes or
other securities, loan, extension of credit, advance or otherwise) other than
Permitted Investments.

      6.8   TRANSACTIONS WITH AFFILIATES.

            Borrower shall not directly or indirectly enter into any transaction
or series of transactions relating to the Project with or for the benefit of an
Affiliate without the prior written approval of Administrative Agent, except for
(a) the Project Documents in effect on the Closing Date, and the transactions
permitted thereby, (b) transactions that contain terms no less favorable to
Borrower than would be included in an arm's-length transaction entered into by a
prudent Person with a non-Affiliated third party, (c) any employment,
noncompetition or confidentiality agreement entered into by Borrower with any of
its employees, officers or directors in the ordinary course of business, and (d)
as otherwise expressly permitted or contemplated by this Agreement and the other
Credit Documents.

      6.9   REGULATIONS.

            Directly or indirectly apply any part of the proceeds of any Term
Loan, any cash equity contributions received by Borrower or other funds or
revenues to the "buying", "carrying" or "purchasing" of any margin stock within
the meaning of Regulations T, U or X of the Federal Reserve Board, or any
regulations, interpretations or rulings thereunder.

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      6.10  PARTNERSHIPS, ETC.

            Other than as expressly permitted or contemplated by this Agreement
and the other Credit Documents, become a general or limited partner in any
partnership or a joint venturer in any joint venture or create and hold stock in
any subsidiary.

      6.11  DISSOLUTION; MERGER.

            Except as provided in this Agreement in connection with a Required
HoldCo Transfer, liquidate or dissolve, or combine, merge or consolidate with or
into any other entity, or change its legal form, or purchase or otherwise
acquire all or substantially all of the assets of any Person.

      6.12  AMENDMENTS; CHANGE ORDERS.

            6.12.1 Without the prior written consent of (a) in the case of the
Power Purchase Agreement, the Supermajority Lenders or (b) in the case of any
other Major Project Document, the Majority Lenders (in each case, acting in
consultation with the Independent Engineer), directly or indirectly, amend,
modify, supplement or waive, accept, or permit or consent to the termination,
amendment, modification, supplement or waiver (including any waiver (or refund)
of damages (liquidated or otherwise) payable by any contractor under any Major
Project Document) of, any of the material provisions of, or give any material
consent (each such termination, amendment, modification, supplement, waiver or
consent, inclusive of any applicable change orders, being referred to herein as
a "Project Document Modification") under any of the Major Project Documents
unless such termination, amendment, modification, supplement or waiver could not
reasonably be expected to have a Material Adverse Effect (as certified to
Administrative Agent and Lenders by Borrower); provided, that the extension of
the term of a Major Project Document on substantially the same terms and
conditions then in effect shall not require the consent or approval of the
Supermajority Lenders or the Majority Lenders.

            6.12.2 Construct, install, or permit the construction or
installation of, shared or joint facilities between the Project and any plants,
facilities, generating stations or other improvements which are not located on
the Site or the Easements (including any such plants, facilities, generating
stations or other improvements owned by PSCo).

            If applicable, the Supermajority Lenders or Majority Lenders (as the
case may be) shall use good faith efforts to respond to each request for a
Project Document Modification pursuant to this Section 6.12 as soon as possible
and in all events within 30 days of its receipt of written notification thereof.
No Project Document Modification requiring approval by the Supermajority Lenders
or Majority Lenders (as the case may be) hereunder shall be deemed approved by
the Supermajority Lenders or Majority Lenders (as the case may be) until
expressly approved.

      6.13  NAME AND LOCATION; FISCAL YEAR.

            Unless consented to in writing by Administrative Agent, change its
name, its jurisdiction of formation, the location of its principal place of
business, its organization identification number or its fiscal year.

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      6.14  USE OF SITE.

            Use, or permit to be used, the Site for any purpose (a) which could
reasonably be expected to constitute a public or private nuisance that could
reasonably be expected to have a Material Adverse Effect, or (b) other than for
the operation and maintenance of the Project as contemplated by the Operative
Documents.

      6.15  ASSIGNMENT.

            Assign its rights hereunder, under the other Credit Documents or
under any Major Project Document to any Person, except as set forth in this
Agreement and the other Credit Documents.

      6.16  ACCOUNTS.

            Maintain, establish or use any account (other than the Accounts)
without the prior written consent of Administrative Agent.

      6.17  HAZARDOUS SUBSTANCES.

            Release into the environment any Hazardous Substances in violation
of any Hazardous Substance Laws, Legal Requirements or Applicable Permits,
except for any Release that could not reasonably be expected to materially
impair the value of the Site and the Collateral, taken as a whole, and could not
otherwise reasonably be expected to have a Material Adverse Effect.

      6.18  ADDITIONAL PROJECT DOCUMENTS.

            Without the consent of the Majority Lenders (which consent shall not
be unreasonably withheld), enter into, or become a party to any Project Document
not in existence on the Closing Date (any such Project Document not subject to
exception as follows, an "Additional Project Document"), except contracts
entered into on an arm's length basis for the purchase by Borrower of goods or
services which:

            (a) provide for the payment by Borrower of, or the provision to
Borrower of such goods and services with a value of, $2,000,000 or less;

            (b) provide for payment of Emergency Operating Costs; or

            (c) replace a Major Project Document as contemplated by the
definition of "Replacement Obligor".

provided that in no event shall Borrower enter into any contract or agreement
without the consent of the Majority Lenders other than those related to
Borrower's owning, leasing, operating, maintaining or using the Project.
Notwithstanding anything contained in this Agreement to the contrary, Borrower
shall not enter into any Project Document with an Affiliate of Borrower unless
Borrower, such Affiliate and Administrative Agent shall have entered into a
Subordination Agreement with respect to such Project Document.

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      6.19  ASSIGNMENT BY THIRD PARTIES.

            Without prior written consent of (a) in the case of the Power
Purchase Agreement, the Supermajority Lenders or (b) in the case of any other
Major Project Document, the Majority Lenders, consent to the assignment of any
obligations under any Major Project Document by any counterparty thereto other
than to a Replacement Obligor.

      6.20  ACQUISITION OF REAL PROPERTY.

            Acquire or lease any real property or other interest in real
property (excluding the acquisition of any easements or the acquisition (but not
the exercise) of any options to acquire any such interests in real property)
other than the Site, Easements and other interests in real property acquired on
or prior to the Closing Date, unless Borrower shall have delivered to
Administrative Agent a "Phase I" environmental report with respect to such real
property and, if a "Phase II" environmental review is warranted (as reasonably
determined by the Administrative Agent upon its review of such "Phase I"
environmental report), a "Phase II" environmental report, in each case, along
with a corresponding reliance letter from the consultant issuing such report(s),
confirming, in form and substance reasonably satisfactory to Administrative
Agent, either that (a) no Hazardous Substances were found in, on or under such
real property of a nature or concentrations that could reasonably be expected to
impose on Borrower or Riverside Borrower a material environmental liability or
(b) the conditions and risks associated with such Hazardous Substances were
otherwise being addressed in a manner satisfactory to Administrative Agent.

      6.21  EMPLOYEE BENEFIT PLANS.

            Maintain any employee benefit plans subject to ERISA.

      6.22  POWER SALES.

            6.22.1 Consent to, or permit, the provision of electrical products
to any Person other than PSCo under the Power Purchase Agreement, without the
prior written consent of Administrative Agent (acting at the direction of the
Majority Lenders).

            6.22.2 (a) Provide information or notification to PSCo relating to
any Long-Term Excess Capacity (as such term is defined in the Power Purchase
Agreement), or (b) exercise the Put Option (as such term is defined in the Power
Purchase Agreement) pursuant to Section 7.3(B) of the Power Purchase Agreement,
in each case, unless (i) Borrower has notified Administrative Agent of its
intention to provide such information or notification or exercise such option
(as the case may be) and (ii) Administrative Agent (acting at the direction of
the Majority Lenders) has not delivered a notice to Borrower objecting to the
provision of such information or notification or the exercise of such option (as
the case may be) within 30 days after the receipt of the notice referred to in
clause (b)(i) above.

      6.23  GOVERNING DOCUMENT CHANGES.

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            Consent to, or permit, (a) the termination or cancellation of the
Governing Documents of Borrower or (b) any material amendment, supplement or
modification of the Governing Documents of Borrower.

                                   ARTICLE 7
                           EVENTS OF DEFAULT; REMEDIES

      7.1   EVENTS OF DEFAULT.

            Until the Termination Date, the occurrence of any of the following
events shall constitute an event of default (each, an "Event of Default")
hereunder:

            7.1.1 Failure to Make Payments. Borrower shall fail to pay in
accordance with the terms of this Agreement (a) any principal on any Term Loan
or any reimbursement obligation in respect of any Funded LC Disbursement on the
date that such sum is due, (b) any interest on any Term Loan within five days
after the date such sum is due, (c) any scheduled fee, cost, charge or sum due
hereunder or under any other Credit Documents within five days of the date that
such sum is due, or (d) any other fee, cost, charge or other sum due under this
Agreement or the other Credit Documents within 30 days after written notice that
such sum is due.

            7.1.2 Bankruptcy; Insolvency. The Pledgor, Borrower or any other
Major Project Participant (so long as such Major Project Participant shall have
outstanding or unperformed obligations under the Operative Document to which it
is a party) shall become subject to a Bankruptcy Event; provided that, solely
with respect to a Bankruptcy Event with respect to a Person other than Borrower
or the Pledgor, no Event of Default shall occur as a result of such Bankruptcy
Event if (a) Borrower obtains a Replacement Obligor for the affected party
within 90 days thereafter and such Bankruptcy Event has not had and does not
have, prior to so obtaining such Replacement Obligor, a Borrower Material
Adverse Effect or (b) the applicable Major Project Participant is substantially
performing its remaining obligations with respect to the Project Documents to
which it is a party and has affirmed, within 90 days thereafter, the Operative
Document(s) to which it is a party.

            7.1.3 Defaults Under Other Indebtedness. Borrower shall default for
a period beyond any applicable grace period (a) in the payment of any principal,
interest or other amount due under any agreement involving Debt and the
outstanding amount or amounts payable under any such agreement equals or exceeds
$1,000,000 in the aggregate or (b) in the performance of any obligation due
under any agreement involving Debt if in the case of this clause (b), pursuant
to such default, the holder of the obligation concerned has accelerated the
maturity of any indebtedness evidenced thereby which equals or exceeds
$1,000,000 in the aggregate.

            7.1.4 Judgments. A final judgment or judgments shall be entered
against Borrower in the amount of $1,000,000 or more individually or in the
aggregate, other than, in each case, (a) a judgment which is fully covered by
insurance or discharged within 60 days after its entry, or (b) a judgment, the
execution of which is effectively stayed within 60 days after its entry but only
for 60 days after the date on which such stay is terminated or expires.

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            7.1.5 ERISA. If any Calpine Entity or any ERISA Affiliate should
establish, maintain, contribute to or become obligated to contribute to any
ERISA Plan and (a) a Reportable Event (under Section 4043(b) or (c) of ERISA for
which notice to the PBGC is not waived) shall have occurred with respect to any
ERISA Plan and, within 30 days after the reporting of such Reportable Event to
Administrative Agent by Borrower (or Administrative Agent otherwise obtaining
knowledge of such event) and the furnishing of such information as
Administrative Agent may reasonably request with respect thereto, Administrative
Agent shall have notified Borrower in writing that (i) Administrative Agent or
the Majority Lenders has made a determination that, on the basis of such
Reportable Event, there are reasonable grounds for the termination of such ERISA
Plan by the PBGC or for the appointment by the appropriate United States
District Court of a trustee to administer such ERISA Plan and (ii) as a result
thereof, an Event of Default exists hereunder; or (b) a trustee shall be
appointed by a United States District Court to administer any ERISA Plan; or (c)
the PBGC shall institute proceedings to terminate any ERISA Plan; or (d) a
complete or partial withdrawal by Borrower or any ERISA Affiliate from any
Multiemployer Plan shall have occurred and, within 30 days after the reporting
of any such occurrence to Administrative Agent by Borrower (or Administrative
Agent otherwise obtaining knowledge of such event) and the furnishing of such
information as Administrative Agent or Majority Lenders may reasonably request
with respect thereto, Administrative Agent shall have notified Borrower in
writing that Administrative Agent has made a determination that, on the basis of
such occurrence, an Event of Default exists hereunder; or (e) any Calpine Entity
or any ERISA Affiliate shall have failed to fulfill its obligations under the
minimum funding standards of ERISA or the Code with respect to any ERISA Plan;
provided that any of the events described in this Section 7.1.5 shall result in
aggregate liability to all Calpine Entities and all ERISA Affiliates in excess
of $5,000,000.

            7.1.6 Breach of Terms of Agreement.

            (a) Defaults Without Cure Periods. Borrower shall fail to perform or
observe any of the covenants set forth in Section 5.1.1, 5.9(a), 5.17 (with
respect to the maintenance of the insurance policies required to be in effect on
the Closing Date (or any replacement policies therefor obtained in compliance
herewith)) or 5.23, or Article 6 (other than Sections 6.1, 6.2, 6.7, 6.8, 6.13,
6.14, 6.16 and 6.17) of this Agreement.

            (b) Defaults With 30 Day Cure Periods. Borrower shall fail to
perform or observe any of the covenants set forth in Section 5.1.2, 5.13, 5.17
(with respect to all matters other than as specifically provided for in clause
(a) of this Section 7.1.6), 5.19, 5.21 5.22, 5.24, 6.1, 6.2, 6.7, 6.8, 6.13,
6.14, 6.16 or 6.17, and such failure shall continue unremedied for a period of
30 days after Borrower becomes aware that the failure thereof could result in an
Inchoate Default or receives written notice thereof from Administrative Agent.

            (c) Other Defaults. Borrower, Riverside Borrower or any other
Calpine Entity shall fail to perform or observe any of the covenants set forth
hereunder or any other Credit Document not otherwise specifically provided for
in Section 7.1.6(a), Section 7.1.6(b) or elsewhere in this Article 7, and such
failure shall continue unremedied for a period of 30 days after Borrower becomes
aware that the failure thereof could result in an Inchoate Default or receives
written notice thereof from Administrative Agent; provided, however, that, if
(i) such failure cannot be cured within such 30 day period, (ii) such failure is
susceptible of cure within

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90 days, (iii) Borrower, Riverside Borrower or such other Calpine Entity, as
applicable, is proceeding with diligence and in good faith to cure such failure,
(iv) the existence of such failure has not had and could not, after considering
the nature of the cure, be reasonably expected to have a Material Adverse
Effect, and (v) Administrative Agent shall have received an officer's
certificate signed by a Responsible Officer to the effect of clauses (i), (ii),
(iii) and (iv) above and stating what action Borrower, Riverside Borrower or
such other Calpine Entity, as applicable, is taking to cure such failure, then
such 30 day cure period shall be extended to such date, not to exceed a total of
90 days, as shall be necessary for Borrower, Riverside Borrower or such other
Calpine Entity, as applicable, diligently to cure such failure.

            7.1.7 Loss of Collateral. Any substantial portion of the Collateral
is damaged, seized or appropriated without appropriate insurance proceeds
(subject to the underlying deductible) or without fair value being paid therefor
so as to allow replacement of such Collateral and/or prepayment of Term Loans
and to allow Borrower to continue satisfying its obligations hereunder and under
the other Operative Documents.

            7.1.8 Riverside Credit Agreement Event of Default. An "Event of
Default" under, and as defined in, the Riverside Credit Agreement shall have
occurred and be continuing.

            7.1.9 Regulatory Status.

            (a) If loss of EWG status for Borrower or loss of Eligible Facility
status for the Project could reasonably be expected to have a Material Adverse
Effect, (i) Borrower shall have tendered notice to FERC that Borrower has ceased
to be an EWG or (ii) FERC shall have issued an order determining that Borrower
no longer meets the criteria of an EWG or takes other action revoking such EWG
status.

            (b) Borrower shall suffer an Adverse PUHCA Event or shall otherwise
become subject to, or not exempt from financial, organizational or rate
regulation as an "electric utility company", "public-utility company" or
"holding company" under PUHCA or as a public utility under the laws of the State
of Colorado as presently constituted and as construed by the courts of Colorado.

            7.1.10 Abandonment. Borrower shall announce that (a) it is
abandoning the Project or (b) the Project shall be abandoned or operation
thereof shall be suspended for a period of more than 30 consecutive days for any
reason (other than force majeure); provided that none of (i) scheduled
maintenance of the Project, (ii) repairs to the Project, whether or not
scheduled, or (iii) a forced outage or scheduled outage of the Project, shall
constitute abandonment or suspension of the Project, so long as Borrower is
diligently attempting to end such suspension.

            7.1.11 Security. Except as the result of the acts or omissions of
Administrative Agent, Depositary Agent, Collateral Agent or the Secured Parties,
any of the Collateral Documents, once executed and delivered, shall, other than
with respect to an immaterial portion of the Collateral, fail to provide to
Collateral Agent, for the benefit of the Secured Parties, the Liens, first
priority security interest (subject to Permitted Liens in clauses (a) and (e) of
the definition thereof and, to the extent required by Governmental Rule, clauses
(b), (c) and (g) of the definition thereof), rights, titles, interest, remedies
permitted by law, powers or privileges

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intended to be created thereby or, except in accordance with its terms, cease to
be in full force and effect, or the first priority or validity thereof or the
applicability thereof to the Term Loans, the Notes (if any) or any other
obligations purported to be secured or guaranteed thereby or any part thereof
shall be disaffirmed by or on behalf of Borrower.

            7.1.12 Loss of or Failure to Obtain Applicable Permits.

            (a) Borrower shall fail to obtain any Permit on or before the date
that such Permit becomes an Applicable Permit with respect to the Project, and
such failure could reasonably be expected to have a Material Adverse Effect.

            (b) Any Applicable Permit necessary for operation of the Project and
for Borrower's performance of its obligations under the Project Documents shall
be materially modified (other than modifications contemplated in a Project
Document requested by Borrower and approved in writing in advance of such
modification by Administrative Agent acting at the direction of the Majority
Lenders, which approval shall not be unreasonably withheld), revoked, canceled
or not renewed by the issuing agency or other Governmental Authority having
jurisdiction (or otherwise ceases to be in full force and effect) other than any
such modification of, revocation of, cancellation of, failure to renew, or
failure to maintain in full force and effect such Permit that could not
reasonably be expected to have a Material Adverse Effect.

            7.1.13 Unenforceability of Credit Documents. At any time after the
execution and delivery thereof and until the Termination Date, any material
provision of any material Credit Document shall cease to be in full force and
effect (other than following the Termination Date by reason of the satisfaction
in full of the Borrower's Obligations or any other termination of a Credit
Document in accordance with the terms hereof or thereof) or any material Credit
Document shall be declared null and void by a Governmental Authority of
competent jurisdiction.

            7.1.14 Misstatements; Omissions. Any representation or warranty made
or deemed made by any Calpine Entity in this Agreement, or in any other Credit
Document to which such Person is a party, or in any separate statement,
certificate or document delivered to Lead Arranger, Administrative Agent,
Depositary Agent, Collateral Agent, Issuing Bank or any Lender hereunder or
under any other Credit Document to which such Person is a party, shall be untrue
or misleading in any material respect as of the time made and such
representation or warranty has not been corrected within 30 days after Borrower
becomes aware that such misstatement or omission could result in an Inchoate
Default or receives notice thereof from Administrative Agent.

            7.1.15 Project Document Defaults.

            (a) Borrower. Borrower shall be in breach of, or in default under, a
Major Project Document which breach or default if not cured could reasonably be
expected to have a Material Adverse Effect and such breach or default shall not
be remediable or, if remediable, shall continue unremedied for the lesser of (i)
the greater of (A) a period of 30 days; provided that if (1) such breach cannot
be cured within such 30 day period (or such lesser period of time, as the case
may be), (2) such breach is susceptible of cure within 90 days after such breach
or

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default, and (3) Borrower is proceeding with diligence and in good faith to cure
such breach, then such 30 day cure period (or such lesser period of time, as the
case may be) shall be extended to such date, not to exceed a total of 90 days,
as shall be necessary for Borrower diligently to cure such breach and (B) the
date that is 30 days prior to the date that Collateral Agent's cure period under
any applicable Consent relating to such Major Project Document expires, or (ii)
such period of time (without giving effect to any extension given to Collateral
Agent under any applicable Consent with respect thereto) under such Major
Project Document which Borrower has available to it in which to remedy such
breach or default.

            (b) Third Party. Any Person other than Borrower shall be in breach
of, or in default under, a Major Project Document which breach or default if not
cured could reasonably be expected to have a Material Adverse Effect and such
breach or default shall not be remediable or, if remediable, shall continue
unremedied for a period of 30 days from the time Borrower obtains knowledge of
such breach; provided that if (i) such breach cannot be cured within such 30 day
period, (ii) such breach or default is susceptible of cure within 90 days, and
(iii) the breaching Person or Borrower is proceeding with diligence and in good
faith to cure such breach, then such 30 day cure period shall be extended to
such date, not to exceed a total of 90 days, as shall be necessary for such
breaching Person diligently to cure such breach; provided, further, that no
Event of Default shall occur as a result of any such action if Borrower obtains
a Replacement Obligor for the affected party within the 90 day cure period
referred to in this paragraph (or within the 30 day cure period, if no extension
is given) and such action does not have prior to so obtaining such Replacement
Obligor a Borrower Material Adverse Effect.

            (c) Third Party Consents. (i) Any Person other than Borrower shall
disaffirm or repudiate in writing its material obligations under any Consent and
such disaffirmation or repudiation is not rescinded and revoked in writing by
such Person within 60 days thereof, (ii) any representation or warranty made by
any Person other than Borrower in a Consent shall be untrue or misleading in any
material respect as of the time made and such untrue or misleading
representation or warranty could reasonably be expected to materially adversely
affect the rights of the Collateral Agent or the Secured Parties thereunder or
to otherwise result in a Material Adverse Effect, or (iii) a Person other than
Borrower shall breach any material covenant of a Consent and such breach or
default shall not be remediable or, if remediable, shall continue unremedied for
a period of 30 days from the time Borrower obtains knowledge of such breach;
provided that if (A) such breach cannot be cured within such 30 day period, (B)
such breach is susceptible of cure within 90 days, (C) the breaching party or
Borrower is proceeding with diligence and in good faith to cure such breach, and
(D) the existence of such breach has not had and could not after considering the
nature of the cure, be reasonably expected to have a Material Adverse Effect,
then such 30 day cure period shall be extended to such date, not to exceed a
total of 90 days, as shall be necessary for such third party diligently to cure
such breach; provided, further, that no Event of Default shall occur as a result
of any such action if Borrower obtains a Replacement Obligor for the affected
party with respect to the contract or contracts to which such Consent relates,
within the 90 day cure period referred to in this paragraph (or within the 30
day cure period, if no extension is given) and such action does not have prior
to so obtaining such Replacement Obligor a Material Adverse Effect.

            (d) Termination. A Major Project Document shall terminate on or
before its scheduled expiration date except upon fulfillment of such party's
obligations thereunder, or shall

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be declared null and void; provided that no Event of Default shall occur as a
result of such breach or default if Borrower obtains a Replacement Obligor for
the affected party within 90 days thereafter and such breach or default has not
had and does not have prior to so obtaining such Replacement Obligor, a Material
Adverse Effect.

            7.1.16 Power Purchase Agreement. (a) PSCo shall have validly
exercised its "step-in" rights pursuant to Section 12.5 of the Power Purchase
Agreement, or (b) the Sponsor shall have failed in any material respects to
perform any of its obligations under the PSCo Calpine Guaranty.

      7.2   REMEDIES.

            Upon the occurrence and during the continuation of an Event of
Default, Administrative Agent, Collateral Agent, and the Lenders may, at the
election of the Majority Lenders, without further notice of default, presentment
or demand for payment, protest or notice of non-payment or dishonor, or other
notices or demands of any kind, all such notices and demands (other than notices
required by the Credit Documents) being waived, exercise any or all of the
following rights and remedies, in any combination or order that the Majority
Lenders may elect, in addition to such other rights or remedies as the Secured
Parties may have hereunder, under the Collateral Documents or at law or in
equity:

            7.2.1 No Further Term Loans. Cancel the Total Term Loan Commitment,
refuse, and Administrative Agent, and the Lenders shall not be obligated, to
continue any Term Loans, or make any payments, or permit the making of payments,
from any Account or any Loss Proceeds or other funds held by Administrative
Agent or Collateral Agent under the Credit Documents or on behalf of Borrower;
provided that in the case of an Event of Default occurring under Section 7.1.2
with respect to Borrower, the Total Term Loan Commitment shall be cancelled and
terminated without further act of Administrative Agent, Collateral Agent, or any
Secured Party.

            7.2.2 Cure by Agents. Without any obligation to do so, make
disbursements to or on behalf of Borrower or disburse amounts from the Accounts
to cure (a) any Event of Default or Inchoate Default hereunder and (b) any
default and render any performance under any Project Document as the Majority
Lenders in their sole discretion may consider necessary or appropriate, whether
to preserve and protect the Collateral or the Secured Parties' interests therein
or for any other reason. All sums so expended, together with interest on such
total amount at the Default Rate (but in no event shall the rate exceed the
maximum lawful rate), shall be repaid by Borrower to Administrative Agent or
Collateral Agent, as the case may be, on demand and shall be secured by the
Credit Documents, notwithstanding that such expenditures may, together with
amounts advanced under this Agreement, exceed the aggregate amount of the Total
Term Loan Commitment.

            7.2.3 Acceleration. Declare and make all or a portion of the sums of
accrued and outstanding principal and accrued but unpaid interest remaining
under this Agreement, together with all unpaid fees, costs (including
Liquidation Costs and Hedge Breaking Fees) and charges due hereunder or under
any other Credit Document, immediately due and payable and require Borrower
immediately, without presentment, demand, protest or other notice of any kind,
all of

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which Borrower hereby expressly waives, to pay Administrative Agent or the
Secured Parties an amount in immediately available funds equal to the aggregate
amount of any outstanding Obligations; provided that, in the event of an Event
of Default occurring under Section 7.1.2 with respect to Borrower, all such
amounts shall become immediately due and payable without further act of
Administrative Agent, Collateral Agent, or the Secured Parties.

            7.2.4 Cash Collateral. Apply or execute upon any amounts on deposit
in any Account or any Loss Proceeds or any other moneys of Borrower on deposit
with Administrative Agent, Collateral Agent, Depositary Agent or any Secured
Party in the manner provided in the UCC and other relevant statutes and
decisions and interpretations thereunder with respect to cash collateral.
Without limiting the foregoing, each of Administrative Agent, Collateral Agent
and Depositary Agent shall have all rights and powers with respect to Loss
Proceeds, the Accounts and the contents of the Accounts as it has with respect
to any other Collateral and may apply, or cause the application of, such amounts
to the payment of interest, principal, fees, costs, charges or other amounts due
or payable to Administrative Agent, Collateral Agent, Issuing Bank, Depositary
Agent or the Secured Parties with respect to the Term Loans or as otherwise
provided in the Depositary Agreement in such order as the Majority Lenders may
elect in their sole discretion. Until such time as the Majority Lenders so elect
to exercise such rights and powers, amounts in the Revenue Account shall be
applied as provided in the Depositary Agreement. Borrower shall not have any
rights or powers with respect to such amounts except as expressly provided in
this Section 7.2.4.

            7.2.5 Possession of Project. Enter into possession of the Project
and perform any and all work and labor necessary to operate and maintain the
Project, and all sums expended by Administrative Agent, Collateral Agent or
Depositary Agent in so doing, together with interest on such total amount at the
Default Rate, shall be repaid by Borrower to Administrative Agent, Collateral
Agent or Depositary Agent, as the case may be, upon demand and shall be secured
by the Credit Documents, notwithstanding that such expenditures may, together
with amounts advanced under this Agreement, exceed the aggregate amount of the
Total Term Loan Commitment.

            7.2.6 Remedies Under Credit Documents. Exercise, and direct
Administrative Agent, Depositary Agent or Collateral Agent (as the case may be)
to exercise, any and all rights and remedies available to it under any of the
Credit Documents, including judicial or non-judicial foreclosure or public or
private sale of any of the Collateral pursuant to the Collateral Documents.

            7.2.7 Cash Collateralization of PSCo Letter of Credit. Maintain in
an account under the exclusive dominion and control of Administrative Agent for
the payment of any Funded LC Disbursement and interest thereon and fees related
thereto an amount of cash equal to the greater of such amount and 110% of the
stated amount of the PSCo Letter of Credit. If and to the extent the PSCo Letter
of Credit is cash collateralized to the extent provided in this Section 7.2.7,
Issuing Bank shall release from the Credit-Linked Deposit Account, and return to
each Lender such Lender's Proportionate Share of, Funded LC Credit-Linked
Deposits in an aggregate amount equal to the amount of the PSCo Letter of Credit
so cash collateralized.

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                                   ARTICLE 8
                               SCOPE OF LIABILITY

            Except as set forth in this Article 8, notwithstanding anything in
this Agreement or the other Credit Documents to the contrary, the Lenders shall
have no claims with respect to the transactions contemplated by the Operative
Documents against the Sponsor or any of its Affiliates (other than Borrower and
Riverside Borrower), shareholders, officers, directors or employees
(collectively, the "Nonrecourse Persons") and the Lenders' recourse against
Borrower and Riverside Borrower and the Nonrecourse Persons shall be limited to
the Collateral, the Project, all Project Revenues, all Term Loan proceeds,
Insurance Proceeds, Eminent Domain Proceeds, and all income or revenues of the
foregoing as and to the extent provided herein and in the Collateral Documents;
provided that the foregoing provision of this Article 8 shall not (a) constitute
a waiver, release or discharge of any of the indebtedness, or of any of the
terms, covenants, conditions, or provisions of this Agreement or any other
Credit Document and the same shall continue (but without personal liability to
the Nonrecourse Persons) until fully paid, discharged, observed, or performed;
(b) limit or restrict the right of Administrative Agent, Collateral Agent,
Issuing Bank or any Secured Party (or any assignee, beneficiary or successor to
any of them) to name Borrower, Riverside Borrower or any other Person as a
defendant in any action or suit for a judicial foreclosure or for the exercise
of any other remedy under or with respect to this Agreement or any other
Collateral Document or Credit Document, or for injunction or specific
performance, so long as no judgment in the nature of a deficiency judgment shall
be enforced against any Nonrecourse Person, except as set forth in this Article
8; (c) in any way limit or restrict any right or remedy of Administrative Agent,
Collateral Agent, Issuing Bank or any Secured Party (or any assignee or
beneficiary thereof or successor thereto) with respect to, and each of the
Nonrecourse Persons shall remain fully liable to the extent that it would
otherwise be liable for its own actions with respect to, any fraud, willful
misrepresentation (which shall not include innocent or negligent
misrepresentation), or misappropriation of Project Revenues, Term Loan proceeds,
Insurance Proceeds, Eminent Domain Proceeds or any other earnings, revenues,
rents, issues, profits or proceeds from or of the Collateral, that should or
would have been paid as provided herein or paid or delivered to Administrative
Agent, Collateral Agent, Issuing Bank or any Secured Party (or any assignee or
beneficiary thereof or successor thereto) towards any payment required under
this Agreement or any other Credit Document; (d) affect or diminish or
constitute a waiver, release or discharge of any specific written obligation,
covenant, or agreement in respect of the transactions contemplated by the
Operative Documents made by any of the Nonrecourse Persons or any security
granted by the Nonrecourse Persons in support of the obligations of such Persons
under any Collateral Document (or as security for the obligations of Borrower)
or the Pledge Agreement; and (e) limit the liability of (i) any Person who is a
party to any Project Document or has issued any certificate or other statement
in connection therewith with respect to such liability as may arise by reason of
the terms and conditions of such Project Document (but subject to any limitation
of liability in such Project Document), certificate or statement, or (ii) any
Person rendering a legal opinion pursuant to this Agreement (including Section
3.1.8 or the definition of Required HoldCo Transfer), in each case under this
clause (e) relating solely to such liability of such Person as may arise under
such referenced agreement, instrument or opinion. The limitations on recourse
set forth in this Article 8 shall survive the Termination Date.

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                                   ARTICLE 9
                              AGENTS; SUBSTITUTION

      9.1   APPOINTMENT, POWERS AND IMMUNITIES.

            9.1.1 Each Lender hereby appoints and authorizes (a) Administrative
Agent to act as its agent hereunder and under the other Credit Documents, (b)
Collateral Agent to act as its collateral agent hereunder and under the other
Credit Documents, and (c) Issuing Bank to act as issuer of the PSCo Letter of
Credit, in each case with such powers as are expressly delegated to
Administrative Agent, Collateral Agent or Issuing Bank (as the case may be) by
the terms of this Agreement and the other Credit Documents, together with such
other powers as are reasonably incidental thereto. None of Administrative Agent,
Collateral Agent or Issuing Bank shall have any duties or responsibilities
except those expressly set forth in this Agreement or in any other Credit
Document, or be a trustee or a fiduciary for any Secured Party. Notwithstanding
anything to the contrary contained herein, none of Administrative Agent,
Collateral Agent or Issuing Bank shall be required to take any action which is
contrary to this Agreement or any other Credit Documents or any Legal
Requirement or exposes Administrative Agent, Collateral Agent or Issuing Bank
(as the case may be) to any liability. Each of Lead Arranger, Collateral Agent,
Administrative Agent, Issuing Bank, the Lenders and any of their respective
Affiliates shall not be responsible to any other Secured Party for (i) any
recitals, statements, representations or warranties made by Borrower or its
Affiliates contained in this Agreement, the other Credit Documents or in any
certificate or other document referred to or provided for in, or received by
Lead Arranger, Administrative Agent, Collateral Agent, Issuing Bank or any
Secured Party under this Agreement or any other Credit Document, (ii) the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement, the other Credit Documents, any Notes or any other document referred
to or provided for herein, or (iii) any failure by Borrower or its Affiliates to
perform their respective obligations hereunder or thereunder. Each of
Administrative Agent, Collateral Agent and Issuing Bank may employ agents and
attorneys-in-fact, and neither shall be responsible for the negligence or
misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care.

            9.1.2 None of Collateral Agent, Administrative Agent, Issuing Bank,
Lead Arranger and their respective directors, officers, employees or agents
shall be responsible for any action taken or omitted to be taken by it or them
hereunder or under any other Credit Document or in connection herewith or
therewith, except for its or their own gross negligence or willful misconduct.
Without limiting the generality of the foregoing, (a) Administrative Agent may
treat the payee of any Note as the holder thereof until Administrative Agent
receives written notice of the assignment or transfer thereof signed by such
payee and in form satisfactory to Administrative Agent; (b) each of
Administrative Agent, Collateral Agent and Issuing Bank may consult with legal
counsel, independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
them in accordance with the advice of such counsel, accountants or experts; (c)
none of Collateral Agent, Administrative Agent, Issuing Bank and Lead Arranger
makes any warranty or representation to any Secured Party for any statements,
warranties or representations made in or in connection with any Operative
Document; (d) none of Collateral Agent, Administrative Agent, Issuing Bank and
Lead Arranger shall have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of any
Operative Document on the part

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of any party thereto, to inspect the property (including the books and records)
of Borrower or any other Person or to ascertain or determine whether a Material
Adverse Effect exists or is continuing; and (e) none of Collateral Agent,
Administrative Agent, Issuing Bank and Lead Arranger shall be responsible to any
Secured Party for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of any Operative Document or any other
instrument or document furnished pursuant hereto. Except as otherwise provided
under this Agreement and the other Credit Documents, each of Administrative
Agent, Collateral Agent and Issuing Bank shall take such action with respect to
the Credit Documents as shall be directed by the Majority Lenders.

            9.1.3 The Book Runner shall have no right, power, obligation,
liability, responsibility or duty under this Agreement, other than those
applicable to all Secured Parties and those set forth in this Article 9. The
Syndication Agent shall have no right, power, obligation, liability,
responsibility or duty under this Agreement, other than those applicable to all
Secured Parties and those set forth in this Article 9. Lead Arranger shall only
have those rights, powers, obligations, liabilities, responsibilities and duties
set forth in Section 3.1 and this Article 9. Without limiting the foregoing,
none of Lead Arranger, Syndication Agent and the Book Runner shall have or be
deemed to have a fiduciary relationship with any Secured Party. Each Secured
Party hereby makes the same acknowledgments with respect to Lead Arranger,
Syndication Agent and the Book Runner as it makes with respect to the
Administrative Agent or the Collateral Agent in this Article 9. Notwithstanding
the foregoing, the parties hereto acknowledge that the Book Runner and the
Syndication Agent hold such titles in name only, and that such titles confer no
additional rights or obligations relative to those conferred on any Secured
Party hereunder.

      9.2   RELIANCE.

            Each of Administrative Agent, Collateral Agent and Issuing Bank
shall be entitled to rely upon any certificate, notice or other document
(including any cable, telegram, facsimile, electronic mail or telex) believed by
it to be genuine and correct and to have been signed or sent by or on behalf of
the proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by it. As to any other
matters not expressly provided for by this Agreement, none of Collateral Agent,
Administrative Agent or Issuing Bank shall be required to take any action or
exercise any discretion, but shall be required to act or to refrain from acting
upon instructions of the Majority Lenders or, where expressly provided, the
Supermajority Lenders or all Lenders (except that none of Collateral Agent,
Administrative Agent or Issuing Bank shall be required to take any action which
exposes Collateral Agent, Administrative Agent or Issuing Bank (as the case may
be) to personal liability or which is contrary to this Agreement, any other
Credit Document or any Legal Requirement). Each of Collateral Agent,
Administrative Agent and Issuing Bank shall in all cases (including when any
action by Collateral Agent, Administrative Agent or Issuing Bank (as the case
may be) alone is authorized hereunder, if Collateral Agent, Administrative Agent
or Issuing Bank (as the case may be) elects in its sole discretion to obtain
instructions from the Majority Lenders) be fully protected in acting, or in
refraining from acting, hereunder or under any other Credit Document in
accordance with the instructions of the Majority Lenders (or, where so expressly
stated, the Supermajority Lenders or all Lenders), and such instructions of the
Majority Lenders (or Supermajority Lenders or all Lenders, where applicable) and
any action taken or failure to act

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pursuant thereto shall be binding on all of the Secured Parties. In addition,
for purposes of determining compliance with the conditions specified in Section
3.1, each Lender that has executed this Agreement shall be deemed to have
consented to, approved or accepted or to be satisfied with, each document or
other matter either sent by Administrative Agent to such Lender for consent,
approval, acceptance or satisfaction, or required thereunder to be consented to
or approved by or acceptable or satisfactory to Lender.

      9.3   NON-RELIANCE.

            Each Lender represents that it has, independently and without
reliance on Lead Arranger, Collateral Agent, Administrative Agent, Issuing Bank
or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own appraisal of the financial condition and
affairs of the Calpine Entities and its own decision to enter into this
Agreement and agrees that it will, independently and without reliance upon Lead
Arranger, Collateral Agent, Administrative Agent, Issuing Bank or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own appraisals and decisions in taking or not
taking action under this Agreement. Each of Administrative Agent, Lead Arranger,
Collateral Agent, Issuing Bank and any Lender shall not be required to keep
informed as to the performance or observance by any Calpine Entity or its
Affiliates under this Agreement or any other document referred to or provided
for herein or to make inquiry of, or to inspect the properties or books of any
Calpine Entity or its Affiliates.

      9.4   DEFAULTS; MATERIAL ADVERSE EFFECT.

            None of Lead Arranger, Collateral Agent, Issuing Bank and
Administrative Agent shall be deemed to have knowledge or notice of the
occurrence of any Inchoate Default, Event of Default or Material Adverse Effect,
unless such Person has received a notice from a Lender or Borrower, referring to
this Agreement, describing such Inchoate Default, Event of Default or Material
Adverse Effect and indicating that such notice is a notice of the occurrence of
such default or Material Adverse Effect (as the case may be). If Administrative
Agent receives such a notice of the occurrence of an Inchoate Default, Event of
Default or Material Adverse Effect, Administrative Agent shall give notice
thereof to the Lenders. Each of Collateral Agent and Administrative Agent shall
take such action with respect to such Inchoate Default, Event of Default or
Material Adverse Effect as is provided in Article 3, Article 7 or the terms of
the Credit Documents, or if not provided for in Article 3, Article 7 or such
Credit Documents, as Administrative Agent or Collateral Agent shall be
reasonably directed by the Majority Lenders; provided, however, that unless and
until Administrative Agent or Collateral Agent shall have received such
directions, each of Administrative Agent and Collateral Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Inchoate Default, Event of Default or Material Adverse Effect as
it shall deem advisable in the best interest of the Lenders.

      9.5   SUCCESSOR AGENT & ISSUING BANK.

            Each of Collateral Agent, Administrative Agent and Issuing Bank may
resign at any time by giving fifteen days' written notice thereof to the Secured
Parties and Borrower; provided that the resigning Administrative Agent or
Collateral Agent may only resign hereunder if such Person

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also resigns in such capacity under the Riverside Credit Agreement. Each of
Collateral Agent, Administrative Agent and Issuing Bank may be removed
involuntarily only for a material breach of its respective duties and
obligations hereunder and under the other Credit Documents or for gross
negligence or willful misconduct in connection with the performance of its
respective duties hereunder or under the other Credit Documents and then only
upon the affirmative vote of the Majority Lenders (excluding Administrative
Agent, Collateral Agent and Issuing Bank (as the case may be) from such vote and
Administrative Agent's, Collateral Agent's and Issuing Bank's (as the case may
be) Proportionate Share (if any) of the Total Term Loan Commitment and Term
Loans from the amounts used to determine the portion of the Total Term Loan
Commitment and Term Loans necessary to constitute the required Proportionate
Share of the remaining Lenders); provided that the removed Administrative Agent
or Collateral Agent may only be removed hereunder if such Person also is removed
in such capacity under the Riverside Credit Agreement. Upon any such resignation
or removal of Administrative Agent, Collateral Agent or Issuing Bank, the
Majority Lenders shall have the right, with the consent of Borrower (such
consent not to be unreasonably withheld or delayed) to appoint a successor
Administrative Agent, Collateral Agent or Issuing Bank (as the case may be)
under this Agreement and, with respect to Administrative Agent or Collateral
Agent, under the Riverside Credit Agreement. If no successor Administrative
Agent, Collateral Agent or Issuing Bank (as the case may be) shall have been so
appointed by the Majority Lenders and shall have accepted such appointment,
within 30 days after the retiring Administrative Agent's, Collateral Agent's or
Issuing Bank's (as the case may be) giving of notice of resignation or the
Lenders' removal of the retiring Administrative Agent, Collateral Agent or
Issuing Bank (as the case may be), the retiring Administrative Agent, Collateral
Agent or Issuing Bank (as the case may be) may, on behalf of the Secured
Parties, with the consent of Borrower (such consent not to be unreasonably
withheld or delayed), appoint a successor Administrative Agent, Collateral Agent
or Issuing Bank (as the case may be) hereunder and, with respect to
Administrative Agent or Collateral Agent, under the Riverside Credit Agreement.
Such successor Administrative Agent or Collateral Agent (as the case may be)
shall be a Lender, if any Lender shall be willing to serve, and otherwise shall
be a commercial bank having a combined capital and surplus of at least
$500,000,000. Such successor Issuing Bank shall be a commercial bank having a
combined capital and surplus of at least $500,000,000 and a rating by S&P on its
long-term senior unsecured indebtedness of at least A-. Upon the acceptance of
any appointment as Administrative Agent, Collateral Agent or Issuing Bank (as
the case may be) under the Operative Documents and, with respect to
Administrative Agent or Collateral Agent, the Riverside Operative Documents by a
successor Administrative Agent, Collateral Agent or Issuing Bank (as the case
may be), such successor Administrative Agent, Collateral Agent or Issuing Bank
(as the case may be) shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent,
Collateral Agent or Issuing Bank (as the case may be), and the retiring
Administrative Agent, Collateral Agent or Issuing Bank (as the case may be)
shall be discharged from its duties and obligations as Administrative Agent,
Collateral Agent or Issuing Bank (as the case may be) only under the Credit
Documents and, with respect to Administrative Agent or Collateral Agent, the
Riverside Credit Documents. After any retiring Administrative Agent's,
Collateral Agent's or Issuing Bank's resignation or removal hereunder as
Administrative Agent, Collateral Agent or Issuing Bank (as the case may be), the
provisions of this Article 9 shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was Administrative Agent or Collateral
Agent (as the case may be) under the Operative Documents.

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Notwithstanding the foregoing, Issuing Bank's resignation or removal under this
Agreement shall not be effective until a successor financial institution becomes
the "Issuing Bank" hereunder. On the date any successor financial institution
becomes "Issuing Bank" hereunder, such successor Issuing Bank shall issue to
PSCo a replacement PSCo Letter of Credit. On the date any successor financial
institution becomes "Administrative Agent" hereunder, the Funded LC
Credit-Linked Deposits will be transferred to the successor Administrative
Agent.

      9.6   AUTHORIZATION.

            Each of Administrative Agent, Collateral Agent and Issuing Bank is
hereby authorized by the Secured Parties to execute, deliver and perform each of
the Credit Documents to which Administrative Agent, Collateral Agent or Issuing
Bank (as the case may be) is or is intended to be a party, and each Lender
agrees to be bound by all of the agreements of Administrative Agent, Collateral
Agent and Issuing Bank contained in the Credit Documents. Each of Administrative
Agent, Collateral Agent and Issuing Bank (as the case may be) is further
authorized by the Secured Parties to (a) release Liens on property that Borrower
is permitted to sell, transfer or otherwise release pursuant to the terms of
this Agreement or the other Credit Documents, (b) to enter into on behalf of
such Secured Parties any and all amendments to, or other modifications of, this
Agreement and the other Credit Documents necessary to effectuate any Required
HoldCo Transfer, (c) perform all of its obligations under the Intercreditor
Agreement and (d) to enter into agreements supplemental hereto for the purpose
of curing any formal defect, inconsistency, omission or ambiguity in this
Agreement or any Credit Document to which it is a party.

      9.7   OTHER ROLES.

            With respect to its Total Term Loan Commitment, the Term Loans made
by it and any Note issued to it, each of Lead Arranger, Collateral Agent,
Issuing Bank and Administrative Agent in its individual capacity shall have the
same rights and powers under the Operative Documents as any other Lender and may
exercise the same as though it were not Lead Arranger, Collateral Agent or
Administrative Agent. The term "Lender" or "Lenders" shall, unless otherwise
expressly indicated, include each of Lead Arranger, Collateral Agent, Issuing
Bank and Administrative Agent in its individual capacity. Each of Lead Arranger,
Collateral Agent, Issuing Bank and Administrative Agent and their respective
Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with Borrower or any
other Person, without any duty to account therefor to the Lenders. For the
avoidance of doubt, Credit Suisse First Boston, acting through its Cayman
Islands Branch (or any permitted successor or assign) may act as Administrative
Agent, Riverside Administrative Agent, Collateral Agent, Issuing Bank, Riverside
Collateral Agent, Lead Arranger, Book Runner and Riverside Lead Arranger
notwithstanding any potential or actual conflict of interest presented by the
foregoing and Borrower and each of the Lenders hereby waives any claim against
each of Lead Arranger, Book Runner, Collateral Agent, Issuing Bank and
Administrative Agent and any of their respective Affiliates based upon any
conflict of interest that such Person may have with regard to acting as an agent
or arranger hereunder and acting in such other roles.

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      9.8   AMENDMENTS AND WAIVERS.

            9.8.1 Majority Lenders' Consent. Subject to Section 9.8.5 below, no
amendment, modification, termination or waiver of any provision of the Credit
Documents, or consent to any departure by any Calpine Entity therefrom, shall in
any event be effective without the written concurrence of the Majority Lenders
and any additional consents required by this Section 9.8.

            9.8.2 Affected Lenders' Consent. No amendment, modification,
termination, or consent shall be effective if the effect thereof would:

            (a) extend the scheduled final maturity of the PSCo Letter of Credit
or any Funded LC Disbursement or any Term Loan or Note outstanding to any Lender
without the prior written consent of that Lender;

            (b) waive, reduce or postpone any scheduled repayment (but not
prepayment) due to any Lender without the prior written consent of that Lender;

            (c) reduce the rate of interest on any Term Loan or Funded LC
Disbursement (other than any waiver of any increase in the interest rate
applicable to any Term Loan or Funded LC Disbursement pursuant to Section 2.3.3)
payable to any Lender or reduce or extend any fee payable hereunder to any
Lender without the prior written consent of that Lender;

            (d) reduce the principal amount of any Term Loan or Funded LC
Disbursement outstanding to any Lender without the prior written consent of that
Lender;

            (e) amend, modify, terminate or waive any provision of this Section
9.8.2, as it applies to any Lender without the prior written consent of that
Lender;

            (f) amend the definition of "Majority Lenders", "Supermajority
Lenders" or "Proportionate Share" without the prior written consent of all
Lenders;

            (g) release any Collateral (other than immaterial portions thereof)
from the Liens created by the Collateral Documents, except as specifically
provided for in this Agreement and the Collateral Documents, without the prior
written consent of all Lenders; or

            (h) amend or modify any provision which requires pro rata payments
among and as between the Lenders without the prior written consent of all
Lenders.

            9.8.3 Other Consents. No amendment, modification, termination or
waiver of any provision of the Credit Documents, or consent to any departure by
any Calpine Entity therefrom, shall amend, modify, terminate or waive any
provision of Article IX as the same applies to Administrative Agent, Collateral
Agent or Issuing Bank, or any other provision hereof as the same applies to the
rights or obligations of Administrative Agent, Collateral Agent or Issuing Bank,
in each case without the consent of Administrative Agent, Collateral Agent or
Issuing Bank (as the case may be).

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            9.8.4 Execution of Amendments, etc. Administrative Agent may, but
shall have no obligation to, with the concurrence of any Lender, execute
amendments, modifications, waivers or consents on behalf of such Lender. Any
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which it was given. No notice to or demand on any Calpine
Entity in any case shall entitle any Calpine Entity to any other or further
notice or demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this Section shall be
binding upon each Lender at the time outstanding, each future Lender and, if
signed by a Calpine Entity, on such Calpine Entity.

            9.8.5 Certain Amendments. Notwithstanding the preceding provisions
of this Section 9.8, Borrower and Administrative Agent may amend or supplement
the Credit Documents without the consent of any Lender:

            (a) to cure any ambiguity, defect or inconsistency;

            (b) to make any change that would provide any additional rights or
benefits to the Lenders or that does not adversely affect the legal rights
hereunder of any Lender; or

            (c) to make, complete or confirm any grant of Collateral permitted
or required by this Agreement or any of the Collateral Documents or any release
of Collateral that becomes effective as set forth in this Agreement or any of
the Collateral Documents.

            9.8.6 Related Funds. For the purposes of this Section 9.8, each of
the Related Funds of a Lender shall exercise its rights in a manner consistent
and collectively with such Lender and each other Related Fund of such Lender.

      9.9   WITHHOLDING TAX.

            If the forms or other documentation required by Section 2.3.4(e) are
not delivered to Administrative Agent, then Administrative Agent may withhold
from any interest payment to any Lender not providing such forms or other
documentation, an amount equivalent to the applicable withholding tax.

            9.9.1 If the Internal Revenue Service or any authority of the United
States or other jurisdiction asserts a claim that Administrative Agent did not
properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered, was not properly executed, or
because such Lender failed to notify Administrative Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason), then such Lender shall indemnify
Administrative Agent fully for all amounts paid, directly or indirectly, by
Administrative Agent as tax or otherwise, including penalties and interest,
together with all expenses incurred, including legal expenses, allocated staff
costs, and any out of pocket expenses. Borrower shall not be responsible for any
amounts paid or required to be paid by a Lender under this Section 9.9.1.

            9.9.2 If any Lender sells, assigns, grants participation in, or
otherwise transfers its rights under this Agreement, the purchaser, assignee,
participant or transferee, as applicable,

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shall comply and be bound by the terms of Section 2.3.4 and this Section 9.9 as
though it were such Lender.

      9.10  GENERAL PROVISIONS AS TO PAYMENTS.

            Administrative Agent shall promptly distribute to each Lender,
subject to Section 2.1.10(d) and any accepted Mandatory Repayment Offer whereby
payments shall be allocated to each accepting Lender's Term Loans (and not to
all Lenders based on Proportionate Shares) and the terms of any separate
agreement between Administrative Agent and such Lender, its pro rata share of
each payment of principal and interest payable to the Lenders on the Term Loans
and of fees hereunder received by Administrative Agent for the account of the
Lenders and of any other amounts owing under the Term Loans. The payments made
for the account of each Lender shall be made, and distributed to it, for the
account of (a) its domestic lending office in the case of payments of principal
of, and interest on, its Base Rate Term Loans, (b) its domestic or foreign
lending office, as each Lender may designate in writing to Administrative Agent,
in the case of LIBOR Term Loans, and (c) its domestic lending office, or such
other lending office as it may designate for the purpose from time to time, in
the case of payments of fees and other amounts payable hereunder. Lenders shall
have the right to alter designated lending offices upon five Banking Days prior
written notice to Administrative Agent and Borrower.

      9.11  EXPENSES; INDEMNITY; DAMAGE WAIVER.

            9.11.1 Borrower shall pay:

            (a) all reasonable out-of-pocket expenses incurred by Administrative
Agent, Collateral Agent, Issuing Bank, Lead Arranger and their Affiliates
(including due diligence expenses and the reasonable fees, charges and
disbursements of Latham & Watkins LLP, together with a single local counsel
retained by Administrative Agent or Collateral Agent in the State of Colorado)
in connection with the arrangement and syndication of the credit facilities
provided for herein, the preparation, execution, delivery and administration of
the Credit Documents or any amendments, modifications or waivers of the
provisions thereof (whether or not the transactions contemplated hereby or
thereby shall be consummated);

            (b) all reasonable out-of-pocket expenses and charges of
Administrative Agent, Collateral Agent, Issuing Bank or their Affiliates
incurred in connection with any evaluations of Collateral conducted by them;

            (c) all reasonable out of pocket expenses incurred by Issuing Bank
in connection with the issuance or amendment of the PSCo Letter of Credit or any
demand for payment thereunder;

            (d) during the continuation of any Inchoate Default or Event of
Default and provided that Borrower has delivered notice to Administrative Agent
of the occurrence thereof or Borrower has received notice from Administrative
Agent of the occurrence thereof, all reasonable out-of-pocket costs and expenses
(including fees and out-of-pocket expenses of counsel) incurred by
Administrative Agent, Collateral Agent, Lead Arranger, Issuing Bank and each
Lender in connection with the enforcement or protection of any of their rights
in connection

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with this Agreement and the other Credit Documents, including any of their
rights under this Section 9.1.11 and including the negotiation of any
restructuring or work-out, whether or not consummated, of any Obligations of
Borrower; and

            (e) all reasonable out-of-pocket costs and expenses (including fees
and out-of-pocket costs and expenses of counsel) incurred by Administrative
Agent, Collateral Agent, Lead Arranger, Issuing Bank and each Lender in
connection with the enforcement of any Obligations of Borrower after an Event of
Default or in connection with any insolvency proceedings.

            9.11.2 Borrower shall indemnify each of Administrative Agent,
Collateral Agent, Lead Arranger, Issuing Bank and each Lender, and each Related
Party of any of the foregoing Persons (each such Person being called an
"Indemnitee") against, and hold each Indemnitee harmless from, any and all third
party losses, claims, damages, liabilities and related expenses, including the
reasonable fees, charges and disbursements of any counsel for any Indemnitee,
incurred by or asserted against any Indemnitee arising out of, in connection
with, or as a result of (a) the execution or delivery of any Credit Document or
any agreement or instrument contemplated hereby, the performance by the parties
to the Credit Documents of their respective obligations thereunder or the
consummation of the Term Loans or any other transactions contemplated thereby
or, with respect to Lead Arranger or any Related Party of Lead Arranger, in
connection with the arrangement and syndication of the credit facilities
provided for herein, (b) any Term Loan or PSCo Letter of Credit or the use of
the proceeds therefrom (including any refusal by Issuing Bank to honor a demand
for payment under the PSCo Letter of Credit if the documents presented in
connection with such demand do not strictly comply with the terms of such PSCo
Letter of Credit), (c) any actual or alleged presence or release of Hazardous
Substances on or from any property owned or operated by Borrower or any of its
Subsidiaries, or any Environmental Claim related in any way to Borrower or any
of its Subsidiaries, or (d) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted primarily from the gross negligence,
willful misconduct or bad faith of such Indemnitee.

            9.11.3 To the extent that Borrower fails to pay any amount required
to be paid by it to Administrative Agent, Collateral Agent, Issuing Bank or Lead
Arranger under Section 9.11.1 or 9.11.2, each Lender severally agrees to pay to
such Administrative Agent, Collateral Agent, Issuing Bank or Lead Arranger, as
the case may be, such Lender's Proportionate Share (determined as of the time
that the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount; provided that the unreimbursed expense or indemnified loss,
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against such Administrative Agent, Collateral Agent, Issuing Bank or
Lead Arranger in its capacity as such.

            9.11.4 All amounts due under this Section shall be payable promptly
after written demand therefor.

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      9.12  SUCCESSORS AND ASSIGNS.

            9.12.1 The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby (including any Affiliate of Issuing Bank that issues
the PSCo Letter of Credit), except that Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder other than in accordance
with Section 6.15 without the prior written consent of each Lender (and any
attempted assignment or transfer by Borrower without such consent shall be null
and void). Nothing in this Agreement, expressed or implied; shall be construed
to confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby (including any Affiliate of Issuing Bank
that issues the PSCo Letter of Credit) and, to the extent expressly contemplated
hereby, the Related Parties of each of Administrative Agent, Collateral Agent,
Lead Arranger, Issuing Bank and the Lenders) any legal or equitable right,
remedy or claim under or by reason of this Agreement.

            9.12.2 Any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Term Loan Commitment, Term Loans at the time owing to it and
Funded LC Credit-Linked Deposits); provided that: (a) Administrative Agent must
give its prior written consent to such assignment (which consent shall not be
unreasonably withheld); (b) except in the case of an assignment to a Lender or
an Eligible Assignee, Borrower must provide its prior written consent to such
assignment (which consent shall not be unreasonably withheld); (c) such Lender
shall at the same time assign a pro rata portion of its "Total Term Commitment"
and "Term Loans" under the Riverside Credit Agreement to the same assignee; (d)
except in the case of an assignment to a Lender or an Eligible Assignee or an
assignment of the entire remaining amount of the assigning Lender's "Total Term
Commitment," "Term Loans," "Funded LC Disbursements" and "Funded LC
Credit-Linked Deposit" under this Agreement and, to the extent applicable, the
Riverside Credit Agreement, the aggregate amount of the Term Loan Commitments,
Term Loans, Funded LC Disbursements and Funded LC Credit-Linked Deposit of the
assigning Lender under this Agreement subject to each such assignment
(determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to Administrative Agent) shall be in an aggregate amount
of not less than $1,000,000 unless each of Borrower and Administrative Agent
otherwise consent; (e) each partial assignment by a Lender of its Commitments,
Term Loans, Funded LC Disbursements and Funded LC Credit-Linked Deposit shall be
made as an assignment of a proportionate part of all the assigning Lender's
rights and obligations under this Agreement in respect of its Commitment, Term
Loans, Funded LC Disbursements and Funded LC Credit-Linked Deposit; (f) the
parties to each assignment shall execute and deliver to Administrative Agent an
Assignment and Acceptance (such Assignment and Acceptance to be (i)
electronically executed and delivered to Administrative Agent via an electronic
settlement system then acceptable to Administrative Agent, which shall initially
be the settlement system of ClearPar, LLC, or (ii) manually executed and
delivered with a processing and recordation fee of $3,500); and (g) the
assignee, if it shall not be a Lender, shall deliver to Administrative Agent an
Administrative Questionnaire; and provided further that any consent of Borrower
otherwise required under this paragraph shall not be required (x) if an Event of
Default under this Agreement shall have occurred and is continuing or (y) in
connection with the initial syndication of the Commitments, Term Loans and
Funded LC Credit-Linked Deposit. Subject to acceptance and recording thereof
pursuant to Section 9.12.4, from and after the effective date specified in

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each Assignment and Acceptance the assignee thereunder shall be a party hereto
and, to the extent of the interest assigned by such Assignment and Acceptance,
have the rights and obligations of a Lender under this Agreement other than as
set forth in Section 2.5.5, and the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Acceptance, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.3.4, 2.5, 2.6 and 9.12). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this Section 9.12.2 shall be treated for purposes of
this Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with Section 9.12.5. Without the consent of
Administrative Agent and Issuing Bank, the Funded LC Credit-Linked Deposit of
any Lender shall not be released in connection with any assignment by such
Lender, but shall instead be purchased by the relevant assignee and continue to
be held for application (to the extent not already applied) in accordance with
Section 2.8.2 to satisfy such assignee's obligations in respect of Funded LC
Disbursements.

            9.12.3 Administrative Agent, acting for this purpose as an agent of
Borrower, shall maintain at one of its offices in New York, New York a copy of
each Assignment and Acceptance delivered to it and a register (the "Register")
setting forth: (a) the Commitments and the Term Loans and Funded LC
Disbursements from time to time of each Lender; (b) the interest rates
applicable to all Term Loans and the effective dates of all changes thereto; (c)
the Interest Period for each LIBOR Term Loan; (d) the date and amount of any
principal or interest due and payable or to become due and payable from Borrower
to each Lender hereunder; (e) each repayment or prepayment in respect of the
principal amount of the Term Loans of each Lender; (f) the amount of any sum
received by Administrative Agent hereunder for the account of the Lenders and
each Lender's share thereof; (g) the names and addresses of the Lenders, and (h)
such other information as Administrative Agent may determine is necessary for
the administering of the Term Loans, the Funded LC Credit-Linked Deposits and
this Agreement. The entries in the Register shall be conclusive, and Borrower,
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by Borrower and any Lender at any
reasonable time and from time to time upon reasonable prior notice.

            9.12.4 Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee, if any, referred to in
Section 9.12.2 and any written consent to such assignment required by such
Section 9.12.2, Administrative Agent shall accept such Assignment and Acceptance
and record the information contained therein in the Register. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this Section 9.12.4. Upon any transfer by a Lender
of all or part of its Term Loan Commitment or Term Loans, Exhibit H shall be
automatically updated without any further act by any Person to reflect the
Lenders' Proportionate Shares after giving effect to such transfer.

            9.12.5 Any Lender may, without the consent of Borrower or
Administrative Agent, sell participations to one or more banks or other entities
(a "Participant") in all or a

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portion of such Lender's rights and obligations under this Agreement (including
all or a portion of its Commitments and Term Loans owing to it and its Funded LC
Credit-Linked Deposit); provided that (a) such Lender's obligations under this
Agreement shall remain unchanged, (b) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(c) Borrower, Administrative Agent, Collateral Agent and the other Lenders shall
continue to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and (d) such Lender shall
at the same time sell a participation in a pro rata portion of its "Total Term
Commitment" and "Term Loans" under the Riverside Credit Agreement to the same
Participant. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and the other Credit Documents and to approve any
amendment, modification or waiver of any provision of this Agreement or the
other Credit Documents; provided that such agreement or instrument may provide
that such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in clause (a), (b), (c), (d) or (g)
of Section 9.8.2. Subject to Section 9.12.6, Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.3.4, 2.5 and 2.6 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to Section 9.12.2. To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 11.2 as though it
were a Lender, provided such Participant agrees to be subject to Section 2.4.1
as though it were a Lender.

            9.12.6 A Participant shall not be entitled to receive any greater
payment under Section 2.3.4, 2.5 or 2.6 than the applicable Lender would have
been entitled to receive with respect to the participation sold to such
Participant. A Participant that would be a non-United States "Lender" under
Section 2.3.4(e) if it were a Lender shall not be entitled to the benefits of
Section 2.3 unless Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of Borrower, to comply
with Section 2.3.4(e) as though it were a Lender.

            9.12.7 Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Lender, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto; provided, further, that the pledgor shall retain the sole
right to enforce this Agreement and the other Credit Documents and to approve
any amendment, modification or waiver of any provision of this Agreement or the
other Credit Documents. In the case of any Lender that is a fund that invests in
bank loans, such Lender may, without the consent of Borrower or Administrative
Agent, assign or pledge all or any portion of its rights under this Agreement,
including the Term Loans and Notes or any other instrument evidencing its rights
as a Lender under this Agreement, to any holder of, trustee for, or any other
representative of holders of, obligations owed or securities issued, by such
fund, as security for such obligations or securities; provided that any
foreclosure or similar action by such trustee or representative shall be subject
to the provisions of Section 9.12.2 concerning assignments.

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<PAGE>

            9.12.8 Notwithstanding anything to the contrary contained herein,
any Lender (a "Granting Lender") may grant to a special purpose funding vehicle
(an "SPC"), identified as such in writing from time to time by the Granting
Lender to Administrative Agent and Borrower, the option to provide to Borrower
all or any part of any Term Loans or Funded LC Credit-Linked Deposit that such
Granting Lender would otherwise be obligated to make to Borrower pursuant to
this Agreement; provided that (a) nothing herein shall constitute a commitment
by any SPC to make any Term Loan or Funded LC Credit-Linked Deposit and (b) if
an SPC elects not to exercise such option or otherwise fails to provide all or
any part of such Term Loan or Funded LC Credit-Linked Deposit, the Granting
Lender shall be obligated to make such Term Loan or Funded LC Credit-Linked
Deposit pursuant to the terms of this Agreement. The making of a Term Loan or
Funded LC Credit-Linked Deposit by an SPC shall utilize the Commitment of the
Granting Lender to the same extent, and as if, such Term Loan or Funded LC
Credit-Linked Deposit were made by such Granting Lender. Each party hereto
hereby agrees that no SPC shall be liable for any indemnity or similar payment
obligation under this Agreement (all liability for which shall remain with the
Granting Lender). In furtherance of the foregoing, each party hereto hereby
agrees (which agreement shall survive the termination of this Agreement ) that,
prior to the date that is one year and one day after the payment in full of all
outstanding commercial paper or other senior indebtedness of any SPC, it will
not institute against, or join any other person in instituting against, such SPC
in connection with its activities as an SPC hereunder any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings under the
laws of the United States or any State thereof. In addition, notwithstanding
anything to the contrary in this Section 9.12, any SPC may with notice to, but
without the prior written consent of, Borrower and Administrative Agent and
without paying any processing fee therefor, assign all or a portion of its
interests in any Term Loans or Funded LC Credit-Linked Deposit to the Granting
Lender or to any financial institutions (consented to by Borrower and
Administrative Agent) providing liquidity and/or credit support to or for the
account of such SPC to support the funding or maintenance of Term Loans or
Funded LC Credit-Linked Deposit. The provisions of this Section 9.12.8 relating
any SPC may not be amended without the written consent of such SPC.

      9.13  LAWS.

            Notwithstanding the foregoing provisions of this Article 9, no sale,
assignment, transfer, negotiation or other disposition of the interests of any
Lender hereunder or under the other Credit Documents shall be allowed if it
would require registration under the federal Securities Act of 1933, as then
amended, any other federal securities laws or regulations or the securities laws
or regulations of any applicable jurisdiction. Borrower shall, from time to time
at the request and expense of Administrative Agent, execute and deliver to
Administrative Agent, or to such party or parties as Administrative Agent may
designate, any and all further instruments as may in the opinion of
Administrative Agent be reasonably necessary or advisable to give full force and
effect to such sale, assignment, transfer, negotiation or disposition which
would not require any such registration.

                                   ARTICLE 10
                             INDEPENDENT CONSULTANTS

      10.1  REMOVAL AND FEES.

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            Administrative Agent (acting at the direction of the Majority
Lenders) may remove from time to time, any one or more of the Independent
Consultants and, after consulting with Borrower as to an appropriate Person,
appoint replacements as Administrative Agent may choose. Notice of any
replacement Independent Consultant shall be given by Administrative Agent to
Borrower, the Lenders and to the Independent Consultant being replaced. All
reasonable fees and expenses of the Independent Consultants (whether the
original ones or replacements) shall be paid by Borrower pursuant to agreements
reasonably acceptable to Borrower; provided that no such acceptance shall be
required at any time an Event of Default shall have occurred and be continuing.

      10.2  DUTIES.

            Each Independent Consultant shall be contractually obligated to
Administrative Agent (on behalf of the Lenders) to carry out the activities
required of it in this Agreement and as otherwise requested by Administrative
Agent and shall be responsible solely to Administrative Agent. Borrower
acknowledges that it will not have any cause of action or claim against any
Independent Consultant resulting from any decision made or not made, any action
taken or not taken or any advice given by such Independent Consultant in the due
performance in good faith of its duties to Administrative Agent, except to the
extent arising from such Independent Consultant's gross negligence or willful
misconduct.

      10.3  INDEPENDENT CONSULTANTS' CERTIFICATES.

            Up to and following the Closing Date, Borrower shall provide such
documents and information to the Independent Consultants as they may reasonably
consider necessary in order for the Independent Consultants to deliver to
Administrative Agent the following certificates or information:

            (a) certificates of the Insurance Consultant, Independent Engineer
and Power Market Consultant delivered on and dated as of the Closing Date as
described in Sections 3.1.9, 3.1.11 and 3.1.13, respectively, and containing the
matters set out therein;

            (b) after the Closing Date, all certificates to be delivered
thereafter pursuant to this Agreement and the other Credit Documents;

            (c) annually, a certificate setting forth a full report on the
status of the Project and such other information; and

            (d) such other information and certifications as Administrative
Agent may reasonably require from the Independent Consultants from time to time.

      10.4  CERTIFICATION OF DATES.

            Administrative Agent will request that the Independent Consultants
act diligently in the issuance of all certificates required to be delivered by
the Independent Consultants hereunder, if their issuance is appropriate.
Borrower shall provide the Independent Consultants with reasonable notice of the
expected occurrence of any such dates or events.

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<PAGE>

                                   ARTICLE 11
                                  MISCELLANEOUS

      11.1  ADDRESSES.

            Any communications between the parties hereto or notices provided
herein to be given may be given to the following addresses:

  If to Administrative Agent or    Credit Suisse First Boston
  Collateral Agent:                11 Madison Avenue, OMA-2
                                   New York, NY 10010
                                   Attention: Cindy Eng
                                   Tel: (212) 325-7110
                                   Fax: (212) 325-8304
                                   E-mail:  As may be designated by
                                   Administrative Agent

  If to Issuing Bank:              Union Bank of California, N.A.
                                   601 Potrero Grande Dr.
                                   Monterey Park, CA 91754
                                   Attention:  Commercial Loan Operations
                                   Tel:  (323) 720-2679/7055
                                   Fax:  (323) 724-6198
                                   E-mail:  As may be designated by Issuing Bank

  If to Borrower:                  Rocky Mountain Energy Center, LLC
                                   50 West San Fernando Street, Suite 627
                                   San Jose, CA  95113
                                   Telephone:  (408) 794-2572
                                   Fax: (408) 794-2573
                                   Attention:  President
                                   E-mail:  As may be designated by Borrower

  With a copy to:                  Rocky Mountain Energy Center, LLC
                                   4160 Dublin Boulevard
                                   Dublin California 94568
                                   Telephone: (925) 479-6600
                                   Fax:  (925) 479-7310
                                   Attention:  Project Manager - Rocky Mountain
                                   E-mail:  As may be designated by Borrower

            All such notices or other communications required or permitted to be
given hereunder shall be in writing and shall be considered as properly given
(a) if delivered in person, (b) if sent by overnight delivery service (including
Federal Express, UPS, ETA, Emery, DHL, AirBorne and other similar overnight
delivery services), (c) if mailed by first class United States Mail, postage
prepaid, registered or certified with return receipt requested, (d) if sent by
facsimile or (e) other electronic means (including electronic mail) confirmed by
facsimile or telephone as agreed by Administrative Agent from time to time.
Notice so given shall be

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effective upon receipt by the addressee, except that communication or notice so
transmitted by facsimile or other direct written electronic means shall be
deemed to have been validly and effectively given on the day (if a Banking Day
and, if not, on the next following Banking Day) on which it is transmitted if
transmitted before 4:00 p.m., recipient's time, and if transmitted after that
time, on the next following Banking Day; provided, however, that if any notice
is tendered to an addressee and the delivery thereof is refused by such
addressee, such notice shall be effective upon such tender. Any party shall have
the right to change its address for notice hereunder to any other location
within the continental United States by giving of 30 days' notice to the other
parties in the manner set forth above.

      11.2  ADDITIONAL SECURITY; RIGHT TO SET-OFF.

            Any deposits or other sums at any time credited or due from Lenders
and any Project Revenues, securities or other property of Borrower in the
possession of any Secured Party may at all times be treated as collateral
security for the payment of the Term Loans, any Notes and any Funded LC
Disbursements and all other obligations of Borrower to the Lenders under this
Agreement and the other Credit Documents, and Borrower hereby pledges to
Collateral Agent for the benefit of the Secured Parties and grants Collateral
Agent for the benefit of the Secured Parties a security interest in and to all
such deposits, sums, securities or other property. Subject to Section 2.4.2,
regardless of the adequacy of any other collateral, any Secured Party with the
prior written consent of the Collateral Agent may execute or realize on its or
the Collateral Agent's security interest in any such deposits or other sums
credited by or due from Lenders to Borrower, and may apply any such deposits or
other sums to or set them off against Borrower's obligations to Lenders under
any Notes and this Agreement at any time after the occurrence and during the
continuance of any Event of Default.

      11.3  DELAY AND WAIVER.

            No delay or omission to exercise any right, power or remedy accruing
to the Secured Parties upon the occurrence of any Event of Default, Inchoate
Default, Material Adverse Effect or any breach or default of Borrower or any
other Calpine Entity or unsatisfied condition precedent under this Agreement or
any other Credit Document shall impair any such right, power or remedy of the
Secured Parties, nor shall it be construed to be a waiver of any such breach or
default or unsatisfied condition precedent, or an acquiescence therein, or of or
in any similar breach or default or unsatisfied condition precedent thereafter
occurring, nor shall any waiver of any single Event of Default, Inchoate
Default, Material Adverse Effect or other breach or default or unsatisfied
condition precedent be deemed a waiver of any other Event of Default, Inchoate
Default, Material Adverse Effect or other breach or default or unsatisfied
condition precedent theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of Administrative
Agent, Collateral Agent, Issuing Bank or the Secured Parties of any Event of
Default, Inchoate Default, Material Adverse Effect or other breach or default or
unsatisfied condition precedent under this Agreement or any other Credit
Document, or any waiver on the part of Administrative Agent, Collateral Agent,
Issuing Bank or the Secured Parties of any provision or condition of this
Agreement or any other Credit Document, must be in writing and shall be
effective only to the extent in such writing specifically set forth. All
remedies, either under this Agreement or any other Credit Document or by law or
otherwise

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<PAGE>

afforded to Administrative Agent, Collateral Agent, Issuing Bank and the Secured
Parties, shall be cumulative and not alternative.

      11.4  ENTIRE AGREEMENT.

            This Agreement and any agreement, document or instrument attached
hereto or referred to herein integrate all the terms and conditions mentioned
herein or incidental hereto and supersede all oral negotiations and prior
writings in respect to the subject matter hereof. In the event of any conflict
between the terms, conditions and provisions of this Agreement and any such
agreement, document or instrument, the terms, conditions and provisions of this
Agreement shall prevail.

      11.5  GOVERNING LAW.

            THIS AGREEMENT AND ANY OTHER CREDIT DOCUMENT (UNLESS OTHERWISE
EXPRESSLY PROVIDED FOR THEREIN), SHALL BE GOVERNED BY, AND CONSTRUED UNDER, THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO CONFLICTS OF LAWS (OTHER
THAN SECTION 5-1401 AND SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

      11.6  SEVERABILITY.

            In case any one or more of the provisions contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

      11.7  HEADINGS.

            Article, Section and Paragraph headings have been inserted in this
Agreement as a matter of convenience for reference only and it is agreed that
such headings are not a part of this Agreement and shall not be used in the
interpretation of any provision of this Agreement.

      11.8  ACCOUNTING TERMS.

            All accounting terms not specifically defined herein shall be
construed in accordance with GAAP and practices consistent with those applied in
the preparation of the financial statements submitted by Borrower to
Administrative Agent, and all financial data submitted pursuant to this
Agreement shall be prepared in accordance with such principles and practices.

      11.9  ADDITIONAL FINANCING.

            The parties hereto acknowledge that as of the Closing Date the
Lenders have made no agreement or commitment to provide any financing or
refinancing to Borrower except as set forth herein.

      11.10 NO PARTNERSHIP, ETC.

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<PAGE>

            The Lenders and Borrower intend that the relationship between them
shall be solely that of creditor and debtor. Nothing contained in this
Agreement, the Notes or in any of the other Credit Documents shall be deemed or
construed to create a partnership, tenancy-in-common, joint tenancy, joint
venture or co-ownership by or between the Lenders and Borrower or any other
Person. None of Lead Arranger, Administrative Agent, Collateral Agent, Issuing
Bank or the Lenders shall be in any way responsible or liable for the debts,
losses, obligations or duties of Borrower or any other Person with respect to
the Project or otherwise. All obligations to pay real property or other taxes,
assessments, insurance premiums, and all other fees and charges arising from the
ownership, operation or occupancy of the Project (if any) and to perform all
obligations and other agreements and contracts relating to the Project shall be
the sole responsibility of Borrower.

      11.11 MORTGAGE/COLLATERAL DOCUMENTS.

            The Obligations of Borrower hereunder are secured in part by the
Mortgage encumbering certain properties in the State of Colorado. Reference is
hereby made to the Mortgage and the other Collateral Documents for the
provisions, among others, relating to the nature and extent of the security
provided thereunder, the rights, duties and obligations of Borrower and the
rights of Administrative Agent, Collateral Agent and the other Secured Parties
with respect to such security.

      11.12 LIMITATION ON LIABILITY.

            No claim shall be made by Borrower against Lead Arranger,
Administrative Agent, Collateral Agent, Issuing Bank, the Lenders or any of
their respective Affiliates, directors, employees, attorneys or agents for any
loss of profits, business or anticipated savings, special or punitive damages or
any indirect or consequential loss whatsoever in respect of any breach or
wrongful conduct (whether or not the claim therefor is based on contract, tort
or duty imposed by law), in connection with, arising out of or in any way
related to the transactions contemplated by this Agreement or the other
Operative Documents or any act or omission or event occurring in connection
therewith, and Borrower hereby waives, releases and agrees not to sue upon any
such claim for any such damages, whether or not accrued and whether or not known
or suspected to exist in its favor.

      11.13 WAIVER OF JURY TRIAL.

            ADMINISTRATIVE AGENT, COLLATERAL AGENT, ISSUING BANK, THE LENDERS
AND BORROWER HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS
THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER CREDIT
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN), OR ACTIONS OF ADMINISTRATIVE AGENT, COLLATERAL AGENT,
ISSUING BANK, THE LENDERS OR BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT
FOR BORROWER, ADMINISTRATIVE AGENT, COLLATERAL AGENT, ISSUING BANK AND THE
LENDERS TO ENTER INTO THIS AGREEMENT.

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<PAGE>

      11.14 CONSENT TO JURISDICTION.

            Administrative Agent, Collateral Agent, Issuing Bank, the Lenders
and Borrower agree that any legal action or proceeding by or against Borrower or
with respect to or arising out of this Agreement, the Notes, or any other Credit
Document may be brought in or removed to the courts of the State of New York, in
and for the County of New York, or of the United States of America for the
Southern District of New York, as Administrative Agent may elect. By execution
and delivery of this Agreement, the Lenders, Administrative Agent, Collateral
Agent, Issuing Bank and Borrower accept, for themselves and in respect of their
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Administrative Agent, Collateral Agent, Issuing Bank, the Lenders and
Borrower irrevocably consent to the service of process out of any of the
aforementioned courts in any manner permitted by law. Nothing herein shall
affect the right of Administrative Agent to bring legal action or proceedings in
any other competent jurisdiction, including judicial or non-judicial foreclosure
of the Mortgage. Administrative Agent, Collateral Agent, Issuing Bank, the
Lenders and Borrower further agree that the aforesaid courts of the State of New
York and of the United States of America shall have exclusive jurisdiction with
respect to any claim or counterclaim of Borrower based upon the assertion that
the rate of interest charged by the Lenders on or under this Agreement, the Term
Loans or the other Credit Documents is usurious. Administrative Agent,
Collateral Agent, the Lenders, Issuing Bank, and Borrower hereby waive any right
to stay or dismiss any action or proceeding under or in connection with any or
all of the Project, this Agreement or any other Credit Document brought before
the foregoing courts on the basis of forum non-conveniens.

      11.15 KNOWLEDGE AND ATTRIBUTION.

            References in this Agreement and the other Credit Documents to the
"knowledge," "best knowledge" or facts and circumstances "known to" Borrower,
and all like references, mean facts or circumstances of which a Responsible
Officer of the applicable Calpine Entity has actual knowledge.

      11.16 COUNTERPARTS.

            This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in one or more duplicate
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.

      11.17 USURY.

            Nothing contained in this Agreement or the Notes shall be deemed to
require the payment of interest or other charges by Borrower or any other Person
in excess of the amount which the holders of the Notes may lawfully charge under
applicable usury laws. In the event that the Lenders shall collect moneys which
are deemed to constitute interest which would

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<PAGE>

increase the effective interest rate to a rate in excess of that permitted to be
charged by applicable Legal Requirements, all such sums deemed to constitute
interest in excess of the legal rate shall, upon such determination, at the
option of the Lenders, be returned to Borrower or credited against the principal
balance then outstanding.

      11.18 SURVIVAL.

            All representations, warranties, covenants and agreements made
herein and in the certificates or other instruments delivered in connection with
or pursuant to this Agreement and the other Credit Documents shall be considered
to have been relied upon by the parties hereto and shall survive the execution
and delivery of this Agreement, the other Credit Documents and the making of the
Term Loans and the issuance of the PSCo Letter of Credit. Notwithstanding
anything in this Agreement or implied by law to the contrary, the agreements and
covenants of Borrower set forth in Articles 5, 6 and 7 shall survive through the
Termination Date, the agreements of Borrower set forth in Sections 2.1.4(b),
2.1.6, 2.1.10, 2.2, 2.3.4, 2.5.3, 2.5.4, 2.6, 2.8.2, 9.1, 9.7, 9.11 and 9.12,
and the agreements of the Lenders set forth in Sections 2.8.2, 9.1, 9.5 and 9.9
shall survive the payment and performance of the Term Loans, the expiration or
termination of the PSCo Letter of Credit and the other Obligations and the
reimbursement of any amounts drawn hereunder, and the Termination Date.

      11.19 INTERCREDITOR AGREEMENT.

            EACH LENDER AND EACH OF ADMINISTRATIVE AGENT, COLLATERAL AGENT AND
ISSUING BANK HEREBY ACKNOWLEDGES AND AGREES THAT THEIR RESPECTIVE LIEN
PRIORITIES AND OTHER MATTERS RELATED TO THE CREDIT DOCUMENTS AND THE COLLATERAL
ARE SUBJECT TO AND GOVERNED BY THE INTERCREDITOR AGREEMENT. Each Lender and each
of Administrative Agent, Collateral Agent and Issuing Bank, by delivering its
signature page hereto, funding its Term Loan on the Closing Date and/or
executing an Assignment and Acceptance (as the case may be), shall be deemed to
have (a) acknowledged receipt of, consented to and approved the Intercreditor
Agreement and (b) authorized Administrative Agent and Collateral Agent to
perform their respective obligations thereunder.

      11.20 CONFIDENTIALITY.

            Each Lender shall hold all non-public information regarding Borrower
and its business identified as such by Borrower and obtained by such Lender
pursuant to the requirements hereof in accordance with such Lender's customary
procedures for handling confidential information of such nature, it being
understood and agreed by Borrower that, in any event, a Lender may make:

            (a) disclosures of such information to Affiliates of such Lender and
to their agents and advisors (and to other Persons authorized by a Lender or
Administrative Agent to organize, present or disseminate such information in
connection with disclosures otherwise made in accordance with this Section
11.20); provided that such Affiliates, agents, advisors and Persons agree to
keep such information confidential in accordance with the requirements of this
Section 11.20;

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<PAGE>

            (b) disclosures of such information reasonably required by any bona
fide or potential assignee, transferee or participant in connection with the
contemplated assignment, transfer or participation by such Lender of any its
interests herein (including any of its Term Loans) or any participations
therein; provided that such assignees, transferees or participants agree to keep
such information confidential in accordance with the requirements of this
Section 11.20;

            (c) disclosure to any rating agency when required by it; provided
that, prior to any disclosure, such rating agency shall undertake in writing to
preserve the confidentiality of any confidential information relating to
Borrower received by it from Administrative Agent or any Lender, and

            (d) disclosures required or requested by any Governmental Authority
or representative thereof or by the National Association of Insurance
Commissioners or pursuant to legal or judicial process; provided, unless
specifically prohibited by applicable law or court order, each Lender shall make
reasonable efforts to notify Borrower of any request by any Governmental
Authority or representative thereof (other than any such request in connection
with any examination of the financial condition or other routine examination of
such Lender by such Governmental Authority) for disclosure of any such
non-public information prior to disclosure of such information.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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<PAGE>

            IN WITNESS WHEREOF, the parties hereto, by their officers duly
authorized, intending to be legally bound, have caused this Credit Agreement to
be duly executed and delivered as of the day and year first above written.

                                      ROCKY MOUNTAIN ENERGY CENTER, LLC,
                                      a Delaware limited liability company

                                      By:        /s/ Brian Harenza
                                          ______________________________________
                                          Name:  Brian Harenza
                                          Title: Vice President

                                      CREDIT SUISSE FIRST BOSTON,
                                      acting through its Cayman Islands Branch,
                                      as Lead Arranger, Book Runner, Lender,
                                      Administrative Agent and Collateral Agent

                                      By:        /s/ S. William Fox
                                          ______________________________________
                                          Name:  S. William Fox
                                          Title: Director

                                      By:        /s/ David J. Dodd
                                          ______________________________________
                                          Name:  David J. Dodd
                                          Title: Associate

                                      COBANK, ACB,
                                      as Syndication Agent and Lender

                                      By:        /s/ David Boyce
                                          ______________________________________
                                          Name:  David Boyce
                                          Title: Vice President

                                      UNION BANK OF CALIFORNIA, N.A.,
                                      as Issuing Bank

                                      By:        /s/ Carmelo Restifo
                                          ______________________________________
                                          Name:  Carmelo Restifo
                                          Title: Vice President

                                       S-1

                [ROCKY MOUNTAIN CREDIT AGREEMENT SIGNATURE PAGE]
<PAGE>

                                                                       EXHIBIT A
                                                             to Credit Agreement

                                   DEFINITIONS

      "Accounts" means the Revenue Account, the Distribution Suspense Account,
the O&M Account, the Major Maintenance Reserve Account, the Loss Proceeds
Account, the Pre-Funded Punchlist Expense Account, the Checking Account, the P&I
Payment Account, the PSCo Security Reserve Account and each cash collateral
account (other than the Credit-Linked Deposit Account) referred to in the Credit
Documents, including any sub-accounts within such accounts.

      "Additional Project Documents" has the meaning given in Section 6.18 of
the Credit Agreement.

      "Administrative Agent" means Credit Suisse First Boston, acting through
its Cayman Islands Branch, acting in its capacity as administrative agent for
the Secured Parties under the Credit Documents.

      "Administrative Questionnaire" means an administrative questionnaire in a
form supplied from time to time by Administrative Agent.

      "Adverse PUHCA Event" means that Borrower or any of its "affiliates"
(within the meaning of Section 2(a)(11)(B) of PUHCA) becomes an "electric
utility company", "public utility company", or "holding company" required to
register as such within the meaning of PUHCA at a time at which applicable
provisions of PUHCA, or any successor statute thereof, and the rules and
regulations thereunder are in effect and such event or occurrence has, or with
the passage of time will have, a Material Adverse Effect or a material and
adverse effect on Administrative Agent, Collateral Agent or the Lenders.

      "Affiliate" of a specified Person means any other Person that (a)
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the Person specified, or (b) only
with respect to matters relating to PUHCA, holds or beneficially owns 10% or
more of the equity interest in the Person specified or 10% or more of any class
of voting securities of the Person specified. When used with respect to
Borrower, "Affiliate" shall include the Sponsor, the Pledgor, Riverside
Borrower, Operator and any Affiliate thereof (other than Borrower).

      "Amortization Schedule" means the schedule for repayment of the principal
of the Term Loans as set forth on Exhibit I to the Credit Agreement.

      "Annual Operating Budget" has the meaning given in Section 5.14.3 of the
Credit Agreement.

      "Anti-Terrorism Laws" has the meaning given in Section 4.6.1 of the Credit
Agreement.

                                       1

<PAGE>

      "Applicable Permit" means, at any time, any Permit, including any zoning,
land use, environmental protection, pollution (including air, water or noise),
sanitation, FERC, Colorado Public Utilities Commission, Colorado Department of
Natural Resources, Colorado Department of Public Health and Environment, import,
export, safety, siting or building Permit (a) that is necessary under applicable
Legal Requirements or any of the Operative Documents to be obtained by or on
behalf of Borrower at such time in light of the stage of ownership or operation
of the Project to operate, maintain, repair, lease, own or use the Project as
contemplated by the Operative Documents, to sell electricity from the Project or
deliver fuel to the Project, or for Borrower to enter into any Operative
Document or to consummate any transaction contemplated thereby, in each case in
accordance with all applicable Legal Requirements, or (b) that is necessary so
that none of Borrower, Administrative Agent, Collateral Agent, the Lead Arranger
or the Secured Parties nor any Affiliate of any of them may be deemed by any
Governmental Authority to be subject to regulation under the FPA (except as
Borrower may be subject to regulation as a public utility) or PUHCA (except as
Borrower may be subject to compliance requirements under Section 32 of PUHCA
applicable to it being an EWG) or treated as a public utility under the
Constitution and the laws of the State of Colorado as presently constituted and
as construed by the courts of Colorado with respect to the regulation of the
rates of, or the financial or organizational regulation of, electric utilities
as a result of the development and construction or operation of the Project or
the sale of electricity therefrom.

      "Applicable Third Party Permit" means, at any time, any Permit, including
any zoning, environmental protection, pollution, sanitation, FERC, Colorado
Public Utilities Commission, Colorado Department of Natural Resources, Colorado
Department of Public Health and Environment, export, safety, siting or building
Permit or that is necessary to be obtained by such time by any Person (other
than Borrower) that is a party to a Major Project Document or a Credit Document
in order to perform such Person's obligations thereunder (other than Permits
necessary to conduct its business generally and maintain its existence and good
standing), or in order to consummate any transaction contemplated thereby, in
each case in accordance with all applicable Legal Requirements.

      "Assignment and Acceptance" means an assignment and acceptance agreement,
substantially in the form of Exhibit M to the Credit Agreement, entered into by
a Lender and an assignee (with the consent of any applicable Person as required
by Section 9.12), and accepted by Administrative Agent.

      "Assignment of Rents" means the Assignment of Leases and Rents and Other
Income, dated on or about the Closing Date, in substantially the form of Exhibit
D-8 to the Credit Agreement, by Borrower in favor of Collateral Agent.

      "Assignment of Water Lease" means the Collateral Assignment of Lease,
dated on or about the Closing Date, in substantially the form of Exhibit D-9 to
the Credit Agreement, by Borrower in favor of Collateral Agent.

      "Bank Book" means that certain confidential Bank Book titled "Riverside
and Rocky Mountain Project Funding" dated May 2004.

                                       2

<PAGE>

      "Banking Day" means any day other than a Saturday, Sunday or other day on
which banks are or Administrative Agent is authorized or required to be closed
in the State of Colorado or the State of New York and, where such term is used
in any respect relating to a LIBOR Term Loan, which is also a day on which
dealings in Dollar deposits are carried out in the London interbank market.

      "Bankruptcy Event" shall be deemed to occur, with respect to any Person,
if that Person shall institute a voluntary case seeking liquidation or
reorganization under the Bankruptcy Law, or shall consent to the institution of
an involuntary case thereunder against it; or such Person shall file a similar
petition or consent or shall otherwise institute any similar proceeding under
any Bankruptcy Law, or shall consent thereto; or such Person shall apply for, or
consent or acquiesce to, the appointment of, a receiver, administrator,
administrative receiver, liquidator, sequestrator or trustee for itself or any
substantial part of its assets under any Bankruptcy Law; or such Person shall
make a general assignment for the benefit of its creditors; or such Person shall
admit in writing its inability to pay its debts generally as they become due; or
if an involuntary case seeking liquidation or reorganization of such Person
under the Bankruptcy Law shall be commenced against such Person and (a) the
petition commencing the involuntary case is not timely controverted, (b) the
petition commencing the involuntary case is not dismissed within 60 days of its
filing, (c) an interim trustee is appointed to take possession of all or a
portion of the property, and/or to operate all or any part of the business of
such Person and such appointment is not vacated within 60 days, or (d) an order
for relief shall have been issued or entered therein; or a decree or order of a
court having jurisdiction in the premises for the appointment of a receiver,
administrator, administrative receiver, liquidator, sequestrator or trustee
shall have been entered; or any other similar relief shall be granted against
such Person under the Bankruptcy Law.

      "Bankruptcy Law" means Title 11, United States Code, and any other state
or federal insolvency, reorganization, moratorium or similar law for the relief
of debtors, or any successor statute to the aforementioned.

      "Base Case Project Projections" means a projection of operating results
for the Project over a period commencing on the Closing Date and ending on
December 31, 2023, showing at a minimum Borrower's reasonable good faith
estimates, as of the Closing Date, of revenues, operating expenses, the Debt
Service Coverage Ratio (which Debt Service Coverage Ratio shall be calculated on
an annual basis, with the first Principal Repayment Date occurring on July 30,
2004, each other Principal Repayment Date occurring semi-annually thereafter and
the final Principal Repayment Date occurring on the Maturity Date), and sources
and uses of revenues over the forecast period, which projection is attached as
Exhibit G-3 to the Credit Agreement.

      "Base Rate" means the greater of (a) the prime commercial lending rate
established from time to time by Administrative Agent at its New York office or
(b) the Federal Funds Rate plus 0.50%. The Base Rate may not necessarily be the
highest or lowest rate of interest charged by Administrative Agent to its
commercial borrowers.

      "Base Rate Term Loan" means a Term Loan accruing interest at the Base
Rate.

                                       3

<PAGE>

      "Book Runner" means Credit Suisse First Boston, acting through its Cayman
Islands Branch, acting in its capacity as book runner under the Credit
Documents.

      "Borrower" means Rocky Mountain Energy Center, LLC, a Delaware limited
liability company.

      "Borrower Material Adverse Effect" means (a) a material adverse change in
the current or reasonably anticipated business, property, results of operation
or financial condition of Borrower, (b) any event or occurrence of whatever
nature which could reasonably be expected to materially and adversely affect
Borrower's ability to perform its material obligations under the Credit
Documents (taken as a whole), and (c) any event or occurrence of whatever nature
which could reasonably be expected to materially and adversely affect the value,
validity or priority of the Secured Parties' security interests in the
Collateral, taken as a whole.

      "Borrowing" means a borrowing by Borrower of the Term Loans.

      "Calculation Period" means, as to a particular date, the 12 month period
(or, during the initial 12 months following the Closing Date, the actual number
of calendar months or partial calendar months following the Closing Date)
immediately preceding such date.

      "Calpine Entity(ies)" has the meaning given in Section 3.1.1 of the Credit
Agreement.

      "Capital Adequacy Requirement" has the meaning given in Section 2.5.4 of
the Credit Agreement.

      "Change of Control" means:

            (a) with respect to Sponsor, other than in connection with a
Permitted Sponsor Transfer, the Sponsor shall cease to directly or indirectly
own and control at any time more than 50% of (i) the economic interests in
Borrower, and (b) the voting interests (whether by committee, contract or
otherwise) in Borrower; or

            (b) with respect to Borrower, Riverside Borrower shall cease to
directly (or, from and after any Required Holdco Transfer, indirectly) own and
control at any time less than 100% of (i) the economic interests in Borrower,
and (b) the voting interests (whether by committee, contract or otherwise) in
Borrower;

provided, that in connection with any disposition by Pledgor of any of its
ownership interests in Riverside Borrower, such disposition shall be deemed to
be a Change of Control unless (i) such disposition is made pursuant to clause
(a) above, (ii) the applicable transferee is a corporation, limited liability
company or limited partnership organized or formed in the United States or a
state or commonwealth therein, (iii) on or before the date of any such
disposition, the applicable transferee enters into a pledge agreement in
substantially the form of Exhibit D-3, pursuant to which such transferee shall
pledge all of its ownership interests in Riverside Borrower to Collateral Agent,
for the benefit of the Secured Parties, and executes and delivers all other
applicable Credit Documents necessary to create and perfect a Lien on such
membership interests in a manner consistent with Section 5.15 of the Riverside
Credit Agreement and the

                                       4

<PAGE>

Intercreditor Agreement, and (iv) on or before the date of any such disposition,
the applicable transferee delivers to Administrative Agent opinions of counsel
with respect to such transferee, such transfer and such pledge agreement
substantially similar to those opinions delivered pursuant to Section 3.1.8 on
the Closing Date.

      "Change of Law" has the meaning given in Section 2.5.2 of the Credit
Agreement.

      "Checking Account" means that certain checking account established by
Borrower pursuant to Section 3.6.1 of the Depositary Agreement.

      "Checking Account Bank" has the meaning given in Section 3.6.1 of the
Depositary Agreement.

      "City of Aurora" means the City of Aurora, Colorado, a home rule municipal
corporation of the State of Colorado, acting by and through its Utility
Enterprise.

      "Closing Date" has the meaning given in Section 3.1 of the Credit
Agreement.

      "CoBank Fee Letter" means that certain letter agreement regarding fees,
dated as of June 24, 2004, by and between Borrower and CoBank, ACB.

      "Code" means the Internal Revenue Code of 1986, as amended.

      "Collateral" means all property which is subject or is intended to become
subject to the security interests or liens granted by any of the Collateral
Documents.

      "Collateral Agent" means Credit Suisse First Boston, acting through its
Cayman Islands Branch, acting in its capacity as collateral agent for the
Secured Parties under the Credit Documents.

      "Collateral Documents" means the Mortgage, the Pledge Agreement, the
Security Agreement, the Intercreditor Agreement, the Depositary Agreement, any
Control Agreement, the Assignment of Rents, the Assignment of Water Lease, the
PSCo Acknowledgment of Subordination, each Consent, and any fixture filings,
financing statements, or other similar documents filed, recorded or delivered in
connection with the foregoing.

      "Commitments" means, with respect to each Lender, each of such Lender's
Term Loan Commitment and Funded LC Credit-Linked Deposit, and with respect to
all Lenders, the Total Term Loan Commitment and the Total Funded LC
Credit-Linked Deposits.

      "Confirmation of Interest Period Selection" has the meaning given in
Section 2.1.7(d)(ii) of the Credit Agreement.

      "Consents" means the consents specified on Exhibit E-2 to the Credit
Agreement and any other third party consents to the assignments contemplated by
the Credit Documents.

                                       5

<PAGE>

      "Consolidated Debt Service" means, for any period, the sum of (a) all fees
(other than fees paid on the Closing Date) payable during such period to any of
the Secured Parties under the Credit Agreement and to any of the Riverside
Secured Parties under the Riverside Credit Agreement, (b) interest on the Term
Loans and Riverside Term Loans less net payments, if any, received during such
period pursuant to Hedge Transactions and Riverside Hedge Transactions, (c)
scheduled Term Loan and Riverside Term Loan principal payments (as reduced to
reflect actual prepayments through the date of such calculation) payable during
such period, (d) net payments, if any, payable during such period pursuant to
Hedge Transactions and Riverside Hedge Transactions, and (e) amounts payable by
Borrower to any of the Secured Parties under the Credit Agreement in respect of
Funded LC Disbursements and Funded LC Credit-Linked Deposits.

      "Consolidated Debt Service Coverage Ratio" means, for any period, the
ratio of (a) Consolidated Operating Cash Available for Debt Service for such
period to (b) Consolidated Debt Service for such period.

      "Consolidated EBITDA" means, with respect to any period, Consolidated Net
Income for such period plus (a) without duplication and to the extent deducted
in determining such Consolidated Net Income, the sum of (i) any and all interest
expense for such period, (ii) all amounts attributable to depreciation and
amortization for such period, (iii) any extraordinary or non-recurring non-cash
charges (other than the write-down of current assets) for such period (including
any such non-cash charges for such period relating to the application of fresh
start accounting principals), (iv) any non-cash goodwill or other intangible
asset impairment charges incurred after the date hereof resulting from the
application of Statement Number 142 of the Financial Accounting Standards Board,
and (v) any non-recurring expenses incurred in connection with the transactions
contemplated by the Credit Documents and the Riverside Credit Documents, plus
(b) without duplication, the cash amount of prepayments received by Borrower
under any Major Project Document or Riverside Borrower under any Riverside Major
Project Document during such period, and minus (c) without duplication (i) all
cash payments made during such period on account of reserves, restructuring
charges and other non-cash charges added to Consolidated Net Income pursuant to
clause (a) above in a previous period and (ii) to the extent included in
determining such Consolidated Net Income, any extraordinary gains and all
non-cash items of income for such period, all determined on a consolidated basis
in accordance with GAAP.

      "Consolidated Net Income" means, with respect to any period and without
duplication, the consolidated net income of Borrower and Riverside Borrower for
such period, determined in accordance with GAAP; provided, that the cumulative
effect of a change in accounting principles will be excluded.

      "Consolidated Operating Cash Available for Debt Service" means, for any
period, the sum of (a) Operating Cash Available for Debt Service for such period
and (b) the positive difference (if any) between (i) Riverside Operating Cash
Available for Debt Service for such period and (ii) amounts distributed or
dividended to Riverside Borrower by Borrower constituting Riverside Project
Revenues during such period.

                                       6

<PAGE>

      "Control Agreement" means that certain control agreement to be entered
into among Borrower, Collateral Agent and Checking Account Bank regarding the
perfection of Collateral Agent's Lien on the Checking Account.

      "Credit Agreement" means the Credit Agreement, dated as of June 24, 2004,
by and among Borrower, Administrative Agent, Collateral Agent, Issuing Bank,
Book Runner, Lead Arranger, the other agents and arrangers listed on the
signature pages thereto and the Lenders.

      "Credit Documents" means the Credit Agreement, the Notes, the Collateral
Documents, the Interest Rate Agreements (including all Hedge Transactions
thereunder), the Fee Letters, the Subordination Agreement, the PSCo Letter of
Credit and any other loan intercreditor or security agreements or letter
agreement or similar document, entered into by Administrative Agent, Collateral
Agent, Depositary Agent, Lead Arranger or any Secured Party, on the one hand,
and the Borrower or one or more Affiliates of Borrower, on the other hand, in
connection with the transactions contemplated by the Credit Documents.

      "Credit-Linked Deposit Account" means, collectively, one or more operating
and/or investment accounts of, and established by, Issuing Bank under its sole
and exclusive control and maintained at the office of Issuing Bank located at
445 S. Figueroa Street, 15th Floor, Los Angeles, CA 90071 (or such other office
as Issuing Bank shall from time to time designate to Borrower and Administrative
Agent), in each case that shall be used for the purposes set forth in Section
2.8 of the Credit Agreement.

      "CSFB Fee Letter" means that certain letter agreement regarding fees,
dated as of June 24, 2004, by and among Lead Arranger, Administrative Agent,
Collateral Agent and Borrower.

      "Debt" of any Person at any date means, without duplication, (a) all
obligations (including contingent obligations) of such Person for borrowed
money, (b) all obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments, (c) all obligations of such Person to pay the
deferred purchase price of property or services, except trade accounts payable
and other accrued expenses arising in the ordinary course of business which in
accordance with GAAP would be shown on the liability side of the balance sheet
of such Person, (d) all obligations of such Person under leases which are or
should be, in accordance with GAAP, recorded as capital leases in respect of
which such Person is liable, (e) all obligations of such Person to purchase
securities (or other property) which arise out of or in connection with the sale
of the same or substantially similar securities (or property), (f) all deferred
obligations of such Person to reimburse any bank or other Person in respect of
amounts paid or advanced under a letter of credit or other instrument, (g) all
Debt of others secured by a Lien on any asset of such Person, whether or not
such Debt is assumed by such Person, (h) all Debt of others guaranteed directly
or indirectly by such Person or as to which such Person has an obligation
substantially the economic equivalent of a guarantee, (i) all monetary
obligations of such Person under a so-called synthetic, off-balance sheet or tax
retention lease and (j) obligations in respect of Hedge Transactions.

      "Debt Service" means, for any period, the sum of (a) all fees (other than
fees paid on the Closing Date) payable during such period to Administrative
Agent, Collateral Agent,

                                       7

<PAGE>

Depositary Agent and the Lenders, (b) interest on the Term Loans less (for
purposes of calculating the Debt Service Coverage Ratio) net payments, if any,
received during such period pursuant to Hedge Transactions, (c) scheduled Term
Loan principal payments (as reduced to reflect actual prepayments through the
date of such calculation) payable during such period, (d) net payments, if any,
payable during such period pursuant to Hedge Transactions and (e) amounts
payable to any of the Secured Parties under the Credit Agreement in respect of
Funded LC Disbursements and Funded LC Credit-Linked Deposits.

      "Debt Service Coverage Ratio" means, for any period, the ratio of (a)
Operating Cash Available for Debt Service for such period to (b) Debt Service
for such period.

      "Default Rate" has the meaning given in Section 2.3.3 of the Credit
Agreement.

      "Depositary Agent" means The Bank of New York, not in its individual
capacity but solely as depositary agent, bank and securities intermediary under
the Depositary Agreement.

      "Depositary Agreement" means the Depositary Agreement, dated as of the
Closing Date, in substantially the form of Exhibit D-4 to the Credit Agreement,
among Borrower, Administrative Agent, Collateral Agent and Depositary Agent.

      "Distribution Suspense Account" has the meaning given in Section 1.1 of
the Depositary Agreement.

      "Dollars" and "$" means United States dollars or such coin or currency of
the United States of America as at the time of payment shall be legal tender for
the payment of public and private debts in the United States of America.

      "Easements" shall have the meaning given in the Mortgage.

      "Eligible Assignee" means (a) any Lender, any Affiliate of any Lender and
any Related Fund (any two or more Related Funds being treated as a single
Eligible Assignee for all purposes hereof), and (b) any commercial bank,
insurance company, investment or mutual fund or other entity that is an
"accredited investor" (as defined in Regulation D under the Securities Act) and
which extends credit or buys loans as one of its businesses.

      "Eligible Facility" means an "eligible facility" within the meaning of
PUHCA and FERC's implementing regulations pertaining thereto.

      "Emergency Operating Costs" means those amounts required to be expended
for the purchase of goods and services in order to prevent or mitigate an
unforeseeable event or circumstances that, in the good faith judgment of
Borrower or Operator, necessitates the taking of immediate measures to prevent
or mitigate injury to Persons or injury to or loss of property.

      "Eminent Domain Proceeds" has the meaning given in Section 3.5.1 of the
Depositary Agreement.

      "Environmental Claim" means any and all liabilities, losses,
administrative, regulatory or judicial actions, suits, demands, decrees, claims,
liens, judgments, warning notices,

                                       8

<PAGE>

notices of noncompliance or violation, investigations, proceedings, removal or
remedial actions or orders, or damages (foreseeable and unforeseeable, including
consequential and punitive damages), penalties, fees, out-of-pocket costs,
expenses, disbursements or attorneys' or consultants' fees, relating in any way
to (a) a violation or alleged violation of any Hazardous Substance Law or Permit
issued under any Hazardous Substance Law, (b) a Release or threatened Release of
Hazardous Substances, or (c) any legal or administrative proceedings relating to
any of the above.

      "Environmental Reports" means that certain R.W. Beck, Inc., Phase I
Environmental Site Assessment Update Letter Report, Rocky Mountain Energy
Center, 6211 County Road 51, Keenesburg, Colorado, 80643, dated as of June 22,
2004.

      "Equipment" has the meaning given in the Mortgage.

      "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

      "ERISA Affiliate" means any trade or business (whether or not
incorporated) that is treated as a single employer together with Borrower under
Section 414 of the Code.

      "ERISA Plan" means any employee benefit plan (a) maintained by Borrower or
any ERISA Affiliate, or to which any of them contributes or is obligated to
contribute, for its employees and (b) covered by Title IV of ERISA or to which
Section 412 of the Code applies.

      "Event of Default" has the meaning given in Article 7 of the Credit
Agreement.

      "Event of Eminent Domain" means any compulsory transfer or taking by
condemnation, eminent domain or exercise of a similar power, or transfer under
threat of such compulsory transfer or taking, of any part of the Collateral or
any of the Mortgaged Property, by any agency, department, authority, commission,
board, instrumentality or political subdivision of the State of Colorado, the
United States or another Governmental Authority having jurisdiction.

      "EWG" has the meaning given in Section 4.16.1 of the Credit Agreement.

      "Executive Order" has the meaning given in Section 4.6.1 of the Credit
Agreement.

      "Existing Rocky Mountain Administrative Agent" means DZ BANK AG, Deutsche
Zentral-Genossenschaftsbank, Frankfurt am Main, New York Branch, in its capacity
as administrative agent under the Existing Rocky Mountain Credit Facility.

      "Existing Rocky Mountain Credit Facility" means the Credit Agreement,
dated as of February 20, 2004, by and among Borrower, Existing Rocky Mountain
Administrative Agent, the financial institutions party thereto from time to time
as lenders and the other agents and arrangers party thereto.

      "Federal Funds Rate" means, for any day, the weighted average of the per
annum rates on overnight Federal funds transactions with member banks of the
Federal Reserve System

                                       9

<PAGE>

arranged by Federal funds brokers as published by the Federal Reserve Bank of
New York for such day (or, if such rate is not so published for any day, the
average rate charged by Administrative Agent on such day on such transactions as
determined by Administrative Agent).

      "Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.

      "Fee Letters" means, collectively, the CSFB Fee Letter, the Issuing Bank
Fee Letter and the CoBank Fee Letter.

      "FERC" means the Federal Energy Regulatory Commission and its successors.

      "Financing Statements" has the meaning given in Section 3.1.19(c) of the
Credit Agreement.

      "FPA" has the meaning given in Section 4.16.1 of the Credit Agreement.

      "Funded LC Credit-Linked Deposit" means, with respect to each Lender, such
Lender's Proportionate Share of the Total Funded LC Credit-Linked Deposit, and
with respect to all Lenders, the Total Funded LC Credit Linked Deposit.

      "Funded LC Disbursement" means a payment or disbursement made by Issuing
Bank pursuant to the PSCo Letter of Credit.

      "GAAP" means generally accepted accounting principles in the United States
of America.

      "Governing Documents" means, with respect to any Person, the certificate
or articles of incorporation, bylaws, operating agreement or other
organizational or governing documents of such Person.

      "Governmental Authority" means any national, state or local government
(whether domestic or foreign), any political subdivision thereof or any other
governmental, quasi-governmental, judicial, public or statutory instrumentality,
authority, body, agency, bureau or entity, (including any zoning authority,
FERC, the Securities Exchange Commission, the Comptroller of the Currency or the
Federal Reserve Board, the Colorado Public Utilities Commission, any central
bank or any comparable authority) or any arbitrator with authority to bind a
party at law.

      "Governmental Rule" means any law, rule, regulation, ordinance, order,
code interpretation, treaty, judgment, decree, directive, guidelines, policy or
similar form of decision of any Governmental Authority.

      "Granting Lender" has the meaning given in Section 9.12.8 of the Credit
Agreement.

      "Hazardous Substances" means (statutory acronyms and abbreviations having
the meaning given them in the definition of "Hazardous Substances Laws")
substances defined as

                                       10

<PAGE>

"hazardous substances," "pollutants" or "contaminants" in Section 101 of the
CERCLA; those substances defined as "hazardous waste," "hazardous materials" or
"regulated substances" by the RCRA; those substances designated as a "hazardous
substance" pursuant to Section 311 of the CWA; those substances defined as
"hazardous materials" in Section 103 of the HMTA; those substances regulated as
a hazardous chemical substance or mixture or as an imminently hazardous chemical
substance or mixture pursuant to Section 6 or 7 of the TSCA; those substances
defined as "contaminants" by Section 1401 of the SDWA, if present in excess of
permissible levels; those substances regulated by the Oil Pollution Act; those
substances defined as a pesticide pursuant to Section 2(u) of the FIFRA; those
substances defined as a source, special nuclear or by-product material by
Section 11 of the AEA; those substances defined as "toxic materials" or "harmful
physical agents" pursuant to Section 6 of the OSHA); those substances defined as
hazardous wastes in 40 C.F.R. Part 261.3; those substances defined as hazardous
waste constituents in 40 C.F.R. Part 260.10, specifically including Appendix VII
and VIII of Subpart D of 40 C.F.R. Part 261; those substances designated as
hazardous substances in 40 C.F.R. Parts 116.4 and 302.4; those substances
defined as hazardous substances or hazardous materials in 49 C.F.R. Part 171.8;
those substances regulated as hazardous materials, hazardous substances, or
toxic substances in 40 C.F.R. Part 1910; those substances regulated as hazardous
materials, hazardous substances, or toxic substances in any other Hazardous
Substances Laws; and those substances regulated as hazardous materials,
hazardous substances, or toxic substances in the regulations adopted and
publications promulgated pursuant to said laws, whether or not such regulations
or publications are specifically referenced herein.

      "Hazardous Substances Law" means any of:

      (i) the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended (42 U.S.C. Section 9601 et seq.) ("CERCLA");

      (ii) the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et
seq.) ("Clean Water Act" or "CWA");

      (iii) the Resource Conservation and Recovery Act (42 U.S.C. Section 6901
et seq.) ("RCRA");

      (iv) the Atomic Energy Act of 1954 (42 U.S.C. Section 2011 et seq.)
("AEA");

      (v) the Clean Air Act (42 U.S.C. Section 7401 et seq.) ("CAA");

      (vi) the Emergency Planning and Community Right to Know Act (42 U.S.C.
Section 11001 et seq.) ("EPCRA");

      (vii) the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
Section 136 et seq.) ("FIFRA");

     (viii) the Oil Pollution Act of 1990 (P.L. 101-380, 104 Stat. 486);

      (ix) the Safe Drinking Water Act (42 U.S.C. Section 300f et seq.)
("SDWA");

                                       11

<PAGE>

      (x) the Toxic Substances Control Act (15 U.S.C. Section 2601 et seq.)
("TSCA");

      (xi) the Hazardous Materials Transportation Act (49 U.S.C. Section 1801 et
seq.) ("HMTA");

      (xii) the Occupational Safety and Health Act (29 U.S.C. Section 651 et
seq.) ("OSHA");

      (xiii) the Colorado Water Quality Control Act, Colo. Rev. Stat Section
25-8-101 et seq., the Colorado Hazardous Waste Management Act, Colo. Rev. Stat.
Section 25-15-101 et seq., the Colorado Air Pollution Prevention and Control
Act, Colo. Rev. Stat. Section 25-7-101 et seq., the Colorado Individual Sewage
Disposal Systems Act, Colo. Rev. Stat. Section 25-10-101 et seq., the Petroleum
Storage Tanks Act, Colo. Rev. Stat. Section 8-20.5-101 et seq. and all related
or similar Colorado State and local Governmental Rules relating to the
protection of human health or the environment; and

      (xiv) all other Federal, state and local Governmental Rules relating to
the protection of human health or the environment or which otherwise govern
Hazardous Substances, and the regulations adopted and publications promulgated
pursuant to all such foregoing laws.

      "Hedge Breaking Fees" has the meaning given in Section 5.20.2 of the
Credit Agreement.

      "Hedge Lender" means a Lender, or any Affiliate thereof which, in any
case, is party to an Interest Rate Agreement with Borrower, in its capacity as
counterparty to such Interest Rate Agreement.

      "Hedge Transaction" means any "Transaction" (such as swaps, caps, collars
or floors) entered into under an Interest Rate Agreement.

      "HoldCo" means a wholly owned subsidiary of Riverside Borrower which is a
limited liability company (and a disregarded entity for federal tax purposes)
formed as of the date required by Section 5.23 of the Credit Agreement and
solely for the purpose of owning the ownership interests of Borrower.

      "Improvements" has the meaning given in the Mortgage.

      "Inchoate Default" or "Default" means any occurrence, circumstance or
event, or any combination thereof, which, with the lapse of time or the giving
of notice or both, would constitute an Event of Default.

      "Increased-Cost Lender" has the meaning given in Section 2.7.2(a) of the
Credit Agreement.

      "Indemnitee" has the meaning given in Section 9.11.2 of the Credit
Agreement.

                                       12

<PAGE>

      "Independent Consultants" means, collectively, the Insurance Consultant,
the Power Market Consultant and the Independent Engineer.

      "Independent Engineer" means R.W. Beck, Inc.

      "Initial Operating Budget" has the meaning given in Section 3.1.20 of the
Credit Agreement.

      "Insurance Consultant" means Marsh USA, Inc.

      "Insurance Proceeds" has the meaning given in Section 3.5.1 of the
Depositary Agreement.

      "Intercreditor Agreement" means that certain Intercreditor Agreement,
dated as of the Closing Date, in substantially the form of Exhibit D-7 to the
Credit Agreement, among Borrower, Riverside Borrower, Administrative Agent,
Riverside Administrative Agent, Collateral Agent and Riverside Collateral Agent.

      "Interest Payment Dates" means (a) October 29, 2004, (b) the last Banking
Day of each January, April, July and October of each calendar year thereafter
until the Maturity Date and (c) the Maturity Date.

      "Interest Period" means, (a) with respect to any LIBOR Term Loan, the time
period selected by Borrower or provided for pursuant to the Credit Agreement
which commences on and includes the first day of such Term Loan, or the
effective date of any conversion (as the case may be) and ends on and excludes
the last day of such time period and (b) with respect to the Funded LC
Credit-Linked Deposits, each period commencing on the Closing Date and ending on
July 30, 2004 and, thereafter, commencing on the last day of the preceding
Interest Period applicable thereto, as the case may be, and ending on the next
following Interest Payment Date thereafter; provided, that (i) a single Interest
Period shall at all times apply to all the Funded LC Credit-Linked Deposits,
(ii) if any Interest Period would end on a day other than a Banking Day, such
Interest Period shall be extended to the next succeeding Banking Day unless such
next succeeding Banking Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Banking Day and (iii) any
Interest Period that commences on the last Banking Day of a calendar month (or
on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Banking Day of the
last calendar month of such Interest Period.

      "Interest Rate" means the Base Rate or the LIBO Rate, as the case may be.

      "Interest Rate Agreements" means one or more interest rate swap
agreements, caps, collars, or other master interest rate hedging mechanisms, in
each case having a term that does not extend beyond the Maturity Date and
otherwise in form and substance reasonably satisfactory to Administrative Agent.

      "Interest Rate Determination Date" means, with respect to any Interest
Period, two Banking Days prior to the first day of such Interest Period.

                                       13

<PAGE>

      "Issuing Bank" means Union Bank of California, N.A., in its capacity as
issuer of the PSCo Letter of Credit.

      "Issuing Bank Fee Letter" means that certain letter agreement regarding
fees, dated as of June 24, 2004, by and between Borrower and Issuing Bank.

      "Lead Arranger" means Credit Suisse First Boston, acting through its
Cayman Islands Branch, in its capacity as lead arranger under the Credit
Agreement.

      "Legal Requirements" means, as to any Person, the Governing Documents of
such Person, any requirement under a Permit, and any Governmental Rule in each
case applicable to or binding upon such Person or any of its properties or to
which such Person or any of its property is subject.

      "Lender" or "Lenders" means each financial institution listed on the
signature pages hereto as a Lender, and any other Person that becomes a party
hereto pursuant to an Assignment and Acceptance. For purposes of determining
Obligations secured by the Collateral, each Hedge Lender shall be deemed a
"Lender" party to the Credit Agreement and Credit Documents to the extent so
specified in Section 5.20.3 of the Credit Agreement.

      "Lending Office" means, with respect to any Lender, the office designated
in writing as such to Administrative Agent and Borrower from time to time.

      "LIBO Rate" means, with respect to any LIBOR Term Loan or the Funded LC
Credit-Linked Deposits for any Interest Period, the rate per annum determined by
Administrative Agent at approximately 11:00 a.m. (London time) on the Interest
Rate Determination Date by reference to the British Bankers' Association
Interest Settlement Rates for deposits in Dollars (as set forth by any service
selected by Administrative Agent which has been nominated by the British
Bankers' Association as an authorized information vendor for the purpose of
displaying such rates) for a period equal to such Interest Period; provided
that, to the extent that an interest rate is not ascertainable pursuant to the
foregoing provisions of this definition, the "LIBO Rate" shall be the interest
rate per annum determined by Administrative Agent to be the average of the rates
per annum at which deposits in Dollars are offered for such Interest Period to
major banks in the London interbank market in London, England by Administrative
Agent at approximately 11:00 a.m. (London time) on the Interest Rate
Determination Date. Each determination by Administrative Agent pursuant to this
definition shall be conclusive in the absence of manifest error.

      "LIBOR Term Loan" means a Term Loan accruing interest at the LIBO Rate.

      "Lien" means, with respect to any property or asset, any mortgage, deed of
trust, lien, pledge, charge, security interest, or encumbrance of any kind in
respect of such asset, whether or not filed, recorded or otherwise perfected or
effective under applicable law, as well as the interest of a vendor or lessor
under any conditional sale agreement, capital lease or other title retention
agreement relating to such asset.

      "Liquidation Costs" has the meaning given in Section 2.6 of the Credit
Agreement.

                                       14

<PAGE>

      "Loss Proceeds" has the meaning given in Section 3.5.1 of the Depositary
Agreement.

      "Loss Proceeds Account" has the meaning given in Section 1.1 of the
Depositary Agreement.

      "Major Casualty Event" has the meaning given in Section 3.5.2 of the
Depositary Agreement.

      "Major Maintenance" means labor, materials and other direct expenses for
any overhaul of, or major maintenance procedure for, the Project which requires
significant disassembly or shutdown of the Project, (a) in accordance with
Prudent Utility Practices, (b) pursuant to manufacturers' requirements to avoid
voiding any such manufacturer's warranty or (c) pursuant to any applicable Legal
Requirement.

      "Major Maintenance Reserve Account" has the meaning given in Section 1.1
of the Depositary Agreement.

      "Major Maintenance Reserve Letter of Credit" has the meaning given in
Section 1.1 of the Depositary Agreement.

      "Major Maintenance Reserve Requirement" has the meaning given in Section
1.1 of the Depositary Agreement.

      "Major Project Documents" means the Power Purchase Agreement, the PSCo
Interconnection Agreement, the Water Lease and the O&M Agreement, any guaranty
agreements (other than the Sponsor O&M Agreement Guaranty), related to the
foregoing executed by Persons in favor of Borrower and, unless otherwise agreed
by Administrative Agent prior to its execution and delivery, any Additional
Project Documents.

      "Major Project Participants" means, without duplication, Borrower,
Operator, PSCo, the City of Aurora and any other Person which provides any
guaranty agreement which is a Major Project Document, and any counterparty to
any Additional Project Document which is a Major Project Document.

      "Majority Lenders" means, at any time, Lenders having Proportionate Shares
which in the aggregate exceed 50%.

      "Mandatory Prepayment" has the meaning given in Section 2.1.10(c) of the
Credit Agreement.

      "Mandatory Repayment Date" has the meaning given in Section 2.1.10(d)(iii)
of the Credit Agreement.

      "Mandatory Repayment Offer" has the meaning given in Section 2.1.10(d) of
the Credit Agreement.

                                       15

<PAGE>

      "Material Adverse Effect" means (a) a material adverse change in the
current or reasonably anticipated business, property, results of operation or
financial condition of Borrower, (b) any event or occurrence of whatever nature
which could reasonably be expected to materially and adversely affect Borrower
or any other Major Project Participant's ability to perform its material
obligations under the Credit Documents (taken as a whole) or Major Project
Documents, as the case may be, and (c) any event or occurrence of whatever
nature which could reasonably be expected to materially and adversely affect the
value, validity or priority of the Secured Parties' security interests in the
Collateral, taken as a whole.

      "Maturity" or "maturity" means, with respect to any Term Loan, Funded LC
Disbursement, Borrowing, interest, fee or other amount payable by Borrower under
the Credit Agreement or the other Credit Documents, the date such Term Loan,
Funded LC Disbursement, Borrowing, interest, fee or other amount becomes due,
whether upon the stated maturity or due date, upon acceleration or otherwise.

      "Maturity Date" means the earlier of (a) the seventh anniversary of the
Closing Date and (b) the date on which the entire outstanding principal balance
of the Term Loans or Funded LC Disbursements, together with all unpaid interest,
fees, charges and costs, becomes due and payable under the Credit Agreement.

      "Minimum Notice Period" means (a) at least three Banking Days before the
Closing Date or any continuation or conversion of a Type of Term Loan resulting
in whole or in part in one or more LIBOR Term Loans, and (b) at least one
Banking Day before any conversion of a Type of Term Loan resulting in whole or
in part in one or more Base Rate Term Loans.

      "MMBtu" means one million British Thermal Units.

      "Moody's" means Moody's Investors Service, Inc.

      "Mortgage" means the Deed of Trust, Security Agreement and Fixture Filing,
dated as of the Closing Date, in substantially the form of Exhibit D-1 to the
Credit Agreement, by Borrower in favor of Collateral Agent (for the benefit of
the Secured Parties).

      "Mortgaged Property" has the meaning given in the Mortgage.

      "Multiemployer Plan" means any ERISA Plan that is a "multiemployer plan"
(as such term is defined in Section 3(37) of ERISA).

      "Non-Consenting Lender" has the meaning given in Section 2.7.2(b) of the
Credit Agreement.

      "Nonrecourse Persons" has the meaning given in Article 8 of the Credit
Agreement.

      "Non-U.S. Lender" has the meaning given in Section 2.3.4(e) of the Credit
Agreement.

      "Notes" has the meaning given in Section 2.1.8 of the Credit Agreement.

                                       16

<PAGE>

      "Notice of Borrowing and LC Activity" has the meaning given in Section
2.1.3(a) of the Credit Agreement.

      "Notice of Conversion of Loan Type" has the meaning given in Section 2.1.9
of the Credit Agreement.

      "O&M Account" has the meaning given in Section 1.1 of the Depositary
Agreement.

      "O&M Agreement" means the Operating and Maintenance Agreement, dated as of
February 20, 2004, between Borrower and Operator.

      "O&M Costs" means, for any period, cash amounts incurred and paid by
Borrower for the operation and maintenance of the Project or any portion thereof
(other than as funded from the Major Maintenance Reserve Account) and for the
purchase of goods and services in connection therewith, including (a) premiums
for insurance policies, (b) consumables (other than fuel supply and related fuel
transportation costs), (c) costs of obtaining any other materials, supplies,
utilities or services for the Project, (d) costs of maintaining, renewing and
amending Permits, (e) franchise, licensing, property, real estate, sales and
excise taxes, (f) general and administrative expenses, (g) employee salaries,
wages and other employment-related costs, (h) business management and
administrative service fees, (i) costs required to be paid by the Project under
any Project Document or Credit Document (other than scheduled Debt Service) or
to satisfy any Legal Requirement or obtain or maintain any Permit, (j) legal,
accounting and consulting fees and other transaction costs and all other fees
payable to the Lenders (other than amounts constituting scheduled Debt Service),
(k) necessary capital expenditures (other than capital expenditures made in
connection with the repair or restoration of any casualty suffered by the
Project to the extent funded with insurance or similar proceeds applied pursuant
to Section 3.5 of the Depositary Agreement or infusions of equity), (l) all
other fees and expenses necessary for the continued operation and maintenance of
the Project and the conduct of the business of the Project, and (m) Emergency
Operating Costs (except for Emergency Operating Costs in connection with the
repair or restoration of any casualty suffered by the Project to the extent
funded with insurance or similar proceeds applied pursuant to Section 3.5 of the
Depositary Agreement or infusions of equity), but exclusive in all cases of
non-cash charges, including depreciation or obsolescence charges or reserves
therefor, amortization of intangibles or other bookkeeping entries of a similar
nature, and also exclusive of all interest charges and charges for the payment
or amortization of principal of indebtedness of Borrower. O&M Costs shall not
include (i) costs of Major Maintenance to the extent paid with funds on deposit
in the Major Maintenance Reserve Account, (ii) Subordinated Payments, (iii)
depreciation, (iv) payments for restoration or repair of the Project from the
Loss Proceeds Account in accordance with the terms of the Depositary Agreement
or (v) amounts to be paid in respect of any federal or state income tax.

      "Obligations" means and includes, with respect to any Person (and, if not
specified and the context so requires, Borrower or any applicable Calpine
Entity), all loans, advances, debts, liabilities, and obligations, howsoever
arising, owed by such Person to Lead Arranger, Administrative Agent, Depositary
Agent, Issuing Bank, Collateral Agent, the Hedge Lenders or the Lenders of every
kind and description (whether or not evidenced by any note or

                                       17

<PAGE>

instrument and whether or not for the payment of money), direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
pursuant to the terms of the Credit Agreement or any of the other Credit
Documents, including all interest, fees, charges, expenses, attorneys' fees and
accountants fees chargeable to such Person and payable by such Person hereunder
or thereunder.

      "Offer Amount" has the meaning given in Section 2.1.10(d)(ii)(B) of the
Credit Agreement.

      "Offer Period" has the meaning given in Section 2.1.10(d)(i) of the Credit
Agreement.

      "Operating Cash Available for Debt Service" means, for any period, Project
Revenues during such period minus (a) O&M Costs during such period and (b)
deposits into the Major Maintenance Reserve Account during such period.

      "Operative Documents" means, collectively, the Credit Documents and the
Project Documents.

      "Operator" means Calpine Operating Services Company, Inc., a Delaware
corporation.

      "Other Taxes" means any and all present and future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made under any of the Credit Documents other than the Interest
Rate Agreements (including all Hedge Transactions thereunder) or from the
execution, delivery or enforcement of, or otherwise with respect to, any of the
Credit Documents other than the Interest Rate Agreements (including all Hedge
Transactions thereunder).

      "P&I Payment Account" has the meaning given in Section 1.1 of the
Depositary Agreement.

      "Participant" has the meaning given in Section 9.12.5 of the Credit
Agreement.

      "Parts" means any part, appliance, instrument, appurtenance, accessory or
other property of any nature necessary or useful to the operation, maintenance,
service or repair of the Project.

      "Payout Amount" has the meaning given in Section 3.1.19(a)(iv) of the
Credit Agreement.

      "PBGC" means the Pension Benefit Guaranty Corporation established pursuant
to Subtitle A of Title IV of ERISA.

      "Permit" means any action, approval, consent, waiver, exemption, variance,
franchise, order, permit, authorization, right or license of or from a
Governmental Authority.

                                       18

<PAGE>

      "Permitted Debt" means (a) Debt incurred under the Credit Documents, (b)
Debt pursuant to the terms of a Project Document (but not for borrowed money),
either not more than 90 days past due or being contested in good faith, (c)
trade or other similar Debt incurred in the ordinary course of business (but not
for borrowed money), either not more than 90 days past due or being contested in
good faith, (d) contingent liabilities, to the extent otherwise constituting
Debt, including those relating to (i) the acquisition of goods, supplies or
merchandise in the normal course of business or normal trade credit, (ii) the
endorsement of negotiable instruments received in the normal course of its
business, and (iii) contingent liabilities incurred with respect to any
Applicable Permit or Operative Document, (e) purchase money obligations incurred
to finance the purchase price of discrete items of equipment not comprising an
integral part of the Project that extend only to the equipment being financed in
an aggregate amount of secured principal and capital lease obligations not
exceeding $3,000,000 at any one time outstanding, and (f) obligations in respect
of surety bonds or similar instruments in an aggregate amount not exceeding
$3,000,000 at any one time outstanding.

      "Permitted Investments" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having a maturity not exceeding
one year from the date of issuance, (b) interest-bearing deposit accounts,
including time deposits and certificates of deposit, of any Lender or any
domestic or foreign commercial bank whose outstanding long-term debt is rated at
least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent
thereof by Moody's having capital and surplus in excess of $500,000,000 having a
maturity not exceeding 90 days from the date of acquisition, (c) commercial
paper issued by any domestic corporation rated at least A-1 or the equivalent
thereof by S&P or at least P-1 or the equivalent thereof by Moody's and, in each
case, having a maturity not exceeding 90 days from the date of acquisition, (d)
fully secured repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (a) above entered into
with any bank meeting the qualifications established in clause (b) above, (e)
high-grade corporate bonds rated at least AA or the equivalent thereof by S&P or
at least Aa2 or the equivalent thereof by Moody's having a maturity not
exceeding 90 days from the date of acquisition, (f) banker's acceptances drawn
on and accepted by any domestic or foreign commercial bank whose long-term
senior unsecured debt is rated at least A or the equivalent thereof by S&P or at
least A2 or the equivalent thereof by Moody's, (g) money market mutual funds
whose investment criteria are substantially similar to items (a) through (f) of
this definition, (h) instruments issued by an investment company rated at least
A or the equivalent thereof by S&P or at least A2 or the equivalent thereof by
Moody's having a portfolio consisting of 95% or more of the securities described
in items (a) through (g) of this definition, and (i) investment contracts
pursuant to which moneys are deposited (to bear interest at an agreed rate) with
a bank, insurance company or other financial institution whose long-term senior
unsecured debt is rated at least A or the equivalent thereof by S&P or at least
A2 or the equivalent thereof by Moody's.

      "Permitted Liens" means (a) the rights and interests of Collateral Agent
and any other Secured Party as provided in the Credit Documents; (b) Liens for
any tax, assessment or other governmental charge, either secured by a bond or
other security reasonably acceptable to Administrative Agent or not yet due or
being contested in good faith and by appropriate proceedings, so long as (i)
such proceedings shall not involve any substantial danger of the sale,

                                       19

<PAGE>

forfeiture or loss of the Project, the Site or any Easements, as the case may
be, title thereto or any interest therein and shall not interfere in any
material respect with the use or disposition of the Project, the Site or any
Easements, (ii) a bond or other security reasonably acceptable to Administrative
Agent has been posted or provided in such manner and amount as to assure
Administrative Agent that any taxes, assessments or other charges determined to
be due will be promptly paid in full when such contest is determined, or (iii)
adequate cash reserves have been provided therefor; (c) materialmen's,
mechanics', workers', repairmen's, employees' or other like Liens, arising in
the ordinary course of business, either for amounts not yet due or for amounts
being contested in good faith and by appropriate proceedings, so long as (i)
such proceedings shall not involve any substantial danger of the sale,
forfeiture or loss of the Project, the Site or any Easements, as the case may
be, title thereto or any interest therein and shall not interfere in any
material respect with the use or disposition of the Project, the Site or any
Easements, (ii) a bond or other security reasonably acceptable to Administrative
Agent has been posted or provided in such manner and amount as to assure
Administrative Agent that any amounts determined to be due will be promptly paid
in full when such contest is determined, or (iii) adequate cash reserves have
been provided therefor; (d) Liens arising out of judgments or awards so long as
an appeal or proceeding for review is being prosecuted in good faith and for the
payment of which adequate reserves, bonds or other security reasonably
acceptable to Administrative Agent have been provided or are fully covered by
insurance; (e) Title Exceptions; (f) Liens, deposits or pledges to secure
statutory obligations or performance of bids, tenders, contracts (other than for
the repayment of borrowed money) or leases, or for purposes of like general
nature in the ordinary course of its business, not to exceed $1,500,000 in the
aggregate at any time, and with any such Lien to be released as promptly as
practicable; (g) other Liens incident to the ordinary course of business that
are not incurred in connection with the obtaining of any loan, advance or credit
and that do not in the aggregate materially impair the use of the property or
assets of Borrower or the value of such property or assets for the purposes of
such business; (h) involuntary Liens as contemplated by the Operative Documents
(including a lien of an attachment, judgment or execution) securing a charge or
obligation, on any of Borrower's property, either real or personal, whether now
or hereafter owned in the aggregate sum of less than $1,500,000; (i) subject to
the Intercreditor Agreement, the rights and interests of the Riverside
Collateral Agent and the other Riverside Secured Parties in Riverside Borrower's
ownership interests in Borrower; and (j) the rights and interests of PSCo as
provided under the PSCo Subordinated Mortgage (as supplemented by the PSCo
Acknowledgement of Subordination).

      "Permitted Sponsor Transfer" means a transfer by the Sponsor of greater
than 50% of its economic and voting interests in Borrower where (a) the electric
energy generation business is the principal line of business of the applicable
transferee; and (b) immediately after giving effect to the direct or indirect
transfer by the Sponsor, the ratings given to the Term Loans and the Riverside
Term Loans by S&P and Moody's shall be at least equal to the higher of (i) the
ratings given to the Term Loans and the Riverside Term Loans by S&P and Moody's
as of the Closing Date and (ii) the ratings given to the Term Loans and the
Riverside Term Loans by S&P and Moody's immediately preceding such transfer by
the Sponsor.

      "Person" means any natural person, corporation, partnership, limited
liability company, firm, association, Governmental Authority or any other entity
whether acting in an individual, fiduciary or other capacity.

                                       20

<PAGE>

      "Pledge Agreement" means, the Pledge and Security Agreement, dated as of
the Closing Date, in substantially the form of Exhibit D-3 to the Credit
Agreement, among the Borrower, Riverside Borrower and Collateral Agent.

      "Pledgor" means Calpine Riverside Holdings, LLC, a Delaware limited
liability company and, from and after any permitted disposition of Calpine
Riverside Holdings, LLC's ownership interests in Riverside Borrower, the
applicable transferee(s).

      "Power Market Consultant" means Henwood Energy Services, Inc.

      "Power Purchase Agreement" means the Power Purchase Agreement, dated as of
March 9, 2001, between PSCo and Borrower, as amended by the First Amendment to
Power Purchase Agreement, dated as of April 3, 2001, the Second Amendment to
Power Purchase Agreement, dated as of January 22, 2003 and the Third Amendment
to Power Purchase Agreement, dated as of November 20, 2003.

      "Pre-Funded Punchlist Expense Account" has the meaning given in Section
1.1 of the Depositary Agreement.

      "Principal Repayment Dates" means (a) with respect to the Term Loans,
January 31, 2005, July 29, 2005 and the last Banking Day of each January and
July of each calendar year thereafter until the Maturity Date, and (b) with
respect to the Term Loans and Funded LC Disbursements, the Maturity Date.

      "Project" means the approximately 601 MW natural gas fired combined cycle
power generation plant located on the Site and the Easements.

      "Project Documents" means, without duplication, the Major Project
Documents, the Easements, the PSCo Subordinated Mortgage and any other agreement
or document relating to the construction, leasing, ownership or operation of the
Project to which Borrower is a party.

      "Project Revenues" means, without duplication, all income and cash
receipts of Borrower derived from the ownership or operation of the Project,
including payments received by Borrower under the Power Purchase Agreement, the
O&M Agreement and the other Project Documents (including damages, liquidated
damages and any other payments, reimbursements or refunds received by Borrower
under a Project Document), proceeds of any business interruption or liability
insurance (to the extent such liability insurance proceeds represent
reimbursement of third party claims previously paid by Borrower), income derived
from the sale or use of electric capacity or energy transmitted or distributed
or ancillary services produced by the Project, payments for remarketing of fuel
or transportation rights relating thereto and investment income on amounts in
the Accounts (solely to the extent deposited in the applicable Account) but
excluding (a) net payments, if any, received by Borrower under Hedge
Transactions, as determined in conformity with cash accounting principles, (b)
any receipts derived from the sale of any property pertaining to the Project or
incidental to the operation of the Project, as determined in conformity with
cash accounting principles (other than sales of electricity, gas and related
services or commodities), (c) proceeds of casualty insurance, (d) the proceeds
of any condemnation awards relating to the Project, (e) proceeds from the
Collateral Documents and (f) the proceeds of any Permitted Debt.

                                       21

<PAGE>

      "Proportionate Share" means:

            (a) in the context of voting in matters requiring the vote of all or
a percentage of the Lenders, with respect to each Lender at any time, a
percentage equal to the quotient of (i) the sum of (A) the percentage interest
of such Lender in the Total Term Loan Commitment, as set forth on Exhibit H to
the Credit Agreement (as updated to reflect any permitted assignments)
multiplied by the Total Term Loan Commitment plus (B) the percentage interest of
such Lender in the sum of (i) the Total Funded LC Credit-Linked Deposits, as set
forth on Exhibit H to the Credit Agreement (as updated to reflect any permitted
assignments) and (ii) any unreimbursed Funded LC Disbursements multiplied by the
sum of the Total Funded LC Credit-Linked Deposits, as set forth on Exhibit H to
the Credit Agreement (as updated to reflect any permitted assignments) and (iii)
any unreimbursed Funded LC Disbursements plus (C) the percentage interest of
such Lender in the Interest Rate Agreements, as set forth on Exhibit H to the
Credit Agreement (as updated to reflect any permitted assignments) multiplied by
the Hedge Breaking Fees actually payable (and not on a "marked to market" basis)
at such time (determined upon the close of the applicable voting period) or, if
no Hedge Breaking Fees are outstanding at such time, 5% of the aggregate
notional amount of those Hedge Transactions which could result in Hedge Breaking
Fees if they were terminated at such time, divided by (ii) the sum of (A) the
Total Term Loan Commitment plus (B) the sum of (i) the Total Funded LC
Credit-Linked Deposits, as set forth on Exhibit H to the Credit Agreement (as
updated to reflect any permitted assignments) and (ii) any unreimbursed Funded
LC Disbursements plus (C) the Hedge Breaking Fees actually payable (and not on a
"marked to market" basis) at such time (determined upon the close of the
applicable voting period) or, if no Hedge Breaking Fees are outstanding at such
time, 5% of the aggregate notional amount of those Hedge Transactions which
could result in Hedge Breaking Fees if they were terminated at such time;

            (b) with respect to each Lender in the context of funding Term Loans
on the Closing Date, the percentage participation of such Lender in the Total
Term Loan Commitment as set forth on Exhibit H to the Credit Agreement and in
the context of funding Funded LC Credit-Linked Deposits on the Closing Date, the
percentage participation of such Lender in the Total Funded LC Credit-Linked
Deposits as set forth on Exhibit H to the Credit Agreement (in each case, as
updated to reflect any permitted assignments); and

            (c) with respect to each Hedge Lender at any time, the percentage
participation of such Hedge Lender in the credit exposure under the Hedge
Transactions, as set forth on Exhibit H to the Credit Agreement (as updated to
reflect any permitted assignments).

      "Prudent Utility Practices" means those practices, methods, equipment,
specifications and standards of safety and performance, as the same may change
from time to time, as are commonly used by natural gas fired electric generation
stations in the Western Systems Coordinating Council of a type and size similar
to the Project as good, safe and prudent engineering practices in connection
with the operation, maintenance, repair and use of electrical and other
equipment, facilities and improvements of such electrical station, with
commensurate standards of safety, performance, dependability, efficiency and
economy. "Prudent Utility Practices" does not necessarily mean one particular
practice, method, equipment specification or standard in all cases, but is
instead intended to encompass a broad range of acceptable practices, methods,
equipment specifications and standards.

                                       22

<PAGE>

      "PSCo" means Public Service Company of Colorado, a Colorado corporation.

      "PSCo Acknowledgment of Subordination" means the Acknowledgement of
Subordination, dated as of a date on or prior to the Closing Date, in
substantially the form of Exhibit D-11 to the Credit Agreement, by PSCo in favor
of Collateral Agent and Borrower.

      "PSCo Calpine Guaranty" has the meaning given in Section 1.1 of the
Depositary Agreement.

      "PSCo Interconnection Agreement" means the Agreement for Interconnection
Services, dated as of May 11, 2001, between the Borrower and PSCo.

      "PSCo Letter of Credit" means that certain letter of credit, in
substantially the form of Exhibit N to the Credit Agreement, issued to PSCo by
Issuing Bank on the Closing Date pursuant to Section 2.8.2(a) of the Credit
Agreement.

      "PSCo Security Fund" has the meaning given in the Power Purchase
Agreement.

      "PSCo Security Reserve Account" has the meaning given in Section 1.1 of
the Depositary Agreement.

      "PSCo Security Reserve Requirement" has the meaning given in Section 1.1
of the Depositary Agreement.

      "PSCo Subordinated Mortgage" means the Subordinated Mortgage, Security
Agreement and Financing Statement dated February 14, 2003 by Borrower in favor
of PSCo, as supplemented by the PSCo Acknowledgement of Subordination.

      "PUHCA" means the Public Utility Holding Company Act of 1935, as amended.

      "Punchlist Items" means those items under the Project's construction,
engineering and equipment procurement contracts which have not been completed as
of the Closing Date.

      "Qualified Letter of Credit" means one or more unconditional, irrevocable
letters of credit on terms and conditions, and in form and substance, reasonably
satisfactory to Administrative Agent and shall (a) name Administrative Agent on
behalf of the Secured Parties as the beneficiary thereof, (b) have an aggregate
amount available to be drawn at all times greater than or equal to the amount
being secured by such letter of credit, (c) be issued from a bank, banks, trust
company or trust companies not a party to the Credit Agreement (and otherwise
reasonably acceptable to Administrative Agent) which bank, banks, trust company
or trust companies shall have a combined capital and surplus of at least
$1,000,000,000 and whose long-term senior unsecured indebtedness is rated at
least A by S&P and A2 by Moody's, (d) not be secured by any of the Collateral,
and (e) not impose on Borrower any obligation to reimburse drawing payments
thereunder; provided that such letter of credit shall provide that it shall (i)
automatically renew upon the expiration thereof unless, at least 60 days prior
to such expiration, the issuer thereof shall provide Administrative Agent with a
notice of non-renewal of such letter of credit, (ii) have an initial expiration
date of at least one year after issuance, and

                                       23

<PAGE>

(iii) have a stated amount equal from time to time to (or, to the extent of cash
deposited, less than) amounts required to be issued as set forth in the Credit
Documents.

      "Register" has the meaning given in Section 9.12.3 of the Credit
Agreement.

      "Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System (or any successor).

      "Regulatory Change" means any change after the Closing Date in federal,
state, local or foreign laws, regulations, Legal Requirements or requirements
under Applicable Permits, or the adoption or making after such date of any
interpretations, directives or requests of or under any federal, state, local or
foreign laws, regulations, Legal Requirements or requirements under Applicable
Permits (whether or not having the force of law) by any Governmental Authority
charged with the interpretation or administration thereof.

      "Related Fund" means, with respect to any Lender that is an investment
fund, any other investment fund that invests in commercial loans similar to the
Term Loans and that is managed or advised by the same investment advisor as such
Lender or by an Affiliate of such investment advisor.

      "Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, trustees, officers, employees,
agents and advisors of such Person and such Person's Affiliates.

      "Release" means disposing, discharging, injecting, spilling, leaking,
leaching, dumping, pumping, pouring, emitting, escaping, emptying, seeping,
placing or the like, into or upon any land or water or air, or otherwise
entering into the environment.

      "Repayment Period" means the sixth month period commencing on a Principal
Repayment Date and ending on the next Principal Repayment Date.

      "Replacement Lender" has the meaning given in Section 2.7.2(c) of the
Credit Agreement.

      "Replacement Obligor" means either (a) a Person (including any guarantor
of such Person's obligations) (i) having, on the date of such replacement,
credit, or acceptable credit support, and experience equal to or greater than
that of the party to the Major Project Document (including any guaranty thereof)
being replaced and (ii) entering into a contract with Borrower with economic
terms no less favorable to Borrower than those in the Major Project Document
(including any guaranty thereof) being replaced and other terms and conditions
no less favorable to Borrower in any material respect than those in the Major
Project Document (including any guaranty thereof) being replaced (provided that
if such Replacement Obligor is for an Affiliate of Borrower, such replacement
Major Project Document may be on market terms rather than on terms and
conditions no less favorable to Borrower and a replacement O&M Agreement need
not provide that the fee payable thereunder be subordinated) or (b) a Person
acceptable to (i) if the affected Major Project Document is the Tolling
Agreement or the Power Purchase Agreement, the Supermajority Lenders or (ii) if
the affected Major Project Document is any other Major Project Document, the
Majority Lenders, in either case which Person enters into

                                       24

<PAGE>

a contract with Borrower on terms and conditions acceptable to the Supermajority
Lenders or the Majority Lenders (as the case may be) (which acceptance shall not
be unreasonably withheld in the case of the replacement of a Major Project
Participant that is an Affiliate of Borrower); provided that in each case, such
Person enters into a Consent, in substantially the form of Exhibit E-1 to the
Credit Agreement, on the date such replacement contract is entered into.

      "Reportable Event" means any of the events set forth in Section 4043(b) or
(c) of ERISA for which notice to the PBGC has not been waived.

      "Required HoldCo Transfer" means any transfer to HoldCo (including by way
of equity contribution) of Riverside Borrower's ownership interests in Borrower;
provided that (a) Riverside Borrower shall have granted to Collateral Agent, for
the benefit of the Secured Parties, a first priority Lien on its ownership
interests in HoldCo (to the same extent provided by Riverside Borrower in the
Pledge Agreement entered into on the Closing Date), (b) Riverside Borrower shall
have granted to Collateral Agent, for the benefit of the Riverside Secured
Parties, a second priority Lien on its ownership interests in HoldCo, (c) the
pledge agreement pursuant to which such Liens will be created shall (i) provide
that HoldCo is a special purpose vehicle established solely to own the ownership
interests of Borrower, and (ii) include covenants customary for such a special
purpose vehicle (including, negative covenants prohibiting HoldCo from incurring
any indebtedness, any obligations and the granting by HoldCo of any Liens (other
than those expressly contemplated hereby), (d) Collateral Agent, on behalf of
the Secured Parties, shall take such actions as are necessary (and is hereby
authorized by the Lenders) to release the Secured Parties interests in and to
the Riverside Borrower's ownership interests in Borrower and to enter into an
amendment and restatement or other replacement of the Pledge Agreement to
effectuate the foregoing, and (e) Administrative Agent shall have received
documentation and evidence (reasonably satisfactory to Administrative Agent)
that the conditions set forth in Sections 3.1.1 through 3.1.5 of the Credit
Agreement have been satisfied in respect of HoldCo, together with legal opinions
of counsel to the Calpine Entities (including, as applicable for purposes of
this definition, HoldCo) involved in such transfer, which opinions shall cover
or confirm, with respect to such transfer, (i) the due formation or
incorporation, as applicable, of each such Calpine Entities, (ii) the due
authorization and enforceability of each Operative Document to which any such
Calpine Entities is a party as of the date of such transfer, (iii) permitting,
and federal and state energy regulatory matters, (iv) the continued validity,
perfection and priority of the Liens under the Collateral Documents (including
any new Liens granted in connection with any such transfer), (v) Investment
Company Act of 1940 matters, (vi) no violations of law and no conflicts with
certain agreements, court orders and Governing Documents, (vii) receipt of all
necessary consents and governmental approvals and (viii) such other matters as
Administrative Agent may reasonably request.

      "Reserve Requirement" means, for LIBOR Term Loans, the maximum rate
(expressed as a percentage) at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained during the
Interest Period therefor under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding $1,000,000,000 against
"Eurocurrency liabilities" (as such term is used in Regulation D). Without
limiting the effect of the foregoing, the Reserve Requirement shall reflect any
other reserves required to be maintained by such member banks by reason of any
Regulatory Change against (a) any category of liabilities which includes
deposits by reference to

                                       25

<PAGE>

which the LIBO Rate or LIBOR Term Loans is to be determined, (b) any category of
liabilities or extensions of credit or other assets which include LIBOR Term
Loans or (c) any category of liabilities or extensions of credit which are
considered irrevocable commitments to lend.

      "Responsible Officer" means, as to any Person, its president, chief
executive officer, any vice president, treasurer, or secretary or any natural
Person who is a managing general partner or manager or managing member of a
limited liability company (or any of the preceding with regard to any such
managing general partner, manager or managing member).

      "Restricted Payment Conditions" has the meaning given in Section 6.6 of
the Credit Agreement.

      "Revenue Account" has the meaning given in Section 1.1 of the Depositary
Agreement.

      "Rights of Way" has the meaning given in Section 3.1.25 of the Credit
Agreement.

      "Riverside Accounts" has the meaning given to the term "Accounts" in
Exhibit A to the Riverside Credit Agreement.

      "Riverside Administrative Agent" has the meaning given to the term
"Administrative Agent" in Exhibit A to the Riverside Credit Agreement.

      "Riverside Applicable Permits" has the meaning given to the term
"Applicable Permits" in Exhibit A to the Riverside Credit Agreement.

      "Riverside Borrower" means Riverside Energy Center, LLC, a Wisconsin
limited liability company.

      "Riverside Closing Date Distribution" has the meaning given in Section
2.1.5 of the Riverside Credit Agreement.

      "Riverside Collateral Agent" has the meaning given to the term "Collateral
Agent" in Exhibit A to the Riverside Credit Agreement.

      "Riverside Collateral Documents" has the meaning given to the term
"Collateral Documents" in Exhibit A to the Riverside Credit Agreement.

      "Riverside Credit Agreement" means that certain Credit Agreement, dated as
of June 24, 2004, by and among Riverside Borrower, Riverside Administrative
Agent, Riverside Collateral Agent, the Riverside Lenders and the other agents
and arrangers party thereto.

      "Riverside Credit Documents" has the meaning given to the term "Credit
Documents" in Exhibit A to the Riverside Credit Agreement.

      "Riverside Depositary Agreement" has the meaning given to the term
"Depositary Agreement" in Exhibit A to the Riverside Credit Agreement.

                                       26

<PAGE>

      "Riverside Hedge Lenders" has the meaning given to the term "Hedge
Lenders" in Exhibit A to the Riverside Credit Agreement.

      "Riverside Hedge Breaking Fees" has the meaning given to the term "Hedge
Breaking Fees" in Exhibit A to the Riverside Credit Agreement.

      "Riverside Hedge Transactions" has the meaning given to the term "Hedge
Transactions" in Exhibit A to the Riverside Credit Agreement.

      "Riverside Interest Rate Agreements" has the meaning given to the term
"Interest Rate Agreements" in Exhibit A to the Riverside Credit Agreement.

      "Riverside Lead Arranger" has the meaning given to the term "Lead
Arranger" in Exhibit A to the Riverside Credit Agreement.

      "Riverside Lenders" has the meaning given to the term "Lenders" in Exhibit
A to the Riverside Credit Agreement.

      "Riverside Major Project Document" has the meaning given to the term
"Major Project Document" in Exhibit A to the Riverside Credit Agreement.

      "Riverside Obligations" means the "Obligations" of Riverside Borrower
under the Riverside Credit Documents.

      "Riverside Operating Cash Available for Debt Service" has the meaning
given to the term "Operating Cash Available for Debt Service" in Exhibit A to
the Riverside Credit Agreement.

      "Riverside Operative Documents" has the meaning given to the term
"Operative Documents" in Exhibit A to the Riverside Credit Agreement.

      "Riverside Power Purchase Agreement" has the meaning given to the term
"Power Purchase Agreement" in Exhibit A to the Riverside Credit Agreement.

      "Riverside Project Revenues" has the meaning given to the term "Project
Revenues" in Exhibit A to the Riverside Credit Agreement.

      "Riverside Revenue Account" has the meaning given to the term "Revenue
Account" in Exhibit A to the Riverside Credit Agreement.

      "Riverside Secured Parties" has the meaning given to the term "Secured
Parties" in Exhibit A to the Riverside Credit Agreement.

      "Riverside Term Loans" has the meaning given to the term "Term Loans" in
Exhibit A to the Riverside Credit Agreement.

      "Riverside Total Term Loan Commitment" has the meaning given to the term
"Total Term Loan Commitment" in Exhibit A to the Riverside Credit Agreement.

                                       27

<PAGE>

      "Riverside Waterfall Level" has the meaning given to the term "Waterfall
Level" in Exhibit A to the Riverside Credit Agreement.

      "Rocky Mountain Closing Date Distribution" has the meaning given in
Section 2.1.5 of the Credit Agreement.

      "S&P" means Standard & Poor's Corporation and its successors and assigns.

      "Satisfaction Date" means the date on which all Obligations of Borrower
(other than such Obligations which, by their terms, survive the termination of
the Credit Agreement) to the Secured Parties shall have been paid in full in
cash, each of the Interest Rate Agreements to which any Secured Party is a party
shall have terminated and all obligations of the Secured Parties under the
Credit Documents have terminated (other than such obligations which, by their
terms, survive the termination of the Credit Documents).

      "Secured Obligations" has the meaning given in the Mortgage.

      "Secured Parties" means Administrative Agent, the Lead Arranger, the
Collateral Agent, Issuing Bank, the Depositary Agent, Syndication Agent, any
Lender (or Affiliate of any Lender) which is a counterparty to an Interest Rate
Agreement entered into by Borrower in accordance with the Credit Agreement, each
Lender and each of their respective successors, transferees and assigns;
provided, that no Affiliate of Sponsor shall be a "Secured Party" hereunder or
under any other Credit Document.

      "Security Agreement" means the Security Agreement, dated as of the Closing
Date, in substantially the form of Exhibit D-2 to the Credit Agreement, between
Borrower and Collateral Agent.

      "Site" has the meaning given in the Mortgage.

      "Solvent" means (a) the present fair saleable value of the assets of
Borrower exceeds the amount required to pay the probable liability on its
existing debts, respectively (whether matured or unmatured, liquidated or
unliquidated, absolute, fixed or contingent), as they become absolute and
matured, and as a result of the consummation of the transactions contemplated
herein and in the Bank Book, will continue to exceed such amount; (b) Borrower
does not, and, as a result of the consummation of the transactions contemplated
in the Credit Agreement, the other Credit Documents and the Bank Book, will not,
have unreasonably small capital for it to carry on its business as proposed to
be conducted; and (c) Borrower is not incurring obligations or making transfers
under any evidence of indebtedness (including indebtedness under the Credit
Agreement) with the intent to hinder, delay or defraud any entity to which it is
or will become indebted.

      "SPC" has the meaning given in Section 9.12.8 of the Credit Agreement.

      "Sponsor" means Calpine Corporation, a Delaware corporation.

      "Sponsor O&M Agreement Guaranty" means that certain Sponsor O&M Agreement
Guaranty, dated as of the Closing Date, by the Sponsor for the benefit of
Borrower.

                                       28

<PAGE>

      "Subordinated Payments" means any fees, bonuses, profits and any other
amounts which are not in the nature of reimbursable costs or expenses, payable
by Borrower to any Affiliate under any Project Document and which are subject to
the Subordination Agreement applicable to such Project Document.

      "Subordination Agreement" means a subordination agreement substantially in
the form of Exhibit D-5 to the Credit Agreement.

      "Subsidiary" means, as to any Person, a corporation, partnership, limited
liability company or other entity of which such Person: (a) owns 10% or more of
the shares of stock or other ownership interests having ordinary voting power
(other than stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity
and/or (b) controls the management, directly or indirectly through one or more
intermediaries. Unless otherwise qualified, all references to a "Subsidiary" or
to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries
of a Person.

      "Supermajority Lenders" means, at any time, Lenders having Proportionate
Shares which in the aggregate exceed 66.67%.

      "Syndication Agent" means CoBank, ACB, in its capacity as syndication
agent under the Credit Agreement.

      "Tax" means any present or future tax, levy, impost, charge, deduction or
withholding of any nature and whatever called, by whomsoever, on whomsoever and
wherever imposed, levied, collected, withheld or assessed by a taxing authority
other than a "Tax on the overall net income" of any Person. A "Tax on the
overall net income" of a Person shall be construed as a reference to a tax
(including U.S. backup withholding taxes and branch profit taxes) imposed by the
jurisdiction in which that Person is organized or in which that Person's
applicable principal office (and/or, in the case of a Lender, its Lending
Office) is located or in which that Person (and/or, in the case of a Lender, its
Lending Office) is deemed to be doing business on all or part of the net income,
profits, capital or gains (whether worldwide, or only insofar as such income,
profits, capital or gains are considered to arise in or to relate to a
particular jurisdiction, or otherwise) of that Person (and/or, in the case of a
Lender, its applicable Lending Office).

      "Term" means the entire period that any Term Loans shall be outstanding.

      "Term Loan" has the meaning given in Section 2.1.2 of the Credit
Agreement.

      "Term Loan Commitment" means, at any time with respect to each Lender,
such Bank's Proportionate Share of the Total Term Loan Commitment at such time.

      "Terminated Lender" has the meaning given in Section 2.7.2(c) of the
Credit Agreement.

      "Termination Date" means the date on which both (a) all Obligations of
Borrower (other than such Obligations which, by their terms, survive the
termination of the Credit

                                       29

<PAGE>

Agreement) to the Secured Parties shall have been paid in full in cash, each of
the Interest Rate Agreements to which any Secured Party is a party shall have
terminated and all obligations of the Secured Parties under the Credit Documents
have terminated (other than such obligations which, by their terms, survive the
termination of the Credit Documents), and (b) all Riverside Obligations (other
than such Riverside Obligations which, by their terms, survive the termination
of the Riverside Credit Agreement) to the Riverside Secured Parties shall have
been paid in full in cash, each of the Riverside Interest Rate Agreements to
which any Riverside Secured Party is a party shall have terminated and all
obligations of the Riverside Secured Parties under the Riverside Credit
Documents have terminated (other than such obligations which, by their terms,
survive the termination of the Riverside Credit Documents).

      "Title Exception" means those exceptions to coverage listed on Schedule B
of the Title Policy, other than the standard printed exceptions contained
therein.

      "Title Insurer" means Stewart Title Guaranty Company.

      "Title Policy" means that certain policy of the title insurance issued by
the Title Insurer dated as of the Closing Date, as provided in Section 3.1.24 of
the Credit Agreement, including all amendments thereto, endorsements thereof and
substitutions or replacements therefor.

      "Total Funded LC Credit-Linked Deposits" means, at any time, the sum of
all the Lenders' Funded LC Credit-Linked Deposits, as the same may be reduced
from time to time pursuant to the Credit Agreement.

      "Total Term Loan Commitment" has the meaning given in Section 2.1.1 of the
Credit Agreement.

      "Type" means the type of Term Loan, whether a Base Rate Term Loan or LIBOR
Term Loan.

      "UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the State of New York; provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the perfection or
priority of the security interest in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State of New York
the term "UCC" shall mean the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof and of the other Credit
Documents relating to such perfection or priority and for purposes of
definitions related to such provisions.

      "Unsatisfied Condition" means a condition in a Permit that has not been
satisfied and that either (a) must be satisfied before such Permit can be come
effective, (b) must be satisfied as of the date on which a representation is
made or a condition precedent must be satisfied under the Credit Agreement, or
(c) must be satisfied as of a future date but with respect to which facts or
circumstances exist which, to Borrower's knowledge, could reasonably be expected
to result in a failure to satisfy such Permit condition.

      "Variable O&M Costs" means those O&M Costs described in the line-items of
the Base Case Project Projections entitled "Reverse Osmosis - Water Treatment",

                                       30

<PAGE>

"Demineralizer/EDI/Polishing - Water Treatment", "Boiler/Steam Chemicals - Water
Treatment", "Cooling Tower - Water Treatment", "Gas Turbine Gasses/Chemicals",
"Waste Water Disposal", "Amnonia (SCR)" and "Electricity Usage Cost".

      "Water Lease" means the Agreement for Lease of Reclaimed Wastewater, dated
April 23, 2001 between the City of Aurora and Borrower, as successor to Sponsor,
and as amended by the First Amendment to Agreement for Lease of Reclaimed
Wastewater, dated October 28, 2002.

      "Waterfall Level" has the meaning given in Section 1.1 of the Depositary
Agreement.

                                       31

<PAGE>

                             RULES OF INTERPRETATION

      1. The singular includes the plural and the plural includes the singular.

      2. "or" is not exclusive.

      3. A reference to a Governmental Rule includes any amendment or
modification to such Governmental Rule, and all regulations, rulings and other
Governmental Rules promulgated under such Governmental Rule.

      4. A reference to a Person includes its permitted successors, permitted
replacements and permitted assigns.

      5. Accounting terms have the meanings assigned to them by GAAP, as applied
by the accounting entity to which they refer.

      6. The words "include", "includes" and "including" are not limiting.

      7. A reference in a document to an Article, Section, Exhibit, Schedule,
Annex or Appendix is to the Article, Section, Exhibit, Schedule, Annex or
Appendix of such document unless otherwise indicated. Exhibits, Schedules,
Annexes or Appendices to any document shall be deemed incorporated by reference
in such document. In the event of any conflict between the provisions of the
Credit Agreement (exclusive of the Exhibits, Schedules, Annexes and Appendices
thereto) and any Exhibit, Schedule, Annex or Appendix thereto, the provisions of
the Credit Agreement shall control.

      8. References to any document, instrument or agreement (a) shall include
all exhibits, schedules and other attachments thereto, (b) shall include all
documents, instruments or agreements issued or executed in replacement thereof,
and (c) shall mean such document, instrument or agreement, or replacement or
predecessor thereto, as amended, amended and restated, modified and supplemented
from time to time and in effect at any given time.

      9. The words "hereof", "herein" and "hereunder" and words of similar
import when used in any document shall refer to such document as a whole and not
to any particular provision of such document.

      10. References to "days" shall mean calendar days, unless the term
"Banking Days" shall be used. References to a time of day shall mean such time
in New York, New York, unless otherwise specified.

      11. If, at any time after the Closing Date, Moody's or S&P shall change
its respective system of classifications, then any Moody's or S&P "rating"
referred to herein shall be considered to be at or above a specified level if it
is at or above the new rating which most closely corresponds to the specified
level under the old rating system.

      12. The Credit Documents are the result of negotiations between, and have
been reviewed by Borrower, each Affiliate of Borrower party thereto,
Administrative Agent, the Lead Arranger, Issuing Bank, each Lender and their
respective counsel. Accordingly, the Credit

                                       32

<PAGE>

Documents shall be deemed to be the product of all parties thereto, and no
ambiguity shall be construed in favor of or against Borrower, any Affiliate of
Borrower party thereto, Administrative Agent, Issuing Bank or any Lender solely
as a result of any such party having drafted or proposed the ambiguous
provision.

                                       33
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1.11
<SEQUENCE>4
<FILENAME>f05222exv10w1w11.txt
<DESCRIPTION>EXHIBIT 10.1.11
<TEXT>
<PAGE>

                                                                 EXHIBIT 10.1.11

                                                               EXECUTION VERSION

================================================================================

                                CREDIT AGREEMENT

                          dated as of February 25, 2005

                                      among

                         CALPINE STEAMBOAT HOLDINGS, LLC
                                   (Borrower)

                                   COBANK, ACB
      (Lead Arranger, Co-Syndication Agent, Underwriter and Co-Book Runner)

                             CALYON NEW YORK BRANCH
                 (Lead Arranger, Underwriter, Collateral Agent,
               Administrative Agent, LC Issuer and Co-Book Runner)

                                UFJ BANK LIMITED
             (Lead Arranger, Co-Documentation Agent and Underwriter)

                                 HSH NORDBANK AG
             (Lead Arranger, Co-Documentation Agent and Underwriter)

              BAYERISCHE HYPO- UND VEREINSBANK AG, NEW YORK BRANCH
              (Lead Arranger, Co-Syndication Agent and Underwriter)

                                       and

                    THE FINANCIAL INSTITUTIONS PARTIES HERETO
                                    (Lenders)

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

                             Freeport Energy Center
                          250 MW Cogeneration Facility
                                 Freeport, Texas

                              Mankato Energy Center
              375 MW Combined Cycle Electricity Generation Facility
                          Blue Earth County, Minnesota

================================================================================

<PAGE>

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                               PAGE
                                                                                                               ----
<S>                                                                                                            <C>
ARTICLE 1 DEFINITIONS............................................................................                2

         1.1        Definitions..................................................................                2
         1.2        Rules of Interpretation......................................................                2

ARTICLE 2 THE CREDIT FACILITIES..................................................................                2

         2.1        Loan Facilities..............................................................                2
         2.2        Security Fund LC Facility....................................................               12
         2.3        Total Commitments............................................................               14
         2.4        Fees.........................................................................               15
         2.5        Security Fund LC Fees........................................................               15
         2.6        Other Payment Terms..........................................................               16
         2.7        Pro Rata Treatment...........................................................               20
         2.8        Change of Circumstances......................................................               20
         2.9        Funding Losses...............................................................               23
         2.10       Alternate Office; Minimization of Costs......................................               23

ARTICLE 3 CONDITIONS PRECEDENT...................................................................               24

         3.1        Conditions Precedent to the Closing Date.....................................               24
         3.2        Conditions Precedent to Each Credit Event....................................               33
         3.3        Conditions Precedent to Term-Conversion......................................               37
         3.4        Conditions Precedent to Use of Proceeds Outside of Initial Allocated
                    Portions.....................................................................               39
         3.5        No Approval of Work..........................................................               40
         3.6        Adjustment of Drawdown Requests..............................................               40

ARTICLE 4 REPRESENTATIONS AND WARRANTIES.........................................................               40

         4.1        Organization.................................................................               40
         4.2        Authorization; No Conflict...................................................               42
         4.3        Enforceability...............................................................               43
         4.4        Compliance with Law..........................................................               44
         4.5        Business, Debt, Contracts, Joint Ventures Etc................................               45
         4.6        Adverse Change...............................................................               46
         4.7        Investment Company Act.......................................................               46
         4.8        ERISA........................................................................               47
         4.9        Permits......................................................................               47
         4.10       Hazardous Substances.........................................................               48
         4.11       Litigation...................................................................               49
         4.12       Labor Disputes and Acts of God...............................................               50
         4.13       Project Documents............................................................               50
</TABLE>

                                       i

<PAGE>

<TABLE>
<S>                                                                                                             <C>
         4.14       Disclosure...................................................................               50
         4.15       Private Offering by Borrower.................................................               51
         4.16       Taxes........................................................................               51
         4.17       Governmental Regulation......................................................               51
         4.18       Regulation U, Etc............................................................               52
         4.19       Budgets; Projections.........................................................               52
         4.20       Financial Statements.........................................................               53
         4.21       No Default...................................................................               53
         4.22       Organizational ID Number; Location of Collateral.............................               53
         4.23       Title and Liens..............................................................               53
         4.24       Intellectual Property........................................................               54
         4.25       Collateral...................................................................               54
         4.26       Sufficiency of Project Documents.............................................               55
         4.27       Utilities....................................................................               56
         4.28       Other Facilities.............................................................               56
         4.29       Proper Subdivision...........................................................               56
         4.30       Flood Zone Disclosure........................................................               56
         4.31       Tax Shelter Regulations......................................................               56

ARTICLE 5 AFFIRMATIVE COVENANTS..................................................................               57

         5.1        Use of Proceeds, Equity Contributions and Project Revenues...................               57
         5.2        Payment......................................................................               58
         5.3        Warranty of Title............................................................               58
         5.4        Notices......................................................................               58
         5.5        Financial Statements.........................................................               61
         5.6        Books, Records, Access.......................................................               62
         5.7        Compliance with Laws, Instruments, Applicable Permits, Etc...................               63
         5.8        Reports......................................................................               63
         5.9        Existence, Conduct of Business, Properties, Etc..............................               64
         5.10       Debt Service Coverage Ratio; Debt to Equity Ratio............................               64
         5.11       Indemnification..............................................................               65
         5.12       Exemption from Regulation....................................................               68
         5.13       Construction of the Projects.................................................               68
         5.14       Operation and Maintenance of Projects; Annual Operating Budget...............               69
         5.15       Preservation of Rights; Further Assurances...................................               70
         5.16       Additional Consents..........................................................               72
         5.17       Drawstop Funds...............................................................               72
         5.18       Maintenance of Insurance.....................................................               72
         5.19       Taxes, Other Government Charges and Utility Charges..........................               72
         5.20       Event of Eminent Domain......................................................               73
         5.21       Interest Rate Protection.....................................................               73
         5.22       Additional Permits...........................................................               74
         5.23       Special Purpose Entity.......................................................               74
</TABLE>

                                       ii

<PAGE>

<TABLE>
<S>                                                                                                             <C>
         5.24       The Patriot Act..............................................................               75
         5.25       Certain Rights Under Dow Agreements..........................................               75
         5.26       Project Representative.......................................................               75
         5.27       Alternate Waterline Easements................................................               75

ARTICLE 6 NEGATIVE COVENANTS.....................................................................               76

         6.1        Contingent Liabilities.......................................................               76
         6.2        Limitations on Liens.........................................................               76
         6.3        Indebtedness.................................................................               76
         6.4        Sale or Lease of Assets......................................................               76
         6.5        Changes......................................................................               77
         6.6        Distributions................................................................               77
         6.7        Investments..................................................................               80
         6.8        Transactions With Affiliates; Subordination Agreements.......................               80
         6.9        Regulations..................................................................               80
         6.10       Partnerships, etc............................................................               80
         6.11       Dissolution; Merger..........................................................               80
         6.12       Amendments; Change Orders; Completion........................................               81
         6.13       Name and Location; Fiscal Year...............................................               84
         6.14       Use of Sites.................................................................               84
         6.15       Assignment...................................................................               84
         6.16       Accounts.....................................................................               84
         6.17       Hazardous Substances.........................................................               84
         6.18       Additional Project Documents.................................................               84
         6.19       Project Budget Amendments....................................................               85
         6.20       Assignment By Third Parties..................................................               85
         6.21       Acquisition of Real Property.................................................               85
         6.22       Employee Benefit Plans.......................................................               86
         6.23       No Merchant Sales............................................................               86
         6.24       Flow of Funds................................................................               86
         6.25       Tax Election.................................................................               86
         6.26       Tax Sharing Agreements.......................................................               86

ARTICLE 7 EVENTS OF DEFAULT; REMEDIES............................................................               87

         7.1        Events of Default............................................................               87
         7.2        Remedies.....................................................................               95

ARTICLE 8 SCOPE OF LIABILITY.....................................................................               97

ARTICLE 9 AGENTS; SUBSTITUTION...................................................................               98

         9.1        Appointment, Powers and Immunities...........................................               98
         9.2        Reliance.....................................................................              100
</TABLE>

                                      iii

<PAGE>

<TABLE>
<S>                                                                                                            <C>
         9.3        Non-Reliance.................................................................              100
         9.4        Defaults; Material Adverse Change............................................              100
         9.5        Indemnification..............................................................              101
         9.6        Successor Agent..............................................................              101
         9.7        Authorization................................................................              102
         9.8        Other Roles..................................................................              103
         9.9        Amendments; Waivers..........................................................              103
         9.10       Withholding Tax..............................................................              104
         9.11       General Provisions as to Payments............................................              104
         9.12       Substitution of Lender.......................................................              105
         9.13       Participation................................................................              105
         9.14       Transfer of Commitment.......................................................              106
         9.15       Laws.........................................................................              107
         9.16       Assignability as Collateral..................................................              107
         9.17       Notices to Lenders...........................................................              108
         9.18       Collateral Agent.............................................................              108

ARTICLE 10 INDEPENDENT CONSULTANTS...............................................................              108

         10.1       Removal and Fees.............................................................              108
         10.2       Duties.......................................................................              109
         10.3       Independent Consultants' Certificates........................................              109
         10.4       Certification of Dates.......................................................              110

ARTICLE 11 MISCELLANEOUS.........................................................................              110

         11.1       Addresses....................................................................              110
         11.2       Additional Security; Right to Set-Off........................................              111
         11.3       Delay and Waiver.............................................................              112
         11.4       Costs, Expenses and Attorneys' Fees; Syndication.............................              112
         11.5       Entire Agreement.............................................................              113
         11.6       Governing Law................................................................              113
         11.7       Severability.................................................................              113
         11.8       Headings.....................................................................              113
         11.9       Accounting Terms.............................................................              114
         11.10      Additional Financing.........................................................              114
         11.11      No Partnership, Etc..........................................................              114
         11.12      Deed of Trust/Collateral Documents...........................................              114
         11.13      Limitation on Liability......................................................              114
         11.14      Waiver of Jury Trial.........................................................              115
         11.15      Consent to Jurisdiction......................................................              115
         11.16      Knowledge and Attribution....................................................              116
         11.17      Successors and Assigns.......................................................              116
         11.18      Counterparts.................................................................              116
         11.19      Usury........................................................................              116
</TABLE>

                                       iv

<PAGE>

<TABLE>
<S>                                                                                                            <C>
         11.20      Survival.....................................................................              116
         11.21      Patriot Act Notice...........................................................              117
         11.22      Treatment of Certain Information; Confidentiality............................              117
         11.23      Release of Project...........................................................              118
         11.24      Project Expansion............................................................              119
</TABLE>

                                       v

<PAGE>

                                INDEX OF EXHIBITS

Exhibit A         Definitions and Rules of Interpretation

                  NOTES

Exhibit B-1       Form of Construction Note
Exhibit B-2       Form of Term Note
Exhibit B-3       Form of FEC Note
Exhibit B-4       Form of MEC Note
Exhibit B-5       Form of Security Fund Letter of Credit
Exhibit B-6       Form of Security Fund LC Loan Note

                  LOAN DISBURSEMENT PROCEDURES

Exhibit C-1       Form of Notice of Construction Loan Borrowing
Exhibit C-2       Form of Notice of Term-Conversion
Exhibit C-3       Form of Confirmation of Interest Period Selection
Exhibit C-4       Form of Notice of Conversion of Loan Type
Exhibit C-5       Form of Drawdown Certificate
Exhibit C-6(a)    Form of Independent Engineer's Drawdown Certificate (Mankato)
Exhibit C-6(b)    Form of Independent Engineer's Drawdown Certificate (Freeport)
Exhibit C-7       Form of Notice of Security Fund LC Loan

                  CREDIT AND SECURITY-RELATED DOCUMENTS

Exhibit D-1       Form of FEC Deed of Trust
Exhibit D-2       Form of MEC Mortgage
Exhibit D-3       Form of Security Agreement
Exhibit D-4       Form of Borrower Depositary Agreement
Exhibit D-5       Form of FEC Depositary Agreement
Exhibit D-6       Form of MEC Depositary Agreement
Exhibit D-7       Form of Subordination Agreement
Exhibit D-8       Form of NSP Acknowledgment of Subordination
Exhibit D-9       Schedule of Security Filings
Exhibit D-10      Form of Group Pledge and Security Agreement
Exhibit D-11      Intentionally Deleted
Exhibit D-12      Form of Interest Rate Agreement
Exhibit D-13      Form of FEC Guaranty
Exhibit D-14      Form of MEC Secured Guaranty
Exhibit D-15      Form of MEC Security Agreement
Exhibit D-16      Form of FEC Security Agreement
Exhibit D-17      Form of FEC-GP Guaranty
Exhibit D-18      Form of FEC-LP Guaranty
Exhibit D-19      Form of MEC Unsecured Guaranty

                                       vi

<PAGE>

                                    CONSENTS

Exhibit E-1       Form of Consent for Contracting Party

                  CLOSING CERTIFICATES

Exhibit F-1       Form of Borrower's Closing Certificate
Exhibit F-2       Form of FEC's Closing Certificate
Exhibit F-3       Form of MEC's Closing Certificate
Exhibit F-4       Intentionally Deleted
Exhibit F-5       Form of Insurance Consultant's Certificate
Exhibit F-6       Form of Independent Engineer's Certificate
Exhibit F-7       Form of Power Market Consultant's Certificate

                  PROJECT DESCRIPTION EXHIBITS

Exhibit G-1       Schedule of Applicable Permits
Exhibit G-2       Project Budget
Exhibit G-3       Base Case Project Projections
Exhibit G-4       Project Schedule
Exhibit G-5       Pending Litigation
Exhibit G-6       Hazardous Substances Disclosure
Exhibit G-7       Pending Change Orders
Exhibit G-8       Template Operating Report
Exhibit G-9       Real Estate Rights

                  OTHER

Exhibit H         Lenders Proportionate Shares
Exhibit I         Amortization Schedule
Exhibit J         Form of Non-Bank Certificate
Exhibit K         Insurance Requirements
Exhibit L         Form of Annual Insurance Certificate
Exhibit M         Form of Confidentiality Agreement

                                      vii
<PAGE>

                                                               EXECUTION VERSION

            This CREDIT AGREEMENT, dated as of February 25, 2005 (this
"Agreement"), is entered into among CALPINE STEAMBOAT HOLDINGS, LLC, a Delaware
limited liability company, as borrower ("Borrower"), the financial institutions
listed on Exhibit H or who later become a party hereto, as Lenders (the
financial institutions party to this Agreement being collectively referred to as
the "Lenders"), CALYON NEW YORK BRANCH, as a Lead Arranger, underwriter, co-book
runner and administrative agent for the Lenders (in such capacity,
"Administrative Agent"), as collateral agent for the Secured Parties (in such
capacity, "Collateral Agent") and as issuer of the Security Fund LC (in such
capacity, "LC Issuer"), COBANK, ACB, as a Lead Arranger, underwriter,
co-syndication agent and co-book runner, HSH NORDBANK AG, as a Lead Arranger,
underwriter and co-documentation agent, UFJ BANK LIMITED, as a Lead Arranger,
underwriter and co-documentation agent, and BAYERISCHE HYPO- UND VEREINSBANK AG,
NEW YORK BRANCH, as a Lead Arranger, underwriter and co-syndication agent.

                                    RECITALS

            A. Borrower is the direct, 100% owner of Mankato Energy Center, LLC
("MEC"), the owner of a combined cycle electric generating facility, capable of
generating approximately 375 MW of electric power, to be located in Blue Earth
County, Minnesota (the "Mankato Project").

            B. Borrower is also the direct 100% owner of both FEC-GP and FEC-LP.
FEC-GP is the sole 1%-owning general partner of Freeport Energy Center, LP
("FEC" and together with MEC, the "Project Companies"), and FEC-LP is the sole
99%-owning limited partner of FEC, the owner of a 250 MW cogeneration facility
to be located on an 8-acre site inside the Plant B industrial complex owned by
The Dow Chemical Company in Freeport, Texas (the "Freeport Project").

            C. Borrower has requested that the Lenders provide a portion of the
construction and term financing for the Mankato Project and the Freeport Project
(together, the "Projects"), which proceeds Borrower shall on-lend to the Project
Companies for the development and construction of the Projects.

            D. The Lenders are willing to provide such financing upon the terms
and subject to the conditions set forth herein and in the other Credit
Documents.

            E. The credit facilities provided hereunder will be secured by,
among other things, the Freeport Project and the Mankato Project and guaranteed
by the Project Companies; and the Lenders would not be willing to extend such
credit facilities to Borrower, and allow Borrower to on-lend the proceeds
thereof to the Project Companies, without being provided such security and such
guaranties.

                                    AGREEMENT

            In consideration of the agreements herein and in the other Credit
Documents and in reliance upon the representations and warranties set forth
herein and therein, the parties hereto agree as follows:

<PAGE>

                                    ARTICLE 1
                                   DEFINITIONS

      1.1   DEFINITIONS.

            Except as otherwise expressly provided, capitalized terms used in
this Agreement (including its exhibits and schedules) shall have the meanings
given to such terms in Exhibit A.

      1.2   RULES OF INTERPRETATION.

            Except as otherwise expressly provided, the rules of interpretation
set forth in Exhibit A shall apply to this Agreement and the other Credit
Documents.

                                    ARTICLE 2
                              THE CREDIT FACILITIES

      2.1   LOAN FACILITIES.

            2.1.1 Construction Loan Facility.

            (a) Availability. Subject to the terms and conditions set forth in
this Agreement and in reliance upon the representations and warranties of
Borrower set forth herein and of the Project Companies set forth in the Project
Company Guaranties, each Lender severally agrees to advance to Borrower from
time to time during the Construction Loan Availability Period such loans as
Borrower may request pursuant to this Section 2.1.1 (individually, a
"Construction Loan" and, collectively, the "Construction Loans"), in an
aggregate principal amount which, when added to such Lender's Proportionate
Share of the aggregate principal amount of all prior Construction Loans made
under this Agreement, does not exceed such Lender's Construction Loan
Commitment. Unless the conditions under Section 3.4 are satisfied, no more of
the Construction Loans than $215,000,000 (the "Initial MEC Allocated Portion")
may be applied toward Project Costs of the Mankato Project, and no more than
$251,500,000 (the "Initial FEC Allocated Portion") may be applied toward Project
Costs of the Freeport Project.

            (b) Notice of Construction Loan Borrowing. Borrower shall request
Construction Loans by delivering to Administrative Agent a written notice in the
form of Exhibit C-1, appropriately completed (a "Notice of Construction Loan
Borrowing"), which contains or specifies, among other things:

                  (i) the portion of the requested Construction Loan which shall
bear interest as is provided in (A) Section 2.1.1(c)(i) (individually, a "Base
Rate Construction Loan" and, collectively, the "Base Rate Construction Loans")
or (B) Section 2.1.1(c)(ii) (individually, a "LIBOR Construction Loan" and,
collectively, the "LIBOR Construction Loans");

                                        2

<PAGE>

                  (ii) the aggregate principal amount of the requested
Construction Loan, which shall be in the minimum amount of $1,000,000 or an
integral multiple of $100,000 in excess thereof; provided that such minimum
amount shall not apply to the Punchlist Drawing, Dow Change Order Drawing, Dow
Performance Test Drawing or the True-Up Drawing (if any);

                  (iii) the proposed date of the requested Construction Loan
(which shall be a Banking Day);

                  (iv) in the case of any requested Construction Loan to be made
as a LIBOR Construction Loan, the initial Interest Period requested therefor
(which shall be an Interest Period contemplated by Section 2.1.3(c));

                  (v) a certification by Borrower that, as of the date such
requested Construction Loan is proposed to be made, the Construction Loan
proposed to be made on such date, when added together with all other
Construction Loans made under this Agreement, does not either (A) exceed the
Total Construction Loan Commitment or (B) cause Construction Loans applied to
Project Costs of MEC to exceed the Initial MEC Allocated Portion or Construction
Loans applied to Project Costs of FEC to exceed the Initial FEC Allocated
Portion; and

                  (vi) the amount of the requested Construction Loan that shall
be designated to constitute part of the MEC Allocated Portion and the FEC
Allocated Portion.

            Borrower shall request no more than one Construction Loan per month.
Borrower shall give each Notice of Construction Loan Borrowing to Administrative
Agent so as to provide not less than the Minimum Notice Period applicable to
Construction Loans of the Type requested. Any Notice of Construction Loan
Borrowing may be modified or revoked by Borrower through the Banking Day prior
to the Minimum Notice Period, and shall thereafter be irrevocable. Each Notice
of Construction Loan Borrowing shall be delivered in the manner provided in
Section 11.1.

            (c) Construction Loan Interest. Subject to Section 2.6.3, Borrower
shall pay interest on the unpaid principal amount of each Construction Loan from
the date of Borrowing of such Construction Loan until the maturity or prepayment
thereof at the following rates per annum:

                  (i) With respect to the principal portion of such Construction
Loan which is, and during such periods as such Construction Loan is, a Base Rate
Construction Loan, at a rate per annum equal to the Base Rate (such rate to
change from time to time as the Base Rate shall change) plus the applicable Rate
Margin minus 0.75%.

                  (ii) With respect to the principal portion of such
Construction Loan which is, and during such periods as such Construction Loan
is, a LIBOR Construction Loan, at a rate per annum, at all times during each
Interest Period for such LIBOR Construction Loan, equal to the LIBO Rate for
such Interest Period plus the applicable Rate Margin.

                                        3

<PAGE>

            (d) Construction Loan Principal Payments. Borrower shall repay to
Administrative Agent, for the account of each Lender, in full on the
Construction Loan Maturity Date the unpaid principal amount of all Construction
Loans made by such Lender which will not be Term-Converted to Term Loans at such
time as is provided in Section 2.1.2(a). Borrower may not re-borrow the
principal amount of any Construction Loan so repaid.

            (e) Cancellation and Return of Construction Notes. Upon payment in
full or Term-Conversion in full of the aggregate principal amount of the
Construction Loans and all accrued and unpaid interest thereon, each Lender
shall promptly mark as canceled any Construction Notes issued to it under
Section 2.1.4 or 9.14 then outstanding and return such canceled Construction
Notes to Borrower.

            2.1.2 Term Loan Facility.

            (a) Availability. Subject to the terms and conditions set forth in
this Agreement and in reliance upon the representations and warranties of
Borrower set forth herein, each Lender severally agrees to make to Borrower on
the Term Period Commencement Date, at the request of Borrower, a term loan under
this Section 2.1.2 (individually a "Term Loan" and, collectively, the "Term
Loans") in an aggregate principal amount equal to the aggregate principal amount
of outstanding Construction Loans made by such Lender. Each Lender shall make
its Term Loan by converting the principal amount of outstanding Construction
Loans made by such Lender to a Term Loan.

            (b) Notice of Term-Conversion. Borrower shall request
Term-Conversion by delivering to Administrative Agent a written notice in the
form of Exhibit C-2, appropriately completed (the "Notice of Term-Conversion"),
which specifies, among other things:

                  (i) the principal portion of the requested Term Loans which
shall bear interest as provided in (A) Section 2.1.2(c)(i) (individually, a
"Base Rate Term Loan" and, collectively, the "Base Rate Term Loans") or (B)
Section 2.1.2(c)(ii) (individually, a "LIBOR Term Loan" and, collectively, the
"LIBOR Term Loans");

                  (ii) the aggregate principal amount of the requested Term
Loans, which shall not exceed the aggregate principal amount of all Construction
Loans outstanding on the Term Period Commencement Date (which amount shall be
calculated immediately prior to Term-Conversion, after giving effect to the
Punchlist Drawing (if any), the Dow Change Order Drawing (if any), the Dow
Performance Test Drawing (if any), the True-Up Drawing (if any), and the
application of all liquidated damages and other amounts required to be applied
to the prepayment of Construction Loans pursuant to the Depositary Agreements);

                  (iii) the proposed date of Term-Conversion (which shall be a
Banking Day on or before the Construction Loan Maturity Date); and

                  (iv) in the case of any requested Term Loan to be made as a
LIBOR Term Loan, the initial Interest Period requested therefor (which shall be
an Interest Period contemplated by Section 2.1.3(c)).

                                        4

<PAGE>

            Borrower shall deliver the Notice of Term-Conversion to
Administrative Agent so as to provide at least the Minimum Notice Period
applicable to Loans of the Type requested upon Term-Conversion; provided that
not later than 10 Banking Days prior to delivery of the Notice of
Term-Conversion, Borrower shall deliver to Administrative Agent a draft of such
Notice of Term-Conversion and evidence documenting that the conditions to
Term-Conversion set forth in Section 3.3 will be satisfied by the proposed date
of Term-Conversion. The Notice of Term-Conversion may be modified or revoked by
Borrower through the Banking Day prior to the Minimum Notice Period, and shall
thereafter be irrevocable. The Notice of Term-Conversion shall be delivered in
the manner provided in Section 11.1.

            (c) Term Loan Interest. Subject to Section 2.6.3, Borrower shall pay
interest on the unpaid principal amount of each Term Loan from the date of
Borrowing of such Term Loan until the maturity or prepayment thereof at one of
the following rates per annum:

                  (i) With respect to the principal portion of such Term Loan
which is, and during such periods as such Term Loan is, a Base Rate Term Loan,
at a rate per annum equal to the Base Rate (such rate to change from time to
time as the Base Rate shall change) plus the applicable Rate Margin minus 0.75%.

                  (ii) With respect to the principal portion of such Term Loan
which is, and during such periods as such Term Loan is, a LIBOR Term Loan, at a
rate per annum during each Interest Period for such LIBOR Term Loan equal to the
LIBO Rate for such Interest Period plus the applicable Rate Margin.

            (d) Term Loan Principal Payment. Beginning on the Initial Principal
Repayment Date and on each Principal Repayment Date thereafter, Borrower shall
repay to Administrative Agent, for the account of each Lender, the aggregate
unpaid principal amount of the Term Loan made by such Lender in installments in
accordance with the repayment schedule set forth on Exhibit I, with any
remaining unpaid principal, interest, fees and costs due and payable on the Term
Loan Maturity Date. Borrower may not re-borrow the principal amount of any Term
Loan so repaid. Upon scheduled repayment of the principal of Term Loans, the
Allocated Portions shall be reduced in accordance with the scheduled
amortization thereof as set forth in the Base Case Project Projections.

            (e) Initial Principal Repayment Date Prior to Term Period
Commencement Date. If the Initial Principal Repayment Date occurs prior to the
Term Period Commencement Date, then Construction Loans in the required amount
shall be repaid first from any funds in the Borrower Revenue Account. After
application of all such funds, if there remains any required payment, then to
the extent that Administrative Agent reasonably concludes that reducing the
Total Construction Loan Commitment would not cause a failure to satisfy the
condition set forth in Section 3.2.16, then the Total Construction Loan
Commitment shall be reduced by up to such required amount, and to the extent of
such reduction, the payment will be deemed made.

                                        5

<PAGE>

            2.1.3 Interest Provisions Relating to All Loans.

            (a) Applicable Interest Rate. Subject to Section 2.6.3, the
applicable basis for determining the rate of interest with respect to any
Construction Loan or Term Loan shall be selected by Borrower initially at the
time a Notice of Construction Loan Borrowing or Notice of Term-Conversion is
given pursuant to Section 2.1.1 or 2.1.2, as the case may be, and with respect
to a Security Fund LC Loan, by delivery to the Administrative Agent of a notice
in the form of Exhibit C-7, appropriately completed to notify the Lenders of the
Interest Period. The basis for determining the interest rate with respect to any
Loan may be changed from time to time as specified in a Notice of Conversion of
Loan Type delivered pursuant to Section 2.1.6. If on any day a Loan is
outstanding with respect to which notice has not been delivered to
Administrative Agent in accordance with the terms of this Agreement specifying
the applicable basis for determining the rate of interest, then for that day
such Loan shall bear interest determined by reference to the Base Rate. Borrower
shall not request, and the Lenders shall not be obligated to make, LIBOR Loans
at any time an Event of Default exists.

            (b) Interest Payment Dates. Borrower shall pay accrued interest on
the unpaid principal amount of each Loan (i) in the case of each Base Rate Loan,
on the last Banking Day of each calendar quarter, (ii) in the case of each LIBOR
Loan, on the last day of each Interest Period related to such LIBOR Loan and,
with respect to Interest Periods longer than three months, the last Banking Day
of each third month in which such LIBOR Loan is outstanding, and (iii) in all
cases, upon repayment or prepayment (to the extent thereof and including any
optional prepayments or Mandatory Prepayments), upon conversion from one Type of
Loan to another Type of Loan and at maturity (whether by acceleration or
otherwise).

            (c) LIBOR Loan Interest Periods.

                  (i) The initial and subsequent Interest Periods for LIBOR
Loans shall be a maximum of one month until the date which falls four months
after the Closing Date (or such earlier date as may otherwise be agreed to by
Administrative Agent and Borrower). Thereafter, each subsequent Interest Period
selected by Borrower for all LIBOR Loans shall be one, three or six months.
Notwithstanding anything to the contrary in either of the two preceding
sentences, (A) any Interest Period which would otherwise end on a day which is
not a Banking Day shall be extended to the next succeeding Banking Day unless
such next Banking Day falls in another calendar month, in which case such
Interest Period shall end on the immediately preceding Banking Day, (B) any
Interest Period which begins on the last Banking Day of a calendar month (or on
a day for which there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last Banking Day of a
calendar month, (C) Borrower may not select Interest Periods which would leave a
greater principal amount of Loans subject to Interest Periods ending after a
date upon which Loans are or may be required to be repaid (including the
Construction Loan Maturity Date, the Term Loan Maturity Date and each Principal
Repayment Date) than the principal amount of Loans scheduled to be outstanding
after such date and for purposes of this clause, Borrower shall assume that all
Security Fund LC Loans will be repaid on the next Principal Repayment Date, (D)
unless Term-Conversion has occurred, any Interest Period for a Construction Loan
which would otherwise end after the

                                        6

<PAGE>

Construction Loan Maturity Date shall end on the Construction Loan Maturity
Date, (E) any Interest Period for a Term Loan which would otherwise end after
the Term Loan Maturity Date shall end on the Term Loan Maturity Date, (F) LIBOR
Loans for each Interest Period shall be in the minimum amount of $500,000 or an
integral multiple of $100,000 in excess thereof, (G) Borrower may not at any
time have outstanding more than six different Interest Periods relating to LIBOR
Loans, and (H) Borrower shall select Types and Interest Periods for Construction
Loans and Term Loans corresponding to the "types" and "interest periods" used
for floating rate payments in the Interest Rate Agreements so as to create, to
the greatest extent possible, a complete hedge.

                  (ii) Borrower may contact Administrative Agent at any time
prior to the end of an Interest Period for a quotation of Interest Rates in
effect at such time for given Interest Periods and Administrative Agent shall
promptly provide such quotation. Borrower may select an Interest Period
telephonically or by electronic mail within the time periods specified in
Section 2.1.6, which selection shall be irrevocable on and after commencement of
the applicable Minimum Notice Period. Borrower shall confirm such telephonic or
electronic mail notice to Administrative Agent by facsimile on the day such
notice is given by delivery to Administrative Agent of a written notice in
substantially the form of Exhibit C-3, appropriately completed (a "Confirmation
of Interest Period Selection"). Borrower shall promptly deliver to
Administrative Agent the original of the Confirmation of Interest Period
Selection initially delivered by facsimile. If Borrower fails to notify
Administrative Agent of the next Interest Period for any LIBOR Loans in
accordance with this Section 2.1.3(c)(ii), such Loans shall automatically
convert to Base Rate Loans on the last day of the current Interest Period
therefor. Administrative Agent shall as soon as practicable (and, in any case,
within two Banking Days after delivery of the Confirmation of Interest Period
Selection) notify Borrower of each determination of the Interest Rate applicable
to each Loan.

            (d) Interest Computations. All computations of interest on Base Rate
Loans shall be based upon a year of 365 days or, in the case of a leap year, 366
days, shall be payable for the actual days elapsed (including the first day but
excluding the last day), and shall be adjusted in accordance with any changes in
the Base Rate to take effect on the beginning of the day of such change in the
Base Rate. All computations of interest on LIBOR Loans shall be based upon a
year of 360 days and shall be payable for the actual days elapsed (including the
first day but excluding the last day). Borrower agrees that all computations by
Administrative Agent of interest shall be conclusive and binding in the absence
of manifest error.

            2.1.4 Promissory Notes. The obligation of Borrower to repay the
Loans made by a Lender and to pay interest thereon at the rates provided herein
shall, upon the written request of such Lender, be evidenced by promissory notes
in the form of Exhibit B-1 (individually, a "Construction Note" and,
collectively, the "Construction Notes"), Exhibit B-2 (individually, a "Term
Note" and, collectively, the "Term Notes") and Exhibit B-6 (individually, a
"Security Fund LC Loan Note" and, collectively, the "Security Fund LC Loan
Notes"), each payable to the order of such requesting Lender and in the
principal amount of such Lender's Construction Loan Commitment, Term Loan
Commitment and Security Fund LC Commitment, respectively. Borrower authorizes
each such requesting Lender to record on the schedule annexed to such

                                        7

<PAGE>

Lender's Note or Notes, the date and amount of each Loan made by such requesting
Lender, and each payment or prepayment of principal thereunder and agrees that
all such notations shall constitute prima facie evidence of the matters noted;
provided that in the event of any inconsistency between the records or books of
Administrative Agent and any Lender's records or Notes, the records of
Administrative Agent shall be conclusive and binding in the absence of manifest
error. Borrower further authorizes each such requesting Lender to attach to and
make a part of such requesting Lender's Note or Notes continuations of the
schedule attached thereto as necessary. No failure to make any such notations,
nor any errors in making any such notations, shall affect the validity of
Borrower's obligations to repay the full unpaid principal amount of the Loans or
the duties of Borrower hereunder or thereunder. Upon the payment in full in cash
of the aggregate principal amount of, and all accrued and unpaid interest on,
the Loans, or in the case of Construction Notes, upon Term-Conversion, the
Lenders holding such Notes shall promptly mark the applicable Notes cancelled
and return such cancelled Notes to Borrower.

            2.1.5 Loan Funding.

            (a) Notice. Each Notice of Construction Loan Borrowing, Notice of
Term-Conversion and Notice of Conversion of Loan Type shall be delivered to
Administrative Agent in accordance with Sections 2.1.1(b), 2.1.2(b) and 2.1.6,
respectively. Administrative Agent shall promptly notify each Lender of the
contents of each Notice of Construction Loan Borrowing, Notice of
Term-Conversion and Notice of Conversion of Loan Type.

            (b) Pro Rata Loans. All Loans shall be made on a pro rata basis by
the Lenders in accordance with their respective Proportionate Shares of such
Loans, with each Borrowing to consist of a Loan by each Lender equal to such
Lender's Proportionate Share of such Loan.

            (c) Lender Funding. Each Lender shall, before 1:00 p.m. on the date
of each Borrowing of a Construction Loan or Term Loan, make available to
Administrative Agent by wire transfer of immediately available funds in Dollars
to the account of Administrative Agent most recently designated by it for such
purpose, such Lender's Proportionate Share of the Construction Loan or Term Loan
(as the case may be) to be made on such date. The failure of any Lender to make
the Construction Loan or Term Loan (as the case may be) to be made by it as part
of any Borrowing shall not relieve any other Lender of its obligation hereunder
to make its Construction Loan or Term Loan (as the case may be) on the date of
such Loan. No Lender shall be responsible for the failure of any other Lender to
make the Construction Loan or Term Loan (as the case may be) to be made by such
other Lender on the date of any Borrowing.

            (d) Failure of Lender to Fund. Unless Administrative Agent shall
have been notified by any Lender prior to the applicable date of a Borrowing of
a Construction Loan or Term Loan that such Lender does not intend to make
available to Administrative Agent the amount of such Lender's Proportionate
Share of the Construction Loan or Term Loan (as the case may be) requested on
such date, Administrative Agent may assume that such Lender has made such amount
available to Administrative Agent on such date in accordance with the prior
paragraph and Administrative Agent may, in its sole discretion and in reliance
upon such assumption, make available to Borrower a corresponding amount on such
date. If such

                                        8

<PAGE>

corresponding amount is not in fact made available to Administrative Agent by
such Lender, Administrative Agent shall be entitled to recover such
corresponding amount on demand (and, in any event, within two Banking Days from
the applicable date of such Borrowing) from such Lender together with interest
thereon, for each day from the applicable date of such Borrowing until the date
such amount is paid to Administrative Agent, at the Federal Funds Rate for the
first two Banking Days after such date. If such Lender pays such amount to
Administrative Agent, then such amount (excluding any interest paid to
Administrative Agent thereon) shall constitute such Lender's Proportionate Share
of such Construction Loan or Term Loan (as the case may be) included in such
Construction Loan or Term Loan (as the case may be). If such Lender does not pay
such corresponding amount forthwith upon Administrative Agent's demand therefor
or within two Banking Days from the applicable date of such Borrowing of a
Construction Loan or Term Loan (as the case may be), Administrative Agent shall
promptly notify Borrower and Borrower shall immediately pay such corresponding
amount to Administrative Agent together with interest thereon, for each day from
the applicable date of such Borrowing until the date such amount is paid to
Administrative Agent, at the rate then payable under this Agreement for Base
Rate Loans. Nothing in this Section 2.1.5(d) shall be deemed to relieve any
Lender from its obligation to fulfill its obligations hereunder or to prejudice
any rights that Borrower may have against any Lender as a result of any default
by such Lender hereunder.

            (e) Construction Accounts. No later than 2:00 p.m. on the date
specified in each Notice of Construction Loan Borrowing, if the applicable
conditions precedent listed in Article 3 have been satisfied or waived in
accordance with the terms thereof and, subject to Section 2.1.5(d), to the
extent Administrative Agent shall have received the appropriate funds from the
Lenders, Administrative Agent shall make available the Construction Loans
requested in such Notice of Construction Loan Borrowing (as may be adjusted
pursuant to Section 3.6) in Dollars and in immediately available funds, at
Administrative Agent's New York Branch, and shall deposit or cause to be
deposited the proceeds of such Construction Loans into the Construction
Accounts.

            2.1.6 Conversion of Loans. Borrower may convert Loans from one Type
of Loan to another Type of Loan; provided, however, that (a) any conversion of
LIBOR Loans into Base Rate Loans shall be effective on, and only on, the first
day after expiration of an Interest Period for such LIBOR Loans, and (b) Loans
shall be converted only in amounts of $500,000 and increments of $100,000 in
excess thereof. Borrower shall request such a conversion by delivering to
Administrative Agent a written notice in the form of Exhibit C-4, appropriately
completed (a "Notice of Conversion of Loan Type"), which contains or specifies,
among other things:

                  (i) the Loans, or portion thereof, which are to be converted;

                  (ii) the Type of Loans into which such Loans, or portion
thereof, are to be converted;

                  (iii) if such Loans are to be converted into LIBOR Loans, the
initial

                                        9

<PAGE>

Interest Period selected by Borrower for such Loans (which Interest Period shall
be selected in accordance with Section 2.1.3(c));

                  (iv) the proposed date of the requested conversion (which
shall be a Banking Day and otherwise in accordance with this Section 2.1.6); and

                  (v) a certification by Borrower that no Event of Default has
occurred and is continuing.

Borrower shall so deliver each Notice of Conversion of Loan Type so as to
provide at least the applicable Minimum Notice Period. Any Notice of Conversion
of Loan Type may be modified or revoked by Borrower through the Banking Day
prior to the Minimum Notice Period, and shall thereafter be irrevocable. Each
Notice of Conversion of Loan Type shall be delivered in the manner provided in
Section 11.1. Administrative Agent shall promptly notify each Lender of the
contents of each Notice of Conversion of Loan Type.

            2.1.7 Prepayments.

            (a)   Terms of All Prepayments.

                  (i) Upon the prepayment of any Loan (whether such prepayment
is an optional prepayment under Section 2.1.7(b) or a Mandatory Prepayment),
Borrower shall pay to Administrative Agent for the account of the Lender which
made such Loan and/or Hedge Bank, as applicable, (A) all accrued interest to the
date of such prepayment on the amount of such Loan prepaid, (B) all accrued fees
to the date of such prepayment relating to the amount of such Loan being
prepaid, (C) to the extent required by the terms of the applicable Interest Rate
Agreement, all Hedge Breaking Fees owed by Borrower to such Hedge Bank as a
result of such prepayment, and (D) if such prepayment is the prepayment of a
LIBOR Loan on a day other than the last day of an Interest Period for such LIBOR
Loan, all Liquidation Costs incurred by such Lender as a result of such
prepayment (pursuant to the terms of Section 2.9).

                  (ii) Notwithstanding the foregoing, but only in respect of any
Mandatory Prepayment, Borrower shall have the right, by giving five Banking
Days' notice to Administrative Agent, in lieu of prepaying a LIBOR Loan on a day
other than the last day of an Interest Period for such LIBOR Loan, to deposit or
cause Administrative Agent to deposit into an account to be held by Depositary
Agent (which account shall be subjected to the Lien of the Collateral Documents
in a manner reasonably satisfactory to Collateral Agent) an amount equal to the
LIBOR Loans to be prepaid. Such funds shall be held in such account until the
expiration of the Interest Period applicable to the LIBOR Loan to be prepaid at
which time the amount deposited in such account shall be used to prepay such
LIBOR Loan and any interest accrued on such amount shall be deposited into the
Borrower Revenue Account. The deposit of amounts into such account shall not
constitute a prepayment of Loans and all Loans to be prepaid using the proceeds
from such account shall continue to accrue interest at the then applicable
interest rate for such Loans until actually prepaid. All amounts in such account
shall only be invested in Permitted Investments as directed by and at the
expense and risk of Borrower.

                                       10

<PAGE>

                  (iii) Except as otherwise specifically set forth herein, all
prepayments of Term Loans shall be applied to reduce the remaining payments
required under Section 2.1.2(d) in inverse order of maturity. Prepayment of Term
Loans with proceeds of the Purchase Option or Put Option pursuant to Section 3.6
of the Borrower Depositary Agreement shall be applied as described in such
section. Any prepayments made pursuant to Sections 3.5.4(f) and 3.7.1 of the
applicable Project Company Depositary Agreement shall be applied to reduce the
Allocated Portion for the Project with respect to which such prepayments have
been received. Prepayment of Term Loans with proceeds of Construction Contractor
Performance LDs pursuant to Section 3.7 of the applicable Project Company
Depositary Agreement and Section 3.8 of the Borrower Depositary Agreement shall
be applied to all maturities of the Term Loans ratably. Borrower may not
re-borrow the principal amount of any Construction Loan or Term Loan which is
prepaid. In connection with any prepayment of loans made pursuant to Section
3.4.2(c) of the Borrower Depositary Agreement, the Allocated Portions shall be
reduced in proportion to their size relative to the aggregate Term Loan.

            (b) Optional Prepayments. Subject to Section 2.1.7(a), Borrower may,
at its option and without premium or penalty, upon five Banking Days' notice to
Administrative Agent, prepay (i) any Construction Loans in whole or from time to
time in part in minimum amounts of $1,000,000 or an incremental multiple of
$100,000 in excess thereof (provided that such minimum amounts shall not apply
to a prepayment of all outstanding Construction Loans), (ii) any Term Loans in
whole or from time to time in part in minimum amounts of $1,000,000 or an
incremental multiple of $100,000 in excess thereof (provided that such minimum
amounts shall not apply to a prepayment of all outstanding Term Loans), or (iii)
any Security Fund LC Loans in whole or from time to time in part in minimum
amounts of $1,000,000 or an incremental multiple of $100,000 in excess thereof
(provided that such minimum amounts shall not apply to a prepayment of all
outstanding Security Fund LC Loans); provided, however, that as a condition to
Borrower's right to make any prepayment of Construction Loans, Borrower shall
reduce the Total Construction Loan Commitment in accordance with Section 2.3.3
of this Agreement by such amount that the Available Construction Loan Commitment
equals zero after giving effect to such prepayment. In connection with any
optional prepayments, Borrower shall terminate or partially terminate Hedge
Transactions such that the notional amount under all of the Hedge Transactions
does not exceed, in the aggregate, the principal amount of Loans outstanding
immediately after giving effect to such prepayment. In connection with any
optional prepayments, Borrower may at the time of such prepayment specify the
portions by which Allocated Portions shall be reduced thereby, and absent such
specification, the Allocated Portions shall be reduced in proportion to their
size relative to the aggregate Term Loan.

            (c) Mandatory Prepayments. Borrower shall prepay (or cause to be
prepaid) Loans to the extent required by Section 11.23, Sections 3.2.2(d),
3.4.2(c) (second sentence), 3.4.2(e), 3.6 or 3.8 of the Borrower Depositary
Agreement, Sections 2.2(b), 3.5.4(e), 3.5.4(f) or 3.7.1(b) of the Project
Company Depositary Agreements (by virtue of requiring transfer of funds to the
Mandatory Prepayment Account), Section 3.1.6(b) of the FEC Depositary Agreement,
or any other provision of any Credit Document which expressly requires such
prepayment (such prepayment, a "Mandatory Prepayment").

                                       11

<PAGE>

            2.1.8 Register. Administrative Agent shall maintain, at its address
referred to in Section 11.1, a register for the recordation of the names and
addresses of the Lenders, the Commitments and Loans of each Lender from time to
time and the name of each Lender which holds a Note, as well as a record of
which payments or prepayments have been applied to which Allocated Portions from
time to time (the "Register"). The Register shall be available for inspection by
Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice. Administrative Agent shall record in the Register (a)
the Commitments and the Loans from time to time of each Lender, (b) the interest
rates applicable to all Loans and the effective dates of all changes thereto,
(c) the Interest Period for each LIBOR Loan, (d) the date and amount of any
principal or interest due and payable or to become due and payable from Borrower
to each Lender hereunder, (e) each repayment or prepayment in respect of the
principal amount of the Loans of each Lender, (f) the amount of any sum received
by Administrative Agent hereunder for the account of the Lenders and each
Lender's share thereof, (g) on each Principal Repayment Date or any other time
any principal of the Loans is paid or prepaid, the Allocated Portion to which
any such principal payment or prepayment is being applied, as well as the
resulting revised Allocated Portions, and (h) such other information as
Administrative Agent may determine is necessary for the administering of the
Loans and this Agreement. Any such recording shall be conclusive and binding in
the absence of manifest error; provided that neither the failure to make any
such recordation, nor any error in such recordation, shall affect any Lender's
Commitment or Borrower's Obligations in respect of any applicable Loans or
otherwise; and provided further that in the event of any inconsistency between
the Register and any Lender's records, the Register shall govern absent manifest
error.

      2.2   SECURITY FUND LC FACILITY.

            2.2.1 Issuance of the Security Fund LC. Subject to the terms and
conditions set forth in this Agreement, on the Closing Date the LC Issuer shall
issue a letter of credit in the form of Exhibit B-5 (the "Security Fund LC") for
the account of Borrower and for the benefit of NSP, in the initial stated amount
of $18,250,000. The Security Fund LC shall be made available solely in lieu of
the "HGC" portion of the Security Fund pursuant to Section 11.1 of the Power
Purchase Agreement. If such section requires or permits that the stated amount
of the Security Fund LC be modified, based on the Sponsor's Credit Rating (as
defined in the Power Purchase Agreement) changing, Borrower shall request of LC
Issuer (and, if a reduction, NSP) to effect such change, and LC Issuer shall
effect such change, it being understood that the stated amount of the Security
Fund LC shall never be increased to exceed $23,500,000 (if prior to the Facility
Acceptance Date for the Mankato Project), or $19,200,000 (if following the
Facility Acceptance Date for the Mankato Project).

            2.2.2 Security Fund LC Loans. To the extent provided in Section
2.2.5, each Lender severally agrees to advance to LC Issuer, for the account of
Borrower, such Lender's Proportionate Share of the full amount of any Drawing
Payment under the Security Fund LC. Upon such advance, the Drawing Payment shall
be deemed to constitute a loan made by such Lender to Borrower in the amount
advanced (a "Security Fund LC Loan"). All Security Fund

                                       12

<PAGE>

LC Loans shall be repaid in accordance with Section 3.2.2 of the Borrower
Depositary Agreement, with any remaining unpaid principal, interest, fees and
costs due and payable on the Term Loan Maturity Date. Borrower may not re-borrow
the principal amount of any Security Fund LC Loan so repaid.

            2.2.3 Security Fund LC Loan Interest. Borrower shall pay interest on
the unpaid principal amount of each Security Fund LC Loan from the date of the
applicable Drawing Payment until the maturity or repayment thereof at the
following rates per annum:

                  (a) with respect to the principal portion of such Security
Fund LC Loan which is, and during such periods as such Security Fund LC Loan is,
a Base Rate Security Fund LC Loan, at a rate per annum equal to the Base Rate
(such rate to change from time to time as the Base Rate shall change) plus the
applicable Rate Margin minus 0.75%; and

                  (b) with respect to the principal portion of such Security
Fund LC Loan which is, and during such periods as such Security Fund LC Loan is,
a LIBOR Security Fund LC Loan, at a rate per annum during each Interest Period
for such LIBOR Security Fund LC Loan equal to the LIBO Rate for such Interest
Period plus the applicable Rate Margin.

            2.2.4 Reduction and Reinstatement of Stated Amount. The Stated
Amount of the Security Fund LC shall be reduced by the amount of Drawing
Payments made in respect thereof. After a draw upon the Security Fund LC, where
the terms of Section 11.1(E) of the Power Purchase Agreement (as in effect on
the Closing Date) require the Stated Amount to thereafter be increased, without
further condition or consent of the Lenders, the Stated Amount of the Security
Fund LC shall be increased in the required amount by the LC Issuer issuing to
NSP an amendment in the form attached to the Security Fund LC, any such
increases not to exceed the Unutilized Security Fund LC Commitment.

            2.2.5 Lender Participation. Each Lender severally agrees to
participate with LC Issuer in the extension of credit arising from the issuance
of the Security Fund LC in an amount equal to such Lender's Proportionate Share
of the Total Security Fund LC Commitment, and the issuance of the Security Fund
LC shall be deemed a confirmation to LC Issuer of such participation in such
amount. LC Issuer may request the Lenders to pay to LC Issuer their respective
Proportionate Shares of all or any portion of any Drawing Payment made or to be
made by LC Issuer under the Security Fund LC by contacting each Lender and
Administrative Agent telephonically (promptly confirmed in writing) at any time
after LC Issuer has received notice of or request for such Drawing Payment, and
specifying the amount of such Drawing Payment, such Lender's Proportionate Share
thereof, and the date on which such Drawing Payment is to be made or was made.
Upon receipt of any such request for payment from LC Issuer, each Lender shall
pay to LC Issuer such Lender's Proportionate Share of the unreimbursed portion
of such Drawing Payment, together with interest thereon at a per annum rate
equal to the Federal Funds Rate, as in effect from time to time, from the date
of such Drawing Payment to the date on which such Lender makes payment. Each
Lender's obligation to make each such payment to LC Issuer shall be absolute,
unconditional and irrevocable and shall not be affected by any circumstance
whatsoever, including the occurrence or continuance of

                                       13

<PAGE>
any Inchoate Default or Event of Default, or the failure of any other Lender to
make any payment under this Section 2.2.5, and each Lender further agrees that
each such payment shall be made without any offset, abatement, withholding or
reduction whatsoever. Nothing in this Section 2.2.5 shall limit or affect the
obligation of the LC Issuer to make any Drawing Payment pursuant to the Security
Fund LC.

      2.3   TOTAL COMMITMENTS.

            2.3.1 Security Fund Letter of Credit. The initial stated amount of
the Security Fund LC shall be as set forth in Section 2.2.1, and any increases
in the stated amount thereof shall not exceed at any time the Unutilized
Security Fund LC Commitment.

            2.3.2 Loan Commitment Amounts.

            (a) Total Construction Loan Commitment. Notwithstanding anything
that may be construed to the contrary in this Agreement, the aggregate principal
amount of all Construction Loans made by the Lenders shall not exceed the lesser
of (i) $466,500,000 and (ii) if such total amount is reduced by Borrower
pursuant to Section 2.3.3, such lower amount (such amount, so reduced from time
to time, the "Total Construction Loan Commitment").

            (b) Total Term Loan Commitment. Notwithstanding anything that may be
construed to the contrary in this Agreement, the aggregate principal amount of
all Term Loans outstanding at any time shall not exceed the aggregate amount of
Construction Loans outstanding on the Term-Period Commencement Date after giving
effect to any Punchlist Drawing, any Dow Change Order Drawing, any Dow
Performance Test Drawing and any True-Up Drawing (such amount, as reduced from
time to time, the "Total Term Loan Commitment").

            2.3.3 Reductions and Cancellations. Borrower may, from time to time
upon five Banking Days written notice to Administrative Agent, permanently
reduce (without premium or penalty), by an amount of $1,000,000 or an integral
multiple of $100,000 in excess thereof or cancel in its entirety the Total
Construction Loan Commitment, subject to the provisions of this Section 2.3.3.
Borrower may not reduce the Total Security Fund LC Commitment or the Unutilized
Security Fund LC Commitment. Borrower may not reduce or cancel the Total
Construction Loan Commitment if, after giving effect to such reduction or
cancellation, (a) the aggregate principal amount of all Construction Loans then
outstanding would exceed the Total Construction Loan Commitment, (b) the
Available Construction Funds would not, in the reasonable judgment of
Administrative Agent and the Independent Engineer, exceed remaining Project
Costs (including budgeted contingency (or the appropriate part thereof) and
anticipated Liquidation Costs and anticipated Hedge Breaking Fees arising from
any prepayment related to such reduction or cancellation), or (c) such reduction
or cancellation would cause an Inchoate Default, Event of Default or have a
Material Adverse Effect. Borrower shall pay to Administrative Agent any
Commitment Fees then due in respect of the canceled portion of the applicable
Commitment upon any cancellation and, from the effective date of any
cancellation or reduction, the Commitment Fees shall be computed on the basis of
the Available Construction

                                       14

<PAGE>

Loan Commitment as so canceled or reduced. Once reduced or canceled, the Total
Construction Loan Commitment may not be increased or reinstated. Any reductions
pursuant to this Section 2.3.3 shall be applied ratably to each Lender's
respective Commitments in accordance with Section 2.7.1.

      2.4   FEES.

            2.4.1 Administrative Agent's Fees. Borrower shall pay to
Administrative Agent solely for Administrative Agent's account the fees and
other amounts described in the Administrative Agent Fee Letter.

            2.4.2 Commitment Fees.

            (a) Construction Loan Commitment Fees. On each Quarterly Payment
Date on and until the Construction Loan Maturity Date (or, if the Total
Construction Loan Commitment is canceled prior to such date, on the date of such
cancellation), Borrower shall pay to Administrative Agent, for the benefit of
the Lenders, accruing from the Closing Date or the first day of such quarter, as
the case may be, a commitment fee (the "Commitment Fee") for such quarter (or
portion thereof) then ending equal to the product of (i) the daily average
unutilized Construction Loan Commitment for such quarter (or portion thereof)
multiplied by (ii) a fraction, the numerator of which is the number of days in
that calendar quarter and the denominator of which is 360 multiplied by (iii)
0.50%, payable quarterly in arrears through Term-Conversion.

            (b) Unutilized Security Fund LC Commitment Fee. On each Quarterly
Payment Date, Borrower shall pay to Administrative Agent, for the benefit of the
Lenders, accruing from the Closing Date or the first day of the Payment Period,
as the case may be, a commitment fee for such quarter (or portion thereof) then
ending equal to the product of (i) the daily average Unutilized Security Fund LC
Commitment for such quarter (or portion thereof) multiplied by (ii) a fraction,
the numerator of which is the number of days in that calendar quarter and the
denominator of which is 360 multiplied by (iii) 0.50%, payable quarterly in
arrears.

      2.5   SECURITY FUND LC FEES.

            2.5.1 Security Fund LC Fee. On each Quarterly Payment Date, Borrower
shall pay to Administrative Agent for the benefit of the Lenders, a Security
Fund LC fee (the "Security Fund LC Fee") for each Payment Period (or portion
thereof) then ending, equal to the product of (a) the daily average Stated
Amount of the Security Fund LC for such Payment Period (or portion thereof)
multiplied by (b) a fraction, the numerator of which is the number of days in
such Payment Period (or portion thereof) and the denominator of which is 360,
multiplied by (c) the applicable Rate Margin.

                                       15

<PAGE>

            2.5.2 Fronting Fee. On each Quarterly Payment Date, Borrower shall
pay to Administrative Agent, solely for LC Issuer's account, a letter of credit
fronting fee for the corresponding Payment Period (or portion thereof) equal to
the product of (a) the daily average Stated Amount of the Security Fund LC
multiplied by (b) 0.20% multiplied by (c) a fraction, the numerator of which is
the number of days in that calendar quarter and the denominator of which is 360.

      2.6   OTHER PAYMENT TERMS.

            2.6.1 Place and Manner. Except as otherwise provided in the
Arrangement Fee Letter, the Administrative Agent Fee Letter or any other
provision contained in any of the Credit Documents, Borrower shall make all
payments due to any Lender, Collateral Agent or Administrative Agent hereunder
to Administrative Agent, for the account of such Lender, Collateral Agent or
Administrative Agent (as the case may be), to the account in the name of Loan
Servicing, Account No. 01-88179-2145-00, ABA No. 026-008-073, Reference: Calpine
Steamboat Holdings, LLC, or such other account as Administrative Agent shall
notify Borrower from time to time, in Dollars and in immediately available funds
not later than 12:00 noon on the date on which such payment is due. Any payment
made after such time on any day shall be deemed received on the Banking Day
after such payment is received. Administrative Agent shall disburse to each
Lender or Collateral Agent (as the case may be) each such payment received by
Administrative Agent for such Lender or Collateral Agent (as the case may be),
such disbursement to occur on the day such payment is received if received by
12:00 noon or if otherwise reasonably possible, or otherwise on the next Banking
Day.

            2.6.2 Date. Whenever any payment due hereunder shall fall due on a
day other than a Banking Day, such payment shall be made on the next succeeding
Banking Day, and such extension of time shall be included in the computation of
interest or fees, as the case may be, without duplication of any interest or
fees so paid in the next subsequent calculation of interest or fees payable.

            2.6.3 Default Interest. Notwithstanding anything to the contrary
herein, upon the occurrence and during the continuation of any Event of Default,
the outstanding principal amount of all Loans and, to the extent permitted by
applicable Legal Requirements, any accrued but unpaid interest payments thereon
and any accrued but unpaid fees, and other amounts hereunder, shall thereafter
bear interest (including post-petition interest in any proceeding under
applicable Bankruptcy Laws) payable upon demand, and the Security Fund LC Fees
shall be increased, at a rate that is (a) 2% per annum in excess of the interest
rate and Security Fund LC Fees then otherwise payable under this Agreement with
respect to the applicable Loans and Security Fund LC, or (b) in the case of any
such fees and other amounts, at a rate that is 2% per annum in excess of the
interest rate then otherwise payable under this Agreement for Base Rate Loans
(the "Default Rate"); provided that, in the case of LIBOR Loans, upon the
expiration of the Interest Period in effect at the time any such increase in
interest rate is effective, such LIBOR Loans shall thereupon become Base Rate
Loans and shall thereafter bear interest payable upon

                                       16

<PAGE>

demand at a rate that is 2% per annum in excess of the interest rate then
otherwise payable under this Agreement for Base Rate Loans.

            2.6.4 Net of Taxes, Etc.

            (a) Taxes. Any and all payments to or for the benefit of
Administrative Agent or any Lender by Borrower hereunder or under any other
Credit Document shall be made free and clear of and without deduction or
withholding, setoff or counterclaim of any kind whatsoever and in such amounts
as may be necessary in order that all such payments, after deduction for or on
account of any present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto (excluding net income and
franchise taxes, which include taxes imposed on or measured by the net income,
net profits or capital of Administrative Agent or such Lender by any
jurisdiction or any political subdivision or taxing authority thereof or therein
as a result of a connection between such Lender and such jurisdiction or
political subdivision, unless such connection results solely from such Lender's
executing, delivering or performing its obligations or receiving a payment
under, or enforcing, this Agreement or any Note) (all such non-excluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"), shall be equal to the amounts otherwise
specified to be paid under this Agreement and the other Credit Documents. If any
Taxes are required to be deducted or withheld from or in respect of any sum
payable hereunder or under any other Credit Document to Administrative Agent or
any Lender, (i) the sum payable shall be increased as may be necessary so that
after all required deductions or withholdings (including deductions or
withholdings applicable to additional sums payable under this Section 2.6.4),
Administrative Agent or such Lender receives an amount equal to the sum it would
have received had no such deductions been made, (ii) Borrower shall make (or
cause to be made) such deductions, and (iii) Borrower shall pay (or cause to be
paid) the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable Legal Requirements. In addition,
Borrower agrees to pay any present or future stamp, recording or documentary
taxes and any other excise or property taxes, charges or similar levies (not
including income or franchise taxes) that arise under the laws of the United
States of America, the State of New York, the State of Texas or the State of
Minnesota from any payment made hereunder or under any other Credit Document or
from the execution or delivery or otherwise with respect to this Agreement or
any other Credit Document (hereinafter referred to as "Other Taxes").

            (b) Tax Indemnity. Borrower shall indemnify each Lender for and hold
it harmless against the full amount of Taxes and Other Taxes (including any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 2.6.4) paid by any Lender, or any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, whether or not
such Taxes or Other Taxes were correctly or legally asserted; provided that
Borrower shall not be obligated to indemnify any Lender for any penalties,
interest or expenses relating to Taxes or Other Taxes arising from such Lender's
gross negligence or willful misconduct. Each Lender agrees to give written
notice to Borrower of the assertion of any claim against such Lender relating to
such Taxes or Other Taxes as promptly as is practicable after being notified of
such assertion, and in no event later than 180 days after the

                                       17

<PAGE>

principal officer of such Lender responsible for administering this Agreement
obtains knowledge thereof; provided that any Lender's failure to notify Borrower
of such assertion within such 180 day period shall not relieve Borrower of its
obligation under this Section 2.6.4 with respect to Taxes or Other Taxes,
penalties, interest or expenses arising prior to the end of such period, but
shall relieve Borrower of its obligations under this Section 2.6.4 with respect
to Taxes or Other Taxes, penalties, interest or expenses between the end of such
period and such time as Borrower receives notice from such Lender as provided
herein. Payments by Borrower pursuant to this indemnification shall be made
within 30 days from the date such Lender makes written demand therefor
(submitted through Administrative Agent), which demand shall be accompanied by a
certificate describing in reasonable detail the basis thereof.

            (c) Notice. Within 30 days after the date of any payment of Taxes by
Borrower, Borrower shall furnish to Administrative Agent, at its address
referred to in Section 11.1, the original or a certified copy of a receipt
evidencing payment thereof or, if such receipt is not obtainable, other evidence
of such payment by Borrower reasonably satisfactory to Administrative Agent.
Borrower shall compensate each Lender for all reasonable losses and expenses
sustained by such Lender as a result of any failure by Borrower to so furnish
such copy of such receipt.

            (d) Conduit Financing. Notwithstanding anything to the contrary
contained in this Section 2.6.4, if a Lender is a conduit entity participating
in a conduit financing arrangement (as defined in Section 7701(l) of the Code
and the Treasury Regulations issued thereunder) with respect to any payments
made by Borrower under this Agreement and under any Note, Borrower shall not be
obligated to pay additional amounts to such Lender pursuant to this Section
2.6.4 to the extent that the amount of Taxes exceeds the amount that would have
otherwise been payable were such Lender not a conduit entity participating in a
conduit financing arrangement.

            (e) Reimbursement by Lenders. If any Lender receives an
indemnification payment pursuant to Section 2.6.4(b) and if such Lender is able,
in its sole opinion, to apply or otherwise take advantage of any refund or tax
credit arising out of or in conjunction with any Taxes or Other Taxes which give
rise to such indemnification, such Lender shall, to the extent that in its sole
opinion it can do so without prejudice to the retention of the amount of such
refund or credit and without any other adverse tax consequences for such Lender,
reimburse to Borrower at such time as such tax refund or credit shall have
actually been received by such Lender such amount as the Lender shall, in its
sole opinion, have determined to be attributable to the relevant Taxes or Other
Taxes and as will leave such Lender in no better or worse position than it would
have been in if the payment of such Taxes or Other Taxes had not been required.
Nothing in this Section 2.6.4(e) shall oblige any Lender to disclose to Borrower
or any other Person any information regarding its tax affairs or tax
computations, or shall interfere with Lender's absolute discretion to arrange
its tax affairs in whatever manner it thinks fit. In particular, no Lender shall
be under any obligation to claim relief from its corporate profits or similar
tax liability in credits or deductions available to it and, if it does claim,
the extent, order and manner in which it does so shall be at its absolute
discretion.

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<PAGE>

            (f) Survival of Obligations. The obligations of Borrower under this
Section 2.6.4 shall survive the termination of this Agreement and the repayment
of Borrower's Obligations.

            2.6.5 Application of Payments. Except as otherwise expressly
provided herein or in the other Credit Documents, payments made under this
Agreement or the other Credit Documents and other amounts received by
Administrative Agent, Collateral Agent, Depositary Agent or the Lenders under
this Agreement or the other Credit Documents shall first be applied to any fees,
costs, charges or expenses payable to Administrative Agent, Collateral Agent,
Depositary Agent or the Lenders hereunder or under the other Credit Documents,
next to any accrued but unpaid interest then due and owing, and then to
outstanding principal then due and owing or otherwise to be prepaid (in each
case, such application to be made on a pro rata basis among such applicable
Persons).

            2.6.6 Withholding Exemption Certificates. Administrative Agent on
the Closing Date, each Lender upon becoming a Lender and each Person to which
any Lender grants a participation (or otherwise transfers its interest in this
Agreement) agree that they will deliver to Administrative Agent and Borrower
either (a) if such Lender or Person is a United States person (other than a
corporation established under the laws of the United States or any political
subdivision thereof), an executed copy of a United States Internal Revenue
Service Form W-9, or (b) if such Lender or Person is not a corporation
established under the laws of the United States or any political subdivision
thereof, two duly completed copies of United States Internal Revenue Service
Form W-8BEN or W-8ECI or successor applicable form, as the case may be
(certifying therein an entitlement to an exemption from, United States
withholding taxes) plus, in the case of a Lender or a Person using the so-called
"portfolio interest exemption," a duly completed and executed non-bank
certificate in the form of Exhibit J, if applicable. Each Lender which delivers
to Borrower and Administrative Agent a Form W-8BEN or W-8ECI pursuant to the
preceding sentence further undertakes to deliver to Borrower and Administrative
Agent further copies of the Form W-8BEN or W-8ECI, or successor applicable
forms, or other manner of certification or procedure, as the case may be, on or
before the date that any such form expires or becomes obsolete or within a
reasonable time after gaining knowledge of the occurrence of any event requiring
a change in the most recent forms previously delivered by it to Borrower, and
such extensions or renewals thereof as may reasonably be requested by Borrower,
certifying in the case of a Form W-8BEN or W-8ECI that such Lender is entitled
to receive payments under this Agreement without deduction or withholding of any
United States federal income taxes, unless in any such cases an event (including
any change in treaty, law or regulation) has occurred prior to the date on which
any such delivery would otherwise be required which renders all such forms
inapplicable or which would prevent a Lender from duly completing and delivering
any such form with respect to it and such Lender advises Borrower that it is not
capable of receiving payments without any deduction or withholding of United
States federal income tax. Borrower shall not be obligated, however, to pay any
additional amounts in respect of United States federal income tax pursuant to
Section 2.6.4 (or make an indemnification payment pursuant to Section 2.6.4) to
any Lender (including any entity to which any Lender sells, assigns, grants a
participation in, or otherwise transfers its rights under this Agreement) if

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<PAGE>

the obligation to pay such additional amounts (or such indemnification) would
not have arisen but for a failure of such Lender to comply with its obligations
under this Section 2.6.6.

      2.7   PRO RATA TREATMENT.

            2.7.1 Borrowings, Commitment Reductions, Etc. Except as otherwise
provided herein, (a) each Borrowing consisting of Construction Loans, Term
Loans, Security Fund LC Loans or each Drawing Payment under the Security Fund LC
and each reduction of the Total Construction Loan Commitment, Total Term Loan
Commitment or Total Security Fund LC Commitment shall be made or allocated among
the Lenders pro rata according to their respective Proportionate Shares of such
Loans or Commitments, as the case may be, (b) each payment of principal of and
interest on Construction Loans, Term Loans or Security Fund LC Loans shall be
made or shared among the Lenders holding such Loans or Commitments pro rata
according to their respective unpaid principal amounts of such Loans or
Commitments held by such Lenders, and (c) each payment of Commitment Fees shall
be shared among the Lenders pro rata according to (i) their respective
Proportionate Shares of the Commitments to which such fees apply, and (ii) in
the case of each Lender which becomes a party to this Agreement hereunder after
the Closing Date, the date upon which such Lender so became a party hereunder.

            2.7.2 Sharing of Payments, Etc. If any Lender shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
setoff, or otherwise) on account of Loans owed to it, in excess of its
Proportionate Share of payments on account of such Loans obtained by all Lenders
entitled to such payments, such Lender shall forthwith purchase from the other
Lenders such participation in the Loans, as the case may be, as shall be
necessary to cause such purchasing Lender to share the excess payment ratably
with each of them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such purchase from
such Lender shall be rescinded and each other Lender shall repay to the
purchasing Lender the purchase price to the extent of such recovery together
with an amount equal to such other Lender's Proportionate Share (according to
the proportion of (a) the amount of such other Lender's required repayment to
(b) the total amount so recovered from the purchasing Lender) of any interest or
other amount paid or payable by the purchasing Lender in respect of the total
amount so recovered. Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section 2.7.2 may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of setoff) with respect to such participation as fully as if such
Lender were the direct creditor of Borrower in the amount of such participation.

      2.8   CHANGE OF CIRCUMSTANCES.

            2.8.1 Inability to Determine Rates. If, on or before the first day
of any Interest Period for any LIBOR Loans, (a) Administrative Agent determines
that the LIBO Rate for such Interest Period cannot be adequately and reasonably
determined due to the unavailability of

                                       20

<PAGE>

funds in or other circumstances affecting the London interbank market, or (b)
Lenders holding aggregate Proportionate Shares of 33-1/3% or more of the
Commitments shall advise Administrative Agent that (i) the rates of interest for
such LIBOR Loans do not adequately and fairly reflect the cost to such Lenders
of making or maintaining such Loans, or (ii) deposits in Dollars in the London
interbank market are not available to such Lenders (as conclusively certified by
each such Lender in good faith in writing to Administrative Agent and to
Borrower) in the ordinary course of business in sufficient amounts to make
and/or maintain their LIBOR Loans, then Administrative Agent shall immediately
give notice of such condition to Borrower. After the giving of any such notice
and until Administrative Agent shall otherwise notify Borrower that the
circumstances giving rise to such condition no longer exist, Borrower's right to
request the making of or conversion to, and the Lenders' obligations to make or
convert to, LIBOR Loans shall be suspended. Any LIBOR Loans outstanding at the
commencement of any such suspension shall be converted at the end of the then
current Interest Period for such Loans into Base Rate Loans unless such
suspension has then ended.

            2.8.2 Illegality. If, after the date of this Agreement, the adoption
of any Governmental Rule, any change in any Governmental Rule or the application
or requirements thereof (whether such change occurs in accordance with the terms
of such Governmental Rule as enacted, as a result of amendment, or otherwise),
any change in the interpretation or administration of any Governmental Rule by
any Governmental Authority, or compliance by any Lender or Borrower with any
request or directive (whether or not having the force of law, but if not having
the force of law, being of a type with which a Lender customarily complies) of
any Governmental Authority (a "Change of Law") shall make it unlawful or
impossible for any Lender to make or maintain any LIBOR Loan, then such Lender
shall immediately notify Administrative Agent and Borrower of such Change of
Law. Upon receipt of such notice, (a) Borrower's right to request the making of
or conversion to, and the Lender's obligations to make or convert to, LIBOR
Loans shall be suspended for so long as such condition shall exist, and (b)
Borrower shall, at the request of such Lender, either (i) pursuant to Section
2.1.6, convert any then outstanding LIBOR Loans into Base Rate Loans at the end
of the current Interest Periods for such Loans, or (ii) immediately repay LIBOR
Loans pursuant to Section 2.1.7 or convert LIBOR Loans into Base Rate Loans if
such Lender shall notify Borrower that such Lender may not lawfully continue to
fund and maintain such Loans. Any conversion or prepayment of LIBOR Loans made
pursuant to the preceding sentence prior to the last day of an Interest Period
for such Loans shall be deemed a prepayment thereof for purposes of Section 2.9.

            2.8.3 Increased Costs. If, after the date of this Agreement, any
Change of Law:

            (a) shall subject any Lender or LC Issuer (the term "Lender" as used
below in this Section to include LC Issuer) to any tax, duty or other charge
with respect to any LIBOR Loan or Commitment in respect thereof, or shall change
the basis of taxation of payments by Borrower to any Lender on such a Loan or
with respect to any such Commitment (except for Taxes, Other Taxes or changes in
the rate of taxation on the overall net income of any Lender); or

                                       21

<PAGE>

            (b) shall impose, modify or hold applicable any reserve, special
deposit or similar requirement (without duplication of any reserve requirement
included within the applicable Interest Rate through the definition of "Reserve
Requirement") against assets held by, deposits or other liabilities in or for
the account of, advances or loans by, or any other acquisition of funds by any
Lender for any LIBOR Loan; or

            (c) shall impose on any Lender any other condition directly related
to any LIBOR Loan or Commitment in respect thereof;

and the effect of any of the foregoing is to increase the cost to such Lender of
making, issuing, creating, renewing, participating in (subject to the
limitations in Section 9.13) or maintaining any such LIBOR Loan or Commitment in
respect thereof or to reduce any amount receivable by such Lender hereunder,
then Borrower shall from time to time, within 10 days after demand by such
Lender, pay to such Lender additional amounts sufficient to reimburse such
Lender for such increased costs or to compensate such Lender for such reduced
amounts. A certificate setting forth in reasonable detail the amount of such
increased costs or reduced amounts and the basis for determination of such
amount, submitted by such Lender to Borrower, shall, in the absence of manifest
error, be conclusive and binding on Borrower for purposes of this Agreement.

            2.8.4 Capital Requirements. If any Lender determines that (a) any
Change of Law after the date of this Agreement increases the amount of capital
required or expected to be maintained by such Lender, or the Lending Office of
such Lender or any Person controlling such Lender (a "Capital Adequacy
Requirement"), and (b) the amount of capital maintained by such Lender or such
Person which is attributable to or based upon the Loans, the Commitments or this
Agreement must be increased as a result of such Capital Adequacy Requirement
(taking into account such Lender's or such Person's policies with respect to
capital adequacy), then Borrower shall pay to such Lender or such Person, within
10 days after delivery of demand by such Lender or such Person, such amounts as
such Lender or such Person shall reasonably determine are necessary to
compensate such Lender or such Person for the increased costs to such Lender or
such Person of such increased capital. A certificate of such Lender or such
Person, setting forth in reasonable detail the computation of any such increased
costs, delivered to Borrower by such Lender or such Person shall, in the absence
of manifest error, be conclusive and binding on Borrower for purposes of this
Agreement.

            2.8.5 Notice; Participating Lenders' Rights. Each Lender shall
notify Borrower of any event occurring after the date of this Agreement that
will entitle such Lender to compensation pursuant to this Section 2.8, as
promptly as practicable, and in no event later than 180 days after the principal
officer of such Lender responsible for administering this Agreement obtains
knowledge thereof; provided that any Lender's failure to notify Borrower within
such 180 day period shall not relieve Borrower of its obligation under this
Section 2.8 with respect to claims arising prior to the end of such period, but
shall relieve Borrower of its obligations under this Section 2.8 with respect to
the time between the end of such period and such time as Borrower receives
notice from the indemnitee as provided herein. No Person purchasing from a
Lender a participation in any Commitment (as opposed to an assignment) shall be
entitled to any payment from or on behalf of Borrower pursuant to Section 2.8.3
or Section 2.8.4 which would

                                       22

<PAGE>

be in excess of the applicable proportionate amount (based on the portion of the
Commitment in which such Person is participating) which would then be payable to
such Lender if such Lender had not sold a participation in that portion of the
Commitment.

      2.9   FUNDING LOSSES.

            If Borrower shall (a) repay or prepay any LIBOR Loans on any day
other than the last day of an Interest Period for such Loans (whether an
optional prepayment or a Mandatory Prepayment), (b) fail to borrow any LIBOR
Loans in accordance with a Notice of Construction Loan Borrowing delivered to
Administrative Agent (whether as a result of the failure to satisfy any
applicable conditions or otherwise) after such Notice of Construction Loan
Borrowing has become irrevocable, (c) fail to convert any Loans into LIBOR Loans
in accordance with a Notice of Conversion of Loan Type delivered to
Administrative Agent (whether as a result of the failure to satisfy any
applicable conditions or otherwise) after such Notice of Conversion of Loan Type
has become irrevocable, (d) fail to continue a LIBOR Loan in accordance with a
Confirmation of Interest Period Selection delivered to Administrative Agent, (e)
fail to convert any Construction Loans into Term Loans in accordance with a
Notice of Term Conversion delivered to Administrative Agent (whether as a result
of a failure to satisfy any applicable conditions or otherwise), or (f) fail to
make any prepayment in accordance with any notice of prepayment delivered to
Administrative Agent, then Borrower shall, within 10 days after demand by any
Lender, reimburse such Lender for all reasonable costs and losses incurred by
such Lender as a result of such repayment, prepayment or failure ("Liquidation
Costs"). Borrower understands that such costs and losses may include losses
incurred by a Lender as a result of funding and other contracts entered into by
such Lender to fund LIBOR Loans (other than non-receipt of the margin applicable
to such LIBOR Loans). Each Lender demanding payment under this Section 2.9 shall
deliver to Borrower a certificate setting forth in reasonable detail the basis
for and the amount of costs and losses for which demand is made. Such a
certificate so delivered to Borrower shall, in the absence of manifest error, be
conclusive and binding as to the amount of such loss for purposes of this
Agreement.

      2.10  ALTERNATE OFFICE; MINIMIZATION OF COSTS.

            2.10.1 To the extent reasonably possible, each Lender shall
designate an alternative Lending Office with respect to its LIBOR Loans and
otherwise take any reasonable actions to reduce any liability of Borrower to any
Lender under Section 2.6.4, 2.8.3, 2.8.4 or 2.9, or to avoid the unavailability
of any Type of Loans under Section 2.8.2 so long as (in the case of the
designation of an alternative Lending Office) such Lender, in its sole
discretion, determines that (a) such designation is not disadvantageous to such
Lender and (b) such actions would eliminate or reduce liability to such Lender.
Borrower hereby agrees to pay all reasonable costs and expenses incurred by any
Lender in connection with any such designation or actions within 10 Banking Days
of demand thereof to Borrower.

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<PAGE>

            2.10.2 If and with respect to each occasion that a Lender either
makes a demand for compensation pursuant to Section 2.6.4, 2.8.3 or 2.8.4 or is
unable for a period of three consecutive months to fund LIBOR Loans pursuant to
Section 2.8.2 or such Lender wrongfully fails to fund a Loan, then Borrower may,
upon at least five Banking Days' prior irrevocable written notice to each of
such Lender and Administrative Agent, in whole permanently replace the Loans and
Commitments of such Lender; provided that Borrower shall replace such Loans and
Commitments with the Loans and Commitments of a commercial bank reasonably
satisfactory to Administrative Agent, and with respect to the Security Fund LC
Commitment, reasonably satisfactory to the LC Issuer. Such replacement Lender
shall upon the effective date of replacement purchase the Borrower's Obligations
hereunder owed to such replaced Lender for the aggregate amount thereof and
shall thereupon for all purposes become a "Lender" hereunder. Such notice from
Borrower shall specify an effective date for the replacement of such Lender's
Loans and Commitments, which date shall not be later than the fourteenth day
after the day such notice is given. On the effective date of any replacement of
such Lender's Loans and Commitments pursuant to this Section 2.10.2, Borrower
shall pay to Administrative Agent for the account of such Lender (a) any fees
due to such Lender to the date of such replacement, (b) the principal of and
accrued interest on the principal amount of outstanding Loans held by such
Lender to the date of such replacement (such amount to be represented by the
purchase of the Borrower's Obligations hereunder of such replaced Lender by the
replacing Lender and not as a prepayment of such Loans), and (c) the amount or
amounts due to such Lender pursuant to each of Sections 2.6.4, 2.8.3 and 2.8.4,
as applicable, and any other amount then payable hereunder to such Lender.
Borrower will remain liable to such replaced Lender for any Liquidation Costs
that such Lender sustains or incurs as a consequence of the purchase of such
Lender's Loans (unless such Lender has defaulted on its obligation to fund a
Loan hereunder). Upon the effective date of the purchase of any Lender's Loans
owed to such Lender and termination of such Lender's Commitments pursuant to
this Section 2.10.2, such Lender shall cease to be a Lender hereunder. No such
termination of any such Lender's Commitments and the purchase of such Lender's
Loans pursuant to this Section 2.10.2 shall affect (i) any liability or
obligation of Borrower or any other Lender to such terminated Lender, or any
liability or obligation of such terminated Lender to Borrower or any other
Lender, which accrued on or prior to the date of such termination, or (ii) such
terminated Lender's rights hereunder in respect of any such liability or
obligation.

            2.10.3 Upon written notice to Administrative Agent, any Lender may
designate a Lending Office other than the Lending Office most recently
designated to Administrative Agent and may assign all of its interests under the
Credit Documents and its Notes (if any) to such Lending Office; provided that
such designation and assignment do not at the time of such designation and
assignment increase the reasonably foreseeable liability of Borrower under
Section 2.6.4, 2.8.3 or 2.8.4 or make an Interest Rate option unavailable
pursuant to Section 2.8.2.

                                    ARTICLE 3
                              CONDITIONS PRECEDENT

      3.1   CONDITIONS PRECEDENT TO THE CLOSING DATE.

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<PAGE>

            The obligation of each Lender to enter into this Agreement and to
make the initial Construction Loans under this Agreement and of the LC Issuer to
issue the Security Fund LC is subject to the prior satisfaction of each of the
following conditions (unless waived in writing by Administrative Agent with the
consent of the Lenders) (the date such conditions precedent are so satisfied or
waived being referred to as the "Closing Date"):

            3.1.1 Resolutions. Delivery to the Lead Arrangers of a copy of one
or more resolutions or other authorizations, in form and substance reasonably
satisfactory to the Lenders, of each Borrower Party, each other Affiliate of
Borrower that is a party to an Operative Document as of the Closing Date (each
such Affiliate, an "Affiliated Major Project Participant" and, together with
each Borrower Party, the "Calpine Entities") certified by a Responsible Officer
of each such Calpine Entity as being in full force and effect on the Closing
Date, authorizing, as applicable and among other things, the Borrowings herein
provided for, the granting of the Liens under the Collateral Documents, the
contribution of equity to the Project Companies and the execution, delivery and
performance of this Agreement and the other Operative Documents and any
instruments or agreements required hereunder or thereunder to which such Calpine
Entity is a party.

            3.1.2 Incumbency. Delivery to the Lead Arrangers of a certificate,
in form and substance reasonably satisfactory to the Lenders, from each Calpine
Entity signed by the appropriate authorized officer or manager of each such
Calpine Entity and dated as of the Closing Date, as to the incumbency of the
natural Persons authorized to execute and deliver this Agreement and the other
Operative Documents and any instruments or agreements required hereunder or
thereunder to which such Calpine Entity is a party.

            3.1.3 Formation Documents. Delivery to the Lead Arrangers of (a)
copies of the articles of incorporation, certificate of incorporation, charter
or other state certified constituent documents of each Calpine Entity, certified
by the secretary of state of such Calpine Entity's state of incorporation or
formation, as applicable, and (b) copies of the bylaws, limited liability
company operating agreement or other comparable constituent documents, if
applicable, of each Calpine Entity, certified by a Responsible Officer of such
Calpine Entity as being true, correct and complete on the Closing Date.

            3.1.4 Good Standing Certificates. Delivery to the Lead Arrangers of
certificates issued by (a) the secretary of state of the state in which each
Calpine Entity is formed or incorporated, as applicable, (b) in the case of each
Affiliated Major Project Participant (other than Calpine and FEC-LP) which is a
party to a FEC Major Project Document, the Secretary of the State of Texas or
the Comptroller of the State of Texas, as the case may be, and (c) in the case
of each Affiliated Major Project Participant (other than Calpine) which is a
party to a MEC Major Project Document, the Secretary of State of the State of
Minnesota, in each case (i) dated a date reasonably close prior to the Closing
Date and (ii) certifying that such Calpine Entity is in good standing and, if
necessary in connection with performance of its obligations under the applicable
Major Project Document, is qualified to do business in, and has paid all
franchise taxes or similar taxes due to, such states.

                                       25

<PAGE>

            3.1.5 Third Party Approvals. The Lead Arrangers shall have received
all information and copies of all documents and copies of any approval by any
Person (including any Governmental Authority) reasonably required in connection
with any transaction herein contemplated or contemplated in any other Credit
Document, which the Lead Arrangers may reasonably have requested in connection
herewith.

            3.1.6 Credit Documents and Project Documents. Delivery to the Lead
Arrangers of (a) executed originals of this Agreement and each other Credit
Document to be executed on the Closing Date and any supplements or amendments
thereto, all of which shall be in form and substance reasonably satisfactory to
the Lenders, (b) a certified list of, and true, correct and complete copies of,
each FEC Project Document (other than any FEC Project Document which is only
incidental to the development, construction, leasing, ownership or operation of
the Freeport Project) executed on or prior to the Closing Date (together with
any supplements or amendments thereto), all of which shall be in form and
substance reasonably satisfactory to the Lenders, and all of which shall have
been duly authorized, executed and delivered by the parties thereto, and all of
which FEC Project Documents shall be certified by a Responsible Officer of FEC
as being true, complete and correct and in full force and effect on the Closing
Date pursuant to the certificate delivered pursuant to Section 3.1.7, and (c) a
certified list of, and true, correct and complete copies of, each MEC Project
Document (other than any MEC Project Document which is only incidental to the
development, construction, leasing, ownership or operation of the Mankato
Project) executed on or prior to the Closing Date (together with any supplements
or amendments thereto, all of which shall be in form and substance reasonably
satisfactory to the Lenders, and all of which shall have been duly authorized,
executed and delivered by the parties thereto, and all of which MEC Project
Documents shall be certified by a Responsible Officer of MEC as being true,
complete and correct and in full force and effect on the Closing Date pursuant
to the certificate delivered pursuant to Section 3.1.7.

            3.1.7 Closing Certificates.

            (a) Certificate of Borrower. Delivery to the Lead Arrangers of a
certificate, dated as of the Closing Date, duly executed by a Responsible
Officer of Borrower, in substantially the form of Exhibit F-1.

            (b) Certificate of FEC. Borrower shall cause FEC to deliver to the
Lead Arrangers a certificate, dated as of the Closing Date, duly executed by a
Responsible Officer of FEC, in substantially the form of Exhibit F-2, which
certificate shall, among other things, (a) state that neither FEC nor, to FEC's
knowledge, any other party to any FEC Project Document (other than any FEC
Project Document which is only incidental to the development, construction,
leasing, ownership or operation of the Freeport Project) is or, but for the
passage of time or giving of notice or both will be, in breach of any material
obligation thereunder, except as otherwise set forth in the Dow Consent, (b)
state that all conditions precedent to the performance of FEC, and, to FEC's
knowledge, all conditions precedent to the performance of the other parties
under such FEC Project Documents then required to have been performed shall have
been satisfied, except as disclosed in writing by FEC prior to the Closing Date,
and

                                       26

<PAGE>

(c) contain each other certification required to be made by a Responsible
Officer of FEC on the Closing Date pursuant to Sections 3.1.6 and 3.1.16.

            (c) Certificate of MEC. Borrower shall cause MEC to deliver to the
Lead Arrangers a certificate, dated as of the Closing Date, duly executed by a
Responsible Officer of MEC, in substantially the form of Exhibit F-3, which
certificate shall, among other things, (a) state that neither MEC nor, to MEC's
knowledge, any other party to any MEC Project Document (other than any MEC
Project Document which is only incidental to the development, construction,
leasing, ownership or operation of the Mankato Project) is or, but for the
passage of time or giving of notice or both will be, in breach of any material
obligation thereunder, (b) state that all conditions precedent to the
performance of MEC, and, to MEC's knowledge, all conditions precedent to the
performance of the other parties under such MEC Project Documents then required
to have been performed shall have been satisfied, except as otherwise disclosed
in writing by MEC prior to the Closing Date, and (c) contain each other
certification required to be made by a Responsible Officer of MEC on the Closing
Date pursuant to Sections 3.1.6 and 3.1.16.

            (d) Certificates of FEC-GP and FEC-LP. Borrower shall cause each of
FEC-GP and FEC-LP to deliver to the Lead Arrangers a certificate, dated as of
the Closing Date, duly executed by a Responsible Officer of FEC-GP and FEC-LP,
respectively, in substantially the form of Exhibit F-8, which certificate shall
contain each certification required to be made by a Responsible Officer of
FEC-GP and FEC-LP on the Closing Date pursuant to Section 3.1.16.

            3.1.8 Legal Opinions. Delivery to the Lead Arrangers of legal
opinions of counsel to the Calpine Entities and each Major Project Participant
(other than NSP (with respect to the MEC Interconnection Agreement) and NNG), in
each case in form and substance reasonably satisfactory to the Lenders.

            3.1.9 Certificate of Insurance Consultant. Delivery to the Lead
Arrangers of the Insurance Consultant's certificate, dated as of the Closing
Date and in substantially the form of Exhibit F-5, together with the Insurance
Consultant's report, in form and substance reasonably satisfactory to the
Lenders, attached thereto.

            3.1.10 Insurance. Insurance complying with terms and conditions set
forth in Exhibit K shall be in full force and effect and the Lead Arrangers and
the Insurance Consultant shall have received (a) a certificate from FEC and
MEC's insurance broker(s), dated as of the Closing Date and in form and
substance reasonably satisfactory to the Lenders, (i) identifying underwriters,
type of insurance, insurance limits and policy terms, (ii) listing the special
provisions required as set forth in Exhibit K, (iii) describing the insurance
obtained and (iv) stating that such insurance is in full force and effect and
that all premiums then due thereon have been paid and that, in the opinion of
such broker(s), such insurance complies with the terms and conditions set forth
in Exhibit K, and (b) certified copies of all policies evidencing such insurance
(or a binder, commitment or certificates signed by the insurer or a broker
authorized to bind the insurer), each in form and substance reasonably
satisfactory to the Lenders.

                                       27

<PAGE>

            3.1.11 Certificate of the Independent Engineer. Delivery to the Lead
Arrangers of the Independent Engineer's certificate, dated as of the Closing
Date and in substantially the form of Exhibit F-6, together with the Independent
Engineer's report, in form and substance reasonably satisfactory to the Lenders,
attached thereto.

            3.1.12 Certificate of Power Market Consultant. Delivery to the Lead
Arrangers of the Power Market Consultant's certificate, dated as of the Closing
Date and in substantially the form of Exhibit F-7, together with the Power
Market Consultant's report, in form and substance reasonably satisfactory to the
Lenders, attached thereto.

            3.1.13 Schedule of Applicable Permits.

            (a) Delivery to the Lead Arrangers of Exhibit G-1, the schedule of
Permits required by any Borrower Party or Dow to develop, construct, lease, own
and operate the Projects, in form and substance reasonably satisfactory to the
Lenders. Borrower shall also deliver and cause FEC and MEC to deliver to the
Lead Arrangers copies of each Permit listed in Part I of Exhibit G-1 in form and
substance reasonably satisfactory to the Lenders. Except as disclosed in Exhibit
G-1, each Applicable Permit listed in Part I of Exhibit G-1 shall (A) constitute
in the Lead Arrangers' reasonable opinion all of the Applicable Permits as of
the Closing Date, (B) have been duly obtained or been assigned in Dow, FEC or
MEC's name as applicable, (C) be in full force and effect, (D) not be subject to
any current legal proceeding, and (E) not be subject to any Unsatisfied
Condition that could reasonably be expected to result in material modification
or revocation of such Applicable Permit, and all applicable appeal periods with
respect to each such Applicable Permit shall have expired.

            (b) Part II of Exhibit G-1 shall list all other Permits that are not
Applicable Permits (as of the Closing Date) required by any Borrower Party or
Dow to develop, construct, lease, own and operate the Projects as contemplated
by the Operative Documents. The Permits listed in Part II of Exhibit G-1 shall,
in the Lead Arrangers' reasonable opinion, be timely obtainable (i) on or before
the date any Borrower Party or Dow requires such Permit, (ii) without delay
materially in excess of the time provided therefor in the Project Schedule (if
applicable), and (iii) without expense materially in excess of the amounts
provided therefor in the Project Budget by FEC or MEC as applicable.

            (c) Except as disclosed in Exhibit G-1, the Permits listed in Part I
of Exhibit G-1 shall not be subject to any restriction, condition, limitation or
other provision which could reasonably be expected to have a Material Adverse
Effect or result in the Projects being operated in a manner substantially
inconsistent with the assumptions underlying the Base Case Project Projections.

            3.1.14 Absence of Litigation. Except as disclosed on Exhibit G-5, no
action, suit, proceeding or investigation shall have been instituted or
threatened in writing against any Borrower Party. No action, suit, proceeding or
investigation shall have been instituted or, to Borrower's knowledge, threatened
in writing against any other Major Project Participant that (for purposes of
this Section 3.1.14, in the Lead Arrangers' sole discretion) could reasonably be

                                       28

<PAGE>

expected to (a) have a Material Adverse Effect, or (b) cause or deem the
Lenders, Administrative Agent, Collateral Agent, the Lead Arrangers or any
Borrower Party or any Affiliate of any of them to be subject to, or not exempted
from, regulation under PUHCA, or treated as a public utility under the laws of
the State of Minnesota (in the case of the Mankato Project) or of Texas (in the
case of the Freeport Project), as constituted and construed by the courts of
Minnesota or Texas as applicable, respecting the rates or the financial or
organizational regulation of electric utilities.

            3.1.15 Payment of Fees. All taxes, fees and other costs payable in
connection with the execution, delivery, recordation and filing of the documents
and instruments referred to in this Section 3.1 and due on the Closing Date
shall have been paid in full or, as approved by the Lenders, provided for.
Borrower shall have paid (or caused to be paid) all outstanding amounts due, as
of the Closing Date, and owing to (a) the Lenders, Administrative Agent or the
Lead Arrangers under any fee or other letter, including without limitation the
Arrangement Fee Letter and the Upfront Fee Letter, or pursuant to Section 2.4.1,
(b) the Lenders' attorneys and consultants (including the Independent
Consultants) and the Title Insurers for all services rendered and billed prior
to the Closing Date, (c) the Depositary Agent under the Depositary Agreements,
and (d) Administrative Agent for any other amounts required to be paid or
deposited by Borrower on the Closing Date.

            3.1.16 Financial Statements. Delivery to the Lead Arrangers of
accurate and complete copies of the most recent (a) unaudited annual financial
statements of each Borrower Party (other than Borrower) for the year ended
December 31, 2004, (b) audited annual financial statements or Form 10-K of
Sponsor, Dow and NSP, for the year ended December 31, 2003, (c) unaudited
quarterly financial statements or Form 10-Q of Sponsor for the fiscal quarter
ended on September 30, 2004, (d) unaudited profit and loss statement and balance
sheet for CCMCI, Operator and CES for the fiscal quarter ended September 30,
2004 and (e) for each Borrower Party, unaudited pro forma income statement,
balance sheet, cash flow statement (other than Borrower, FEC-GP and FEC-LP) and
reconciliation of net worth of each such Borrower Party as of the Closing Date,
together with, in the case of each such Borrower Party, a certificate from the
appropriate Responsible Officer thereof, dated as of the Closing Date and in
substantially the form of Exhibit F-2 (in the case of FEC), Exhibit F-3 (in the
case of MEC) or Exhibit F-8 (in the case of FEC-GP and FEC-LP), stating that no
Material Adverse Change in the consolidated assets, liabilities, operations or
financial condition of such Person has occurred from those set forth in the most
recent financial statements provided to the Lead Arrangers.

            3.1.17 UCC Reports. Delivery to the Lead Arrangers of a UCC report
of a date no less recent than 30 days before the Closing Date for each of the
jurisdictions in which the UCC-1 financing statements and the fixture filings
are intended to be filed in respect of the Collateral, showing that upon due
filing or recordation (assuming such filing or recordation occurred on the date
of such respective reports), as the case may be, the security interests created
under the Collateral Documents, with respect to such Collateral, will be prior
to all other financing statements, future filings or other security documents
wherein the security interest is perfected by filing or recording in respect of
the Collateral.

                                       29

<PAGE>

            3.1.18 Project Budget. Delivery to the Lead Arrangers of a budget in
the form of Exhibit G-2 (the "Project Budget") for all anticipated costs to be
incurred in connection with the development, construction, installation,
start-up and testing of each Project, which Project Budget shall be satisfactory
to the Lenders.

            3.1.19 Base Case Project Projections. Delivery to the Lead Arrangers
of the Base Case Project Projections of operating expenses and cash flow for
each Project in the form of Exhibit G-3, which Base Case Project Projections
shall be in form and substance satisfactory to the Lenders.

            3.1.20 No Material Adverse Change. Since December 31, 2003, no
Material Adverse Change has occurred and is continuing.

            3.1.21 A.L.T.A. Surveys. Administrative Agent shall have received
A.L.T.A. surveys of the Sites (which surveys shall be reasonably current and in
form and substance reasonably satisfactory to the Lenders and the Title
Insurer), certified to FEC or MEC, as applicable, Administrative Agent and the
Title Insurer by a licensed Texas surveyor (in the case of the Freeport Project)
or a licensed Minnesota surveyor (in the case of the Mankato Project) reasonably
satisfactory to the Lenders, showing, among other things, (a) as to the Sites,
the location and dimensions thereof (including (i) the location of all means of
access thereto and all easements or encumbrances relating thereto, and (ii) the
perimeter within which all improvements are to be located), (b) the existing
utility facilities servicing the Projects (including water, electricity, fuel,
telephone, sanitary sewer and storm water distribution and detention
facilities), (c) other than Permitted Liens, no existing or contemplated
improvements encroach or interfere with adjacent property or existing easements
or other rights (whether on, above or below ground), and that there are no gaps,
gores, projections, protrusions or other survey defects, (d) whether the MEC
Site or any portion thereof is located in a special flood hazard zone, and (e)
no other matters constituting a defect in title other than Title Exceptions;
provided, however, that the matters described in clauses (a)(ii) and (d) above
may be shown by separate maps, surveys or other information reasonably
satisfactory to the Lenders, and the surveyor shall not be required to certify
as to the location of any easements, improvements, encroachments utilities or
other matters which do not exist as of the Closing Date.

            3.1.22 Title Policies. Delivery to the Lead Arrangers of a lender's
A.L.T.A. extended coverage policy of title insurance with respect to the Mankato
Project and a Mortgagee Policy of Title Insurance with respect to the Freeport
Project (collectively, the "Title Policies") (with any standard coverage
exception reasonably acceptable to the Lead Arrangers but without a mechanics'
and materialmen's exception included therein (except where applicable
Governmental Rules prevent the deletion of such exception) necessary to cause
the Title Insurer to issue affirmative coverage for mechanics' and materialmens'
liens in form and substance reasonably satisfactory to the Lenders), together
with such endorsements thereto as are reasonably required by the Lead Arrangers
and otherwise available in the applicable state, or the unconditional and
irrevocable commitment of the Title Insurer to issue such policies, dated as of
the Closing Date, in an amount equal to 50% of Project Costs for the Freeport
Project and 50% of Project Costs for the Mankato Project (with such reinsurance
as is reasonably satisfactory to

                                       30

<PAGE>

the Lenders) issued by the applicable Title Insurer in form and substance
satisfactory to the Lead Arrangers, insuring (or agreeing to insure) that:

            (a) FEC has good and indefeasible right to occupy and use the FEC
Site and the FEC Easements as lessee and easement holder, in each case free and
clear of all Liens and exceptions to title whatsoever, other than (i) the Title
Exceptions, and (ii) such Liens or other exceptions to title as are reasonably
satisfactory to the Lenders;

            (b) MEC has a good, marketable and insurable (i) fee simple interest
in the MEC Site, and (ii) easement interest in the MEC Easements, in each case
free and clear of Liens or other exceptions to title, other than (A) the Title
Exceptions, and (B) such Liens or other exceptions to title as are reasonably
satisfactory to the Lenders;

            (c) the FEC Deed of Trust is (or will be when recorded) a valid
first lien on FEC's leasehold interest in the FEC Mortgaged Property, free and
clear of all Liens and exceptions to title whatsoever, other than (i) the Title
Exceptions, and (ii) such Liens or other exceptions to title as are reasonably
satisfactory to the Lenders; and

            (d) the MEC Mortgage is (or will be when recorded, so long as the
NSP Acknowledgement of Subordination is recorded prior thereto) a valid first
lien on MEC's interest in the MEC Mortgaged Property, free and clear of all
Liens and exceptions to title whatsoever, other than (i) the Title Exceptions,
and (ii) such Liens or other exceptions to title as are reasonably satisfactory
to the Lenders.

            3.1.23 Real Estate Rights. Except as disclosed on Exhibit G-9, each
Borrower Party and each other Major Project Participant shall have obtained and
shall hold all fee interests, leasehold interests, easements or other possessory
rights in real estate, together with necessary real property permits and
crossing rights (collectively, "Rights of Way") necessary for (a) performance in
full of each such Person's obligations under the Operative Documents to which
such Person is a party and each Permit to which such Person or its assets is
bound by, and (b) the development, leasing, construction and operation of the
Projects in accordance with the Base Case Project Projections. The use of such
Rights of Way shall not encroach on or interfere with property adjacent to such
Rights of Way or existing easements or other rights (whether on, above or below
ground), except for Permitted Liens, and the full length of the Rights of Way
shall be continuous, without break, gap or interruption.

            3.1.24 Regulatory Status. Delivery to the Lead Arrangers of (a) an
order issued by FERC confirming that MEC is an Exempt Wholesale Generator, (b)
an order issued by FERC authorizing MEC to sell electricity at market-based
rates and granting MEC all waivers of regulations and blanket authorizations as
are customarily granted by FERC to entities with market-based rate authority,
(c) evidence reasonably satisfactory to the Lead Arrangers confirming that the
Freeport Project is a Qualifying Facility, and (d) all necessary approvals from
any Governmental Authority in respect of the MEC Interconnection Agreement, the
Power Purchase Agreement and the Capacity Sales Agreement, to the extent
applicable.

                                       31

<PAGE>

            3.1.25 Notice to Proceed. The Construction Contractor shall have
been given (or shall be given simultaneously with the Closing Date) an
unconditional notice to proceed or otherwise been unconditionally directed (or
shall be directed simultaneously with the Closing Date) to begin performance
under the Project Documents to which such Person is a party and the Lead
Arrangers shall have received reasonably satisfactory evidence thereof.

            3.1.26 Establishment of Accounts. The Accounts required to be
established as of the Closing Date for the Projects under the Control Agreements
and the Depositary Agreements shall have been established to the satisfaction of
the Lead Arrangers.

            3.1.27 Representations and Warranties. Each representation and
warranty of each Borrower Party and each other Calpine Entity under the Credit
Documents shall be true and correct as of the Closing Date.

            3.1.28 No Default. No Event of Default or Inchoate Default shall
have occurred and be continuing as of the Closing Date.

            3.1.29 Utilities. Delivery to the Lead Arrangers of reasonably
satisfactory evidence that all potable water, sewer, telephone, electric and all
other utility services necessary for the development, construction, ownership
and operation of the Projects are either contracted for, or are readily
available on commercially reasonable terms, at the Projects.

            3.1.30 Project Schedule. Delivery to the Lead Arrangers of the
Project Schedule in the form of Exhibit G-4, which Project Schedule shall be
reasonably satisfactory to the Lenders.

            3.1.31 Consents. Delivery to the Lead Arrangers of executed Consents
from each of the Major Project Participants, which Consents shall be in
substantially the form of Exhibit E-1 or such other form agreed to by Borrower
and the Lead Arrangers, and otherwise reasonably satisfactory to the Lenders.

            3.1.32 Process Agents. Delivery to the Lead Arrangers of evidence
reasonably acceptable to the Lead Arrangers that each Calpine Entity has
appointed Corporation Service Company as its respective agent for service of
process in the State of New York in respect of each Credit Document to which
such Person is a party which is governed by the laws of the State of New York.

            3.1.33 PPA Security Fund. The Security Fund shall have been provided
to NSP in compliance with all applicable requirements under the Power Purchase
Agreement and shall be in full force and effect.

            3.1.34 Undertaking Support LCs. Collateral Agent shall have been
absolutely assigned, and shall be in possession of, the Undertaking Support LCs,
subject to Collateral Agent's continuing obligations with respect to such
Undertaking Support LCs as set forth in Section 3.7 of the Borrower Depositary
Agreement.

                                       32

<PAGE>

            3.1.35 Use of Equity. Borrower shall have certified to the Lead
Arrangers (in form and substance reasonably satisfactory to the Lenders) and the
Lead Arrangers and the Independent Engineer shall have confirmed, that FEC and
MEC have applied the proceeds of cash equity contributions made by Sponsor to
the payment of Project Costs in an aggregate amount not less than the Base
Equity Requirement.

      3.2 CONDITIONS PRECEDENT TO EACH CREDIT EVENT.

            The obligation of the Lenders to make each Construction Loan
(including the first Construction Loan, and any Punchlist Drawing, Dow Change
Order Drawing, Dow Performance Test Drawing or True-Up Drawing), of the LC
Issuer to issue the Security Fund LC, and of Collateral Agent to authorize
release of Project Revenues from the Construction Account for application to
Project Costs (each such loan and issuance, a "Credit Event"), is subject to the
prior satisfaction (or written waiver by Administrative Agent with the consent
of the Majority Lenders) of each of the following conditions:

            3.2.1 Representations and Warranties. Each representation and
warranty made by or on behalf of Borrower and each Benefiting Project Company in
any of the Credit Documents (other than representations and warranties relating
solely to a Project Company which is not a Benefiting Project Company) shall be
true and correct in all material respects as if made on the date of such Credit
Event, unless such representation or warranty expressly relates solely to an
earlier date. Each representation and warranty of each Major Project Participant
(other than any Person which is a Major Project Participant solely by virtue of
its relationship with a Project Company which is not a Benefiting Project
Company) contained in the Operative Documents (other than this Agreement) shall
be true and correct in all material respects as if made on the date of such
Credit Event, unless such representation and warranty expressly relates solely
to an earlier date, and except where the untruth of such representation and
warranty could not reasonably be expected to have a Material Adverse Effect.

            3.2.2 No Default. No Event of Default or Inchoate Default shall have
occurred and be continuing or will result from such Credit Event.

            3.2.3 Operative Documents in Effect. Each Credit Document and Major
Project Document relating to the Benefiting Project Company shall remain in full
force and effect in accordance with its terms (except for any Major Project
Document that has expired or been terminated in accordance with the terms
thereof and, if applicable, the relevant Consent).

            3.2.4 No Material Adverse Change. Since the Closing Date, no
Material Adverse Change shall have occurred and be continuing.

            3.2.5 Notice of Construction Loan Borrowing; Calculations. Borrower
shall have delivered a Notice of Construction Loan Borrowing to Administrative
Agent in accordance with the procedures specified in Section 2.1.1, provided
that no Notice of Construction Loan Borrowing shall be required if the sole
Credit Event occurring is release of Project Revenues toward payment of Project
Costs. To the extent that the proceeds of the requested Construction Loan are
intended to be used to reimburse Sponsor for certain equity contributions made
by it as

                                       33

<PAGE>

contemplated by Section 5.1.1, then Borrower shall have delivered the
calculations and other information described in Section 5.10 as and when
required thereby.

            3.2.6 Drawdown Certificate and Independent Engineer's Certificate.

            (a) At least six Banking Days prior to each Credit Event, Borrower
shall have provided Administrative Agent and the Independent Engineer with a
duly executed copy of the Drawdown Certificate, dated the date of delivery of
such certificate, setting forth the date of the proposed occurrence of such
Credit Event and signed by a Responsible Officer of Borrower, substantially in
the form of Exhibit C-5.

            (b) At least four Banking Days prior to each Credit Event, the
Independent Engineer shall have provided Administrative Agent with a certificate
of the Independent Engineer, dated the date of delivery of such certificate,
setting forth the date of the proposed occurrence of such Credit Event and
signed by an authorized representative of the Independent Engineer,
substantially in the form of Exhibit C-6 (the "Independent Engineer's Drawdown
Certificate").

            (c) Borrower shall use reasonable efforts to provide Administrative
Agent and the Independent Engineer with drafts of any certificates and other
materials to be delivered pursuant to this Section 3.2.6 in advance of the time
frames listed above as reasonably requested in writing by Administrative Agent.

            3.2.7 Amount. Construction Loans made on any single date of
Borrowing shall not exceed an aggregate amount equal to the lesser of (a) the
Available Construction Loan Commitment determined as of such date, and (b) such
amounts as shall ensure that uncommitted funds remaining in the Construction
Accounts other than the subaccounts thereof shall be disbursed to the greatest
extent possible, subject to the requirements of Section 2.1.1(b)(ii).

            3.2.8 Title Policy Endorsements. Borrower shall provide, or
Administrative Agent shall be adequately assured, that (A) at the time of each
Credit Event where MEC is the Benefiting Project Company, the Title Insurer is
committed to issue to Administrative Agent a date-down endorsement of the Title
Policy insuring the MEC Mortgage, dated as of the date of such Credit Event,
insuring the continuing first priority of the MEC Mortgage (subject only to (a)
the exceptions to title contained in the title policy delivered pursuant to
Section 3.1.22, (b) Permitted Liens described in clause (b) of the definition
thereof (to the extent the same are afforded priority over the Lien of the MEC
Mortgage by operation of law), and (c) any other exceptions to title as are
reasonably acceptable to Administrative Agent), and otherwise in form and
substance reasonably satisfactory to Administrative Agent, and (B) at the time
of each Credit Event where FEC is the Benefiting Project Company, that the Title
Insurer is committed to issue to Administrative Agent a letter addressed to
Administrative Agent addressing matters of record which may have arisen since
the last Credit Event, provided that no such commitment, endorsement or letter
shall be required if the sole Credit Event occurring is release of Project
Revenues toward payment of Project Costs.

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<PAGE>

            3.2.9 Lien Releases. If requested by Administrative Agent and
subject to the Benefiting Project Company's right to contest liens as described
in the definition of "Permitted Liens," the Benefiting Project Company shall
have delivered to Administrative Agent duly executed acknowledgments of payments
and releases of mechanics' and materialmen's liens, in the form attached to the
relevant Project Document or otherwise in form and substance reasonably
acceptable to Administrative Agent and the Title Insurer, from each contractor
or vendor that is a Major Project Participant of the Benefiting Project Company
for all work, services and materials (including equipment and fixtures of all
kinds, done, previously performed or furnished for the construction of such
Project), for which the disbursement of Construction Loan or non-Loan funds (as
the case may be) is being requested; provided, however, that such releases may
be conditioned upon receipt of payment with respect to work, services and
materials to be paid for with the proceeds of the requested Construction Loan or
disbursement of non-Loan proceeds, as applicable.

            3.2.10 Applicable Permits.

            (a) All Applicable Permits, required to have been obtained by the
Benefiting Project Company and, if the Benefiting Project Company is FEC, Dow by
the date of such Credit Event from any Governmental Authority shall have been
issued and be in full force and effect and not subject to current legal
proceedings or to any Unsatisfied Conditions that could reasonably be expected
to result in material modification or revocation, and all applicable appeal
periods with respect thereto shall have expired.

            (b) With respect to any of the Permits not yet obtained and listed
in Part II of Exhibit G-1, to Borrower's knowledge, no fact or circumstance
shall exist which makes it likely that any such Permit will not be timely
obtainable by the Benefiting Project Company and, if the Benefiting Project
Company is FEC, Dow (i) prior to the time that it becomes an Applicable Permit,
as applicable, (ii) without delay materially in excess of the time periods
thereof in the Project Schedule (if applicable), and (iii) without expense
materially in excess of the amounts provided therefor in the then-current
Project Budget by FEC or MEC as applicable.

            (c) Except as disclosed in Exhibit G-1, the Permits listed in
Exhibit G-1 which have been obtained by the Benefiting Project Company and, if
the Benefiting Project Company is FEC, Dow, shall not be subject to any
restriction, condition, limitation or other provision that could reasonably be
expected to have a Material Adverse Effect.

            3.2.11 Additional Documentation. With respect to Additional Project
Documents entered into or obtained, transferred or required (whether because of
the status of the development, construction or operation of the Projects or
otherwise) since the date of the most recent Credit Event by the Benefiting
Project Company, there shall be (a) redelivery of such matters as are described
in Section 3.1.6(b) to the extent applicable to such Additional Project
Documents, and (b) if reasonably requested by Administrative Agent, delivery of
such matters as are described in Sections 3.1.1 and 3.1.8 from the applicable
Borrower Party, and Sections 3.1.8 and, to the extent required by Section 5.16,
Section 3.1.31, from the counterparty to such Additional Project Document;
provided that references to such matters being satisfactory to the

                                       35

<PAGE>

Lead Arrangers shall, for purposes of this Section 3.2.11, be deemed to be
references to such matters being reasonably satisfactory to Administrative
Agent.

            3.2.12 Acceptable Work; No Liens. All work that has been done on the
Project owned by the Benefiting Project Company has been done in a good and
workmanlike manner and in accordance with the applicable Construction Contract,
and in accordance with the standard of care set forth in the applicable
Construction Contract, and there shall not have been filed against any of the
Collateral relating to the Benefiting Project Company or otherwise filed with or
served upon Borrower or the Benefiting Project Company with respect to the
applicable Project or any part thereof, notice of any Lien, claim of Lien or
attachment upon or claim affecting the right to receive payment of any of the
moneys payable to any of the Persons named on such request which has not been
released by payment or bonding or otherwise or which will not be released with
the payment of such obligation out of such Construction Loan or non-Loan
proceeds, other than Permitted Liens.

            3.2.13 Casualty. If at the time of any Credit Event any Benefiting
Project Company shall have suffered a Major Casualty Event, Depositary Agent
shall have received funds (including applicable Loss Proceeds or equity funds
irrevocably committed on terms and conditions reasonably satisfactory to
Administrative Agent and, if in excess of $5,000,000, supported by a Qualified
Letter of Credit) sufficient in the reasonable judgment of Administrative Agent
and the Independent Engineer to assure (i) restoration of such Project to
substantially the same operating and performance parameters (including
applicable O&M Costs required to operate such Project) as were in effect
immediately prior to such Major Casualty Event, and (ii) Completion of such
Project prior to the Construction Loan Maturity Date.

            3.2.14 Absence of Litigation. Except as set forth on Exhibit G-5, no
action, suit, proceeding or investigation shall have been instituted or
threatened in writing against Borrower, the Benefiting Project Company, the
applicable Major Project Participants or the applicable Project which could
reasonably be expected to (a) have a Material Adverse Effect, or (b) cause or
deem the Lenders, Administrative Agent, Collateral Agent, the Lead Arrangers or,
except to the extent provided in the first sentence of Section 4.17, any
Borrower Party or any Affiliate of any of them to be subject to, or not exempted
from, regulation under PUHCA, or treated as a public utility under the laws of
the State of Texas (in the case of the Freeport Project), or Minnesota (in the
case of the Mankato Project), as constituted and construed by the courts of
Texas or Minnesota, as applicable, respecting the rates or the financial or
organizational regulation of electric utilities.

            3.2.15 Insurance. Insurance complying with the requirements of
Section 5.18 shall be in effect for the Borrower and the Benefiting Project
Company, and, upon the reasonable written request of Administrative Agent,
evidence thereof shall have been provided to Administrative Agent.

            3.2.16 Available Construction Funds. After taking into consideration
the making of the applicable Credit Event, Administrative Agent (based on
consultation with the Independent Engineer) shall have reasonably determined
that Available Construction Funds

                                       36

<PAGE>

allocable to the Benefiting Project Company shall not be less than the aggregate
unpaid amount required to cause the Completion Date for such Project to occur in
accordance with all Legal Requirements, the applicable Construction Contract,
each other applicable Project Document pursuant to which construction work with
respect to the applicable Project is being performed, and the Credit Documents,
prior to the Construction Loan Maturity Date and to pay or provide for all
anticipated non-construction Project Costs of the Benefiting Project Company,
all as set forth in the then-current Project Budget with respect to such
Benefiting Project Company.

            3.2.17 Delivery of First Amendment to PPA. Where MEC is the
Benefiting Project Company, for any Credit Events to occur more than seven
months following the Closing Date, delivery to the Lead Arrangers of the First
Amendment to PPA, fully executed and approved by all necessary Governmental
Authorities.

      3.3   CONDITIONS PRECEDENT TO TERM-CONVERSION.

            No Construction Loans shall Term-Convert unless the following
conditions shall have been satisfied or waived in writing by Administrative
Agent with consent of the Majority Lenders (the date such conditions are so
satisfied or waived being referred to as the "Term Period Commencement Date"):

            3.3.1 Credit Event Conditions. The conditions set forth in Section
3.2, with the exception of Sections 3.2.5-3.2.9 and 3.2.16, shall have been
satisfied as of the date of Term-Conversion.

            3.3.2 Payment of Obligations. Borrower shall have paid to
Administrative Agent the principal amount of the Construction Loans outstanding
which will not be Term-Converted to Term Loans as provided in Section 2.1.2,
plus all interest due and owing through such date on such Construction Loans and
all other Obligations of Borrower due and owing through such date to
Administrative Agent, Collateral Agent and the Lenders hereunder or under any
other Credit Document.

            3.3.3 Punchlist Drawing; Dow Change Order Drawing; Dow Performance
Test Drawing; True-Up Drawing.

            (a) Punchlist Drawing. Prior to Term-Conversion, Borrower shall have
made a drawing up to any then-remaining Available Construction Loan Commitment
(the "Punchlist Drawing") in an amount equal to, when aggregated with any
amounts then on deposit (or being simultaneously deposited) in the respective
Construction Accounts immediately prior to such Punchlist Drawing, the amount
necessary to fund in full the payments set forth in Section 3.1.3 of the Project
Company Depositary Agreements for Punchlist and other items necessary to achieve
Final Completion of both Projects. The amounts drawn for Punchlist items
pursuant to this Section 3.3.3(a) shall be deposited into the applicable Project
Company Construction Account.

            (b) Dow Change Order Drawing. If, after giving effect to the making
of the Punchlist Drawing (if any), (i) there remains any Available Construction
Loan Commitment on

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<PAGE>

the Term Period Commencement Date and (ii) Dow has elected less than $5,000,000
of changes pursuant to Section 2.3.2 of the Capacity Sales Agreement, then
Borrower, at its election, may draw additional Construction Loans at or prior to
Term-Conversion (the "Dow Change Order Drawing"), in an amount up to the lesser
of (A) $5,000,000 minus the cost of changes which Dow did elect pursuant to such
section, and (B) $4,000,000. Such amount shall be deposited into Borrower's
Revenue Account.

            (c) Dow Performance Test Drawing. Solely in the event that any
performance tests at the Freeport Project have been deferred pursuant to
Sections 4.3.2 and 4.3.3 of the Capacity Sales Agreement (a "Dow Test
Deferral"), then if, after giving effect to the making of the Punchlist Drawing
(if any) and Dow Change Order Drawing (if any), there remains any Available
Construction Loan Commitment, then Borrower shall draw additional Construction
Loans on the Term Period Commencement Date in an amount equal to the lesser of
(i) the Available Construction Loan Commitment and (ii) the Dow Performance Test
Exposure. The amount of such drawing (the "Dow Performance Test Drawing Amount"
shall be deposited into the First Step Construction Sub-Account pursuant to
Section 3.1.1(h) of the FEC Depositary Agreement.

            (d) True-Up Drawing. If, after giving effect to the making of the
Punchlist Drawing (if any), the Dow Change Order Drawing (if any), and the Dow
Performance Test Drawing (if any), (i) there remains any Available Construction
Loan Commitment and (ii) the Debt to Equity Ratio (as determined in accordance
with Section 5.10(b)) is less than the Target Debt to Equity Ratio, then
Borrower, at its election, may draw additional Construction Loans on the Term
Period Commencement Date (the "True-Up Drawing") in an amount up to the lesser
of (i) the amount of the then-remaining Available Construction Loan Commitment,
and (ii) an amount which, after giving effect to the making of the Punchlist
Drawing (if any), the Dow Change Order Drawing (if any), and the Dow Performance
Test Drawing (if any), yields the Target Debt to Equity Ratio. Such amount shall
be deposited into the Borrower Revenue Account. After the True-Up Drawing, any
remaining Construction Loan Commitment shall be cancelled.

            3.3.4 Completion. Completion with respect to each Project shall have
occurred and Borrower shall have delivered to Administrative Agent, in form and
substance reasonably satisfactory to Administrative Agent, a certification that
Completion with respect to each Project has occurred.

            3.3.5 Annual Budget. Administrative Agent shall have received the
Annual Operating Budget for each Project as required under Section 5.14.3 for
the period from the Term Period Commencement Date through the end of the
calendar year in which Term-Conversion is to occur; provided that if such period
is less than three months, Administrative Agent shall have also received the
Annual Operating Budget for each Project for the first full calendar year
thereafter. In the event that either such Annual Operating Budget does not, in
Administrative Agent's reasonable opinion acting in consultation with the
Independent Engineer, properly reflect the operation of the applicable Project
during such calendar year as a result of the actual date of Term-Conversion
being different from the date anticipated therefor and set forth in such

                                       38

<PAGE>

Annual Operating Budget, Administrative Agent shall have received an amendment
to such Annual Operating Budget properly reflecting the actual date of
Term-Conversion upon written request to Borrower for the same.

            3.3.6 Debt Service Reserve Account. On the Term Period Commencement
Date, the amount on deposit in or credited to the Debt Service Reserve Account,
together with the stated amount of any Qualified Letter of Credit available for
payment to Administrative Agent for disbursement to the Debt Service Reserve
Account, shall be not less than 50% of the DSR Required Balance, and each
Project Company has available to it in its O&M Account or in use as working
capital the amount of working capital required under the applicable Depositary
Agreement.

            3.3.7 Term Notes. Borrower shall have delivered duly executed Term
Notes to each Lender, if any Lender shall have requested such Term Notes in
writing pursuant to Section 2.1.4 or 9.14.

            3.3.8 Delivery of Documents. Administrative Agent shall have
received, in form and substance reasonably satisfactory to Administrative Agent,
such date-down opinions, resolutions, certificates and other evidence as
Administrative Agent may reasonably request in writing to ensure Administrative
Agent's reasonable satisfaction with the matters covered in Sections 3.1.8 (with
respect solely to Borrower Parties), 3.1.6 (with respect to any Credit Document
or Project Document not previously delivered) and 3.1.10.

            3.3.9 Sufficient Funds for Initial Principal Repayment Date. In the
event that Term-Conversion takes place less than three months prior to the
Initial Principal Repayment Date, Borrower shall have demonstrated to
Administrative Agent's reasonable satisfaction that amounts retained in the
Revenue Accounts after Term-Conversion plus anticipated Project Revenues prior
to the Initial Principal Repayment Date will be sufficient to make the payments
of principal and interest due on the Initial Principal Repayment Date.

      3.4 CONDITIONS PRECEDENT TO USE OF PROCEEDS OUTSIDE OF INITIAL ALLOCATED
PORTIONS.

            Prior to "Substantial Completion" under the MEC Construction
Contract and funding of the Punchlist Drawing for the Mankato Project, Borrower
may not draw any Construction Loan in an amount which would cause a violation of
the Initial Allocated Portion requirements set forth in Section 2.1.1(a), unless
the following conditions shall have been satisfied or waived in writing by
Administrative Agent with consent of the Majority Lenders:

            3.4.1 The Initial Allocated Portion of the Project Company requiring
additional funds shall have been fully expended.

            3.4.2 The Independent Engineer shall have certified that the
remaining Commitments are sufficient for Completion of both Projects, and the
Administrative Agent shall have provided consent for the additional draw based
upon the Independent Engineer's certification.

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<PAGE>

      3.5   NO APPROVAL OF WORK.

                  The making of any Loan hereunder shall in no event be deemed
an approval or acceptance by Administrative Agent, Collateral Agent, the Lenders
or any other Secured Party of any work, labor, supplies, materials or equipment
furnished or supplied with respect to the Projects.

      3.6   ADJUSTMENT OF DRAWDOWN REQUESTS.

                  In the event Administrative Agent determines that any item
listed in a Drawdown Certificate as a Project Cost is not properly included in
such Drawdown Certificate, Administrative Agent may in its reasonable discretion
cause to be made a Loan or Loans in the amount requested in such Drawdown
Certificate less the amount of such item or may reduce the amount of Loans made
pursuant to any subsequent Drawdown Certificate. In the event that Borrower
prevails in any dispute as to whether such Project Costs were properly included
in such Drawdown Certificate, Loans in the amount requested but not initially
made shall forthwith be made.

                                    ARTICLE 4
                         REPRESENTATIONS AND WARRANTIES

            Borrower makes the following representations and warranties on
behalf of each Borrower Party to and in favor of the Secured Parties as of the
Closing Date (unless such representation and warranty expressly relates solely
to another time) and, to the extent set forth in Article 3, as of the date of
each Credit Event, all of which shall survive the Closing Date and the making of
the Loans:

      4.1   ORGANIZATION.

            4.1.1 Borrower is (a) a limited liability company duly formed,
validly existing and in good standing under the laws of the State of Delaware,
and (b) is duly qualified as a foreign limited liability company, and is in good
standing, in each other jurisdiction in which such qualification is required by
law. Borrower has all requisite limited liability company power and authority to
(i) own or hold under lease and operate the property it purports to own or hold
under lease, (ii) carry on its business as now being conducted and as now
proposed to be conducted in respect of the Projects, (iii) execute, deliver and
perform each Operative Document to which it is a party, and (iv) take each
action as may be necessary to consummate the transactions contemplated
thereunder.

            4.1.2 (a) The capital of Borrower is adequate for the business and
undertakings of Borrower; (b) Borrower's funds and assets are not, and will not
be, commingled with those of any other entity; (c) the Governing Documents of
Borrower require it to maintain proper books of account and minutes of meetings
and other proceedings of its directors; and (d) Borrower has

                                       40
<PAGE>

not entered into any transactions or conducted any business unrelated to the
transactions contemplated by this Agreement.

            4.1.3 FEC is (a) a limited partnership duly formed, validly existing
and in good standing under the laws of the State of Delaware, and (b) is duly
qualified as a foreign limited partnership, and is in good standing, in each
jurisdiction in which such qualification is required by law. FEC has all
requisite limited partnership power and authority to (i) own or hold under lease
and operate the property it purports to own or hold under lease, (ii) carry on
its business as now being conducted and as now proposed to be conducted in
respect of the Freeport Project, (iii) execute, deliver and perform each
Operative Document to which it is a party, and (iv) take each action as may be
necessary to consummate the transactions contemplated thereunder. As of the
Closing Date, Borrower is the 100% owner of FEC-LP, the 100% owner of FEC-GP,
and the 100% indirect owner of FEC.

            4.1.4 FEC-GP is (a) a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware, and (b)
is duly qualified as a foreign limited liability company, and is in good
standing, in each jurisdiction in which such qualification is required by law.
FEC-GP has all requisite limited liability company power and authority to (i)
own or hold under lease and operate the property it purports to own or hold
under lease, (ii) carry on its business as now being conducted and as now
proposed to be conducted in respect of the Freeport Project, (iii) execute,
deliver and perform each Operative Document to which it is a party, and (iv)
take each action as may be necessary to consummate the transactions contemplated
thereunder. As of the Closing Date, FEC-GP is the 1%-owning general partner of
FEC.

            4.1.5 FEC-LP is (a) a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware, and (b)
is duly qualified as a foreign limited liability company, and is in good
standing, in each jurisdiction in which such qualification is required by law.
FEC-LP has all requisite limited liability company power and authority to (i)
own or hold under lease and operate the property it purports to own or hold
under lease, (ii) carry on its business as now being conducted and as now
proposed to be conducted in respect of the Freeport Project, (iii) execute,
deliver and perform each Operative Document to which it is a party, and (iv)
take each action as may be necessary to consummate the transactions contemplated
thereunder. As of the Closing Date, FEC-LP is the 99%-owning limited partner of
FEC.

            4.1.6 MEC is (a) a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware, and (b)
is duly qualified as a foreign limited liability company, and is in good
standing, in each jurisdiction in which such qualification is required by law.
MEC has all requisite limited liability company power and authority to (i) own
or hold under lease and operate the property it purports to own or hold under
lease, (ii) carry on its business as now being conducted and as now proposed to
be conducted in respect of the Mankato Project, (iii) execute, deliver and
perform each Operative Document to which it is a party, and (iv) take each
action as may be necessary to consummate the transactions contemplated
thereunder. As of the Closing Date, MEC is directly wholly-owned by Borrower.

                                       41
<PAGE>

      4.2   AUTHORIZATION; NO CONFLICT.

            4.2.1 Borrower has duly authorized, executed and delivered each
Operative Document to which Borrower is a party (or such Operative Documents
have been duly and validly assigned to Borrower and Borrower has authorized the
assumption thereof, and has assumed the obligations of the assignor thereunder)
and neither Borrower's execution and delivery thereof nor its consummation of
the transactions contemplated thereby nor its compliance with the terms thereof
(a) does or will contravene the Governing Documents or any other Legal
Requirement applicable to or binding on Borrower or any of its properties which,
in the case of such Legal Requirements, could reasonably be expected to have a
Material Adverse Effect, (b) does or will contravene or result in any breach of
or constitute any default under, or result in or require the creation of any
Lien (other than Permitted Liens) upon any of its property under, any agreement
or instrument to which it is a party or by which it or any of its properties may
be bound or affected, or (c) does or will require the consent or approval of any
Person, and with respect to any Governmental Authority, does or will require any
registration with, or notice to, or any other action of, with or by any
applicable Governmental Authority, in each case which has not already been
obtained and disclosed in writing to Administrative Agent (except as set forth
on Exhibit G-1 or otherwise provided in Section 4.9).

            4.2.2 FEC has duly authorized, executed and delivered each Operative
Document to which FEC is a party and neither FEC's execution and delivery
thereof nor its consummation of the transactions contemplated thereby nor its
compliance with the terms thereof (a) does or will contravene the Governing
Documents or any other Legal Requirement applicable to or binding on FEC or any
of its properties which, in the case of such Legal Requirements, could
reasonably be expected to have a Material Adverse Effect, (b) does or will
contravene or result in any breach of or constitute any default under, or result
in or require the creation of any Lien (other than Permitted Liens) upon any of
its property under, any agreement or instrument to which it is a party or by
which it or any of its properties may be bound or affected, or (c) does or will
require the consent or approval of any Person, and with respect to any
Governmental Authority, does or will require any registration with, or notice
to, or any other action of, with or by any applicable Governmental Authority, in
each case which has not already been obtained and disclosed in writing to
Administrative Agent (except as set forth on Exhibit G-1 or otherwise provided
in Section 4.9).

            4.2.3 FEC-GP has duly authorized, executed and delivered each
Operative Document to which FEC-GP is a party and neither FEC-GP's execution and
delivery thereof nor its consummation of the transactions contemplated thereby
nor its compliance with the terms thereof (a) does or will contravene the
Governing Documents or any other Legal Requirement applicable to or binding on
FEC-GP or any of its properties which, in the case of such Legal Requirements,
could reasonably be expected to have a Material Adverse Effect, (b) does or will
contravene or result in any breach of or constitute any default under, or result
in or require the creation of any Lien (other than Permitted Liens) upon any of
its property under, any agreement or instrument to which it is a party or by
which it or any of its properties may be bound or

                                       42
<PAGE>

affected, or (c) does or will require the consent or approval of any Person, and
with respect to any Governmental Authority, does or will require any
registration with, or notice to, or any other action of, with or by any
applicable Governmental Authority, in each case which has not already been
obtained and disclosed in writing to Administrative Agent (except as set forth
on Exhibit G-1 or otherwise provided in Section 4.9).

            4.2.4 FEC-LP has duly authorized, executed and delivered each
Operative Document to which FEC-LP is a party and neither FEC-LP's execution and
delivery thereof nor its consummation of the transactions contemplated thereby
nor its compliance with the terms thereof (a) does or will contravene the
Governing Documents or any other Legal Requirement applicable to or binding on
FEC-LP or any of its properties which, in the case of such Legal Requirements,
could reasonably be expected to have a Material Adverse Effect, (b) does or will
contravene or result in any breach of or constitute any default under, or result
in or require the creation of any Lien (other than Permitted Liens) upon any of
its property under, any agreement or instrument to which it is a party or by
which it or any of its properties may be bound or affected, or (c) does or will
require the consent or approval of any Person, and with respect to any
Governmental Authority, does or will require any registration with, or notice
to, or any other action of, with or by any applicable Governmental Authority, in
each case which has not already been obtained and disclosed in writing to
Administrative Agent (except as set forth on Exhibit G-1 or otherwise provided
in Section 4.9).

            4.2.5 MEC has duly authorized, executed and delivered each Operative
Document to which MEC is a party (or such Operative Documents have been duly and
validly assigned to MEC and MEC has authorized the assumption thereof, and has
assumed the obligations of the assignor thereunder) and neither MEC's execution
and delivery thereof nor its consummation of the transactions contemplated
thereby nor its compliance with the terms thereof (a) does or will contravene
the Governing Documents or any other Legal Requirement applicable to or binding
on MEC or any of its properties which, in the case of such Legal Requirements,
could reasonably be expected to have a Material Adverse Effect, (b) does or will
contravene or result in any breach of or constitute any default under, or result
in or require the creation of any Lien (other than Permitted Liens) upon any of
its property under, any agreement or instrument to which it is a party or by
which it or any of its properties may be bound or affected, or (c) does or will
require the consent or approval of any Person, and with respect to any
Governmental Authority, does or will require any registration with, or notice
to, or any other action of, with or by any applicable Governmental Authority, in
each case which has not already been obtained and disclosed in writing to
Administrative Agent (except as set forth on Exhibit G-1 or otherwise provided
in Section 4.9).

      4.3   ENFORCEABILITY.

            4.3.1 Each of the Operative Documents to which Borrower is a party
is a legal, valid and binding obligation of Borrower, enforceable against
Borrower in accordance with its terms, except to the extent that enforceability
may be limited by applicable bankruptcy,

                                       43
<PAGE>

insolvency, moratorium, reorganization or other similar laws affecting the
enforcement of creditors' rights or by the effect of general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law). None of the Operative Documents to which
Borrower is a party has been amended or modified after the Closing Date except
in accordance with this Agreement.

            4.3.2 Each of the Operative Documents to which FEC is a party is a
legal, valid and binding obligation of FEC, enforceable against FEC in
accordance with its terms, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency, moratorium, reorganization or
other similar laws affecting the enforcement of creditors' rights or by the
effect of general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law). None of the
Operative Documents to which FEC is a party has been amended or modified after
the Closing Date except in accordance with this Agreement.

            4.3.3 Each of the Operative Documents to which FEC-GP is a party is
a legal, valid and binding obligation of FEC-GP, enforceable against FEC-GP in
accordance with its terms, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency, moratorium, reorganization or
other similar laws affecting the enforcement of creditors' rights or by the
effect of general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law). None of the
Operative Documents to which FEC-GP is a party has been amended or modified
after the Closing Date except in accordance with this Agreement.

            4.3.4 Each of the Operative Documents to which FEC-LP is a party is
a legal, valid and binding obligation of FEC-LP, enforceable against FEC-LP in
accordance with its terms, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency, moratorium, reorganization or
other similar laws affecting the enforcement of creditors' rights or by the
effect of general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law). None of the
Operative Documents to which FEC-LP is a party has been amended or modified
after the Closing Date except in accordance with this Agreement.

            4.3.5 Each of the Operative Documents to which MEC is a party is a
legal, valid and binding obligation of MEC, enforceable against MEC in
accordance with its terms, except to the extent that enforceability may be
limited by applicable bankruptcy, insolvency, moratorium, reorganization or
other similar laws affecting the enforcement of creditors' rights or by the
effect of general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law). None of the
Operative Documents to which MEC is a party has been amended or modified after
the Closing Date except in accordance with this Agreement.

      4.4   COMPLIANCE WITH LAW.

            4.4.1 There are no material violations by Borrower or, to Borrower's
knowledge, any Calpine Entity, of any Legal Requirement (including any Hazardous
Substance Laws).

                                       44
<PAGE>

Except as otherwise have been delivered to Administrative Agent, no notices of
any material violation of any Legal Requirement (including any Hazardous
Substance Laws) relating to the Projects or the Sites have been issued, entered
or received by Borrower or, to Borrower's knowledge, any Calpine Entity.

            4.4.2 There are no material violations by FEC of any Legal
Requirement (including any Hazardous Substance Laws). Except as otherwise have
been delivered to Administrative Agent or set forth on Exhibit G-6, no notices
of any material violation of any Legal Requirement (including any Hazardous
Substance Laws) relating to the Freeport Project or the FEC Site have been
issued, entered or received by FEC or, to Borrower's knowledge, any Calpine
Entity.

            4.4.3 There are no material violations by FEC-GP of any Legal
Requirement (including any Hazardous Substance Laws). Except as otherwise have
been delivered to Administrative Agent or set forth on Exhibit G-6, no notices
of any material violation of any Legal Requirement (including any Hazardous
Substance Laws) relating to the Freeport Project or the FEC Site have been
issued, entered or received by FEC-GP or, to Borrower's knowledge, any Calpine
Entity.

            4.4.4 There are no material violations by FEC-LP of any Legal
Requirement (including any Hazardous Substance Laws). Except as otherwise have
been delivered to Administrative Agent or set forth on Exhibit G-6, no notices
of any material violation of any Legal Requirement (including any Hazardous
Substance Laws) relating to the Freeport Project or the FEC Site have been
issued, entered or received by FEC-GP or, to Borrower's knowledge, any Calpine
Entity.

            4.4.5 There are no material violations by MEC of any Legal
Requirement (including any Hazardous Substance Laws). Except as otherwise have
been delivered to Administrative Agent, no notices of any material violation of
any Legal Requirement (including any Hazardous Substance Laws) relating to the
Mankato Project or the MEC Site have been issued, entered or received by MEC or,
to Borrower's knowledge, any Calpine Entity.

      4.5   BUSINESS, DEBT, CONTRACTS, JOINT VENTURES ETC.

            4.5.1 Borrower has not conducted any business other than the
business contemplated by the Operative Documents, does not have any outstanding
Debt or other material liabilities other than pursuant to or allowed by the
Operative Documents, and Borrower is not a party to or bound by any material
contract other than the Operative Documents.

            4.5.2 Borrower is not a general partner or a limited partner in any
general or limited partnership or a joint venturer in any joint venture other
than the sole member of MEC, FEC-LP and FEC-GP.

            4.5.3 Borrower does not have any Subsidiaries other than FEC-LP,
FEC-GP, FEC and MEC.

                                       45
<PAGE>

            4.5.4 FEC has not conducted any business other than the business
contemplated by the Operative Documents, does not have any outstanding Debt
other than pursuant to or allowed by the Credit Documents or other material
liabilities other than pursuant to the Operative Documents to which it is a
party, and FEC is not a party to or bound by any material contract other than
the Operative Documents.

            4.5.5 FEC does not have any Subsidiaries.

            4.5.6 FEC-GP has not conducted any business other than the business
contemplated by the Operative Documents, does not have any outstanding Debt or
other material liabilities, and FEC-GP is not a party to or bound by any
material contract other than the Credit Documents, the FEC Partnership
Agreement, or the Operative Documents to which FEC is a party by reason of
FEC-GP being the general partner of FEC.

            4.5.7 FEC-GP does not have any Subsidiaries other than FEC.

            4.5.8 FEC-LP has not conducted any business other than the business
contemplated by the Operative Documents, does not have any outstanding Debt or
other material liabilities, and FEC-LP is not a party to or bound by any
material contract other than the Credit Documents, the FEC Partnership Agreement
and the Operative Documents to which FEC is a party by reason of FEC-LP being
the limited partner of FEC.

            4.5.9 FEC-LP does not have any Subsidiaries other than FEC.

            4.5.10 MEC has not conducted any business other than the business
contemplated by the Operative Documents, does not have any outstanding Debt
other than pursuant to or allowed by the Credit Documents or other material
liabilities other than pursuant to the Operative Documents to which it is a
party, and MEC is not a party to or bound by any material contract other than
the Operative Documents.

            4.5.11 MEC is not a general partner or a limited partner in any
general or limited partnership or a joint venturer in any joint venture.

            4.5.12 MEC does not have any Subsidiaries.

            4.5.13 No Borrower Party has any deposit or other accounts other
than as created under the Depositary Agreements, the MEC Checking Account and
the FEC Checking Account.

      4.6   ADVERSE CHANGE.

            To Borrower's knowledge, since the Closing Date there has occurred
no event or circumstance which could reasonably be expected to have a Material
Adverse Effect, except as disclosed to Administrative Agent in writing at or
prior to the time the representation in this Section 4.6 is being made.

      4.7   INVESTMENT COMPANY ACT.

                                       46
<PAGE>

            None of the Borrower Parties or any other Calpine Entity is an
investment company or a company controlled by an investment company, within the
meaning of the Investment Company Act of 1940, as amended.

      4.8   ERISA.

            Either (a) there are no ERISA Plans or Multiemployer Plans for any
Calpine Entity or any ERISA Affiliate, or (b) (i) each Calpine Entity and each
ERISA Affiliate have fulfilled their obligations (if any) under the minimum
funding standards of ERISA and the Code for each ERISA Plan, (ii) each such Plan
is in compliance in all material respects with the currently applicable
provisions of ERISA and the Code, and (iii) neither any Calpine Entity nor any
ERISA Affiliate has incurred any liability to the PBGC or an ERISA Plan or
Multiemployer Plan under Title IV of ERISA (other than liability for premiums
due in the ordinary course). None of any Calpine Entity's assets constitute
assets of an employee benefit plan within the meaning of 29 C.F.R. Section
2510.3-101. No Borrower Party maintains or contributes to, and is obligated to
contribute to, or has at any point of its existence maintained or contributed
to, or been obligated to contribute to, any employee benefit plan subject to
ERISA.

      4.9   PERMITS.

            There are no Permits under existing Legal Requirements as the
Projects are currently designed that are or will become Applicable Permits other
than the Permits listed in Exhibit G-1 (as such Exhibit may be supplemented by
Borrower Parties to reflect any Change of Law or the issuance or modification of
any Permit after the Closing Date). Except as disclosed in Exhibit G-1 (as so
supplemented), each Permit listed in Part I of Exhibit G-1 is in full force and
effect and is not subject to any current legal proceeding or to any Unsatisfied
Condition that could reasonably be expected to have a Material Adverse Effect,
and all applicable appeal periods with respect thereto have expired. Each Permit
listed in Part II of Exhibit G-1 is of a type that is routinely granted upon
submission of a timely application and demonstration that the Projects comply
with applicable standards and Legal Requirements. No Permit listed in Part II is
required under applicable Legal Requirements or Project Documents to be obtained
before the time contemplated to be obtained by the applicable Borrower Party or
Dow. No fact or circumstance exists, to any Borrower Party's knowledge, which
makes it likely that any Permit identified in Part II of Exhibit G-1 shall not
be timely obtainable by the applicable Borrower Party or Dow before it becomes
an Applicable Permit without expense in excess of amounts provided therefor in
the then-current Project Budget or the then-current Annual Operating Budget, as
the case may be, and without delay materially in excess of the time provided
therefor in the Project Schedule (if applicable). Each Borrower Party and Dow is
in compliance with all Applicable Permits except to the extent such
noncompliance could not reasonably be expected to have a Material Adverse
Effect.

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<PAGE>

      4.10  HAZARDOUS SUBSTANCES.

            4.10.1 Except as set forth in Exhibit G-6: After giving effect to
the environmental indemnity provided by Dow under Section 17.2.2 of the FEC
Ground Lease and Dow's curative actions performed under Section 17.3.2 of the
FEC Ground Lease, (a) each Project Company, with respect to the Sites,
Improvements, other FEC Mortgaged Property or other MEC Mortgaged Property, is
not and has not in the past been in violation of any Hazardous Substance Law
which violation could reasonably be expected to result in a material liability
to any Borrower Party or its properties and assets or in an inability of any
Borrower Party to perform its obligations under the Operative Documents, (b) no
Project Company or, to Borrower's knowledge, any other Person has used,
Released, generated, manufactured, produced or stored in, on, under, or about
the Sites, Improvements, other FEC Mortgaged Property or other MEC Mortgaged
Property, or transported thereto or therefrom, any Hazardous Substances that
could reasonably be expected to subject any Secured Party to liability or any
Borrower Party to material liability under any Hazardous Substance Law, (c) to
Borrower's knowledge, there are no underground tanks, whether operative or
temporarily or permanently closed, located on the Sites, Improvements, other FEC
Mortgaged Property or other MEC Mortgaged Property that could reasonably be
expected to subject any Secured Party to liability, or Borrower to material
liability under any Hazardous Substances Laws, (d) there are no Hazardous
Substances used, stored or present at or on the Sites, Improvements, other FEC
Mortgaged Property or other MEC Mortgaged Property, except in compliance with
Hazardous Substance Laws and other Legal Requirements or, in the case of MEC, as
disclosed in the Environmental Reports or, in the case of FEC, that could not
reasonably be expected to have a Material Adverse Effect or to subject any
Secured Party to liability or any Borrower Party to liability under any
Hazardous Substance Laws, (e) to Borrower's knowledge, there are no Hazardous
Substances that could reasonably be expected to migrate onto the Sites,
Improvements, other FEC Mortgaged Property or other MEC Mortgaged Property that
could reasonably be expected to impose on any Borrower Party a material
liability, except, in the case of MEC, as disclosed in the Environmental Reports
or, in the case of FEC, that could not reasonably be expected to have a Material
Adverse Effect and (f) to Borrower's knowledge there neither is nor has been any
condition, circumstance, action, activity or event that could reasonably be
expected to be, or result in, a material violation by any Borrower Party of any
Hazardous Substance Law, or to result in liability to any Secured Party or
material liability to any Borrower Party under any Hazardous Substance Law.

            4.10.2 Except as set forth on Exhibit G-5 or Exhibit G-6 and after
giving effect to the environmental indemnity provided by Dow under Section
17.2.2 of the FEC Ground Lease and Dow's curative actions performed under
Section 17.3.2 of the FEC Ground Lease, (a) as of the Closing Date, there is no
pending or, to Borrower's knowledge, threatened in writing, action or proceeding
by any Governmental Authority (including the Minnesota Public Utilities
Commission, Blue Earth County, Minnesota, Brazoria County, Texas, U.S. Army
Corps of Engineers and U.S. Environmental Protection Agency) or any other Person
which is not a Governmental Authority with respect to the presence or Release of
Hazardous Substances in, on, from or to the Sites, Improvements, other FEC
Mortgaged Property or other MEC Mortgaged

                                       48
<PAGE>

Property and, (b) thereafter, there is no pending or, to Borrower's knowledge,
threatened in writing, action or proceeding by any Governmental Authority
(including the Minnesota Public Utilities Commission, Blue Earth County,
Minnesota, Freeport County, Texas, U.S. Army Corps of Engineers and U.S.
Environmental Protection Agency) or any non-governmental third party with
respect to the presence or Release of Hazardous Substances in, on, from or to
the Sites, Improvements, other FEC Mortgaged Property or other MEC Mortgaged
Property which could reasonably be expected to have a Material Adverse Effect.

            4.10.3 Except as set forth in the Environmental Report and after
giving effect to the environmental indemnity provided by Dow under Section
17.2.2 of the FEC Ground Lease and Dow's curative actions performed under
Section 17.3.2 of the FEC Ground Lease, to Borrower's knowledge, there are no
past violations that have not been finally resolved or existing violations of
any Hazardous Substances Laws by any Person affecting the Sites, Improvements,
other FEC Mortgaged Property or other MEC Mortgaged Property, which violations
could reasonably be expected to result in a material liability to any Borrower
Party.

      4.11  LITIGATION.

            (a) Except as set forth on Exhibit G-5, as of the Closing Date, no
action, suit, proceeding or investigation has been instituted or, to Borrower's
knowledge, threatened in writing against any Borrower Party.

            (b) Except as set forth on Exhibit G-5, as of the Closing Date,
Borrower has no knowledge of (i) any action, suit, proceeding or investigation
that has been instituted or threatened in writing against, any Calpine Entity or
any other Major Project Participant, or by which any of them or their properties
are bound, which could reasonably be expected to have a Material Adverse Effect,
or (ii) any order, judgment or decree that has been issued or proposed to be
issued by any Governmental Authority that, as a result of the construction,
development, ownership or operation of the Projects by any Borrower Party, the
sale of electricity or steam therefrom by any Borrower Party or the entering
into of any Operative Document or any transaction contemplated hereby or
thereby, could reasonably be expected to cause or deem the Lenders,
Administrative Agent, Collateral Agent, the Lead Arrangers or any Borrower Party
or any Affiliate of any of them to be subject to, or not exempted from,
regulation under PUHCA, or treated as a public utility under the laws of the
State of Texas (in the case of the Freeport Project) or Minnesota (in the case
of the Mankato Project) as presently constituted and as construed by the courts
of Texas or Minnesota, as applicable, respecting the rates or the financial or
organizational regulation of electric utilities.

            (c) After the Closing Date, there are no pending or, to Borrower's
knowledge, threatened actions or proceedings of any kind, including actions or
proceedings of or before any Governmental Authority, to which each Borrower
Party is a party or is subject, or by which any of them or any of their
properties are bound, which could reasonably be expected to have a

                                       49
<PAGE>

Material Adverse Effect and which have not been disclosed by Borrower Parties to
Administrative Agent in accordance with, and to the extent required by, Section
5.4.

      4.12  LABOR DISPUTES AND ACTS OF GOD.

            Neither the business nor the properties of any Borrower Party or, to
Borrower's knowledge, Dow or NSP are currently affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy, or other casualty
(whether or not covered by insurance), which could reasonably be expected to
have a Material Adverse Effect.

      4.13  PROJECT DOCUMENTS.

            4.13.1 Copies of all of the Major Project Documents and Major
Equipment Contracts executed on or prior to such date have been delivered to
Administrative Agent. Since the Closing Date, except as has been disclosed to
Administrative Agent in writing and as permitted hereunder, as of such date,
none of such Major Project Documents has been amended, modified or terminated
(other than expiration thereof in accordance with its terms and the Credit
Documents).

            4.13.2 To Borrower's knowledge, except as disclosed to
Administrative Agent in writing at or prior to the time the representation and
warranty in this Section 4.13.2 is being made, the representations and
warranties of the Major Project Participants contained in the Operative
Documents (other than this Agreement) are true and correct in all material
respects except where the untruth of such representation and warranty could not
reasonably be expected to have a Material Adverse Effect.

      4.14  DISCLOSURE.

            Neither this Agreement nor any certificate or other documentation
(other than the Project Budgets, the Annual Operating Budgets or the Base Case
Project Projections) furnished or verified by a Borrower Party to the Lead
Arrangers, Administrative Agent, Collateral Agent, or the Lenders, or to any
consultant submitting a report to Administrative Agent, the Lead Arrangers or
the Lenders, by or, to Borrower's knowledge, on behalf of any Borrower Party
with respect to the Projects, the Borrower Parties or any other Calpine Entity
or in connection with the transactions contemplated by this Agreement, the other
Credit Documents or the design, construction, description or operation of the
Projects, contained (at the time of delivery or verification thereof) any untrue
statement of a material fact or omitted (at the time of delivery or verification
thereof) to state a material fact necessary in order to make the statements
contained herein or therein not misleading under the circumstances in which they
were made at the time such statements were made (other than any information that
was corrected or updated in writing to the Lead Arrangers prior to the Closing
Date). As of the Closing Date, there is no fact known to Borrower which has had
or could reasonably be expected to have a Material Adverse Effect which has not
been disclosed in writing to Administrative Agent, the Lead Arrangers,

                                       50
<PAGE>

Collateral Agent, or the Lenders by or on behalf of any Borrower Party on or
prior to the Closing Date in connection with the transactions contemplated
hereby.

      4.15  PRIVATE OFFERING BY BORROWER.

            Assuming that each Lender is acquiring its Notes for investment
purposes only, and not for purposes of resale or distribution thereof except for
assignments or participations as provided in Sections 9.13 and 9.14, no
registration of such Notes under the Securities Act of 1933, as amended, or
under the securities laws of the States of Texas, Minnesota or New York is
required in connection with the offering, issuance and sale of such Notes
hereunder. No Borrower Party or anyone acting on its behalf has taken, or will
take, any action which would subject the issuance or sale of any Notes to
Section 5 of the Securities Act of 1933, as amended.

      4.16  TAXES.

            (a) Each Borrower Party has timely filed, or caused to be filed, all
federal, state and local tax returns and reports that it is required to file,
has paid all taxes, material assessments, utility charges, fees and other
governmental charges it is required to pay to the extent due (other than those
taxes that it is contesting in good faith and by appropriate proceedings in
accordance with the requirements of Section 5.20). Borrower knows of no proposed
tax assessment against any Borrower Party or any other Calpine Entity which
could reasonably be expected to have a Material Adverse Effect (other than those
proposed tax assessments that any Borrower Party is contesting in good faith and
by appropriate proceedings in accordance with the requirements of Section 5.20).
In either case, to the extent such taxes, assessments, charges and fees are not
due, the applicable Calpine Entity has established reserves that are adequate
for the payment thereof in conformity with GAAP.

            (b) At all times since its formation, each Borrower Party has been
an entity with a single owner (with the exception of FEC which has two owners)
that is disregarded as separate from its owner for federal tax purposes. No Form
8832 has ever been filed with respect to any Borrower Party as other than a
disregarded entity and no such election shall have been made.

            (c) No Borrower Party has liability for the taxes of any Person
(other than such Borrower Party) (i) under Treasury Regulations Section 1.1502-6
(or any similar provision of state, local or foreign law), (ii) as a transferee
or successor, (iii) by contract, or (iv) otherwise.

            (d) No Borrower Party intends to treat the Loans (including the
incurrence thereof) as being a "reportable transaction" (within the meaning of
Treasury Regulation Section 1.6011-4).

      4.17  GOVERNMENTAL REGULATION.

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<PAGE>

            None of Borrower Parties, Administrative Agent, Collateral Agent, or
any Lender, nor any Affiliate of any of them will, solely as a result of the
construction, ownership, leasing or operation of the Projects, the sale of
electricity, steam, capacity or ancillary services therefrom or the entering
into any Operative Document in respect of the Projects or any transaction
contemplated hereby or thereby, be subject to, or not exempt from, regulation
under the FPA or PUHCA or under state laws and regulations respecting the rates
or the financial or organizational regulation of electric utilities, except that
(a) MEC is subject to the compliance requirements under PUHCA applicable to an
Exempt Wholesale Generator and an owner of an Eligible Facility, (b) each of MEC
and CES is a "public utility" subject to FERC jurisdiction under the FPA with
authority to sell wholesale electric power at market based rates, and with all
waivers of regulations and blanket authorizations as are customarily granted by
FERC to a "public utility" that sells wholesale electric power and ancillary
services at market based rates, (c) FEC is subject to the requirements under
PURPA and the regulations of FERC promulgated thereunder, as amended from time
to time, necessary to be a Qualifying Facility, (d) FEC is subject to state laws
and regulations respecting the rates or the financial or organizational
regulation of electric utilities to the extent contemplated by 18 C.F.R. Section
292.602(c), and (e) the exercise of remedies, as provided for under the
Collateral Documents, with respect to MEC and the Mankato Project may be subject
to Section 32 of PUHCA and Section 203, 204 and/or 205 of the FPA. Except to the
extent provided in the first sentence of this Section 4.17, no Borrower Party
will be deemed by any Governmental Authority having jurisdiction to be subject
to financial, organizational or rate regulation as an "electric utility",
"electric corporation", "electrical company", "public utility", "holding
company", or "public utility holding company" or any similar Person under any
applicable Governmental Rule then in effect.

      4.18  REGULATION U, ETC.

            No Borrower Party is engaged principally, or as one of its principal
activities, in the business of extending credit for the purpose of "buying",
"carrying" or "purchasing" margin stock (each as defined in Regulations T, U or
X of the Federal Reserve Board), and no part of the proceeds of the Loans or the
Project Revenues will be used by any Borrower Party for the purpose of "buying",
"carrying" or "purchasing" any such margin stock or for any other purpose which
violates the provisions of the regulations of the Federal Reserve Board.

      4.19  BUDGETS; PROJECTIONS.

            Borrower has prepared the Project Budgets, the Annual Operating
Budgets and the Base Case Project Projections and is responsible for developing
the assumptions on which such Project Budgets, Annual Operating Budgets and the
Base Case Project Projections are based; and such Project Budgets, Annual
Operating Budgets and the Base Case Project Projections (a) as of the date
delivered, updated or supplemented are based on reasonable assumptions
(including as to all legal and factual matters material to the estimates set
forth therein), (b) as of the date delivered, updated or supplemented are
consistent in all material respects with the provisions of the Project Documents
executed on or prior to such date, and (c) as of the date delivered, updated or
supplemented indicate that the estimated aggregate Project Costs will not exceed
Available Construction Funds.

                                       52
<PAGE>

      4.20  FINANCIAL STATEMENTS.

            In the case of each financial statement of each Borrower Party
(other than the financial statements delivered by any Borrower Party pursuant to
Sections 3.1.16(a) and (e)) and accompanying information delivered by each
Borrower Party under the Credit Documents (insofar as financial statements
relate to each such Borrower Party), each such financial statement and
information has been prepared in conformity with GAAP and fairly presents, in
all material respects, the financial position (on a consolidated and, where
applicable, consolidating basis) of each Borrower Party, as the case may be,
described in such financial statements as at the respective dates thereof and
the results of operations and cash flows (on a consolidated and, where
applicable, consolidating basis) of each Borrower Party, as the case may be,
described therein for each of the periods then ended, subject, in the case of
any such unaudited financial statements, to changes resulting from audit and
normal year-end adjustments and the absence of footnote disclosure. Except for
obligations under the Operative Documents to which it is a party, each Borrower
Party does not (and will not following the funding of the initial Loans) have
any contingent obligations, unmatured liabilities, contingent liability or
liability for taxes, long-term lease or forward or long-term commitment required
to be shown under GAAP that is not reflected in the foregoing financial
statements or the notes thereto and which in any such case is material in
relation to the business, results of operations, properties, financial condition
or prospects of each Borrower Party.

      4.21  NO DEFAULT.

            No Event of Default or Inchoate Default which has not been disclosed
to Administrative Agent in writing has occurred and is continuing.

      4.22  ORGANIZATIONAL ID NUMBER; LOCATION OF COLLATERAL.

            4.22.1 (a) Borrower's organizational identification number is
3899075; (b) FEC's organizational identification number is 3754988; (c) FEC-GP's
organizational identification number is 3754613; (d) FEC-LP's organization
identification number is 3754610; and (e) MEC's organizational identification
number is 3861873.

            4.22.2 All of the Collateral (other than the Accounts, the
membership interests in any Borrower Party, general intangibles and the Siemens
Turbines) is, or when installed pursuant to the Project Documents will be,
located on the Sites or the Easements or at the applicable Borrower Party's
address set forth in Section 11.1; provided that certain equipment may be
temporarily removed from the Sites and/or Easements from time to time in the
ordinary course of business and equipment owned by Borrower may be located at
other sites as indicated in writing to the Collateral Agent, who shall have the
right to inspect such equipment from time to time.

      4.23  TITLE AND LIENS.

                                       53
<PAGE>

            Borrower has good, legal and valid title to the Collateral in which
it grants the Collateral Agent a Lien. FEC has good and indefeasible title to
the Collateral in which it grants the Collateral Agent a Lien and a valid and
enforceable leasehold interest in the FEC Site and its interest in the
Easements, in each case free and clear of all Liens, encumbrances or other
exceptions to title other than Permitted Liens. MEC has good, marketable and
insurable fee simple interest in the Collateral in which it grants the
Collateral Agent a Lien, in each case free and clear of all Liens, encumbrances
or other exceptions to title other than Permitted Liens. The Lien of the
Collateral Documents constitutes a valid and subsisting first priority lien of
record on all the FEC Mortgaged Property described in the FEC Deed of Trust and
MEC Mortgage described in the MEC Mortgage and a first priority perfected
security interest in all the personal property described in the Collateral
Documents, subject to no Liens except Permitted Liens.

      4.24  INTELLECTUAL PROPERTY.

            Except as disclosed in Exhibit G-5:

            (a) Each Borrower Party owns, possesses or has entered into
contracts with others who possess all licenses, permits, franchises,
authorizations, patents, copyrights, service marks, trademarks and trade names,
or rights thereto, that are necessary for the operation of its business, without
known conflict with the rights of others.

            (b) No product of any Borrower Party infringes in any material
respect any license, permit, franchise, authorization, patent, copyright,
service mark, trademark, trade name or other right owned by any other Person.

            (c) There is no violation by any Person of any right of any Borrower
Party with respect to any patent, copyright, service mark, trademark, trade name
or other right owned or used by any Borrower Party.

            (d) There exists no pending or threatened claim or litigation
against or affecting any Borrower Party contesting its right to sell or use any
such product, process, method, substance, part or other material.

      4.25  COLLATERAL.

            The respective liens and security interests granted to Collateral
Agent (for the benefit of the Secured Parties) pursuant to the Collateral
Documents (a) constitute as to personal property included in the Collateral a
valid security interest, and (b) constitute as to the FEC Mortgaged Property and
the MEC Mortgaged Property included in the Collateral a valid lien and security
interest in the FEC Mortgaged Property and the MEC Mortgaged Property,
respectively. The security interest granted to Collateral Agent (for the benefit
of the Secured Parties) pursuant to the Collateral Documents in the Collateral
consisting of personal property will be perfected (i) with respect to any
property that can be perfected by filing, upon the filing of financing
statements in the filing offices identified in Exhibit D-9, (ii) with respect to
any property that can be perfected by control, upon execution of the Control
Agreements and the Depositary Agreements, and (iii) with respect to any property
(if any) that can be perfected by possession,

                                       54
<PAGE>

upon Collateral Agent receiving possession thereof, and in each case such
security interest will be, as to Collateral perfected under the UCC or otherwise
as aforesaid, superior and prior to the rights of all third Persons now existing
or hereafter arising whether by way of mortgage, lien, security interests,
encumbrance, assignment or otherwise, except (i) Title Exceptions and Permitted
Liens described in clauses (a) and (e) of the definition of "Permitted Liens",
and (ii) to the extent required by Governmental Rule, those matters described in
clauses (b), (c) and (g) of the definition of "Permitted Liens". Except to the
extent possession of portions of the Collateral is required for perfection, all
such action as is necessary has been taken to establish and perfect Collateral
Agent's rights in and to the Collateral in existence on such date to the extent
Collateral Agent's security interest can be perfected by filing, including any
recording, filing, registration, giving of notice or other similar action. As of
the Closing Date, no filing, recordation, re-filing or re-recording other than
those listed on Exhibit D-9 hereto is necessary to perfect and maintain the
perfection of the interest, title or Liens of the Collateral Documents, and on
the Closing Date all such filings or recordings will have been made to the
extent Collateral Agent's security interest can be perfected by filing. Each
Borrower Party has properly delivered or caused to be delivered, or provided
control, to Collateral Agent or Depositary Agent with respect to all Collateral
that permits perfection of the Lien and security interest described above by
possession or control.

      4.26  SUFFICIENCY OF PROJECT DOCUMENTS.

            4.26.1 Other than those that can be reasonably expected to be
commercially available when and as required, the services to be performed, the
materials to be supplied and the real property interests, the Easements and
other rights granted, or to be granted, pursuant to the Project Documents in
effect as of such date:

            (a) comprise all of the property interests necessary to secure any
right material to the acquisition, leasing, development, construction,
installation, completion, operation and maintenance of the Projects in
accordance with all Legal Requirements and in accordance with the Project
Schedule, all without reference to any proprietary information not owned by or
available to any Borrower Party;

            (b) are sufficient to enable the Projects to be located, constructed
and operated on the Sites and the Easements; and

            (c) provide adequate ingress and egress from the Sites for any
reasonable purpose in connection with the construction and operation of the
Projects.

            4.26.2 There are no services, materials or rights required for the
construction or operation of the Projects in accordance with the Construction
Contracts, the other Major Project Documents and the assumptions that form the
basis of Base Case Project Projections, other than those (a) to be provided
under the Project Documents, or (b) that can reasonably be expected to be
commercially available at or for delivery to the Sites on commercially
reasonable terms

                                       55
<PAGE>

consistent with the then-current Project Budget, the then-current Annual
Operating Budget and the Base Case Project Projections.

      4.27  UTILITIES.

            All utility services necessary for the construction and the
operation of each Project for its intended purposes are available at each such
Project or can reasonably be expected to be so available as and when required
upon commercially reasonable terms consistent with the then-current Project
Budget, Project Schedule, the then-current Annual Operating Budget and the Base
Case Project Projections.

      4.28  OTHER FACILITIES.

            4.28.1 All roads necessary for the construction and full utilization
of each Project for its intended purposes have either been completed or the
applicable Borrower Party possesses the necessary rights of way therefor, other
than rights of way that can reasonably be expected to be available on
commercially reasonable terms as and when needed.

            4.28.2 Each Borrower Party possesses, or the counterparties to the
Major Project Documents (including the Power Purchase Agreement and the Capacity
Sales Agreement) pursuant to which interconnection facilities will be
constructed if necessary and, if applicable, operated for the benefit of each
Project, possess and are obligated to provide or make available to the
applicable Project Company, all necessary equipment, easements, rights of way,
licenses, agreements and/or other rights, as necessary, for the construction,
interconnection and utilization of the interconnection facilities (including
fuel, water, wastewater and electrical).

      4.29  PROPER SUBDIVISION.

            The MEC Site has been subdivided or entitled to exception therefrom.
For all purposes, the MEC Site may be mortgaged, conveyed and otherwise dealt
with as separate legal lot or parcel. FEC's leasehold interest in the FEC Site
may be mortgaged and conveyed.

      4.30  FLOOD ZONE DISCLOSURE.

            No material portion of the Collateral includes Improvements that are
or will be located in an area that has been identified by the Federal Emergency
Management Agency as an area having special flood or mudslide hazards and in
which flood insurance has been made available under the National Flood Insurance
Act of 1968, as amended.

      4.31  TAX SHELTER REGULATIONS.

            Borrower does not intend to treat the Loans and related transactions
as being a "reportable transaction" (within the meaning of Treasury Regulation
section 1.6011-4). If Borrower determines to take any action inconsistent with
such intention, it will promptly notify

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the Administrative Agent thereof. Borrower acknowledges that the Administrative
Agent or one or more of the Lenders may treat the Loans as part of a transaction
that is subject to Treasury Regulation section 1.6011-4 or section 301.6112 - 1
(or any successor sections), and the Administrative Agent and such Lender or
Lenders, as applicable, may file such Internal Revenue Service forms or maintain
such lists and other records as they may determine is required by such Treasury
Regulations.

                                    ARTICLE 5
                              AFFIRMATIVE COVENANTS

            Borrower covenants and agrees that until the repayment in full in
cash of all of Borrower's Obligations (other than those contingent Obligations
that are intended to survive the termination of this Agreement or the other
applicable Credit Documents), return and cancellation of the Security Fund LC
and the expiration or termination of all Commitments and Interest Rate
Agreements to which any Secured Party is a party, Borrower shall, or as
applicable shall cause (whether directly or through FEC-GP and FEC-LP) the
applicable Project Company to:

      5.1   USE OF PROCEEDS, EQUITY CONTRIBUTIONS AND PROJECT REVENUES.

            5.1.1 Proceeds and Equity Contributions.

            (a) Unless otherwise applied by Administrative Agent pursuant to
this Agreement and the other Credit Documents, (i) Borrower shall on-lend
proceeds of the Construction Loans to the Project Companies in accordance with
an approved drawdown request, (ii) each Project Company shall deposit the
proceeds of the Construction Loans and any cash equity contributions (including
Additional Borrower Equity) in its Construction Account, (iii) subject to
Section 5.1.1(b), use them solely to pay Project Costs, and in accordance with
the Credit Documents.

            (b) Notwithstanding anything to the contrary herein, Borrower shall
be permitted to use the proceeds of the initial Construction Loans, the Dow
Change Order Drawing and the True-Up Drawing, to reimburse Sponsor for (i)
Project Costs paid (A) by Sponsor, or (B) by a Project Company with the proceeds
of cash or in-kind equity contributions made by Sponsor to such Project Company
(in each case, as verified by the Independent Engineer) on or before the date of
the initial Construction Loan, and (ii) Construction Loans made pursuant to
Section 5.17 to reimburse Sponsor for Drawstop Funds in accordance with Section
5.17.

            5.1.2 Revenues. Unless otherwise applied by Administrative Agent or
Collateral Agent pursuant to the terms of this Agreement or the other Credit
Documents, each Borrower Party shall apply any Project Revenues, equity
contributions, Loan proceeds, Insurance Proceeds, Eminent Domain Proceeds and
damage payments solely for the purpose, and in the order and manner, provided
for in the Depositary Agreements.

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      5.2   PAYMENT.

            5.2.1 Credit Documents. Borrower shall pay all sums due under this
Agreement and the other Credit Documents to which it is a party according to the
terms hereof and thereof. Each Project Company shall pay all sums due under the
Intercompany Note to which it is a party, to the extent of funds available
therefor at the applicable Waterfall Levels under the Project Company Depositary
Agreements.

            5.2.2 Project Documents. Each Project Company shall pay all of its
obligations due under the Project Documents, howsoever arising, as and when due
and payable, except (a) such as may be contested in good faith or as to which a
bona fide dispute may exist; provided that adequate cash reserves have been
established in conformity with GAAP, or Administrative Agent is satisfied in its
reasonable discretion that non-payment of such obligation pending the resolution
of such contest or dispute will not in any way endanger its Project or result in
a Material Adverse Change or that provision is made to the satisfaction of
Administrative Agent in its reasonable discretion for the posting of security
(other than the Collateral) for or the bonding of such obligations or the prompt
payment thereof in the event that such obligation is payable, (b) each Project
Company's trade payables which shall be paid in the ordinary course of business
and (c) such failures as could not reasonably be expected to have a Material
Adverse Effect.

      5.3   WARRANTY OF TITLE.

            (a) MEC shall maintain good, marketable and insurable fee simple
interest in the MEC Site, (b) FEC shall maintain good, indefeasible and
insurable leasehold interest in the FEC Site, and (c) MEC shall maintain (i)
good, marketable and insurable easement interest in the MEC Easements, and (ii)
good, legal and valid title to all of its other respective material properties
and assets (other than properties and assets disposed of in the ordinary course
of business or otherwise disposed of in accordance with Section 6.4) and (d) FEC
shall maintain (i) a good, indefeasible and insurable easement interest in the
FEC Easements, and (ii) good, legal and valid title to all of its other
respective material properties and assets (other than properties and assets
disposed of in the ordinary course of business or otherwise disposed of in
accordance with Section 6.4), in each case free and clear of all Liens other
than Permitted Liens.

      5.4   NOTICES.

            Each Borrower Party shall promptly, upon acquiring notice or giving
notice (except as otherwise specified below), as the case may be, or obtaining
knowledge thereof, give written notice (with copies of any underlying notices,
papers, files or related documentation) to Administrative Agent of:

            5.4.1 any litigation pending or, to each Borrower Party's knowledge,
threatened in writing against any Borrower Party involving claims against any
Borrower Party or either Project in excess of $500,000 individually or
$1,000,000 in the aggregate per calendar year or involving any injunctive,
declaratory or other equitable relief, such notice to include, if requested

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<PAGE>

in writing by Administrative Agent, copies of all papers filed in such
litigation and to be given monthly if any such papers have been filed since the
last notice given;

            5.4.2 any dispute or disputes for which written notice has been
received by any Borrower Party which may exist between such Borrower Party and
any Governmental Authority and which involve (a) claims against such Borrower
Party which exceed $500,000 individually or $1,000,000 in the aggregate per
calendar year, (b) injunctive or declaratory relief, or (c) revocation,
modification, failure to renew or the like of any Applicable Permit;

            5.4.3 any Event of Default or Inchoate Default;

            5.4.4 any casualty, damage or loss, whether or not insured, through
fire, theft, other hazard or casualty, or any act or omission of (a) any
Borrower Party, its employees, agents, contractors, consultants or
representatives in excess of $500,000 for any one casualty or loss or $1,000,000
in the aggregate in any calendar year, or (b) to each Borrower Party's
knowledge, any other Person if such casualty, damage or loss could reasonably be
expected to have a Material Adverse Effect;

            5.4.5 any cancellation, suspension or material change in the terms,
coverage or amounts of any insurance described in Exhibit K;

            5.4.6 any contractual obligations incurred by any Borrower Party
exceeding $500,000 per year in the aggregate for the Projects, not including any
obligations incurred pursuant to the Credit Documents or the Project Documents
or any obligation contemplated in the then-current Project Budget or the
then-current Annual Operating Budget;

            5.4.7 any intentional withholding of compensation to, or any right
to withhold compensation claimed by, any Major Project Participant or pursuant
to any Major Project Document, other than (a) retention provided by the express
terms of any such contracts and (b) any such withholding or right which exceeds
$500,000 individually or $1,000,000 in the aggregate;

            5.4.8 any (a) termination (other than expiration in accordance with
its terms and any applicable Consent) or material default of which any Borrower
Party has knowledge or written notice thereof under any Major Project Document,
and (b) material Project Document Modification (with copies of all such Project
Document Modifications whether or not requiring approval of Administrative Agent
or the Majority Lenders pursuant to Section 6.12);

            5.4.9 any written claim of events of force majeure, change orders in
excess of $500,000, or any Borrower Party caused delay under the Construction
Contracts or any other Major Project Document (including claims therefor
regardless of whether such Borrower Party believes such claim has merit) and, to
the extent requested in writing by Administrative Agent, copies of invoices or
statements which are reasonably available to such Borrower Party under the
Construction Contracts or any other Major Project Document, certified by an
authorized representative of such Borrower Party, together with a copy of any
supporting documentation,

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<PAGE>

schedule, data or affidavit delivered under the Construction Contracts or such
other Major Project Document;

            5.4.10 within one Banking Day after any Borrower Party receives
notice pursuant to any Major Project Document of the proposed conduct of
Performance Tests for either Project or material portion thereof and promptly
prior to the proposed conduct of any subsequent Performance Tests, written
notice of such proposed Performance Tests;

            5.4.11 after giving effect to the environmental indemnity provided
by Dow under Section 17.2.2 of the FEC Ground Lease and Dow's curative actions
performed under Section 17.3.2 of the FEC Ground Lease, any (a) material
noncompliance with any Hazardous Substance Law or any material Release of
Hazardous Substances on or from the Sites, Improvements, other FEC Mortgaged
Property or other MEC Mortgaged Property that has resulted or could reasonably
be expected to result in personal injury or material property damage or to have
a Material Adverse Effect, (b) pending or, to each Borrower Party's knowledge,
threatened in writing, Environmental Claim against any Borrower Party or, to
each Borrower Party's knowledge, any of its Affiliates, contractors, lessees or
any other Persons, arising in connection with their occupying or conducting
operations on or at the Projects, the Sites, the Improvements, other FEC
Mortgaged Property or other MEC Mortgaged Property which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect, or
(c) underground tank, whether operative or temporarily or permanently closed,
located on the Sites, Improvements, other FEC Mortgaged Property or other MEC
Mortgaged Property;

            5.4.12 promptly, but in no event later than 30 days prior to the
time any Person will become a member of any of Borrower Parties or the
occurrence of any other change in or transfer of ownership interests in any
Borrower Party or the Projects, notice thereof, which notice shall identify such
Person and such Person's interest in the Borrower Party or shall describe, in
reasonable detail, such other change or transfer;

            5.4.13 any material written notices, reports or information
(including any notice that either Project has achieved any completion milestone
under the Construction Contracts, the Power Purchase Agreement, or the Capacity
Sales Agreement) delivered to or received by any Borrower Party or CCMCI from,
the parties to the Major Project Documents;

            5.4.14 initiation of any condemnation proceedings involving either
Project or either Site or any material portion thereof;

            5.4.15 promptly, but in no event later than 15 Banking Days after
any Borrower Party has knowledge of the execution and delivery thereof, a copy
of each Additional Project Document;

            5.4.16 promptly, but in no event later than 30 days after the
receipt thereof by any Borrower Party, copies of (a) all Applicable Permits
obtained by such Borrower Party after the Closing Date, (b) any material
amendment, supplement or other modification to any Applicable Permit received by
any Borrower Party after the Closing Date, and (c) all material

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notices relating to either Project received by any Borrower Party from, or
delivered by such Borrower Party to, any Governmental Authority;

            5.4.17 promptly, but in no event later than five days after
occurrence thereof, notice of any forced outage with an anticipated duration in
excess of five days;

            5.4.18 within five Banking Days of receipt thereof, copies of any
recovery plan ("Remedial Plan") proposed by the Construction Contractor pursuant
to Section 3.3.3 of either Construction Contract for review by Administrative
Agent and the Independent Engineer;

            5.4.19 (a) within 10 days prior to the occurrence of a Reportable
Event with respect to any ERISA Plan, (b) promptly, but in no event later than
15 days, after the withdrawal of any Calpine Entity or any ERISA Affiliate from
a Multiemployer Plan, (c) promptly, but in no event later than five days, after
the PBGC institutes any proceedings to terminate any ERISA Plan or takes action
to appoint a trustee of any ERISA Plan under Section 4042 of ERISA, (d)
promptly, but in no event later than 10 days, after the occurrence of any event
which could give rise to a lien in favor of the IRS or the PBGC under any ERISA
Plan, (e) promptly, but in no event later than 30 days, after any Calpine Entity
or any ERISA Affiliate has knowledge that a Multiemployer Plan is in
reorganization, is insolvent or intends to terminate under Section 4041A of
ERISA, and (f) promptly, but in no event 10 days prior to the date, any Calpine
Entity or any ERISA Affiliate shall fail to fulfill its obligations under the
minimum funding standards of ERISA or the Code for any ERISA Plan; and

            5.4.20 promptly, but in no event later than the time period
specified in the Construction Contracts, notice of any Material Adverse Change
in the Project Schedule or in the economics or feasibility of the Project
Companies developing, constructing, owning or operating the Projects, or any
other event or circumstance which could reasonably be expected to have a
Material Adverse Effect.

      5.5   FINANCIAL STATEMENTS.

            5.5.1 Each Borrower Party shall deliver or cause to be delivered to
Administrative Agent, in form and detail reasonably satisfactory to
Administrative Agent (except where GAAP is specifically required), except that
where a specified financial statement is publicly available due to the issuer's
filings with the United States Securities and Exchange Commission, Borrower may
so notify Administrative Agent and the specified financial statement will not be
required to be delivered hereunder:

            (a) as soon as practicable and in any event within 120 days after
the close of each applicable fiscal year (commencing from fiscal year 2004 for
each Borrower Party except for the Borrower, and commencing from fiscal year
2005 for Borrower), unaudited annual financial statements of, without
duplication, each Borrower Party and the related statements of income, cash
flow, and shareholders' or members' equity (as applicable) for such fiscal year,
setting forth in each case in comparative form corresponding unaudited figures
from the

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preceding fiscal year, all prepared in accordance with GAAP (subject to changes
resulting from audit and normal year-end adjustments and the absence of footnote
disclosure);

            (b) as soon as practicable and in any event within 60 days after the
end of the first, second and third quarterly accounting periods of its fiscal
year, unaudited quarterly financial statements of Sponsor. Such financial
statements shall include the related statements of income, cash flow, and
shareholders' equity for such quarterly period and (in the case of second and
third quarterly periods) for the portion of fiscal year ending with the last day
of such quarterly period, setting forth in each case in comparative form
corresponding unaudited figures from the preceding fiscal year, all prepared in
accordance with GAAP (subject to changes resulting from audit and normal
year-end adjustments and the absence of footnote disclosure); and

            (c) as soon as practicable and in any event within 120 days after
the close of each applicable fiscal year (commencing from fiscal year 2005),
unaudited pro forma income statement, balance sheet, cash flow statement and
reconciliation of net worth of, without duplication, each Borrower Party and the
related statements of income, cash flow, and shareholders' or members' equity
(as applicable) for such fiscal year, setting forth in each case in comparative
form corresponding unaudited figures from the preceding fiscal year, all
prepared in accordance with GAAP (subject to changes resulting from audit and
normal year-end adjustments and the absence of footnote disclosure).

            5.5.2 Cause to be delivered, along with such financial statements of
each Borrower Party, a certificate signed by a Responsible Officer of such
Borrower Party, as applicable, certifying that (a) such Responsible Officer has
made or caused to be made a review of the transactions and financial condition
of such Person during the relevant fiscal period and that such review has not,
to such Responsible Officer's knowledge, disclosed the existence of any event or
condition which constitutes an Event of Default or Inchoate Default, or if any
such event or condition existed or exists, the nature thereof and the corrective
actions that such Person has taken or proposes to take with respect thereto, (b)
such Person is in compliance with all applicable material provisions of each
Credit Document to which such Person is a party or, if such is not the case,
stating the nature of such non-compliance and the corrective actions which such
Person has taken or proposes to take with respect thereto, and (c) such
financial statements are true and correct in all material respects and that no
material adverse change in the consolidated assets, liabilities, operations, or
financial condition of such Person has occurred since the date of the
immediately preceding financial statements provided to Administrative Agent or,
if a material adverse change has occurred, the nature of such change.

      5.6   BOOKS, RECORDS, ACCESS.

            Borrower and each Project Company shall maintain, or cause to be
maintained, adequate books, accounts and records with respect to itself and its
Project, as applicable, and prepare all financial statements required hereunder
in accordance with GAAP (subject, in the case of unaudited financial statements,
to changes resulting from audit and normal year-end adjustments and the absence
of footnote disclosure) and in compliance with the regulations of

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any Governmental Authority having jurisdiction thereof; and, subject to
requirements of Governmental Rules, safety requirements and existing
confidentiality restrictions imposed upon any Borrower Party by any other
Person, permit employees or agents of Administrative Agent and Independent
Engineer at any reasonable times and upon reasonable prior notice to Borrower,
the applicable Project Company, Construction Contractor, Dow or Operator, as
applicable, to inspect all of Borrower Parties' properties, including the Sites,
to examine or audit all of Borrower Parties' books, accounts and records and
make copies and memoranda thereof, to communicate with Borrower Parties'
auditors outside the presence of such Borrower Party and to witness any
Performance Tests.

      5.7   COMPLIANCE WITH LAWS, INSTRUMENTS, APPLICABLE PERMITS, ETC.

            Borrower and each Project Company shall promptly comply, or cause
compliance, in all material respects with all Legal Requirements (including
Legal Requirements and Applicable Permits relating to pollution control,
environmental protection, equal employment opportunity or employee benefit
plans, ERISA Plans and employee safety) with respect to itself and its Project,
as applicable, and make, or cause to be made, such alterations to its Project
and its Site as may be required for such compliance.

      5.8   REPORTS.

            5.8.1 Each Project Company shall promptly after receipt thereof,
deliver to Administrative Agent copies of all progress reports of the
construction of its Project issued by Construction Contractor and received by
any Borrower Party, supplementing such reports in reasonable detail with
material information not already included therein, detailing the progress of the
development and construction of its Project since the last prior report
hereunder (including any change orders then requested by any Borrower Party or
Construction Contractor).

            5.8.2 Each Project Company shall deliver to Administrative Agent
within 30 days of the end of each calendar quarter after the Project Commercial
Operation Date with respect to the Freeport Project and the Facility Acceptance
Date with respect to the Mankato Project, a summary operating report with
respect to each Project, which shall include, with respect to the period most
recently ended, the information set forth on the Template Operating Report, as
further described in the annotations thereto.

            5.8.3 Each Project Company shall provide to Administrative Agent
promptly upon request such reports, statements, lists of property, accounts,
budgets, forecasts and other information concerning its Project and, to the
extent reasonably available, the Major Project Participants and at such times as
Administrative Agent shall reasonably require, including such reports and
information as are reasonably required by the Independent Consultants.

            5.8.4 Each Project Company shall within 30 days after each annual
policy renewal date, deliver to Administrative Agent a certificate,
substantially in the form of Exhibit L, and otherwise in form and substance
reasonably satisfactory to Administrative Agent in

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consultation with the Insurance Consultant, certifying that the insurance
requirements of Exhibit K have been implemented and are being complied with in
all material respects.

            5.8.5 If in any year either Project Company's gross merchant
revenues (defined as gross revenues deriving from merchant sales, minus the cost
of fuel and other direct expenses) amount to less than 80% of the Project's
gross merchant revenues set forth in the Base Case Project Projections, then at
Borrower's expense, the Administrative Agent may commission the Power Market
Consultant or any replacement thereto, to perform a market study for the market
in which the Project is located.

      5.9  EXISTENCE, CONDUCT OF BUSINESS, PROPERTIES, ETC.

            Except as otherwise expressly permitted under this Agreement, each
Borrower Party shall (a) maintain and preserve its existence as a Delaware
limited liability company in the case of Borrower, a Delaware limited
partnership in the case of FEC, a Delaware limited liability company in the case
of FEC-GP, a Delaware limited liability company in the case of FEC-LP, and a
Delaware limited liability company in the case of MEC, and all material rights,
privileges and franchises necessary in the normal conduct of its business, (b)
subject to Section 5.2.2, perform (to the extent not excused by force majeure
events or the nonperformance of the other party and not subject to a good faith
dispute) all of its material contractual obligations under the Major Project
Documents to which it is party or by which it is bound, (c) maintain and, in the
case of FEC, cause Dow to maintain, all Applicable Permits, except to the extent
that any such failure to maintain could not reasonably be expected to have a
Material Adverse Effect, and (d) at or before the time that any Permit becomes
an Applicable Permit, obtain such Permit.

      5.10  DEBT SERVICE COVERAGE RATIO; DEBT TO EQUITY RATIO.

            (a) Following Term-Conversion, no later than 10 Banking Days after
each Principal Repayment Date, Borrower shall calculate and deliver to
Administrative Agent the Debt Service Coverage Ratio for the Calculation Period
for such Principal Repayment Date. The calculations of Debt Service Coverage
Ratios hereunder shall be used in determining the application and distribution
of funds pursuant to Section 6.6, and Section 3.3 of the Borrower Depositary
Agreement.

            (b) No later than five Banking Days prior to the making of any
True-Up Drawing pursuant to Section 3.3.3(d), or any distribution pursuant to
Section 3.1.5 of the FEC Depositary Agreement, Borrower shall calculate and
deliver to Administrative Agent the Debt to Equity Ratio (after giving effect to
the making of the Punchlist Drawing (if any), the Dow Change Order Drawing, (if
any) and the Dow Performance Test Drawing (if any)), together with such written
information as is necessary for Administrative Agent to verify the Debt to
Equity Ratio. Administrative Agent shall notify Borrower in writing of any
suggested corrections, changes or adjustments to such calculations within three
Banking Days after receipt. Borrower shall incorporate all such corrections,
changes or adjustments as are required

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<PAGE>

to accurately reflect the Debt to Equity Ratio, and (if necessary) shall
promptly recalculate and resubmit to Administrative Agent such calculations.

      5.11  INDEMNIFICATION.

            5.11.1 Each Borrower Party shall indemnify, defend and hold harmless
each Lead Arranger, Administrative Agent, Collateral Agent, LC Issuer, and each
Lender, and in their capacities as such, their respective officers, directors,
shareholders, controlling Persons, employees, agents and servants (collectively,
the "Indemnitees") from and against and reimburse the Indemnitees for:

            (a) any and all claims, obligations, liabilities, losses, damages,
injuries (to Person, property, or natural resources), penalties, stamp or other
similar taxes, actions, suits, judgments, costs and expenses (including
reasonable attorney's fees) of whatever kind or nature, whether or not well
founded, meritorious or unmeritorious, demanded, asserted or claimed against any
such Indemnitee (collectively, "Subject Claims") in any way relating to, or
arising out of or in connection with this Agreement or the other Operative
Documents to which it is a party, except for claims by a Calpine Entity against
an Indemnitee that are in whole or in part successful;

            (b) any and all Subject Claims arising in connection with the
Release or presence of any Hazardous Substances at either Project, whether
foreseeable or unforeseeable, including all costs of removal, investigation,
remediation and disposal of such Hazardous Substances, all reasonable costs
required to be incurred in (i) determining whether such Project is in
compliance, and (ii) causing such Project to be in compliance, with all
applicable Legal Requirements, all reasonable costs associated with claims for
damages to Persons or property, and reasonable attorneys' and consultants' fees
and court costs; and

            (c) any and all Subject Claims in any way relating to, or arising
out of or in connection with any claims, suits or liabilities against any
Borrower Party or any of its Affiliates to the extent related to the Projects or
the transactions contemplated by the Operative Documents.

            5.11.2 The foregoing indemnities shall not apply with respect to an
Indemnitee, to the extent arising as a result of the gross negligence or willful
misconduct of such Indemnitee, but shall continue to apply to other Indemnitees.

            5.11.3 The provisions of this Section 5.11 shall survive foreclosure
of the Collateral Documents and satisfaction or discharge of Borrower's
obligations hereunder and under the other Credit Documents to which it is a
party, and shall be in addition to any other rights and remedies of the Lead
Arrangers, Administrative Agent, Collateral Agent and any Lender.

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<PAGE>

            5.11.4 In case any action, suit or proceeding shall be brought
against any Indemnitee, such Indemnitee shall notify the applicable Borrower
Party of the commencement thereof, and such Borrower Party shall be entitled, at
its expense, acting through counsel reasonably acceptable to such Indemnitee, to
participate in, and, to the extent that such Borrower Party desires, to assume
and control the defense thereof. Such Indemnitee shall be entitled, at its
expense, to participate in any action, suit or proceeding the defense of which
has been assumed by such Borrower Party. Notwithstanding the foregoing, each
Borrower Party shall not be entitled to assume and control the defenses of any
such action, suit or proceedings if and to the extent that, in the reasonable
opinion of such Indemnitee and its counsel, such action, suit or proceeding
involves the potential imposition of criminal liability upon such Indemnitee or
a conflict of interest between such Indemnitee and such Borrower Party or
between such Indemnitee and another Indemnitee (unless such conflict of interest
is waived in writing by the affected Indemnitees), and in such event (other than
with respect to disputes between such Indemnitee and another Indemnitee) such
Borrower Party shall pay the reasonable expenses of such Indemnitee in such
defense.

            5.11.5 If a Borrower Party has assumed the defense of any action,
suit or proceeding pursuant to Section 5.11.4, such Borrower Party shall
promptly report to such Indemnitee on the status of such action, suit or
proceeding as material developments shall occur and from time to time as
requested by such Indemnitee (but not more frequently than every 60 days). Such
Borrower Party shall deliver to such Indemnitee a copy of each document filed or
served on any party in such action, suit or proceeding, and each material
document which such Borrower Party possesses relating to such action, suit or
proceeding.

            5.11.6 Notwithstanding each Borrower Party's rights hereunder to
control certain actions, suits or proceedings:

            (a) if any Indemnitee reasonably determines that failure to
compromise or settle any Subject Claim made against such Indemnitee is
reasonably likely to subject such Indemnitee to civil, criminal or
administrative penalties, to result in the loss, suspension or impairment of a
license or Permit held by such Indemnitee or to cause material damage to such
Indemnitee's reputation, such Indemnitee shall be entitled to compromise or
settle such Subject Claim; and

            (b) if the Majority Lenders reasonably determine that failure to
compromise or settle any Subject Claim made against such Indemnitee is
reasonably likely to have a Material Adverse Effect, Administrative Agent shall
provide the applicable Borrower Party with written notice of a proposed
compromise or settlement of such claim specifying in detail the nature and
amount of such proposed settlement or compromise. Such Borrower (and any other
relevant Calpine Entity) shall be deemed to have approved such proposed
compromise or settlement unless, within 30 days after the date such Borrower
receives such notice of intended compromise or settlement, such Borrower
provides the Lenders with a written legal analysis from counsel reasonably
acceptable to the Majority Lenders reasonably concluding that, based on the
magnitude of the Subject Claim, the legal basis for such Subject Claim, or the
cost of defending such Subject Claim, the amount of such proposed settlement or
compromise is not

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within a reasonable range of settlements or compromises for such Subject Claim,
and indicating, based on such factors, such counsel's view as to the appropriate
amount of a reasonable settlement or compromise for such Subject Claim (the
"Settlement Amount"). If the Lenders receive such legal analysis required by
this Section 5.11.6 within such 30-day period, then (i) the Majority Lenders may
elect to settle or compromise such Subject Claim and such Borrower Party shall
be responsible for the payment of all amounts of such compromise or settlement
up to 125% of the Settlement Amount, (ii) such Indemnitee shall be responsible
for payment of all amounts of such compromise or settlement in excess of such
125% limit, and (iii) such compromise or settlement shall be binding upon the
Borrower Party. If the Borrower Party does not provide such legal analysis
within such period, or if such legal analysis is not reasonable, in the
reasonable determination of the Majority Lenders, then such Indemnitee may
settle or compromise such Subject Claim (and such Borrower Party shall cause any
other relevant Calpine Entity to agree to the same) and shall be fully
indemnified by such Borrower Party therefor. The Lenders shall not otherwise
settle or compromise any such Subject Claim other than at their own expense.

            5.11.7 Upon payment of any Subject Claim by the applicable Borrower
Party pursuant to this Section 5.11 or other similar indemnity provisions
contained herein to or on behalf of an Indemnitee, such Borrower Party, without
any further action, shall be subrogated to any and all claims that such
Indemnitee may have relating thereto, and such Indemnitee shall cooperate with
such Borrower Party and such Borrower Party's insurance carrier and give such
further assurances as are necessary or advisable to enable such Borrower Party
vigorously to pursue such claims.

            5.11.8 Any amounts payable by a Borrower Party pursuant to this
Section 5.11 shall be regularly payable within 30 days after such Borrower Party
receives an invoice for such amounts from any applicable Indemnitee, and if not
paid within such 30-day period shall bear interest at the Default Rate.

            5.11.9 Notwithstanding anything to the contrary set forth herein,
such Borrower Party shall not, in connection with any one legal proceeding or
claim, or separate but related proceedings or claims arising out of the same
general allegations or circumstances, in which the interests of the Indemnitees
do not materially differ, be liable to the Indemnitees (or any of them) under
any of the provisions set forth in this Section 5.11 for the fees and expenses
of more than one separate firm of attorneys (which firm shall be selected by the
affected Indemnitees, or upon failure to so select, by Administrative Agent).

            5.11.10 If, for any reason whatsoever, the indemnification provided
under this Section 5.11 is unavailable to any Indemnitee or is insufficient to
hold it harmless to the extent provided in this Section 5.11, then provided such
payment is not prohibited by or contrary to any applicable Governmental Rule,
Legal Requirement or public policy, such Borrower Party shall contribute to the
amount paid or payable by such Indemnitee as a result of the Subject Claim in
such proportion as is appropriate to reflect the relative economic interests of
such Borrower Party and its Affiliates on the one hand, and such Indemnitee on
the other hand, in the matters contemplated by this Agreement as well as the
relative fault of such Borrower Party (and its

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Affiliates) and such Indemnitee with respect to such Subject Claim, and any
other relevant equitable considerations.

            5.11.11 Nothing in this Section 5.11 shall constitute a release by a
Borrower Party of any claims that it has as a result of a breach or a default by
any of the Secured Parties of their respective obligations under this Agreement
or any other Credit Document.

      5.12  EXEMPTION FROM REGULATION.

            Each applicable Project Company shall take or cause to be taken all
necessary or appropriate actions so that (a) (i) MEC will be an Exempt Wholesale
Generator and (ii) the Mankato Project will be an Eligible Facility at all times
hereunder, (b) the Freeport Project will be a Qualifying Facility at all times
hereunder, (c) except to the extent provided in the first sentence of Section
4.17, each Project shall not be subject to, or shall be exempt from, financial
or organizational regulation as a "public utility company" or "public utility
holding company" under PUHCA or financial, organizational or rate regulation as
a public utility under the laws of the State of Minnesota in the case of MEC or
Texas in the case of FEC, as presently constituted and as construed by the
courts of Minnesota and Texas, respectively, (d) MEC will be authorized to sell
electricity at market-based rates, with all waivers of regulations and blanket
authorizations as are customarily granted by FERC to entities with market-based
rate authority, and (e) FEC shall not be subject to regulation as a "public
utility" under the FPA.

      5.13  CONSTRUCTION OF THE PROJECTS.

            (a) Each Project Company shall cause its Project to be constructed
and equipped substantially in accordance with the Plans and Specifications, the
then-current Project Budget, the Construction Contracts and the other Major
Project Documents, as any of the same may be amended from time to time pursuant
to Section 6.12.

            (b) Each Project Company shall terminate, as applicable, either the
FEC Construction Contract or the MEC Construction Contract under the terms
provided for therein or in the applicable Consent, upon receipt of notice from
Administrative Agent upon direction of the Majority Lenders and after
consultation with the applicable Project Company that (i) there has been an
Event of Default (as defined in the applicable Construction Contract) by CCMCI
in the performance of its obligations under such Construction Contract, or (ii)
there has been a Bankruptcy Event of CCMCI or Sponsor and, as a result thereof,
in the opinion of the Majority Lenders, there exists the reasonable possibility
that CCMCI will not be able to perform all of its obligations under such
Construction Contract in a manner consistent with the terms thereof and of the
other Operative Documents (including Section 5.13(a) hereof). Upon any such
termination of a Construction Contract, the applicable Project Company shall
replace CCMCI as construction contractor with an entity approved by the Majority
Lenders, under a construction contract approved by the Majority Lenders.

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      5.14  OPERATION AND MAINTENANCE OF PROJECTS; ANNUAL OPERATING BUDGET.

            5.14.1 Each Project Company shall keep its Project, or cause the
same to be kept, in an operating condition consistent with the standard of care
set forth in the O&M Agreements, all Applicable Permits, Legal Requirements and
the Operative Documents, and make or cause to be made all repairs (structural
and non-structural, extraordinary or ordinary) necessary to keep the Projects in
such condition.

            5.14.2 Each Project Company shall operate its Project, or cause the
same to be operated, in a manner consistent with Prudent Utility Practices and
in compliance with the terms of the Power Purchase Agreement, including any MAPP
requirements as defined and described therein, in the case of the Mankato
Project and with the terms of the Dow Agreements, including any ERCOT
requirements as described therein, in the case of the Freeport Project.

            5.14.3 On or before the date that is 60 days prior to the later to
occur of the anticipated Facility Acceptance Date and the anticipated Project
Commercial Operation Date and thereafter 60 days prior to the beginning of each
subsequent calendar year, each Project Company shall submit an operating plan
and a budget, detailed by month, of anticipated revenues and anticipated
expenditures under all applicable Waterfall Levels, and, with respect to the
budget submitted for MEC, anticipated expenditures from the MEC Major
Maintenance Reserve Account, each such budget to include Debt Service, the
projected Debt Service Coverage Ratio, proposed dividend distributions, Major
Maintenance, reserves and all anticipated O&M Costs (including reasonable
allowance for contingencies) applicable to the applicable Project for the
ensuing calendar year (or, in the case of the initial Annual Operating Budgets,
partial calendar year) and, in the case of Major Maintenance in accordance with
Section 5.14.5, to the conclusion of the second full calendar year thereafter
(each such annual operating plan and budget, including the initial Annual
Operating Budgets, an "Annual Operating Budget"). Each Annual Operating Budget
for each Project shall be subject to the reasonable approval of Administrative
Agent acting in consultation with the Independent Engineer, such approval not to
be unreasonably withheld. Failure by Administrative Agent to approve or
disapprove any such draft Annual Operating Budget within 30 days after receipt
thereof shall be deemed to be an approval by Administrative Agent of such draft
as the final Annual Operating Budget for such Project. Borrower and each Project
Company shall consider in good faith Administrative Agent's suggestions in
preparation of a final Annual Operating Budget for each Project. Borrower shall,
or shall cause each Project Company to, prepare a final Annual Operating Budget
for each Project no less than 30 days in advance of the later to occur of the
anticipated Facility Acceptance Date and the Project Commercial Operation Date,
and each subsequent calendar year. The O&M Costs in each Annual Operating Budget
which are subject to escalation limitations in the Project Documents shall not,
absent extraordinary circumstances, be increased by more than the amounts
provided in such Project Documents.

            5.14.4 Each Project Company shall operate, or cause to be operated,
and maintain its Project, within amounts for (a) any Operating Budget Category
not to exceed 110%

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(on a year-to-date basis), and (b) for all Operating Budget Categories not to
exceed 105% (on a year-to-date basis), in each case of the amounts budgeted
therefor as set forth in the then-current Annual Operating Budget for the
applicable Project as approved or deemed approved by Administrative Agent;
provided, however, that (i) subject to Section 6.12, each Project Company may
propose an amendment to the Annual Operating Budget for such Project for
Administrative Agent's approval if at any time either Project Company cannot
comply with clause (a) or (b) above (and Administrative Agent shall consider
each such amendment in good faith and shall not unreasonably withhold its
consent to the approval of any such amendment), and (ii) the 110% limitation
shall not apply to Variable O&M Costs to the extent that such Variable O&M Costs
result from the dispatch of the applicable Project at levels in excess of the
levels contemplated by the then-current Annual Operating Budget for such
Project. Pending approval of any Annual Operating Budget or amendment thereto in
accordance with the terms of this Section 5.14.4, each Project Company shall use
its best efforts to operate and maintain its Project, or cause such Project to
be operated and maintained, within the then-current Annual Operating Budget for
such Project (it being acknowledged that if a particular calendar year's Annual
Operating Budget for such Project has not been approved by the time periods
provided in Section 5.14.3, then the then-current Annual Operating Budget for
such Project shall be deemed to be the Annual Operating Budget in effect for
such Project prior to the delivery of the final Annual Operating Budget for such
Project pursuant to Section 5.14.3); provided that the amounts specified therein
shall be increased or decreased to the extent specified in the MEC O&M/Major
Maintenance Agreement.

            5.14.5 Borrower shall also include in each Annual Operating Budget a
reassessment of (a) the Major Maintenance Reserve Requirement for the Mankato
Project, determined as provided in the definition of "Major Maintenance Reserve
Requirement" in the MEC Depositary Agreement, (b) the anticipated scheduling,
probable cost and a reasonably detailed description of each anticipated item of
Major Maintenance, through the next major turbine overhaul cycle for each
Project (the "Major Maintenance Plan"), and (c) the anticipated amounts which
will be on deposit in the MEC Major Maintenance Reserve Account and FEC Major
Maintenance Reserve Account during each year of the Major Maintenance Plan.
Borrower shall cause each Project Company to cause its Project to perform (or
cause to be performed) all Major Maintenance on its respective Project
substantially in accordance with the then-current Major Maintenance Plan and in
all material respects in accordance with the provisions of the Operative
Documents. The Major Maintenance Plan, including without limitation the
assumptions made in connection with calculating the Mankato Project's Major
Maintenance Reserve Requirement, shall be subject to approval by the
Administrative Agent in consultation with the Independent Engineer, such
approval not to be unreasonably withheld.

      5.15  PRESERVATION OF RIGHTS; FURTHER ASSURANCES.

            5.15.1 Each Project Company shall cause its Project to maintain in
full force and effect, perform (subject to Section 5.2) the obligations of the
applicable Project Company under, preserve, protect and defend the material
rights of such Project Company under and, subject to Section 5.13(b), take all
reasonable action necessary to prevent termination (except by expiration

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in accordance with its terms) of each and every Major Project Document,
including (where each such Project Company in the exercise of its business
judgment deems it proper) prosecution of suits to enforce any material right of
such Project Company thereunder and enforcement of any material claims with
respect thereto. Without limiting the foregoing, Borrower shall enforce all of
its rights under the Completion Undertaking Agreements and the Undertaking
Support LCs (to the extent the Undertaking Support LCs are held by Borrower) and
the Project Companies shall enforce all of their rights under the Construction
Contract Guaranties.

            5.15.2 From time to time, Borrower shall, and shall cause each
Borrower Party to, execute, acknowledge, record, register, deliver and/or file
all such notices, statements, instruments and other documents (including any
memorandum of lease or other agreement, financing statement, continuation
statement, certificate of title or estoppel certificate), relating to the Loans
stating the interest and charges then due and any known Events of Default or
Inchoate Defaults, and take such other steps as may be necessary or advisable to
render fully valid and enforceable under all applicable laws the rights, liens
and priorities of the Secured Parties with respect to all Collateral and other
security from time to time furnished under this Agreement and the other Credit
Documents or intended to be so furnished, in each case in such form and at such
times as shall be reasonably requested by Collateral Agent, and pay all
reasonable fees and expenses (including reasonable attorneys' fees) incident to
compliance with this Section 5.15.2.

            5.15.3 If any Borrower Party shall at any time acquire any real
property or leasehold or other interest in real property not covered by the FEC
Deed of Trust or the MEC Mortgage, then promptly upon such acquisition, execute,
deliver and record a supplement to such Deed of Trust, reasonably satisfactory
in form and substance to Collateral Agent, subjecting the real property or
leasehold or other interests to the Lien and security interest created by such
Deed of Trust. If reasonably requested by Collateral Agent, such Borrower Party
shall obtain an appropriate endorsement or supplement to, as applicable, the
Title Policy or the Term Title Policy insuring the Lien of the Secured Parties
in such additional property, subject only to Permitted Liens and other
exceptions to title approved by Collateral Agent.

            5.15.4 Upon the request of Administrative Agent or Collateral Agent,
the applicable Borrower Party shall execute and deliver all documents as shall
be necessary or that Administrative Agent or Collateral Agent (as the case may
be) shall reasonably request in connection with the rights and remedies of
Administrative Agent or Collateral Agent (as the case may be) and the Lenders
under the Operative Documents, and perform such other reasonable acts as may be
necessary to carry out the intent of this Agreement and the other Credit
Documents.

            5.15.5 The applicable Borrower Party shall take such action,
including the execution and filing of all such documents and instruments, as may
be necessary to effect and continue the appointment of Corporation Service
Company as its agent for service of process in full force and effect, or if
necessary by reason of any fact or condition relating to such agent, to replace
such agent (but only after having given notice and evidence thereof to
Administrative Agent).

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      5.16  ADDITIONAL CONSENTS.

            Upon the reasonable request of Administrative Agent, with respect to
(a) any Major Project Document (including any Additional Project Document)
entered into after the Closing Date and (b) any Major Project Document entered
into by a Replacement Obligor pursuant to Article 7, in each case, the
applicable Project Company shall cause the applicable counterparty or
Replacement Obligor, as applicable, to execute and deliver to Administrative
Agent a Consent in substantially the form of Exhibit E-1, with such changes as
are reasonably acceptable to Administrative Agent.

      5.17  DRAWSTOP FUNDS.

            Notwithstanding anything in this Agreement to the contrary, if,
during any period when Loans are not available to Borrower as a result of a
failure to meet any of the applicable conditions set forth in Article 3 hereof
or Article 3 of the Borrower Depositary Agreement, Sponsor pays Project Costs
through direct or indirect cash equity contributions provided to or on behalf of
Borrower (such amounts used to pay such Project Costs, as certified by the
Independent Engineer and confirmed by Administrative Agent, the "Drawstop
Funds"), then, at such time as such conditions shall be met and Construction
Loans shall become available to Borrower, Borrower shall be entitled to make a
Borrowing of Construction Loans in the amount of the Drawstop Funds, but in no
event in excess of the Available Construction Loan Commitment, and shall be
permitted to reimburse Sponsor for such excess cash equity contributions.

      5.18  MAINTENANCE OF INSURANCE.

            Borrower shall cause each Project Company to maintain or cause to be
maintained on its behalf in effect at all times the types of insurance required
pursuant to Exhibit K, in the amounts and on the terms and conditions specified
therein, from the quality of insurers specified in such Exhibit or other
insurance companies of recognized responsibility reasonably satisfactory to
Administrative Agent.

      5.19  TAXES, OTHER GOVERNMENT CHARGES AND UTILITY CHARGES.

            Subject to the second sentence of this Section 5.19 and except for
Permitted Liens, each Borrower Party shall timely file all tax returns and pay,
or cause to be paid, as and when due and prior to delinquency, all taxes,
assessments and governmental charges of any kind that may at any time be
lawfully assessed or levied against or with respect to any Borrower Party or
either Project, including sales and use taxes and real estate taxes, all utility
and other charges incurred in the operation, maintenance, use, occupancy and
upkeep of each Project, and all assessments and charges lawfully made by any
Governmental Authority for public improvements that may be secured by a Lien on
each Project. Borrower Parties may contest in good faith any such taxes,
assessments and other charges and, in such event, may permit the taxes,
assessments or other charges so contested to remain unpaid during any period,
including appeals, when Borrower Parties are in good faith contesting the same,
so long as (a) reserves to the extent required by GAAP have been established in
an amount sufficient to pay any such

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taxes, assessments or other charges, accrued interest thereon and potential
penalties or other costs relating thereto, or other adequate provision for the
payment thereof shall have been made and maintained at all times during such
contest, (b) enforcement of the contested tax, assessment or other charge is
effectively stayed for the entire duration of such contest, and (c) any tax,
assessment or other charge determined to be due, together with any interest or
penalties thereon, is promptly paid after resolution of such contest.

      5.20  EVENT OF EMINENT DOMAIN.

            If an Event of Eminent Domain shall occur with respect to any
Collateral, Borrower shall cause each Project Company (in the case of the
Freeport Project, insofar as consistent with Dow's rights under the Dow
Agreements), to (a) diligently pursue all its rights to compensation against the
relevant Governmental Authority in respect of such Event of Eminent Domain, (b)
not, without the written consent of the Administrative Agent (which consent
shall not be unreasonably withheld or delayed), compromise or settle any claim
against such Governmental Authority, and (c) pay or apply all Eminent Domain
Proceeds in accordance with Section 3.5 of each of the FEC Depositary Agreement
and the MEC Depositary Agreement. Each Borrower Party consents to, and agrees
not to object to or otherwise impede or impair, the participation of
Administrative Agent in any eminent domain proceedings, and each Borrower Party
shall from time to time deliver to Administrative Agent all documents and
instruments reasonably requested by it to permit such participation.

      5.21  INTEREST RATE PROTECTION.

            5.21.1 Compliance With Interest Rate Agreements. Within 45 days
after the initial Construction Loan, Borrower shall enter into one or more
Interest Rate Agreements with one or more Lenders (or Affiliates thereof) for
the period commencing on the date of such Interest Rate Agreements and ending on
the Term Loan Maturity Date, in a notional amount equal to at least 50% of the
anticipated amount of Loans projected to be outstanding during such period
(which anticipated amount (a) shall be determined by reference to the Base Case
Project Projections, (b) shall take into account any scheduled or projected
repayments or prepayments of Loans contemplated thereunder, and (c) shall
otherwise be determined in consultation with the Administrative Agent). Borrower
shall at all times comply with and maintain in full force and effect through the
end of such period such Interest Rate Agreements.

            5.21.2 Hedge Breaking Fees. To the extent required pursuant to the
terms of the Hedge Transactions, Borrower shall pay all costs, fees and expenses
incurred by Borrower in connection with any unwinding, breach or termination of
such Hedge Transactions ("Hedge Breaking Fees"), all to the extent provided in
and as calculated pursuant to the applicable Interest Rate Agreements.

            5.21.3 Security. Each Interest Rate Agreement provided by a Lender
(or an Affiliate thereof) hereunder, including all Hedge Transactions
thereunder, entered into in accordance with the terms of this Agreement, and all
Hedge Breaking Fees shall be and are

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hereby secured by any Collateral Documents, pari passu with the Loans. The
parties hereto agree that, for purposes of any sharing of Collateral under the
Collateral Documents, any Hedge Bank, in its capacity as a counterparty or
intermediary to the Interest Rate Agreements, shall be deemed to have made a
Loan to Borrower in an amount equal to the unpaid amount of any Hedge Breaking
Fees owed by Borrower to such Hedge Bank, under any such Hedge Transaction on
the date that an Early Termination Date (as defined in the applicable Interest
Rate Agreement) occurs. For purposes of any such Collateral sharing such Hedge
Bank shall be deemed a Lender under the Collateral Documents to the extent of
such deemed Loan. For purposes of voting on matters under this Agreement, such
Hedge Bank shall be deemed a Lender and hold votes to the extent specified in
the definition of "Proportionate Share."

      5.22  ADDITIONAL PERMITS.

            Promptly, but in no event later than 30 days after obtaining
knowledge of any Applicable Permit relating to any Borrower Party or Dow (other
than any such Permits set forth in Exhibit G-1 as of such time or otherwise
theretofore disclosed in writing to Administrative Agent), Borrower shall
provide written notice of such Applicable Permit to Administrative Agent.

      5.23  SPECIAL PURPOSE ENTITY.

            5.23.1 Borrower shall conduct its business solely in its own name
through its duly authorized directors, officers or agents so as not to mislead
others as to the identity of the company with which those others are concerned,
and particularly will avoid the appearance of conducting business on behalf of
any other entity or that its assets or the assets of any other entity are
available to pay the creditors of such other entity. Without limiting the
generality of the foregoing, all oral and written communications of Borrower,
including, without limitation, letters, invoices, purchase orders, contracts and
statements, will be made solely in the name of Borrower.

            5.23.2 Borrower shall maintain records and books of account separate
from those of all other entities.

            5.23.3 Borrower shall obtain proper authorization from its managers
of all action requiring such authorization. Meetings of the managers of Borrower
shall be held with such frequency as required by Delaware law or otherwise
deemed appropriate by Borrower.

            5.23.4 Operating expenses and liabilities of Borrower shall be paid
from its own funds.

            5.23.5 The resolutions, agreements and other instruments underlying
the transactions contemplated by this Agreement shall be continuously maintained
by Borrower as official records.

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            5.23.6 Other than as permitted pursuant to Section 6.8, Borrower
shall maintain an arm's-length relationship with all other entities.

            5.23.7 Borrower shall keep its assets and its liabilities wholly
separate from those of all other entities.

      5.24  THE PATRIOT ACT.

            Borrower shall and shall cause Sponsor and each Borrower Party to
comply with the disclosure requirements pursuant to Section 11.21.

      5.25  CERTAIN RIGHTS UNDER DOW AGREEMENTS.

            In the event that the circumstances arise that are described in
Section 5.6 of the FEC Ground Lease, Borrower shall cause FEC to take such
actions, and to fully exercise its rights under such section, as may be
necessary to obtain adequate real estate rights, Permits, and contract rights so
that if Dow were to fail, FEC would have exercised all reasonable efforts toward
being able to operate the Freeport Project independently of Dow.

      5.26  PROJECT REPRESENTATIVE.

            Borrower shall cause each Project Company to designate one or more
individuals who will be responsible for protecting the interests of such Project
Company in all contract discussions and negotiations, with Affiliates of the
Project Company and otherwise, and will for purposes of interactions with the
Independent Engineer, be and in all respects act, as the representative of the
owner of the applicable Project.

      5.27  ALTERNATE WATERLINE EASEMENTS.

            MEC and Borrower have advised the Lenders and each of the Lenders
understands and agrees that the waterline path currently proposed for the
Mankato Project may be relocated during the course of development and
construction of the Mankato Project, and, notwithstanding anything in this
Agreement or the MEC Mortgage to the contrary, the Lenders agree that MEC may,
in accordance with MEC's business judgment, relocate the waterline provided
that, in such event, MEC shall provide the Lenders with a survey of the new
waterline easement(s) that complies with the requirements of Section 3.1.21 and
endorsements to the lender's title policy as originally provided pursuant to
Section 3.1.22 which will add the new waterline easement(s) as an insured
easement(s), and, in connection with such relocation, MEC and the Lenders shall
execute an agreement modifying the MEC Mortgage to extend the lien of the MEC
Mortgage to the new waterline easement(s) and to release the lien of the MEC
Mortgage from the former waterline easement(s).

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                                    ARTICLE 6
                               NEGATIVE COVENANTS

            Borrower covenants and agrees that until the repayment in full in
cash of all of Borrower's Obligations (other than those contingent Obligations
that are intended to survive the termination of this Agreement and the other
applicable Credit Documents) and the expiration or termination of all
Commitments and Interest Rate Agreements to which any Secured Party is a party,
Borrower shall not and shall cause the applicable Borrower Party to not take the
following actions:

      6.1   CONTINGENT LIABILITIES.

            Except as provided in this Agreement, Borrower and each other
Borrower Party shall not become liable as a surety, guarantor, accommodation
endorser or otherwise, for or upon the obligation of any other Person; provided,
however, that this Section 6.1 shall not be deemed to prohibit or otherwise
limit the occurrence of Permitted Debt.

      6.2   LIMITATIONS ON LIENS.

            Borrower and each other Borrower Party shall not create, assume or
suffer to exist any Lien, securing a charge or obligation on the Projects or on
any of the Collateral, real or personal, whether now owned or hereafter
acquired, except Permitted Liens.

      6.3   INDEBTEDNESS.

            Borrower and each Project Company shall not incur, create, assume or
permit to exist any Debt except Permitted Debt. FEC-GP and FEC-LP shall not
incur any Debt except Debt incurred under the FEC-GP Guaranty by FEC-GP and
under the FEC-LP Guaranty by FEC-LP.

      6.4   SALE OR LEASE OF ASSETS.

            6.4.1 Except as provided under Section 6.5(b) of the Security
Agreement, Borrower, FEC-GP and FEC-LP shall not sell, lease, assign, transfer
or otherwise dispose of assets, whether now owned or hereafter acquired, except
assets used for the administration of their respective businesses and having a
value of less than $10,000.

            6.4.2 Each Project Company shall not sell, lease, assign, transfer
or otherwise dispose of assets, whether now owned or hereafter acquired, except
(a) in the ordinary course of its business and as contemplated by the Operative
Documents, (b) to the extent that such asset is unnecessary, worn out or no
longer useful or usable in connection with the operation or maintenance of its
Project, at fair market value, (c) the sale, transfer or release, with or
without consideration, of real property or interests in real property related to
its Project to the extent that such real property or interests in real property
is only incidental to, or no longer useful in

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connection with, the development, construction, leasing, ownership or operation
of its Project, or (d) the granting of easements or other interests in real
property related to its Project to other Persons if, with respect to clauses (c)
and (d) only, the Administrative Agent has determined that such sale, transfer
or release could not reasonably be expected to have a Material Adverse Effect.
Upon any such sale, lease, assignment, transfer or other disposition of any such
assets, all Liens in favor of any Secured Party relating to such asset shall be
released.

      6.5   CHANGES.

            Borrower and each other Borrower Party shall not change the nature
of its business or expand its business beyond the business contemplated in the
Operative Documents; provided further that the representations with respect to
ownership of the Borrower Parties set forth in Section 4.1 shall remain true at
all times.

      6.6   DISTRIBUTIONS.

            6.6.1 Pre-Initial Principal Repayment Date. Except as provided in
Section 6.6.4, prior to the first Principal Repayment Date after
Term-Conversion, Borrower shall not directly or indirectly, make or declare any
dividend or other distribution (in cash, property or obligation) on, or other
payment on account of, any interest in any Borrower Party.

            6.6.2 Post-Initial Principal Repayment Date. Except as provided in
Section 6.6.4, from and after the first Principal Repayment Date after
Term-Conversion, Borrower shall not directly or indirectly, make or declare any
dividend or other distribution (in cash, property or obligation) on, or other
payment on account of, any interest in any Borrower Party or make any payment of
principal or interest due under any permitted subordinated note, unless the
following conditions have been satisfied (the "Restricted Payment Conditions"):

            (a) such dividend or distribution is on a date occurring within 15
Banking days after the immediately preceding Principal Repayment Date;

            (b) no Event of Default or Inchoate Default has occurred and is
continuing as of the date of such applicable dividend or distribution, and such
dividend or distribution would not cause an Event of Default or Inchoate
Default;

            (c) the Debt Service Coverage Ratio for the Calculation Period
relating to the Principal Repayment Date immediately preceding the proposed date
of such dividend or distribution is greater than or equal to 1.25 to 1;

            (d) no Material Adverse Change shall have occurred and be continuing
as of the date of the applicable dividend or distribution or would result from
the making of such dividend or distribution;

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            (e) the funds necessary to make any such dividend or distribution
are on deposit in the Distribution Suspense Account as of the Principal
Repayment Date to which the applicable dividend or distribution relates and are
otherwise available to be withdrawn from the Distribution Suspense Account on
such date in accordance with the terms and conditions of the Borrower Depositary
Agreement;

            (f) all reserve accounts are funded in the amount required by the
Depositary Agreements;

            (g) no Security Fund LC Loans are then outstanding; and

            (h) for the first distribution pursuant to this Section 6.6.2 only,
the following conditions have been satisfied: (i) Collateral Agent shall have
received as-built A.L.T.A. surveys of the Sites, in form and substance
reasonably satisfactory to Collateral Agent and the Title Insurer, certified to
Borrower, Collateral Agent and the Title Insurer as to completeness and accuracy
as of not more than 60 days prior to the first distribution under Section 6.6.2
by a licensed Texas surveyor (in the case of the Freeport Project) and a
licensed Minnesota surveyor (in the case of the Mankato Project) reasonably
satisfactory to Collateral Agent, showing, among other things, (A) as to the
Sites, the location and dimensions thereof, including the location of all means
of access thereto and all easements and encumbrances relating thereto and
showing the perimeter within which all improvements are located, (B) the
location and dimensions of all improvements, fences or encroachments located in
or on the Sites, (C) the existing utility facilities servicing the Projects
(including water, electricity, fuel, telephone, sanitary sewer and storm water
distribution and detention facilities), (D) that the location of each Project
does not encroach on or interfere with adjacent property or existing easements,
encumbrances or other rights (whether on, above or below ground), other than
Permitted Liens, and that there are no gaps, gores, projections, protrusions or
other survey defects, (E) whether either Site or any portion thereof is located
in a special flood hazard zone, and (F) no other matters constituting a defect
in title other than relevant Title Exceptions; provided, however, that the
matters described in clause (E) may be shown by separate maps, surveys or other
information reasonably satisfactory to Collateral Agent, and (ii) Collateral
Agent shall have received (A) endorsements to the Title Policies delivered to
Collateral Agent pursuant to Section 3.1.22 reasonably satisfactory to
Collateral Agent reflecting the items referred to in clause (B) below (such
policy and endorsements being collectively referred to as the "Term Title
Policies"), insuring the continued first priority Lien on the FEC Mortgaged
Property evidenced by the FEC Deed of Trust and on the MEC Mortgaged Property
evidenced by the MEC Mortgage (in each case without a mechanics' and
materialmen's exception included in such title policy), and such other matters
as Collateral Agent may reasonably request, and, if such endorsements are not
available in Texas or Minnesota, then (B) a Mortgagee Policy of Title Insurance,
together with such endorsements thereto as are reasonably required by Collateral
Agent and are obtainable in the State of Texas with respect to the Freeport
Project and an A.L.T.A. extended coverage lender's policy of title insurance,
together with such endorsements as are available thereto in the State of
Minnesota with respect to the Mankato Project, at reasonable costs, in an amount
equal to the aggregate amount of Loans Term-Converted into Term Loans, issued by
the Title Insurer, in form and substance and with such

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reinsurance as is reasonably satisfactory to Collateral Agent, and insuring
Collateral Agent as to all matters described in Section 3.1.22, the continued
first priority of the Lien on the FEC Mortgaged Property evidenced by the FEC
Deed of Trust and on the MEC Mortgaged Property evidenced by the MEC Mortgage
(in each case without a mechanics' and materialmen's exception included therein,
except where applicable Governmental Rules prevent the deletion of such
exception, in which case, if permissible under applicable Governmental Rules,
the Title Insurer shall be provided with any affidavits or indemnities (with
respect to which Borrower shall have no reimbursement obligations) necessary to
cause the Title Insurer to issue affirmative coverage for mechanics' and
materialmens' liens in form and substance reasonably satisfactory to Collateral
Agent) and as to such other matters as Collateral Agent may reasonably request,
and containing only (1) any standard coverage exception reasonably acceptable to
Collateral Agent, (2) Title Exceptions, and (3) Permitted Liens described in
clauses (a) and (b) of the definition thereof (to the extent the same are
afforded priority over the Lien of the FEC Deed of Trust and the MEC Mortgage by
operation of law), such Permitted Liens as are junior and subordinate to the FEC
Deed of Trust and the MEC Mortgage and any other exceptions to title as are
reasonably acceptable to Collateral Agent.

            6.6.3 No Borrower Party shall enter into any agreement, contract or
arrangement (other than the Operative Documents) restricting its ability to pay
or make dividends or distributions in cash or kind, to make loans, advances or
other payments of any nature or to make transfers or distributions of all or any
part of its assets to Borrower or, in the case of FEC, to FEC-GP and/or FEC-LP.

            6.6.4 Notwithstanding anything to the contrary contained in this
Agreement, nothing in this Section 6.6 shall prohibit, or otherwise limit (1)
any payment made to, or for the account of, Sponsor in accordance with Section
5.1.1(b), 5.17 and 11.23, and Section 3.6 of the Borrower Depositary Agreement,
(2) the payment of O&M Costs in accordance with the FEC Depositary Agreement and
the MEC Depositary Agreement, (3) the payment of unsubordinated amounts due and
payable to any Affiliated Major Project Participant pursuant to any Major
Project Document, (4) any payment among the Borrower Parties expressly
contemplated by any of the Depositary Agreements, (5) any subordinated payments
allowed at Borrower's Waterfall Level 9, (6) the special distributions to be
made on the Term Period Commencement Date pursuant to Borrower's Waterfall Level
11, (7) the distributions described in Section 3.1.4 of each of the FEC
Depositary Agreement and the MEC Depositary Agreement (relating to Undertaking
Support LCs which have been drawn due to expiration or issuer credit quality),
(8) the distribution described in Section 3.1.5 of the FEC Depositary Agreement
(relating to certain Project Revenues retained due to a Dow Test Deferral, (9)
the distribution described in Section 3.1.6 of the FEC Depositary Agreement
(relating to the delayed true-up resulting from a Dow Test Deferral), (10)
payment by NSP (or its escrow agent) to MEC (or at its direction) of any
escrowed amounts release by NSP (or its escrow agent) which amounts constituted
High Grade Collateral prior to the Closing Date, (11) the payment of any funds
to CCMCI by Borrower as required pursuant to Section 2.6 of the Completion
Undertaking Agreements, or (12) the transfer or sale of either Siemens Turbine
(or any Collateral substituted therefor as contemplated by Section 6.5(b) of the
Borrower Security Agreement) and the cancellation of the related Subordinated
Note, in each case at any time after such Siemens Turbine (or substitute

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collateral, as the case may be) is released from the Collateral pursuant to
Section 11.23 and/or Section 6.5(b) of the Borrower Security Agreement.

      6.7   INVESTMENTS.

            No Borrower Party shall make any investments (whether by purchase of
stocks, bonds, notes or other securities, loan, extension of credit, advance or
otherwise) other than Permitted Investments. FEC-GP and FEC-LP shall not make
any investments, other than their ownership interests in FEC.

      6.8   TRANSACTIONS WITH AFFILIATES; SUBORDINATION AGREEMENTS.

            No Borrower Party shall directly or indirectly enter into any
transaction or series of transactions relating to the Projects with or for the
benefit of an Affiliate without the prior written approval of Administrative
Agent, except for (a) the Project Documents in effect on the Closing Date, and
the transactions permitted thereby, (b) except insofar as a counterparty to such
Project Document has entered into a Subordination Agreement, transactions that
contain terms no less favorable to each Borrower Party than would be included in
an arm's-length transaction entered into by a prudent Person with a
non-Affiliated third party, (c) any employment, noncompetition or
confidentiality agreement entered into by each Borrower Party with any of its
employees, officers or directors in the ordinary course of business, and (d) as
otherwise expressly permitted or contemplated by this Agreement and the other
Credit Documents. Except for the COSCI Subordination Agreement, which has
already been approved, no Borrower Party shall enter into any Subordination
Agreement with any Affiliate or any other Person without approval by the
Majority Lenders.

      6.9   REGULATIONS.

            No Borrower Party shall directly or indirectly apply any part of the
proceeds of any Loan, any cash equity contributions received by Borrower or
other funds or revenues to the "buying", "carrying" or "purchasing" of any
margin stock within the meaning of Regulations T, U or X of the Federal Reserve
Board, or any regulations, interpretations or rulings thereunder.

      6.10  PARTNERSHIPS, ETC.

            No Borrower Party shall become a general or limited partner in any
partnership or a joint venturer in any joint venture or create and hold stock in
any subsidiary, except as described in Section 4.1.

      6.11  DISSOLUTION; MERGER.

            No Borrower Party shall liquidate or dissolve, or combine, merge or
consolidate with or into any other entity, or change its legal form, or purchase
or otherwise acquire all or substantially all of the assets of any Person.

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      6.12  AMENDMENTS; CHANGE ORDERS; COMPLETION.

            6.12.1 No Project Company shall directly or indirectly amend,
modify, supplement or waive, accept, or permit or consent to the termination,
amendment, modification, supplement or waiver (including any waiver (or refund)
of damages (liquidated or otherwise) payable by any contractor under any Major
Project Document) of, any of the material provisions of, or give any material
consent under any of the Major Project Documents which could reasonably be
expected to have a Material Adverse Effect (each such termination, amendment,
modification, supplement, waiver or consent, inclusive of any applicable change
orders, being referred to herein as a "Project Document Modification"), except
(a) as otherwise permitted by this Section 6.12, or (b) as may otherwise be
approved by the Majority Lenders; provided, that the extension of the term of a
Major Project Document on substantially the same terms and conditions then in
effect shall not require the consent or approval of Administrative Agent or the
Majority Lenders; and provided, further, that the Lenders shall be deemed to
have approved the First Amendment to Purchased Power Agreement between NSP and
MEC, in the form delivered to the Lenders on the Closing Date.

            6.12.2 Without the prior written consent of Administrative Agent
(which consent shall not be unreasonably withheld or delayed), in consultation
with the Independent Engineer and acting at the direction of the Majority
Lenders, no Project Company shall direct or consent to any Project Document
Modification (including, without limitation, modifications to the FEC Technical
Requirements or the Dow/DEC Technical Requirements) unless:

            (a) except for any Project Document Modification made by FEC as a
result of a Dow Change pursuant to Section 2.3.2 of the Capacity Sales
Agreement, such Project Document Modification is not, individually in an amount
greater than $250,000 or, together with all previous Project Document
Modifications issued after the Closing Date, will not increase or decrease the
Project Costs by more than $1,000,000 in the aggregate, respectively (exclusive
of increases reimbursed by insurance awards, condemnation awards or contractual
damage awards);

            (b) the applicable Project Company has certified in writing to
Administrative Agent and the Lenders, as confirmed and countersigned by the
Independent Engineer, that such Project Document Modification (i) is technically
feasible in light of the Plans and Specifications and the overall design of the
applicable Project, and (ii) will not materially delay Completion of the
applicable Project, or in any event is not reasonably likely to delay Completion
of the applicable Project beyond the Construction Loan Maturity Date;

            (c) such Project Document Modification will not alter any guaranty,
liquidated damages provision or the standards for any of the Performance Tests;

            (d) such Project Document Modification is not reasonably likely to
result in any adverse modification or impair the enforceability of any warranty
under any Construction Contract, the O&M Agreements or any other Major Project
Document;

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            (e) such Project Document Modification is not reasonably likely to
materially impair or reduce the maximum capacity, efficiency, output,
performance, reliability, durability or availability of the applicable Project,
or materially increase O&M Costs or heat rate associated with the applicable
Project, or materially decrease Project Revenues;

            (f) such Project Document Modification is permitted by the
applicable Project Document and could not reasonably be expected to (i)
materially diminish any obligation of any Major Project Participant, or (ii)
materially increase any obligation of any Borrower Party under any Major Project
Document;

            (g) such Project Document Modification is not reasonably likely to
present a significant risk of the revocation or material modification of any
Applicable Permit or jeopardize the MEC's status as an Exempt Wholesale
Generator or the Freeport Project's status as a Qualifying Facility;

            (h) such Project Document Modification will not eliminate, modify or
impair any consent, verification or approval rights afforded to Administrative
Agent, the Lenders or the Independent Engineer under any Major Project Document;

            (i) such Project Document Modification could not reasonably be
expected to cause either Project not to comply with Legal Requirements;

            (j) except for any Project Document Modification made by FEC as a
result of a Dow Change pursuant to Section 2.3.2 of the Capacity Sales
Agreement, such Project Document Modification is not an amendment, modification,
supplement, termination, waiver or consent thereto of the Power Purchase
Agreement or any Dow Agreement; and

            (k) such Project Document Modification will not obligate either
Project Company to arrange or procure fuel supply or fuel transportation
services or electrical transmission services.

            6.12.3 Neither Project Company shall (a) declare, with respect to
its Project or material portion thereof, Final Completion (as such term is
defined in the Construction Contracts), (b) approve the successful completion of
any Performance Test, (c) approve, modify or amend the testing protocols under
the Construction Contracts, or (d) agree to accept any facilities being
constructed under any other Major Project Document as "commercially
operational", "mechanically complete", "substantially complete" or "complete"
(however defined therein), in each case without the approval of Administrative
Agent acting in consultation with the Independent Engineer, or use the proceeds
of any Loan to make any payment under any Construction Contract all or any
portion of which payment the Independent Engineer has given the applicable
Project Company written notice (prior to the due date thereof) that it disputes
is then due, without the written approval of Administrative Agent acting in
consultation with the Independent Engineer, which approval, if given, shall not
be unreasonably delayed or withheld, taking into account applicable time
limitations imposed by the terms of the applicable Project Document.

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            6.12.4 Neither Project Company shall agree on any Remedial Plan or
Punchlist with respect to any Project work without the written approval of
Administrative Agent acting in consultation with the Independent Engineer, which
approval, if given, shall not be unreasonably delayed or withheld, taking into
account applicable time limitations imposed by the terms of any Construction
Contract.

            6.12.5 Neither Project Company shall consent, without Administrative
Agent's prior written approval, to (a) any action taken by Construction
Contractor to modify the equipment or services provided by Construction
Contractor to conform to the intellectual property rights of others if such
action could reasonably be expected to materially and adversely affect either
Project Company's continued use of its Project or (b) the settlement by
Construction Contractor of any claim or proceeding which could reasonably be
expected to materially adversely affect either Project Company's rights.

            6.12.6 Neither Project Company shall direct any party to a
Construction Contract to suspend any construction activities being performed
under any such Construction Contract without Administrative Agent's prior
written consent, except to avoid immediate danger to Persons or property.

            6.12.7 Neither Project Company shall except as expressly
contemplated by the Project Documents, construct, install, or permit the
construction or installation of, shared or joint facilities between its Project
and any plants, facilities, generating stations or other improvements which are
not located on its Project Site or the Easements (including any such plants,
facilities, generating stations or other improvements owned by NSP or Dow).

            6.12.8 Neither Project Company shall accept any letter of credit,
bond or other form of credit support in lieu of retainage under any Project
Document not in form and substance reasonably satisfactory to Administrative
Agent.

            6.12.9 Without the prior written consent of Administrative Agent,
neither Project Company shall submit any notice or certificate to NSP or Dow
declaring or acknowledging, in the case of the Mankato Project, the occurrence
of the Facility Acceptance Date, or in the case of the Freeport Project, the
date on which the Commercial Operation of each FEC Work Phase occurs or the
Project Commercial Operation Date.

            6.12.10 Without the prior written consent of Administrative Agent,
neither Project Company shall approve the replacement of a major maintenance
provider or operator.

            6.12.11 Without the prior written consent of Administrative Agent
(in consultation with the Independent Engineer), FEC shall not propose a
reduction to the "Fixed Prices" schedule, as contemplated by Section 3.3 of the
Major Maintenance Service Arrangement.

            Administrative Agent shall use good faith efforts to respond to each
request pursuant to this Section 6.12 as soon as possible and in all events
within 30 days of its receipt of written notification thereof and shall not
unreasonably withhold its approval of such request. No

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request pursuant to this Section 6.12 requiring approval by Administrative Agent
shall be deemed approved by Administrative Agent until expressly approved.

      6.13  NAME AND LOCATION; FISCAL YEAR.

            No Borrower Party shall change its name, its jurisdiction of
organization, the location of its principal place of business, its organization
identification number or its fiscal year without providing 30 days prior written
notice to Administrative Agent.

      6.14  USE OF SITES.

            Neither Project Company shall use, or permit to be used, its Project
Site for any purpose (a) which may constitute a public or private nuisance that
could reasonably be expected to have a Material Adverse Effect, or (b) other
than for the construction, operation and maintenance of its Project as
contemplated by the Operative Documents.

      6.15  ASSIGNMENT.

            No Borrower Party shall assign its rights hereunder, under the other
Credit Documents or under any Major Project Document to any Person, except as
set forth in this Agreement and the other Credit Documents.

      6.16  ACCOUNTS.

            No Borrower Party shall maintain, establish or use any account
(other than the Accounts) without the prior written consent of Administrative
Agent.

      6.17  HAZARDOUS SUBSTANCES.

            No Borrower Party shall release into the environment any Hazardous
Substances in violation of any Hazardous Substance Laws, Legal Requirements or
Applicable Permits, except for (a) temporary unplanned exceedances not allowed
under either Project's Permits, which temporary unplanned exceedances could not
reasonably be expected to have a Material Adverse Effect and which such
applicable Borrower Party is diligently and in good faith attempting to correct
(or, in the case of FEC, causing Dow to diligently attempt to correct), and (b)
unintentional violations with respect to which (i) the Release is not continuing
or reasonably likely to re-occur and is not reasonably susceptible to prevention
or cure, (ii) there are no unsatisfied reporting and/or remediation requirements
under applicable Hazardous Substance Laws, Legal Requirements or Applicable
Permits, (iii) no non-monetary penalties or sanctions have been imposed or are
reasonably likely to be imposed (except for the remediation of such violation)
under applicable Hazardous Substance Laws, Legal Requirements or Applicable
Permits, and (iv) the Release could not reasonably be expected to materially
impair the value of either Site or any other Collateral, and could not otherwise
reasonably be expected to have a Material Adverse Effect.

      6.18  ADDITIONAL PROJECT DOCUMENTS.

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            Without the consent of the Majority Lenders (which consent shall not
be unreasonably withheld), no Borrower Party shall enter into, or become a party
to any Project Document not in existence on the Closing Date, except any Project
Document which (a) provides for the payment by Project Companies of, or the
provision to Project Companies of such goods and services with a value of,
$250,000 per annum individually or less, which may be entered into with the
prior written consent of Administrative Agent, (b) provides for the payment by
Project Companies of, or the provision to Project Companies of such goods and
services with a value of, less than $1,000,000 in the aggregate, which may be
entered into with the prior written consent of Administrative Agent, (c) provide
for payment of Emergency Operating Costs, provided that prior to entering into
or becoming a party to any such contract under this Section 6.18(c) that
provides for the payment by Project Companies of, or the provision to Borrower
Parties of such goods and services with a value of, more than $1,000,000 per
annum, such applicable Project Company shall have exercised reasonable efforts
to obtain the consent of Administrative Agent; provided, further, that such
applicable Borrower Party shall provide notice to Administrative Agent of
contracts entered into under this Section 6.18(c) as soon as practicable, and in
no event more than 15 Banking Days after such contract is entered into, or (d)
are contracts by Borrower, FEC-GP or FEC-LP of an individual value less than
$25,000 and in the aggregate no greater than $250,000, provided that such
contracts are consistent with the requirements under Section 5.24.

      6.19  PROJECT BUDGET AMENDMENTS.

            Without the prior consent of Administrative Agent, neither Project
Company shall amend, allocate, re-allocate or modify its Project Budget to
increase the aggregate amount payable thereunder, unless such amendment,
allocation, re-allocation or modification is (a) a necessary conforming change
related to an amendment to a Project Document permitted by Section 6.12, and (b)
concurrent and consistent with cash equity contributions made available to the
Project Companies which were not theretofore contemplated in the applicable
Project Budget (including liquidated damages being applied to obligations
hereunder and proceeds of insurance applied in accordance with the terms of this
Agreement and the Depositary Agreements); provided that the foregoing shall not
prevent the Project Companies from applying identified cost savings in a budget
category (after completing each of the items to which such category relates), as
confirmed by the Independent Engineer, to cost overruns in another budget
category (as confirmed by the Independent Engineer) without increasing the
aggregate amount payable under the applicable Project Budget; provided, however,
that neither Project Company shall apply identified cost savings in any budget
category to cost overruns in any budget category relating to management expenses
or development fees payable to any Person or any other fees and costs payable to
any Affiliate of Sponsor.

      6.20  ASSIGNMENT BY THIRD PARTIES.

            Without prior written consent of the Required Lenders or unless
provided in a Consent, neither Project Company shall consent to the assignment
of any obligations under any Major Project Document by any counterparty thereto.

      6.21  ACQUISITION OF REAL PROPERTY.

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            No Borrower Party shall acquire or lease any real property or other
interest in real property (excluding the acquisition of any easements, the
acquisition (but not the exercise) of any options to acquire any such interests
in real property or any expansions of the FEC Site in connection with the
procurement of substitute services or in connection with Borrower and FEC's
obligations under Section 5.25) other than the Sites, Easements and other
interests in real property acquired on or prior to the Closing Date or as
contemplated by Section 5.27.

      6.22  EMPLOYEE BENEFIT PLANS.

            No Borrower Party shall maintain, contribute to, or become obligated
to contribute to any employee benefit plans subject to ERISA.

      6.23  NO MERCHANT SALES.

            Neither Project Company, as applicable, shall (a) sell or provide
electrical products from either Project to any Person other than (i) by MEC, to
NSP under the Power Purchase Agreement, and (ii) by FEC, to Dow under the
Capacity Sales Agreement or to CES with respect to the Reserved Capacity under
the Capacity Sales Agreement, or (b) exercise the Put Option (as such term is
defined in the Capacity Sales Agreement) pursuant to Section 15.1 of the
Capacity Sales Agreement, in each case without the prior written consent of the
Required Lenders.

      6.24  FLOW OF FUNDS.

            Neither Project Company nor Borrower shall agree to any amendment,
modification or termination of either Intercompany Note without the prior
written consent of the Majority Lenders; or apply, contribute or fund any
amounts received in connection with any Loan to Borrower unless such amounts are
loaned by Borrower to a Project Company and allocated between FEC and MEC in
accordance with and pursuant to the terms of the Project Budget, or as otherwise
permitted by Section 3.4.

      6.25  TAX ELECTION.

            No Borrower Party shall make an election to be classified for
federal income tax purposes as an association taxable as a corporation without
the prior written consent of the Administrative Agent, which consent shall not
be unreasonably withheld or delayed.

      6.26  TAX SHARING AGREEMENTS.

            No Borrower Party shall enter into any tax sharing agreements with
any other Calpine Entity other than to the extent taxes to be paid pursuant to
any such agreement are paid only using funds, if any, that may from time to time
be on deposit in the Distribution Suspense Account and are otherwise available
for the making of distributions in strict accordance with the requirements of
Section 6.6 and the Depositary Agreements.

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                                    ARTICLE 7
                           EVENTS OF DEFAULT; REMEDIES

      7.1   EVENTS OF DEFAULT.

            The occurrence of any of the following events by any of the Borrower
Parties shall constitute an event of default (each, an "Event of Default")
hereunder:

            7.1.1 Failure to Make Payments. Borrower shall fail to pay, in
accordance with the terms of this Agreement (i) any principal on any Loan on the
date that such sum is due, (ii) any interest on any Loan within five days after
the date such sum is due, (iii) any scheduled fee, cost, charge or sum due
hereunder or under any other Credit Documents within five days of the date that
such sum is due, or (iv) any other fee, cost, charge or other sum due under this
Agreement or the other Credit Documents within 10 days after written notice that
such sum is due.

            7.1.2 Bankruptcy; Insolvency. Any Borrower Party or any other Major
Project Participant (so long as such Major Project Participant shall have
outstanding or unperformed obligations under the Operative Document to which it
is a party) shall become subject to a Bankruptcy Event; provided that, solely
with respect to a Bankruptcy Event with respect to a Person other than any
Borrower Party, Sponsor (for so long as CCMCI's obligations under the
Construction Contracts remain outstanding), NSP or Dow, no Event of Default
shall occur as a result of such Bankruptcy Event if (a) such applicable Borrower
Party obtains a Replacement Obligor for the affected party within 90 days
thereafter and such Bankruptcy Event has not had and does not have, prior to so
obtaining such Replacement Obligor, a Material Adverse Effect or (b) the
applicable Major Project Participant is substantially performing its remaining
obligations with respect to the Project Documents to which it is a party and has
affirmed, within 90 days thereafter, the Operative Document(s) to which it is a
party.

            7.1.3 Defaults Under Other Indebtedness.

            (a) Any Borrower Party shall default for a period beyond any
applicable grace period (i) in the payment of any principal, interest or other
amount due under any agreement involving Debt and the outstanding amount or
amounts payable under any such agreement equals or exceeds $1,000,000 in the
aggregate, or (ii) in the performance of any obligation due under any agreement
involving Debt if pursuant to such default, the holder of the obligation
concerned has the right to accelerate the maturity of any indebtedness evidenced
thereby which equals or exceeds $1,000,000 in the aggregate.

            (b) So long as neither of the Projects has achieved Completion, or
even if one of the Projects has achieved Completion, if the full original stated
amounts of the Undertaking Support LCs are not available for draw, Sponsor shall
default for a period beyond any applicable grace period (i) in the payment of
any principal, interest or other amount due under any agreement involving Debt
and the outstanding amount or amounts payable under any such agreement equals or
exceeds $10,000,000 in the aggregate, or (ii) in the performance of any
obligation due under any agreement involving Debt if pursuant to such default,
the holder of the

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obligation concerned has the right to accelerate the maturity of any
indebtedness evidenced thereby which equals or exceeds $10,000,000 in the
aggregate.

            (c) From and after such time as one of the Projects has achieved
Completion, if the full original stated amounts of the Undertaking Support LCs
are available for draw, and so long as CCMCI's obligations under the
Construction Contracts remain outstanding, Sponsor shall default under any
agreement involving Debt which equal or exceed $10,000,000 in the aggregate, and
the holder thereof shall have accelerated Sponsor's obligations in at least such
amount.

            7.1.4 Judgments. A final judgment or judgments shall be entered
against (a) Sponsor, so long as CCMCI's obligations under the Construction
Contracts remain outstanding, in the amount of $25,000,000 or more individually
or in the aggregate or (b) any Borrower Party in the amount of $500,000 or more
individually or $1,000,000 or more in the aggregate (other than, in each case,
(i) a judgment which is fully covered by insurance or discharged within 60 days
after its entry, or (ii) a judgment, the execution of which is effectively
stayed within 60 days after its entry but only for 60 days after the date on
which such stay is terminated or expires).

            7.1.5 ERISA. If any Calpine Entity or any ERISA Affiliate should
establish, maintain, contribute to or become obligated to contribute to any
ERISA Plan and (a) a Reportable Event (under Section 4043(b) or (c) of ERISA for
which notice to the PBGC is not waived) shall have occurred with respect to any
ERISA Plan and, within 30 days after the reporting of such Reportable Event to
Administrative Agent by any Borrower Party (or Administrative Agent otherwise
obtaining knowledge of such event) and the furnishing of such information as
Administrative Agent may reasonably request with respect thereto, Administrative
Agent shall have notified such applicable Borrower Party in writing that (i)
Administrative Agent or Majority Lenders has made a determination that, on the
basis of such Reportable Event, there are reasonable grounds for the termination
of such ERISA Plan by the PBGC or for the appointment by the appropriate United
States District Court of a trustee to administer such ERISA Plan and (ii) as a
result thereof, an Event of Default exists hereunder, or (b) a trustee shall be
appointed by a United States District Court to administer any ERISA Plan, or (c)
the PBGC shall institute proceedings to terminate any ERISA Plan, (d) a complete
or partial withdrawal by any Borrower Party or any ERISA Affiliate from any
Multiemployer Plan shall have occurred and, within 30 days after the reporting
of any such occurrence to Administrative Agent by such applicable Borrower Party
(or Administrative Agent otherwise obtaining knowledge of such event) and the
furnishing of such information as Administrative Agent or Majority Lenders may
reasonably request with respect thereto, Administrative Agent shall have
notified such applicable Borrower Party in writing that Administrative Agent has
made a determination that, on the basis of such occurrence, an Event of Default
exists hereunder, or (e) any Calpine Entity or any ERISA Affiliate shall have
failed to fulfill its obligations under the minimum funding standards of ERISA
or the Code with respect to any ERISA Plan; provided that any of the events
described in this Section 7.1.5 shall result in aggregate liability to all
Calpine Entities and all ERISA Affiliates in excess of $5,000,000.

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            7.1.6 Breach of Terms of Agreement.

            (a) Defaults Without Cure Periods. (i) Any Borrower Party shall fail
to perform or observe any of the covenants set forth in Sections 5.1, 5.3,
5.9(a), 5.12, 5.18, or 5.20 or Article 6 (other than Sections 6.2, 6.7, 6.8,
6.14, 6.16 or 6.19), or (ii) Construction Contractor shall fail to provide
either Undertaking Support LC under the applicable Completion Undertaking
Agreement.

            (b) Defaults With 30 Day Cure Periods. Any Borrower Party shall fail
to perform or observe any of the covenants set forth in Sections 5.13(b), 5.15.1
(as to the last sentence thereof), 5.23, 5.24 or 6.16, and in each case such
failure shall continue unremedied for a period of 30 days after such Borrower
Party becomes aware thereof or receives written notice thereof from
Administrative Agent.

            (c) Other Defaults. Any Borrower Party, Sponsor or any other Calpine
Entity shall fail to perform or observe any of the covenants set forth hereunder
or any other Credit Document not otherwise specifically provided for in Section
7.1.6(a), Section 7.1.6(b) or elsewhere in this Article 7, and such failure
shall continue unremedied for a period of 30 days after such Borrower Party
becomes aware thereof or receives written notice thereof from Administrative
Agent; provided, however, that, if (i) such failure cannot be cured within such
30 day period, (ii) such failure is susceptible of cure within 90 days, (iii)
such Borrower Party, Sponsor or such other Calpine Entity, as applicable, is
proceeding with diligence and in good faith to cure such failure, (iv) the
existence of such failure has not had and could not, after considering the
nature of the cure, be reasonably expected to have a Material Adverse Effect,
and (v) Administrative Agent shall have received an officer's certificate signed
by a Responsible Officer to the effect of clauses (i), (ii), (iii) and (iv)
above and stating what action such Borrower Party, Sponsor or such other Calpine
Entity, as applicable, is taking to cure such failure, then such 30 day cure
period shall be extended to such date, not to exceed a total of 90 days, as
shall be necessary for such Borrower Party, Sponsor or such other Calpine
Entity, as applicable, diligently to cure such failure.

            7.1.7 Loss of Collateral. Subject to Section 11.23, any substantial
portion of the Collateral is damaged, seized or appropriated without appropriate
insurance proceeds (subject to the underlying deductible) or without fair value
being paid therefor so as to allow replacement of such Collateral and/or
prepayment of Loans and to allow each Borrower Party to continue satisfying its
obligations hereunder and under the other Operative Documents.

            7.1.8 Regulatory Status.

            (a) If loss of Exempt Wholesale Generator status for MEC or loss of
Eligible Facility status for the Mankato Project could reasonably be expected to
have a Material Adverse Effect, (i) MEC shall have tendered notice to FERC that
it has ceased to be an Exempt Wholesale Generator or that the Mankato Project
has ceased to be an Eligible Facility, or (ii) FERC shall have issued an order
determining that MEC no longer meets the criteria of an

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Exempt Wholesale Generator or takes other action revoking such Exempt Wholesale
Generator status.

            (b) If loss of Qualifying Facility status for the Freeport Project
could reasonably be expected to have a Material Adverse Effect, (i) FEC shall
have tendered notice to FERC that the Freeport Project has ceased to be a
Qualifying Facility, (ii) FERC shall have issued an order determining that the
Freeport Project no longer meets the criteria of a Qualifying Facility or takes
other action revoking the Freeport Project's Qualifying Facility status, or
(iii) the Freeport Project ceases to satisfy the criteria for Qualifying
Facility status.

            (c) If loss of MEC's authorization to make sales of electric energy,
capacity and ancillary services and/or waivers of regulations and blanket
authorizations customarily granted by FERC to entities with market-based rate
authority could reasonably be expected to have a Material Adverse Effect, (i)
MEC shall have tendered notice to FERC that MEC has ceased to satisfy any
conditions imposed by FERC necessary to maintain such market-based rate
authorization and/or waivers and/or blanket authorizations, or (ii) FERC has
issued an order determining that MEC is no longer entitled to make sales of
electric energy, capacity and ancillary services at market-based rates and/or is
no longer entitled to waivers of regulations and blanket authorizations
customarily granted by FERC to entities with market-based rate authority.

            (d) FEC shall become subject to regulation as a "public utility"
under the FPA.

            (e) Any Borrower Parties shall suffer an Adverse PUHCA Event or,
except to the extent provided in the first sentence of Section 4.17, shall
otherwise become subject to, or not exempt from financial, organizational or
rate regulation as an "electric utility company", "public utility company" or
"public utility holding company" under PUHCA or as a public utility under the
laws of the State of Minnesota in the case of MEC or Texas in the case of FEC as
presently constituted and as construed by the courts of Minnesota and Texas,
respectively.

            7.1.9 Abandonment.

            (a) At any time prior to Term-Conversion, either Project Company
shall announce that it is abandoning its Project or the Projects shall be
abandoned or work thereon shall cease for a period of more than 30 consecutive
days for any reason (which period (i) shall be measured from the first
occurrence of a work stoppage and continuing until work of a substantial nature
is resumed and thereafter diligently continued, and (ii) shall not include
delays caused by any event of force majeure, a Dow Delay Event, or default by a
Major Project Participant (other than either Project Company or Affiliated Major
Project Participant) under any Major Project Document pursuant to which material
construction activities are being performed).

            (b) At any time following Term-Conversion, either Project Company
shall announce that (i) it is abandoning its Project, or (ii) the Projects shall
be abandoned or operation thereof shall be suspended for a period of more than
30 consecutive days for any reason (other than force majeure or a Dow Delay
Event (in the case of the Freeport Project)); provided that

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none of (A) scheduled maintenance of the Projects, (B) repairs to the Projects,
whether or not scheduled, or (C) a forced outage or scheduled outage of the
Projects, shall constitute abandonment or suspension of the Projects, so long as
such Project Company is diligently attempting to end such suspension; and
provided further, that none of the foregoing circumstances in this Section
7.1.9(b) shall cause an Event of Default with respect to the Freeport Project so
long as Capacity Payments (as defined in the Capacity Sales Agreement) continue
to be paid under the Capacity Sales Agreement.

            7.1.10 Security. Any of the Collateral Documents, shall, except as
the result of the acts or omissions of Administrative Agent, Depositary Agent,
Collateral Agent or the Secured Parties, fail to provide to Collateral Agent,
for the benefit of the Secured Parties, the Liens, first priority security
interest (subject to Permitted Liens in clauses (a) and (e) of the definition
thereof and, to the extent required by Governmental Rule, clauses (b), (c) and
(g) of the definition thereof), rights, titles, interest, remedies permitted by
law, powers or privileges intended to be created thereby or, except in
accordance with its terms, cease to be in full force and effect, or the first
priority or validity thereof or the applicability thereof to the Loans, the
Notes (if any) or any other obligations purported to be secured or guaranteed
thereby or any part thereof shall be disaffirmed by or on behalf of any Borrower
Party.

            7.1.11 Change of Control. Subject to Section 11.23, Sponsor shall
cease to directly or indirectly own and control (a) at any time prior to
Term-Conversion, 100% of (i) the economic interests in any Borrower Party, and
(ii) the voting interests (whether by committee, contract or otherwise) in any
Borrower Party, and (b) at any time on or after Term-Conversion, more than 50%
of (A) the economic interests in any Borrower Party, and (B) the voting
interests (whether by committee, contract or otherwise) in any Borrower Party;
provided that Sponsor may only dispose of any portion of such economic or voting
interests in any Borrower Party on and after Term-Conversion if:

            (a) the applicable transferee is a corporation, limited liability
company or limited partnership organized or formed in the United States or a
state or commonwealth therein;

            (b) at the time of the proposed disposition, the applicable
transferee's unsecured senior long-term debt has a rating of at least Baa3 by
Moody's and BBB- by S&P;

            (c) the electric energy generation business is a substantial part of
the applicable transferee's business;

            (d) on or before the date of any such disposition, the applicable
transferee enters into a pledge agreement in substantially the form of Exhibit
D-10, pursuant to which such transferee shall pledge all of its ownership
interests in such Borrower Party to Collateral Agent, for the benefit of the
Secured Parties, and executes and delivers all other applicable Credit Documents
as requested by Administrative Agent, Collateral Agent or the Majority Lenders;

            (e) on or before the date of any such disposition, the applicable
transferee delivers to Administrative Agent such opinions, resolutions,
certificates and other evidence as

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Administrative Agent may reasonably request (all of which shall be in form and
substance reasonably satisfactory to Administrative Agent) to insure
Administrative Agent's reasonable satisfaction as of the date of any such
disposition with the matters covered by Sections 3.1.1 through 3.1.6(a), 3.1.8
and 3.1.18 (with respect solely to the applicable transferee and, if reasonably
requested by Administrative Agent, the applicable Borrower Party); and

            (f) after giving effect to any such disposition, Sponsor retains
economic and voting control of such Borrower Party.

            7.1.12 Loss of or Failure to Obtain Applicable Permits.

            (a) Either Project Company or Dow shall fail to obtain any Permit on
or before the date that such Permit becomes an Applicable Permit with respect to
its Project, and such failure could reasonably be expected to have a Material
Adverse Effect.

            (b) Any Applicable Permit necessary for operation of the Projects
and for each Project Company's performance of its obligations under the Project
Documents shall be materially modified (other than modifications contemplated in
a Project Document requested by a Project Company and approved in writing in
advance of such modification by Administrative Agent acting at the direction of
the Required Lenders, which approval shall not be unreasonably withheld),
revoked, canceled or not renewed by the issuing agency or other Governmental
Authority having jurisdiction (or otherwise ceases to be in full force and
effect) and within 30 days thereafter such Project Company is not able to
demonstrate to the reasonable satisfaction of the Required Lenders that such
modification of, revocation of, cancellation of, failure to renew, or failure to
maintain in full force and effect such Permit could not reasonably be expected
to have a Material Adverse Effect.

            7.1.13 Unenforceability of Credit Documents. At any time after the
execution and delivery thereof, any material provision of any Credit Document
shall cease to be in full force and effect (other than by reason of the
satisfaction in full of the Borrower Parties' Obligations or any other
termination of a Credit Document in accordance with the terms hereof or thereof)
or any Credit Document shall be declared null and void by a Governmental
Authority of competent jurisdiction.

            7.1.14 Misstatements; Omissions. Any representation or warranty made
or deemed made by any Borrower Party in any Credit Document to which such Person
is a party or in any separate statement, certificate or document delivered to
the Lead Arrangers, Administrative Agent, Depositary Agent, Collateral Agent, or
any Lender hereunder or under any other Credit Document to which such Person is
a party, shall be untrue or misleading in any material respect as of the time
made; provided that, in respect of unintentional misrepresentations which are
capable of being remedied and are made or deemed made after the Closing Date,
and the untruth of which could not reasonably be expected to have a Material
Adverse Effect, any such unintentional misrepresentation shall not be deemed to
be an Event of Default if such misrepresentation is corrected within 90 days of
the occurrence thereof.

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            7.1.15 Project Document Defaults.

            (a) Project Companies. Either Project Company shall be in breach of,
or in default of, any material obligation under a Major Project Document and
such breach or default shall reasonably be expected to have a Material Adverse
Effect and shall not be remediable or, if remediable, shall continue unremedied
for the lesser of (i) a period of 30 days, or (ii) such period of time (without
giving effect to any extension given to Collateral Agent under any applicable
Consent with respect thereto) under such Major Project Document which such
Project Company has available to it in which to remedy such breach or default;
provided that if (A) extending such cure period does not exacerbate such
Material Adverse Effect, (B) such breach cannot be cured within such 30 day
period (or such lesser period of time, as the case may be), (C) such breach is
susceptible of cure within 90 days after such breach or default, (D) such
Project Company is proceeding with diligence and in good faith to cure such
breach, (E) the existence of such breach or default has not had and could not
after considering the nature of the cure, be reasonably expected to give rise to
termination by the counterparty to the Major Project Document which is subject
to breach or to otherwise have exacerbated the Material Adverse Effect, and (F)
Administrative Agent shall have received an officer's certificate signed by a
Responsible Officer to the effect of clauses (A)-(E) above and stating what
action such Project Company is taking to cure such breach, then such 30 day cure
period (or such lesser period of time, as the case may be) shall be extended to
such date, not to exceed a total of 90 days, as shall be necessary for such
Project Company diligently to cure such breach.

            (b) Third Party. Any Person other than either Project Company shall
be in breach of, or in default under, a Major Project Document and such breach
or default shall reasonably be expected to have a Material Adverse Effect and
(i) shall not be remediable or (ii) if remediable, shall continue unremedied for
a period of 30 days from the time a Project Company obtains knowledge of such
breach or default; provided that if (A) such breach cannot be cured within such
30 day period, (B) such breach or default is susceptible of cure within 90 days,
(C) the breaching Person or the applicable Project Company is proceeding with
diligence and in good faith to cure such breach, and (D) extending the cure
period would not exacerbate the Material Adverse Effect, then such 30 day cure
period shall be extended to such date, not to exceed a total of 90 days, as
shall be necessary for such breaching Person diligently to cure such breach;
provided, further, that no Event of Default shall occur as a result of any such
action if such Project Company obtains a Replacement Obligor for the affected
party within the 90 day cure period referred to in this paragraph (or within the
30 day cure period, if no extension is given); provided, further, that no
Inchoate Default or Event of Default shall occur as a result of an "Event of
Default" under Section 16.2.2(a) of the MEC Construction Contract (relating to
"inadequate progress") unless the MEC Construction Contract is terminated as a
result thereof; and provided, further, in the case of any default or event of
default under any Major Project Document which is the basis for the making of a
drawing under either Contractor Undertaking LC pursuant to Section 2.2(c)(i)(C)
or 2.2(c)(ii) of either Completion Undertaking Agreement (or application of
proceeds of any Contractor Undertaking LC under similar circumstances as
provided in Section 2.3 of either Completion Undertaking Agreement), such
default or event of default under such Major Project Document shall be

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deemed cured and any related Inchoate Default or Event of Default hereunder
shall no longer exist following such drawing or application of funds.

            (c) Third Party Consents. (i) Any Person other than any Borrower
Party shall disaffirm or repudiate in writing its material obligations under any
Consent, (ii) any representation or warranty made in any Consent by Dow, NSP,
CCMCI, Operator or Sponsor (for so long as CCMCI's obligations under the
Construction Contracts remain outstanding) shall be untrue or misleading in any
material respect as of the time made and such untrue or misleading
representation or warranty could reasonably be expected to materially adversely
affect the rights of the Collateral Agent or the Secured Parties thereunder or
to otherwise result in a Material Adverse Change, or (iii) Dow, NSP, CES, CCMCI,
Operator or Sponsor (for so long as CCMCI's obligations under the Construction
Contracts remain outstanding) shall breach any material covenant in a Consent
and such breach or default shall not be remediable or, if remediable, shall
continue unremedied for a period of 30 days from the time of such breach or
default; provided that if (A) such breach cannot be cured within such 30 day
period, (B) such breach is susceptible of cure within 90 days, (C) the breaching
party is proceeding with diligence and in good faith to cure such breach, and
(D) the existence of such breach has not had and could not after considering the
nature of the cure, be reasonably expected to have a Material Adverse Effect,
then such 30 day cure period shall be extended to such date, not to exceed a
total of 90 days, as shall be necessary for such third party diligently to cure
such breach; provided, further, that no Event of Default shall occur as a result
of any such action if (1) the applicable Project Company obtains a Replacement
Obligor for the affected party with respect to the contract or contracts to
which such Consent relates, and (2) such Replacement Obligor executes a Consent
reasonably satisfactory to Administrative Agent, each within the 90 day cure
period referred to in this paragraph (or within the 30 day cure period, if no
extension is given) and such action does not have prior to so obtaining such
Replacement Obligor a Material Adverse Effect.

            (d) Termination. Any material provision in any Major Project
Document shall for any reason cease to be valid and binding on any party thereto
(other than any Borrower Party) except upon fulfillment of such party's
obligations thereunder, or shall be declared null and void; provided that no
Event of Default shall occur as a result of such breach or default if (i) such
provision is restored or replaced by a replacement provision in form and
substance reasonably acceptable to Administrative Agent within a period of 90
days thereafter, or (ii) such applicable Borrower Party obtains a Replacement
Obligor for the affected party within 90 days thereafter and, in either case,
such breach or default has not had and does not have prior to so obtaining such
replacement provision or Replacement Obligor, a Material Adverse Effect.

            7.1.16 Power Purchase Agreement and Capacity Sales Agreement. (a)
NSP shall have exercised its "step-in" rights pursuant to Section 12.7 of the
Power Purchase Agreement, (b) Sponsor shall reject or disavow its obligations
under the guaranty portion of the Security Fund, and (c) (i) any valid draw or
claim on the guaranty portion of the Security Fund by NSP pursuant to Section
12.7 of the Power Purchase Agreement shall fail to be timely honored in full,
and (ii) in the event that the Security Fund LC is increased as required under
Section 11.1(E) of the Power Purchase Agreement and contemplated by Section
2.2.4, Borrower

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has not provided cash collateral in the amount of any such increase. For
purposes of the previous sentence, "cash collateral" includes amounts in the
Borrower Revenue Account prior to Term-Conversion.

            7.1.17 MEC Facility Acceptance. The Facility Acceptance Date is not
achieved by three months after the Facility Acceptance Milestone, as such date
may have been extended for force majeure or other reason under the Power
Purchase Agreement.

            7.1.18 FEC Commercial Operation. Commercial Operation is not
achieved or deemed achieved by three months after the date of the FEC Milestone
for achieving Commercial Operation of the FEC Phase 3 Work for the Freeport
Project, as such date may have been extended for force majeure or other reason
under the Capacity Sales Agreement.

            7.1.19 Guaranties. The Borrower Party party thereto shall fail to
perform any of its material obligations under Section 2 of each of the MEC
Guaranties, the FEC Guaranty, the FEC-GP Guaranty or the FEC-LP Guaranty.

            7.1.20 Shortfall of Proceeds of Purchase Option or Put Option. As
further described in Section 3.6 of the Borrower Depositary Agreement, the
proceeds of the Purchase Option or Put Option, when applied (together with any
other amounts made available to prepay the FEC Allocated Portion, any amounts
then on deposit in the Accounts established under the FEC Depositary Agreement
and an amount equal to the FEC Allocated Portion Percentage of any amounts then
on deposit in the Debt Service Reserve Account) to prepay Term Loans, are
insufficient to reduce the outstanding principal of Term Loans by the amount of
the FEC Allocated Portion.

      7.2   REMEDIES.

            Upon the occurrence and during the continuation of an Event of
Default, Administrative Agent, Collateral Agent, and the Lenders may, at the
election of the Majority Lenders, without further notice of default, presentment
or demand for payment, protest or notice of non-payment or dishonor, or other
notices or demands of any kind, all such notices and demands (other than notices
expressly required by the Credit Documents) being waived, exercise any or all of
the following rights and remedies, in any combination or order that the Majority
Lenders may elect, in addition to such other rights or remedies as the Secured
Parties may have hereunder, under the Collateral Documents or at law or in
equity:

            7.2.1 No Further Loans or Letter of Credit. Cancel all Commitments,
refuse, and Administrative Agent, LC Issuer and the Lenders shall not be
obligated, to continue any Loans, make any additional Loans (other than Security
Fund LC Loans), issue, renew, or extend the Security Fund LC, or make any
payments, or permit the making of payments, from any Account or any Loan
proceeds or other funds held by Administrative Agent or Collateral Agent under
the Credit Documents or on behalf of Borrower; provided that in the case of an
Event of Default occurring under Section 7.1.2 with respect to Borrower, all
such Commitments shall be cancelled and terminated without further act of
Administrative Agent, Collateral Agent, or any Secured Party.

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            7.2.2 Cure by Agents. Without any obligation to do so, make
disbursements or Loans to or on behalf of Borrower or disburse amounts from the
Construction Account to cure (a) any Event of Default or Inchoate Default
hereunder, and (b) any default and render any performance under any Project
Document as the Majority Lenders in their sole discretion may consider necessary
or appropriate, whether to preserve and protect the Collateral or the Secured
Parties' interests therein or for any other reason. All sums so expended,
together with interest on such total amount at the Default Rate (but in no event
shall the rate exceed the maximum lawful rate), shall be repaid by Borrower to
Administrative Agent or Collateral Agent, as the case may be, on demand and
shall be secured by the Credit Documents, notwithstanding that such expenditures
may, together with amounts advanced under this Agreement, exceed the aggregate
amount of the Total Construction Loan Commitment.

            7.2.3 Acceleration. Declare and make all or a portion of the sums of
accrued and outstanding principal and accrued but unpaid interest remaining
under this Agreement, together with all unpaid fees, costs (including
Liquidation Costs and Hedge Breaking Fees) and charges due hereunder or under
any other Credit Document, immediately due and payable and require Borrower
immediately, without presentment, demand, protest or other notice of any kind,
all of which Borrower hereby expressly waives, to pay Administrative Agent or
the Secured Parties an amount in immediately available funds equal to the
aggregate amount of any outstanding Obligations of Borrower; provided that, in
the event of an Event of Default occurring under Section 7.1.2 with respect to
Borrower, all such amounts shall become immediately due and payable without
further act of Administrative Agent, LC Issuer, Collateral Agent, or the Secured
Parties.

            7.2.4 Cash Collateral; Letters of Credit. Apply or execute upon any
amounts on deposit in any Account, other than the Construction Sub-Account under
the MEC Depositary Agreement or the Third Step Construction Sub-Account under
the FEC Depositary Agreement, or any proceeds or any other moneys of Borrower on
deposit with Administrative Agent, Collateral Agent, Depositary Agent or any
Secured Party in the manner provided in the UCC and other relevant statutes and
decisions and interpretations thereunder with respect to cash collateral; or
draw upon any Collateral Replacement LC held by Collateral Agent as security.
Without limiting the foregoing, each of Administrative Agent, Collateral Agent
and Depositary Agent shall have all rights and powers with respect to the Loan
proceeds, draws upon any Collateral Replacement LC, the Accounts and the
contents of the Accounts as it has with respect to any other Collateral and may
apply, or cause the application of, such amounts to the payment of interest,
principal, fees, costs, charges or other amounts due or payable to
Administrative Agent, Collateral Agent, Depositary Agent or the Secured Parties
with respect to the Loans in such order as the Majority Lenders may elect in
their sole discretion. Borrower shall not have any rights or powers with respect
to such amounts.

            7.2.5 Possession of Projects. Enter into possession of either or
both Projects and perform any and all work and labor necessary to complete the
Projects substantially according to the Plans and Specifications or to operate
and maintain the Projects, and all sums expended by Administrative Agent,
Collateral Agent or Depositary Agent in so doing, together with interest on such
total amount at the Default Rate, shall be repaid by Borrower to Administrative
Agent,

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Collateral Agent or Depositary Agent, as the case may be, upon demand and shall
be secured by the Credit Documents, notwithstanding that such expenditures may,
together with amounts advanced under this Agreement, exceed the aggregate amount
of the Total Construction Loan Commitment.

            7.2.6 Remedies Under Credit Documents. Exercise, and direct
Administrative Agent, Depositary Agent, or Collateral Agent (as the case may be)
to exercise, any and all rights and remedies available to it under any of the
Credit Documents, including judicial or non-judicial foreclosure or public or
private sale of any of the Collateral pursuant to the Collateral Documents.
Furthermore, if Administrative Agent requests that certain actions be taken and
a Project Company fails to take the requested actions within five Banking Days,
Administrative Agent or Collateral Agent (as applicable) may enforce in its own
name or in such Project Company's name, such rights of the Project Company, all
as more particularly provided in the Security Agreement and the other Credit
Documents.

                                    ARTICLE 8
                               SCOPE OF LIABILITY

            Except as set forth in this Article 8, notwithstanding anything in
this Agreement or the other Credit Documents to the contrary, the Lenders, the
Hedge Banks and the LC Issuer shall have no claims with respect to the
transactions contemplated by the Operative Documents against Sponsor or any of
its Affiliates (other than Borrower Parties), shareholders, officers, directors
or employees (collectively, the "Nonrecourse Persons") and the Lenders', the
Hedge Banks' and the LC Issuer's recourse against Borrower Parties and the
Nonrecourse Persons shall be limited to the Collateral, the Projects, all
Project Revenues, all Loan proceeds, Insurance Proceeds, Eminent Domain
Proceeds, and all income or revenues of the foregoing as and to the extent
provided herein and in the Collateral Documents; provided that the foregoing
provision of this Article 8 shall not (a) constitute a waiver, release or
discharge of any of the indebtedness, or of any of the terms, covenants,
conditions, or provisions of this Agreement or any other Credit Document and the
same shall continue (but without personal liability to the Nonrecourse Persons)
until fully paid, discharged, observed, or performed, (b) limit or restrict the
right of Administrative Agent, Collateral Agent or any Secured Party (or any
assignee, beneficiary or successor to any of them) to name any Borrower Party or
any other Person as a defendant in any action or suit for a judicial foreclosure
or for the exercise of any other remedy under or with respect to this Agreement
or any other Collateral Document or Credit Document, or for injunction or
specific performance, so long as no judgment in the nature of a deficiency
judgment shall be enforced against any Nonrecourse Person, except as set forth
in this Article 8, (c) in any way limit or restrict any right or remedy of
Administrative Agent, Collateral Agent or any Secured Party (or any assignee or
beneficiary thereof or successor thereto) with respect to, and each of the
Nonrecourse Persons shall remain fully liable to the extent that it would
otherwise be liable for its own actions with respect to, any fraud, willful
misrepresentation (which shall not include innocent or negligent
misrepresentation), or misappropriation of Project Revenues, Loan proceeds,
Insurance Proceeds, Eminent Domain Proceeds or any other earnings, revenues,
rents, issues, profits or proceeds from or of the Collateral, that should or
would have been paid as provided herein or paid or delivered to Administrative
Agent, Collateral Agent or

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any Secured Party (or any assignee or beneficiary thereof or successor thereto)
towards any payment required under this Agreement or any other Credit Document,
(d) affect or diminish or constitute a waiver, release or discharge of any
specific written obligation, covenant, or agreement in respect of the
transactions contemplated by the Operative Documents made by any of the
Nonrecourse Persons or any security granted by the Nonrecourse Persons in
support of the obligations of such Persons under any Collateral Document or
Project Document (or as security for the obligations of Borrower Parties), or
the Group Pledge and Security Agreement, or (e) limit the liability of (i) any
Person who is a party to any Project Document or has issued any certificate or
other statement in connection therewith with respect to such liability as may
arise by reason of the terms and conditions of such Project Document (but
subject to any limitation of liability in such Project Document), certificate or
statement, or (ii) any Person rendering a legal opinion pursuant to this
Agreement (including Section 3.1.8, 3.2.11, 3.3.8 or 7.1.11), in each case under
this clause (e) relating solely to such liability of such Person as may arise
under such referenced agreement, instrument or opinion. The limitations on
recourse set forth in this Article 8 shall survive the termination of this
Agreement, the termination of all Commitments and the Interest Rate Agreements
to which any Secured Party is a party and the indefeasible payment in full in
cash and performance in full of the Borrower's Obligations hereunder and under
the other Operative Documents.

                                    ARTICLE 9
                              AGENTS; SUBSTITUTION

      9.1   APPOINTMENT, POWERS AND IMMUNITIES.

            9.1.1 Each Lender hereby appoints and authorizes (a) Administrative
Agent to act as its agent hereunder and under the other Credit Documents, and
(b) Collateral Agent to act as its collateral agent hereunder and under the
other Credit Documents, in each case with such powers as are expressly delegated
to Administrative Agent or Collateral Agent (as the case may be) by the terms of
this Agreement and the other Credit Documents, together with such other powers
as are reasonably incidental thereto. Neither Administrative Agent nor
Collateral Agent shall have any duties or responsibilities except those
expressly set forth in this Agreement or in any other Credit Document, or be a
trustee or a fiduciary for any Secured Party. Notwithstanding anything to the
contrary contained herein, neither Administrative Agent nor Collateral Agent
shall be required to take any action which is contrary to this Agreement or any
other Credit Documents or any Legal Requirement or exposes Administrative Agent
or Collateral Agent (as the case may be) to any liability. Each of the Lead
Arrangers, Collateral Agent, Administrative Agent, the Lenders and any of their
respective Affiliates shall not be responsible to any other Secured Party for
(i) any recitals, statements, representations or warranties made by each
Borrower Party or its Affiliates contained in this Agreement, the other Credit
Documents or in any certificate or other document referred to or provided for
in, or received by the Lead Arrangers, Administrative Agent, Collateral Agent,
or any Secured Party under this Agreement or any other Credit Document, (ii) the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement, the other Credit Documents, any

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Notes or any other document referred to or provided for herein, or (iii) any
failure by any Borrower Party or its Affiliates to perform their respective
obligations hereunder or thereunder. Each of Administrative Agent and Collateral
Agent may employ agents and attorneys-in-fact, and neither shall be responsible
for the negligence or misconduct of any such agents or attorneys-in-fact
selected by it with reasonable care.

            9.1.2 None of Collateral Agent, Administrative Agent, the Lead
Arrangers and their respective directors, officers, employees or agents shall be
responsible for any action taken or omitted to be taken by it or them hereunder
or under any other Credit Document or in connection herewith or therewith,
except for its or their own gross negligence or willful misconduct. Without
limiting the generality of the foregoing, (a) Administrative Agent may treat the
payee of any Note as the holder thereof until Administrative Agent receives
written notice of the assignment or transfer thereof signed by such payee and in
form satisfactory to Administrative Agent, (b) each of Administrative Agent and
Collateral Agent may consult with legal counsel, independent public accountants
and other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by them in accordance with the advice of such
counsel, accountants or experts, (c) none of Collateral Agent, Administrative
Agent and the Lead Arrangers makes any warranty or representation to any Secured
Party for any statements, warranties or representations made in or in connection
with any Operative Document, (d) none of Collateral Agent, Administrative Agent
and the Lead Arrangers shall have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of any
Operative Document on the part of any party thereto, to inspect the property
(including the books and records) of any Borrower Party or any other Person or
to ascertain or determine whether a Material Adverse Effect exists or is
continuing, and (e) none of Collateral Agent, Administrative Agent and the Lead
Arrangers shall be responsible to any Secured Party for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of any
Operative Document or any other instrument or document furnished pursuant
hereto. Except as otherwise provided under this Agreement and the other Credit
Documents, each of Administrative Agent and Collateral Agent shall take such
action with respect to the Credit Documents as shall be directed by the Majority
Lenders or, if expressly so provided, the Required Lenders.

            9.1.3 None of the Co-Syndication Agents, Underwriters,
Co-Documentation Agents and Co-Book Runners shall have any right, power,
obligation, liability, responsibility or duty under this Agreement, other than
those applicable to all Secured Parties and those set forth in Section 5.11 and
this Article 9. The Lead Arrangers shall only have those rights, powers,
obligations, liabilities, responsibilities and duties set forth in Section 3.1,
Section 5.11, this Article 9 and Section 11.1. Without limiting the foregoing,
none of the Lead Arrangers, Underwriters, Co-Syndication Agents,
Co-Documentation Agents and Co-Book Runners shall have or be deemed to have a
fiduciary relationship with any Secured Party. Each Secured Party hereby makes
the same acknowledgments with respect to the Lead Arrangers, Underwriters,
Co-Syndication Agents, Co-Documentation Agents and Co-Book Runners as it makes
with respect to the Administrative Agent or the Collateral Agent in this Article
9. Notwithstanding the foregoing, the parties hereto acknowledge that the
Co-Syndication Agents, Underwriters, Co-Documentation Agents and Co-Book Runners
hold such titles in name only, and that such

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titles confer no additional rights or obligations relative to those conferred on
any Secured Party hereunder.

      9.2   RELIANCE.

            Each of Administrative Agent and Collateral Agent shall be entitled
to rely upon any certificate, notice or other document (including any cable,
telegram, facsimile, electronic mail or telex) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons, and upon advice and statements of legal counsel, independent
accountants and other experts selected by it. As to any other matters not
expressly provided for by this Agreement, neither Collateral Agent nor
Administrative Agent shall be required to take any action or exercise any
discretion, but shall be required to act or to refrain from acting upon
instructions of the Majority Lenders or, where expressly provided, the Required
Lenders or all Lenders (except that neither Collateral Agent nor Administrative
Agent shall be required to take any action which exposes Collateral Agent or
Administrative Agent (as the case may be) to personal liability or which is
contrary to this Agreement, any other Credit Document or any Legal Requirement).
Each of Collateral Agent and Administrative Agent shall in all cases (including
when any action by Collateral Agent or Administrative Agent (as the case may be)
alone is authorized hereunder, if Collateral Agent or Administrative Agent (as
the case may be) elects in its sole discretion to obtain instructions from the
Majority Lenders) be fully protected in acting, or in refraining from acting,
hereunder or under any other Credit Document in accordance with the instructions
of the Majority Lenders (or, where so expressly stated, the Required Lenders or
all Lenders), and such instructions of the Majority Lenders (or Required Lenders
or all Lenders, where applicable) and any action taken or failure to act
pursuant thereto shall be binding on all of the Secured Parties.

      9.3   NON-RELIANCE.

            Each Lender represents that it has, independently and without
reliance on the Lead Arrangers, Collateral Agent, Administrative Agent, or any
other Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of the financial condition and affairs of
the Calpine Entities and its own decision to enter into this Agreement and
agrees that it will, independently and without reliance upon the Lead Arrangers,
Collateral Agent, Administrative Agent, or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own appraisals and decisions in taking or not taking action under this
Agreement. Each of Administrative Agent, the Lead Arrangers, Collateral Agent
and any Lender shall not be required to keep informed as to the performance or
observance by any Calpine Entity or its Affiliates under this Agreement or any
other document referred to or provided for herein or to make inquiry of, or to
inspect the properties or books of any Calpine Entity or its Affiliates.

      9.4   DEFAULTS; MATERIAL ADVERSE CHANGE.

            None of the Lead Arrangers, Collateral Agent and Administrative
Agent shall be deemed to have knowledge or notice of the occurrence of any
Inchoate Default, Event of

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Default or Material Adverse Change, unless such Person has received a notice
from a Lender or any Borrower Party, referring to this Agreement, describing
such Inchoate Default, Event of Default or Material Adverse Change and
indicating that such notice is a notice of the occurrence of such default or
Material Adverse Change (as the case may be). If Administrative Agent receives
such a notice of the occurrence of an Inchoate Default, Event of Default or
Material Adverse Change, Administrative Agent shall give notice thereof to the
Lenders. Each of Collateral Agent and Administrative Agent shall take such
action with respect to such Inchoate Default, Event of Default or Material
Adverse Change as is provided in Article 3, Article 7 or the terms of the Credit
Documents, or if not provided for in Article 3, Article 7 or such Credit
Documents, as Administrative Agent or Collateral Agent shall be reasonably
directed by the Majority Lenders; provided, however, that unless and until
Administrative Agent or Collateral Agent shall have received such directions,
each of Administrative Agent and Collateral Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Inchoate Default, Event of Default or Material Adverse Change as it
shall deem advisable in the best interest of the Lenders.

      9.5   INDEMNIFICATION.

            Without limiting the Obligations of each Borrower Party hereunder,
each Lender agrees to indemnify the Lead Arrangers, Collateral Agent and
Administrative Agent and their respective officers, directors, shareholders,
controlling Persons, employees, agents and servants, ratably in accordance with
their Proportionate Shares for any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may at any time be imposed on, incurred
by or asserted against Administrative Agent, the Lead Arrangers, Collateral
Agent or such Person in any way relating to or arising out of this Agreement or
any documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or the enforcement of any of the
terms hereof or thereof or of any such other documents (to the extent Borrower
has not paid any such amounts pursuant to Section 5.11); provided, however, that
no Lender shall be liable for any of the foregoing to the extent they arise from
Administrative Agent's, the Lead Arrangers', Collateral Agent's or any such
Person's gross negligence or willful misconduct. Administrative Agent or any
such Person shall be fully justified in refusing to take or to continue to take
any action hereunder or under any other Credit Document unless it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. Without limitation of the foregoing, each Lender agrees to
reimburse Administrative Agent, the Lead Arrangers, Collateral Agent or any such
Person promptly upon demand for its Proportionate Share of any out-of-pocket
expenses (including counsel fees) incurred by Administrative Agent, the Lead
Arrangers, Collateral Agent or any such Person in connection with the
preparation, execution, administration or enforcement of, or legal advice in
respect of rights or responsibilities under, the Operative Documents, to the
extent that Administrative Agent, the Lead Arrangers, Collateral Agent or any
such Person is not reimbursed for such expenses by Borrower.

      9.6   SUCCESSOR AGENT.

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            Each of Collateral Agent and Administrative Agent may resign at any
time by giving 15 days' written notice thereof to the Secured Parties and
Borrower. Each of Collateral Agent and Administrative Agent may be removed
involuntarily only for a material breach of its respective duties and
obligations hereunder and under the other Credit Documents or for gross
negligence or willful misconduct in connection with the performance of its
respective duties hereunder or under the other Credit Documents and then only
upon the affirmative vote of the Required Lenders (excluding Administrative
Agent and Collateral Agent (as the case may be) from such vote and
Administrative Agent's and Collateral Agent's (as the case may be) Proportionate
Share (if any) of the Commitments from the amounts used to determine the portion
of the Commitments necessary to constitute the required Proportionate Share of
the remaining Lenders). Upon any such resignation or removal of either
Administrative Agent or Collateral Agent, the Required Lenders shall have the
right, with the consent of Borrower (such consent not to be unreasonably
withheld or delayed) to appoint a successor Administrative Agent or Collateral
Agent (as the case may be). If no successor Administrative Agent or Collateral
Agent (as the case may be) shall have been so appointed by the Required Lenders
and shall have accepted such appointment, within 30 days after the retiring
Administrative Agent's or Collateral Agent's (as the case may be) giving of
notice of resignation or the Lenders' removal of the retiring Administrative
Agent or Collateral Agent (as the case may be), the retiring Administrative
Agent and Collateral Agent (as the case may be) may, on behalf of the Secured
Parties, with the consent of Borrower (such consent not to be unreasonably
withheld or delayed), appoint a successor Administrative Agent or Collateral
Agent (as the case may be) hereunder, which shall be a Lender, if any Lender
shall be willing to serve, and otherwise shall be a commercial bank having a
combined capital and surplus of at least $500,000,000. Upon the acceptance of
any appointment as Administrative Agent or Collateral Agent (as the case may be)
under the Operative Documents by a successor Administrative Agent or Collateral
Agent (as the case may be), such successor Administrative Agent or Collateral
Agent (as the case may be) shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Administrative Agent
or Collateral Agent (as the case may be), and the retiring Administrative Agent
or Collateral Agent (as the case may be) shall be discharged from its duties and
obligations as Administrative Agent or Collateral Agent (as the case may be)
only under the Credit Documents. After any retiring Administrative Agent's or
Collateral Agent's resignation or removal hereunder as Administrative Agent or
Collateral Agent (as the case may be), the provisions of this Article 9 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Administrative Agent or Collateral Agent (as the case may be) under the
Operative Documents.

      9.7   AUTHORIZATION.

            Each of Administrative Agent and Collateral Agent is hereby
authorized by the Secured Parties to execute, deliver and perform each of the
Credit Documents to which Administrative Agent or Collateral Agent (as the case
may be) is or is intended to be a party, and each Lender agrees to be bound by
all of the agreements of Administrative Agent and Collateral Agent contained in
the Credit Documents. Each of Administrative Agent and Collateral Agent is
further authorized by the Secured Parties to release Liens on property that
Borrower is permitted to sell or transfer pursuant to the terms of this
Agreement or the other Credit Documents and to

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enter into agreements supplemental hereto for the purpose of curing any formal
defect, inconsistency, omission or ambiguity in this Agreement or any Credit
Document to which it is a party.

      9.8   OTHER ROLES.

            With respect to its Commitment, the Loans made by it and any Note
issued to it, each of the Lead Arrangers, Collateral Agent, Administrative Agent
and LC Issuer in its individual capacity shall have the same rights and powers
under the Operative Documents as any other Lender and may exercise the same as
though it were not a Lead Arranger, Collateral Agent, Administrative Agent or LC
Issuer. The term "Lender" or "Lenders" shall, unless otherwise expressly
indicated, include each of the Lead Arrangers, Collateral Agent, Administrative
Agent and LC Issuer in its individual capacity. Each of the Lead Arrangers,
Collateral Agent, Administrative Agent, LC Issuer and their respective
Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with any Borrower
Party or any other Person, without any duty to account therefor to the Lenders.
For the avoidance of doubt Collateral Agent may act as Depositary Agent
notwithstanding any potential or actual conflict of interest presented by the
foregoing and any Borrower Party. Each of the Lenders hereby waives any claim
against each of the Lead Arrangers, Collateral Agent, Administrative Agent, LC
Issuer and any of their respective Affiliates based upon any conflict of
interest that such Person may have with regard to acting as an agent, arranger
or issuing bank hereunder and acting in such other roles.

      9.9   AMENDMENTS; WAIVERS.

            Subject to the provisions of this Section 9.9, unless otherwise
specified in this Agreement or another Credit Document, the Majority Lenders (or
Administrative Agent or Collateral Agent upon written direction or consent of
the Majority Lenders) and any Borrower Party may enter into agreements, waivers
or supplements hereto for the purpose of adding, modifying or waiving any
provisions to the Credit Documents or changing in any manner the rights of the
Lenders or any Borrower Party hereunder or thereunder or waiving any Inchoate
Default or Event of Default; provided, however, that no such supplemental
agreement shall, without the consent of all of the Lenders:

            (a) increase the amount of the Commitment of any Lender hereunder;
or

            (b) reduce the percentage specified in the definition of "Majority
Lenders" or "Required Lenders"; or

            (c) amend this Section 9.9; or

            (d) release any Collateral (other than immaterial portions thereof
or as expressly permitted pursuant to the Credit Documents) from the Lien of any
of the Collateral Documents; or

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            (e) extend the Construction Loan Maturity Date or the Term Loan
Maturity Date or reduce the principal amount of any outstanding Loans or Notes
or reduce the rate or change the time of payment of interest due on any Loan;
provided that only the consent of the Required Lenders shall be necessary to
amend the definition of "Default Rate" contained in Section 2.6.3 or to waive
any obligation of Borrower to pay interest at the Default Rate; or

            (f) reduce the amount or extend the payment date for any amount due,
whether principal or interest; or

            (g) subordinate the Loans to any other Debt.

            No amendment, modification, termination or waiver of any provision
of this Agreement affecting the rights or obligations of Administrative Agent,
Collateral Agent, LC Issuer or the Lead Arrangers shall be effective without the
written consent of Administrative Agent, Collateral Agent, LC Issuer or the Lead
Arrangers, as the case may be.

      9.10  WITHHOLDING TAX.

            If the forms or other documentation required by Section 2.6.6 are
not delivered to Administrative Agent, then Administrative Agent may withhold
from any interest payment to any Lender not providing such forms or other
documentation, an amount equivalent to the applicable withholding tax.

            9.10.1 If the Internal Revenue Service or any authority of the
United States or other jurisdiction asserts a claim that Administrative Agent
did not properly withhold tax from amounts paid to or for the account of any
Lender (because the appropriate form was not delivered, was not properly
executed, or because such Lender failed to notify Administrative Agent of a
change in circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason), then such Lender shall
indemnify Administrative Agent fully for all amounts paid, directly or
indirectly, by Administrative Agent as tax or otherwise, including penalties and
interest, together with all expenses incurred, including legal expenses,
allocated staff costs, and any out of pocket expenses. Borrower shall not be
responsible for any amounts paid or required to be paid by a Lender under this
Section 9.10.1.

            9.10.2 If any Lender sells, assigns, grants participation in, or
otherwise transfers its rights under this Agreement, the purchaser, assignee,
participant or transferee, as applicable, shall comply and be bound by the terms
of Section 2.6.6 and this Section 9.10 as though it were such Lender.

      9.11  GENERAL PROVISIONS AS TO PAYMENTS.

            Administrative Agent shall promptly distribute to each Lender,
subject to the terms of any separate agreement between Administrative Agent and
such Lender, its pro rata share of each payment of principal and interest
payable to the Lenders on the Loans and of fees hereunder received by
Administrative Agent for the account of the Lenders and of any other

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amounts owing under the Loans. The payments made for the account of each Lender
shall be made, and distributed to it, for the account of (a) its domestic
lending office in the case of payments of principal of, and interest on, its
Base Rate Loans, (b) its domestic or foreign lending office, as each Lender may
designate in writing to Administrative Agent, in the case of LIBOR Loans, and
(c) its domestic lending office, or such other lending office as it may
designate for the purpose from time to time, in the case of payments of fees and
other amounts payable hereunder. Lenders shall have the right to alter
designated lending offices upon five Banking Days prior written notice to
Administrative Agent and Borrower.

      9.12  SUBSTITUTION OF LENDER.

            Should any Lender fail to make a Loan in violation of its
obligations under this Agreement (a "Non-Advancing Bank"), Administrative Agent
shall (a) in its sole discretion fund the Loan on behalf of the Non-Advancing
Bank, or (b) cooperate and consult with Borrower or any other Lender to find
another Person that shall be acceptable to Administrative Agent and that shall
be willing to assume the Non-Advancing Bank's obligations under this Agreement
(including the obligation to make the Loan which the Non-Advancing Bank failed
to make but without assuming any liability for damages for failing to have made
such Loan or any previously required Loan). Subject to the provisions of the
next following sentence, such Person shall be substituted for the Non-Advancing
Bank hereunder upon execution and delivery to Administrative Agent of an
agreement acceptable to Administrative Agent by such Person assuming the
Non-Advancing Bank's obligations (including its Commitments) under this
Agreement, and all interest and fees which would otherwise have been payable to
the Non-Advancing Bank shall thereafter be payable to such Person. Nothing in
(and no action taken pursuant to) this Section 9.12 shall relieve the
Non-Advancing Bank from any liability it might have to Borrower or to the other
Lenders as a result of its failure to make any Loan.

      9.13  PARTICIPATION.

            9.13.1 Sales of Participation. Nothing herein provided shall prevent
any Lender from selling a participation in one or more of its Commitments (or
Loans made hereunder); provided that (a) no such sale of a participation shall
alter such Lender's or Borrower's obligations hereunder, and (b) any agreement
pursuant to which any Lender may grant a participation in its rights with
respect to its Commitment (or Loans made hereunder) shall provide that, with
respect to such Commitment (or Loans made hereunder), subject to the following
proviso, such Lender shall retain the sole right and responsibility to exercise
the rights of such Lender, and enforce the obligations of Borrower relating to
such Commitment (or Loans made hereunder), including the right to approve any
amendment, modification or waiver of any provision of this Agreement or any
other Credit Document and the right to take action to have the Obligations
hereunder (or any portion thereof) declared due and payable pursuant to Article
7; provided, however, that such agreement may provide that the participant may
have rights to approve or disapprove decreases in Commitments, interest rates or
fees, lengthening of maturity of any Loans, extend the payment date for any
amount due under Article 2 or release of

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any material Collateral. No recipient of a participation in any Commitment or
Loans of any Lender shall have any rights under this Agreement or shall be
entitled to any reimbursement for Taxes, Other Taxes, increased costs or reserve
requirements under Section 2.6 or 2.8 or any other indemnity or payment rights
against Borrower (but shall be permitted to receive from the Lender granting
such participation a proportionate amount which would have been payable to the
Lender from whom such Person acquired its participation).

            9.13.2 Special Purpose Funding Vehicles. Notwithstanding anything to
the contrary contained herein, any Lender (a "Granting Bank") may grant to a
special purpose funding vehicle (a "SPC"), identified as such in writing from
time to time by the Granting Bank to Administrative Agent and Borrower, the
option to provide to Borrower all or any part of any Loan that such Granting
Bank would otherwise be obligated to make to Borrower pursuant to this
Agreement; provided that (a) nothing herein shall constitute a commitment by any
SPC to make any Loan, and (b) if a SPC elects not to exercise such option or
otherwise fails to provide all or any part of such Loan, the Granting Bank shall
be obligated to make such Loan pursuant to the terms hereof. The making of a
Loan by a SPC hereunder shall utilize the Commitment of the Granting Bank to the
same extent, and as if, such Loan were made by such Granting Bank. Each party
hereto hereby agrees that no SPC shall be liable for any indemnity or similar
payment obligation under this Agreement (all liability for which shall remain
with the Granting Bank). In furtherance of the foregoing, each party hereto
hereby agrees (which agreement shall survive the termination of this Agreement)
that, prior to the date that is one year and one day after the payment in full
of all outstanding commercial paper or other senior indebtedness of any SPC, it
will not institute against, or join any other Person in instituting against,
such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings under the laws of the United States or any state thereof. In
addition, notwithstanding anything to the contrary contained in this Section
9.13, any SPC may (i) with notice to, but without the prior written consent of,
Borrower, Administrative Agent or and without paying any processing fee
therefor, assign all or a portion of its interests in any Loans to the Granting
Bank or to any financial institutions (consented to by Borrower and
Administrative Agent) providing liquidity or credit support to or for the
account of such SPC to support the funding or maintenance of Loans, and (ii)
disclose on a confidential basis any non-public information relating to its
Loans to any rating agency, commercial paper dealer or provider of any surety,
guarantee or credit or liquidity enhancement to such SPC. This Section 9.13.2
may not be amended without the written consent of all SPCs having outstanding
Loans or Commitments hereunder.

      9.14  TRANSFER OF COMMITMENT.

            Notwithstanding anything else herein to the contrary (but subject to
Section 9.13.2), any Lender, after receiving Administrative Agent's prior
written consent (such consent not to be unreasonably withheld) and (so long as
no Event of Default has occurred and is continuing), after consulting with
Borrower as to the identity of the applicable assignee, may from time to time,
at its option, sell, assign, transfer, negotiate or otherwise dispose of a
portion of one or more of its Commitments (including, for purposes of this
Section 9.14, Loans made hereunder) (including the Lender's interest in this
Agreement and the other Credit Documents) to any Lender; provided, however, that
no Lender (including any assignee of any Lender) may

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assign any portion of its Commitment (including Loans) (a) in an amount less
than $5,000,000 (unless to another Lender), or (b) in an amount which leaves the
assigning Lender with a Commitment (including Loans) of less than $5,000,000 (in
each case based on the original principal amount of the Commitment assigned)
after giving effect to such assignment and all previous assignments (except that
a Lender may be left with no Commitment or Loans if it assigns its entire
Commitment); and provided, further, that any Lender may assign all or any
portion of its Commitments to an Affiliate of such Lender without the consent of
any Person. In the event of any such assignment, (i) the assigning Lender's
Proportionate Share shall be reduced and its obligations hereunder released by
the amount of the Proportionate Share assigned to the new Lender, (ii) the
parties to such assignment shall execute and deliver an appropriate agreement
evidencing such sale, assignment, transfer or other disposition, in form and
substance reasonably satisfactory to Administrative Agent and Borrower, (iii)
the parties to the sale, assignment, transfer or other disposition, excluding
Borrower, shall collectively pay to Administrative Agent an administrative fee
of $3,500, (iv) at the assigning Lender's option, Borrower shall execute and
deliver to such new Notes in the forms attached hereto as Exhibit B-1 or Exhibit
B-2, as requested, in a principal amount equal to such new Lender's Commitment,
but only if it shall also be executing and exchanging with the assigning Lender
a replacement note for any Note in an amount equal to the Commitment retained by
the assigning Lender, if any; provided that Borrower shall have received for
cancellation the existing Note held by such assigning Lender, and (v)
Administrative Agent shall amend Exhibit H to reflect the Proportionate Shares
of the Lenders following such assignment. Thereafter, such new Lender shall be
deemed to be a Lender and shall have all of the rights and duties of a Lender
(except as otherwise provided in this Article 9), in accordance with its
Proportionate Share, under each of the Credit Documents.

      9.15  LAWS.

            Notwithstanding the foregoing provisions of this Article 9, no sale,
assignment, transfer, negotiation or other disposition of the interests of any
Lender hereunder or under the other Credit Documents shall be allowed if it
would require registration under the federal Securities Act of 1933, as then
amended, any other federal securities laws or regulations or the securities laws
or regulations of any applicable jurisdiction. Borrower shall, from time to time
at the request and expense of Administrative Agent, execute and deliver to
Administrative Agent, or to such party or parties as Administrative Agent may
designate, any and all further instruments as may in the opinion of
Administrative Agent be reasonably necessary or advisable to give full force and
effect to such sale, assignment, transfer, negotiation or disposition which
would not require any such registration.

      9.16  ASSIGNABILITY AS COLLATERAL.

            Notwithstanding any other provision contained in this Agreement or
any other Credit Document to the contrary, any Lender may assign all or any
portion of the Loans or Notes held by it to the Federal Reserve Bank and the
United States Treasury as collateral security; provided that any payment in
respect of such assigned Loans or Notes made by Borrower to or for the account
of the assigning or pledging Lender in accordance with the terms of this

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Agreement shall satisfy Borrower's obligations hereunder in respect of such
assigned Loans or Notes to the extent of such payment. No such assignment shall
release the assigning Lender from its obligations hereunder.

      9.17  NOTICES TO LENDERS.

            The Administrative Agent promptly shall deliver all material
documents, instruments and notices that it receives hereunder and under the
other Operative Documents to each Lender. Except as expressly provided in this
Agreement or the other Credit Documents, the Borrower shall not be required to
deliver any documents, instruments or notices directly to the Lenders.

      9.18  COLLATERAL AGENT.

            The Collateral Agent shall:

            9.18.1 forward promptly to Administrative Agent any notice delivered
to the Collateral Agent pursuant to any Consent;

            9.18.2 have the right, but not the obligation, to (a) refuse any
item for credit to any Account except as required by the terms of the Credit
Documents, (b) refuse to honor any request for transfer in relation to any
Account that is not consistent with the Credit Documents, (c) charge to any
Account all applicable charges related to maintaining such Accounts, and (d) pay
fees, interest and other charges owing by Borrower as provided herein and in the
other Operative Documents;

            9.18.3 except as otherwise provided herein and in the Depositary
Agreements (including by the provision of standing instructions therein), take
all actions and make all determinations with respect to the Collateral, the
Security Documents (including as to the advisability of taking additional steps
to perfect, or cause the perfection of, any security interest) and the other
Credit Documents to which it is a party as directed in writing by Administrative
Agent (acting in accordance with Section 9.9); and

            9.18.4 have the right at any time to seek clarification and
instructions concerning the administration of the Credit Documents from
Administrative Agent, legal counsel selected by it in good faith with reasonable
care or any court of competent jurisdiction and shall be fully protected in
relying upon such instructions.

                                   ARTICLE 10
                             INDEPENDENT CONSULTANTS

      10.1  REMOVAL AND FEES.

            Administrative Agent, in its reasonable discretion, may remove from
time to time, any one or more of the Independent Consultants and, after
consulting with Borrower as to an appropriate Person, appoint replacements as
Administrative Agent may choose. Notice of any

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replacement Independent Consultant shall be given by Administrative Agent to
Borrower, the Lenders and to the Independent Consultant being replaced. All
reasonable fees and expenses of the Independent Consultants (whether the
original ones or replacements) shall be paid by Borrower pursuant to agreements
reasonably acceptable to Borrower; provided that no such acceptance shall be
required at any time an Event of Default shall have occurred and be continuing.

      10.2  DUTIES.

            Each Independent Consultant shall be contractually obligated to (a)
on or before the Closing Date, the Lead Arrangers, and (b) thereafter,
Administrative Agent to carry out the activities required of it in this
Agreement and as otherwise requested by the Lead Arrangers or Administrative
Agent (as the case may be) and shall be responsible solely to the Lead Arrangers
or Administrative Agent (as the case may be). Borrower acknowledges that it will
not have any cause of action or claim against any Independent Consultant
resulting from any decision made or not made, any action taken or not taken or
any advice given by such Independent Consultant in the due performance in good
faith of its duties to the Lead Arrangers or Administrative Agent (as the case
may be), except to the extent arising from such Independent Consultant's gross
negligence or willful misconduct.

      10.3  INDEPENDENT CONSULTANTS' CERTIFICATES.

            (a) Until the receipt by Administrative Agent of certificates
satisfactory to Administrative Agent from each Independent Consultant whom
Administrative Agent considers necessary or appropriate certifying Completion of
a Project or Final Completion, Borrower shall provide such documents and
information to the Independent Consultants as any of the Independent Consultants
may reasonably consider necessary in order for the Independent Consultants to
deliver to Administrative Agent the following:

                  (i) certificates of the Insurance Consultant, Independent
Engineer and Power Market Consultant delivered on and dated as of the Closing
Date as described in Sections 3.1.9, 3.1.11 and 3.1.12, respectively, and
containing the matters set out therein;

                  (ii) after the Closing Date, all certificates to be delivered
thereafter pursuant to this Agreement; and

                  (iii) monthly after the Closing Date, a full report and status
of the progress of each Project to that date, a complete assessment of Project
Costs to Final Completion and such other information and certification as
Administrative Agent may reasonably require from the Independent Engineer from
time to time.

            (b) Following Completion of each Project, Borrower shall provide
such documents and information to the Independent Consultants as they may
reasonably consider necessary in order for the Independent Consultants to
deliver annually to Administrative Agent

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a certificate setting forth a full report on the status of each Project and such
other information and certification as Administrative Agent may reasonably
require from time to time.

      10.4  CERTIFICATION OF DATES.

            Administrative Agent will request that the Independent Consultants
act diligently in the issuance of all certificates required to be delivered by
the Independent Consultants hereunder, if their issuance is appropriate.
Borrower shall provide the Independent Consultants with reasonable notice of the
expected occurrence of any dates or events requiring the issuance of such
certificates.

                                   ARTICLE 11
                                  MISCELLANEOUS

      11.1  ADDRESSES.

            Any communications between the parties hereto or notices provided
herein to be given may be given to the following addresses:

            If to Administrative Agent or
            Collateral Agent:              Calyon New York Branch
                                           1301 Avenue of the Americas
                                           New York, NY 10019-6022
                                           Attn: Project Finance-
                                                 Portfolio Management
                                           Telephone No.: (212) 261-7882
                                           Telecopy No.: (212) 261-3421
                                           E-mails: Robert.Colvin@us.calyon.com;
                                           Justine.Ventrelli@us.calyon.com

            If to Borrower:                 Calpine Steamboat Holdings, LLC
                                            50 West San Fernando St.
                                            Suite 642
                                            San Jose, CA 95113
                                            Telephone: (408) 794-2606
                                            Fax: (408) 792-1162
                                            Attn: Brian Harenza

            All such notices or other communications required or permitted to be
given hereunder shall be in writing and shall be considered as properly given
(a) if delivered in person, (b) if sent by overnight delivery service (including
Federal Express, UPS, ETA, Emery, DHL, AirBorne and other similar overnight
delivery services), (c) if mailed by first class United States Mail, postage
prepaid, registered or certified with return receipt requested, (d) if sent by
facsimile with receipt confirmed by telephone, or (e) by Electronic Transmission
(as defined below). Notice so given shall be effective upon receipt by the
addressee, except that communication or notice so transmitted by facsimile or
other direct written electronic means shall be deemed to have been validly and
effectively given on the day (if a Banking Day and, if

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not, on the next following Banking Day) on which it is transmitted if
transmitted before 4:00 p.m., recipient's time, and if transmitted after that
time, on the next following Banking Day; provided, however, that if any notice
is tendered to an addressee and the delivery thereof is refused by such
addressee, such notice shall be effective upon such tender. Any party shall have
the right to change its address for notice hereunder to any other location
within the continental United States by giving of 30 days' notice to the other
parties in the manner set forth above.

            Any Borrower Party may deliver to Administrative Agent, Collateral
Agent or Depositary Agent, as the case may be, any borrowing base certificate,
collateral report or other material that such Borrower Party is required to
deliver to Administrative Agent, Collateral Agent or Depositary Agent (as the
case may be) hereunder or under the other Credit Documents, by e-mail or other
electronic transmission (an "Electronic Transmission"), subject to the following
terms:

                  (1) Each Electronic Transmission must be sent by the treasurer
or chief financial officer of the applicable Borrower Party (or any other
authorized representative), and must be addressed to the loan officer and the
assistant loan officer of Administrative Agent or Collateral Agent or account
officer of Depositary Agent (as the case may be) that handle Borrower's account,
as designated by Administrative Agent or Collateral Agent (as the case may be)
from time to time. If any Electronic Transmission is returned to the sender as
undeliverable, the material included in such Electronic Transmission must be
delivered to the intended recipient in the manner required by Section 11.1.

                  (2) Each certificate, collateral report or other material
contained in an Electronic Transmission must be in a "pdf" or other imaging
format. Any signature on a certificate, collateral report or other material
contained in an Electronic Transmission shall constitute a valid signature for
purposes hereof. Administrative Agent and Collateral Agent may rely upon, and
assume the authenticity of, any such signature, and any material containing such
signature shall constitute an "authenticated" record for purposes of the Uniform
Commercial Code and shall satisfy the requirements of any applicable statute of
frauds.

                  (3) The Borrower Parties shall maintain the original versions
of all certificates, collateral reports and other materials delivered to
Administrative Agent or Collateral Agent by means of an Electronic Transmission
and shall furnish to Administrative Agent or Collateral Agent such original
versions within five Banking Days of Administrative Agent or Collateral Agent's
request for such materials, signed and certified (to the extent required
hereunder) by the officer submitting the Electronic Transmission.

      11.2 ADDITIONAL SECURITY; RIGHT TO SET-OFF.

            Any deposits or other sums at any time credited or due from Lenders
and any Project Revenues, securities or other property of any Borrower Party in
the possession of any Secured Party may at all times be treated as collateral
security for the payment of the Loans and any Notes and all other obligations of
each Borrower Party to the Lenders under this Agreement and the other Credit
Documents, and each Borrower Party hereby pledges to Collateral Agent for

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the benefit of the Secured Parties and grants Collateral Agent for the benefit
of the Secured Parties a security interest in and to all such deposits, sums,
securities or other property. Subject to Section 2.7.2, regardless of the
adequacy of any other collateral, any Secured Party with the prior written
consent of the Collateral Agent may execute or realize on its or the Collateral
Agent's security interest in any such deposits or other sums credited by or due
from Lenders to Borrower, and may apply any such deposits or other sums to or
set them off against Borrower's obligations to Lenders under any Notes and this
Agreement at any time after the occurrence and during the continuance of any
Event of Default.

      11.3 DELAY AND WAIVER.

            No delay or omission to exercise any right, power or remedy accruing
to the Secured Parties upon the occurrence of any Event of Default, Inchoate
Default, Material Adverse Change or any breach or default of any Borrower Party
or any other Calpine Entity or unsatisfied condition precedent under this
Agreement or any other Credit Document shall impair any such right, power or
remedy of the Secured Parties, nor shall it be construed to be a waiver of any
such breach or default or unsatisfied condition precedent, or an acquiescence
therein, or of or in any similar breach or default or unsatisfied condition
precedent thereafter occurring, nor shall any waiver of any single Event of
Default, Inchoate Default, Material Adverse Change or other breach or default or
unsatisfied condition precedent be deemed a waiver of any other Event of
Default, Inchoate Default, Material Adverse Change or other breach or default or
unsatisfied condition precedent theretofore or thereafter occurring. Any waiver,
permit, consent or approval of any kind or character on the part of
Administrative Agent, Collateral Agent or the Secured Parties of any Event of
Default, Inchoate Default, Material Adverse Effect or other breach or default or
unsatisfied condition precedent under this Agreement or any other Credit
Document, or any waiver on the part of Administrative Agent, Collateral Agent or
the Secured Parties of any provision or condition of this Agreement or any other
Credit Document, must be in writing and shall be effective only to the extent in
such writing specifically set forth. All remedies, either under this Agreement
or any other Credit Document or by law or otherwise afforded to Administrative
Agent, Collateral Agent, LC Issuer and the Secured Parties, shall be cumulative
and not alternative.

      11.4 COSTS, EXPENSES AND ATTORNEYS' FEES; SYNDICATION.

            11.4.1 Borrower will pay to each of Administrative Agent, Collateral
Agent, and the Lead Arrangers all of their respective reasonable costs and
expenses in connection with the preparation, negotiation, closing and
administering of this Agreement and the documents contemplated hereby and any
participation or syndication of the Loans or this Agreement, including the
reasonable fees, expenses and disbursements of Latham & Watkins LLP, together
with other legal counsel retained by Administrative Agent or Collateral Agent in
the States of Minnesota and Texas in connection with the preparation of such
documents and any amendments hereof; provided, however, that Borrower shall not
be required to pay the fees of the other Lenders' attorneys. Borrower will
reimburse (a) Administrative Agent and Collateral Agent for

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all costs and expenses, including reasonable attorneys' fees, expended or
incurred by Administrative Agent, Collateral Agent, and the Lenders for their
reasonable internal out-of-pocket expenses (but not, in the case of the Lenders,
for counsel fees), in enforcing this Agreement or the other Credit Documents in
connection with an Event of Default or Inchoate Default, in actions for
declaratory relief in any way related to this Agreement or in collecting any sum
which becomes due on the Notes or under the Credit Documents and (b)
Administrative Agent, Collateral Agent, and the Lenders for their reasonable
out-of-pocket expenses, including reasonable attorney fees and reasonable
expert, consultant and advisor fees and expenses, in the case of a restructuring
of the Loans or otherwise relating to the occurrence of any Inchoate Default or
Event of Default. Borrower shall not be responsible for any counsel fees of the
Lead Arrangers, Administrative Agent, Collateral Agent or the Lenders other than
as set forth above, in Section 5.11 or as otherwise set forth in a separate
agreement.

            11.4.2 In connection with syndication of the Loans and Commitments,
an information package containing certain relevant information concerning each
Borrower Party, the Projects and the other Project participants (including a
computer model prepared by Borrower containing the Base Case Project
Projections) will be prepared on behalf of Borrower and provided to potential
Lenders and participants. Borrower agrees to cooperate and to cause each other
Borrower Party and Sponsor to cooperate in the syndication of the Loans and
Commitments in all respects reasonably requested by the Lead Arrangers,
including participation of each Borrower Party and Sponsor in bank meetings held
in connection with such syndication.

      11.5 ENTIRE AGREEMENT.

            This Agreement and any agreement, document or instrument attached
hereto or referred to herein integrate all the terms and conditions mentioned
herein or incidental hereto and supersede all oral negotiations and prior
writings in respect to the subject matter hereof. In the event of any conflict
between the terms, conditions and provisions of this Agreement and any such
agreement, document or instrument, the terms, conditions and provisions of this
Agreement shall prevail.

      11.6 GOVERNING LAW.

            THIS AGREEMENT AND ANY OTHER CREDIT DOCUMENT (UNLESS OTHERWISE
EXPRESSLY PROVIDED FOR THEREIN), SHALL BE GOVERNED BY, AND CONSTRUED UNDER, THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO CONFLICTS OF LAWS (OTHER
THAN SECTION 5-1401 AND SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

      11.7 SEVERABILITY.

            In case any one or more of the provisions contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.

      11.8 HEADINGS.

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            Article, Section and Paragraph headings have been inserted in this
Agreement as a matter of convenience for reference only and it is agreed that
such headings are not a part of this Agreement and shall not be used in the
interpretation of any provision of this Agreement.

      11.9 ACCOUNTING TERMS.

            All accounting terms not specifically defined herein shall be
construed in accordance with GAAP and practices consistent with those applied in
the preparation of the financial statements submitted by Borrower to
Administrative Agent, and all financial data submitted pursuant to this
Agreement shall be prepared in accordance with such principles and practices.

      11.10 ADDITIONAL FINANCING.

            The parties hereto acknowledge that as of the Closing Date the
Lenders have made no agreement or commitment to provide any financing except as
set forth herein.

      11.11 NO PARTNERSHIP, ETC.

            The Lenders and Borrower intend that the relationship between them
shall be solely that of creditor and debtor. Nothing contained in this
Agreement, the Notes or in any of the other Credit Documents shall be deemed or
construed to create a partnership, tenancy-in-common, joint tenancy, joint
venture or co-ownership by or between the Lenders and Borrower or any other
Person. None of the Lead Arrangers, Administrative Agent, Collateral Agent or
the Lenders shall be in any way responsible or liable for the debts, losses,
obligations or duties of Borrower or any other Person with respect to the
Projects or otherwise. All obligations to pay real property or other taxes,
assessments, insurance premiums, and all other fees and charges arising from the
ownership, operation or occupancy of the Projects (if any) and to perform all
obligations and other agreements and contracts relating to the Projects shall be
the sole responsibility of Borrower Parties.

      11.12 DEED OF TRUST/COLLATERAL DOCUMENTS.

            Certain guaranties of the Loans are secured in part by the FEC Deed
of Trust and the MEC Mortgage encumbering certain properties in the States of
Texas and Minnesota, in each case, solely to the extent provided therein.
Reference is hereby made to the FEC Deed of Trust and the MEC Mortgage and the
other Collateral Documents for the provisions, among others, relating to the
nature and extent of the security provided thereunder, the rights, duties and
obligations of Borrower and the rights of Administrative Agent, Collateral Agent
and the other Secured Parties with respect to such security.

      11.13 LIMITATION ON LIABILITY.

            No claim shall be made by any Borrower Party against the Lead
Arrangers, Administrative Agent, Collateral Agent, the Lenders or any of their
respective Affiliates, directors, employees, attorneys or agents for any loss of
profits, business or anticipated savings,

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special or punitive damages or any indirect or consequential loss whatsoever in
respect of any breach or wrongful conduct (whether or not the claim therefor is
based on contract, tort or duty imposed by law), in connection with, arising out
of or in any way related to the transactions contemplated by this Agreement or
the other Operative Documents or any act or omission or event occurring in
connection therewith, and each Borrower Party hereby waives, releases and agrees
not to sue upon any such claim for any such damages, whether or not accrued and
whether or not known or suspected to exist in its favor, in each case, except to
the extent such claim is based on gross negligence or willful misconduct of such
Person.

      11.14 WAIVER OF JURY TRIAL.

            ADMINISTRATIVE AGENT, COLLATERAL AGENT, THE LENDERS, THE HEDGE
BANKS, THE LC ISSUER AND BORROWER HEREBY KNOWINGLY, VOLUNTARILY, AND
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF ADMINISTRATIVE
AGENT, COLLATERAL AGENT, THE LENDERS, THE HEDGE BANKS, THE LC ISSUER, OR
BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR BORROWER, ADMINISTRATIVE
AGENT, COLLATERAL AGENT, THE LENDERS, THE HEDGE BANKS AND THE LC ISSUER TO ENTER
INTO THIS AGREEMENT.

      11.15 CONSENT TO JURISDICTION.

            Administrative Agent, Collateral Agent, the Lenders, the Hedge
Banks, the LC Issuer and Borrower agree that any legal action or proceeding by
or against Borrower or with respect to or arising out of this Agreement, the
Notes, or any other Credit Document may be brought in or removed to the courts
of the State of New York, in and for the County of New York, or of the United
States of America for the Southern District of New York, as Administrative Agent
may elect. By execution and delivery of this Agreement, the Lenders, the Hedge
Banks, the LC Issuer, Administrative Agent, Collateral Agent and Borrower
accept, for themselves and in respect of their property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Administrative Agent,
Collateral Agent, the Lenders, the Hedge Banks, the LC Issuer and Borrower
irrevocably consent to the service of process out of any of the aforementioned
courts in any manner permitted by law. Nothing herein shall affect the right of
Administrative Agent to bring legal action or proceedings in any other competent
jurisdiction, including judicial or non-judicial foreclosure of the FEC Deed of
Trust or the MEC Mortgage. Administrative Agent, Collateral Agent, the Lenders,
the Hedge Banks, the LC Issuer and Borrower further agree that the aforesaid
courts of the State of New York and of the United States of America shall have
exclusive jurisdiction with respect to any claim or counterclaim of Borrower
based upon the assertion that the rate of interest charged by the Lenders on or
under this Agreement, the Loans or the other Credit Documents is usurious.
Administrative Agent, Collateral Agent, the Lenders, the Hedge Banks, the LC
Issuer and Borrower hereby waive any

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right to stay or dismiss any action or proceeding under or in connection with
any or all of the Projects, this Agreement or any other Credit Document brought
before the foregoing courts on the basis of forum non-conveniens.

      11.16 KNOWLEDGE AND ATTRIBUTION.

            References in this Agreement and the other Credit Documents to the
"knowledge," "best knowledge" or facts and circumstances "known to" Borrower,
and all like references, mean facts or circumstances of which a Responsible
Officer of the applicable Calpine Entity has actual knowledge.

      11.17 SUCCESSORS AND ASSIGNS.

            The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
Borrower may not assign or otherwise transfer any of its rights under this
Agreement except as provided in Section 6.15, and the Lenders may not assign or
otherwise transfer any of their rights under this Agreement except as provided
in Article 9.

      11.18 COUNTERPARTS.

            This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in one or more duplicate
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.

      11.19 USURY.

            Nothing contained in this Agreement or the Notes shall be deemed to
require the payment of interest or other charges by Borrower or any other Person
in excess of the amount which the holders of the Notes may lawfully charge under
applicable usury laws. In the event that the Lenders shall collect moneys which
are deemed to constitute interest which would increase the effective interest
rate to a rate in excess of that permitted to be charged by applicable Legal
Requirements, all such sums deemed to constitute interest in excess of the legal
rate shall, upon such determination, at the option of the Lenders, be returned
to Borrower or credited against the principal balance then outstanding.

      11.20 SURVIVAL.

            All representations, warranties, covenants and agreements made
herein and in the certificates or other instruments delivered in connection with
or pursuant to this Agreement and the other Credit

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Documents shall be considered to have been relied upon by the parties hereto and
shall survive the execution and delivery of this Agreement, the other Credit
Documents and the making of the Loans. Notwithstanding anything in this
Agreement or implied by law to the contrary, the agreements of Borrower set
forth in Sections 2.1.1(e), 2.1.4, 2.6.4, 2.8.3, 2.8.4, 5.11, 11.4, 11.22 and
the agreements of the Lenders set forth in Sections 9.1, 9.5, 9.8, 9.10.1 and
11.22 shall survive the payment and performance of the Loans and the other
Obligations and the reimbursement of any amounts drawn hereunder, and the
termination of this Agreement.

      11.21 PATRIOT ACT NOTICE.

            Each Lender, the Collateral Agent (for itself and not on behalf of
any other Person, including any Lender), the Administrative Agent (for itself
and not on behalf of any other Person, including any Lender) and LC Issuer (for
itself and not on behalf of any other Person, including any Lender) hereby
notifies Borrower, Sponsor and each other Borrower Party that, pursuant to the
requirements of the USA Patriot Act (2001 H.R. 3162 (signed into law October 26,
2001)) (the "Act"), it is required to obtain, verify and record information that
identifies Borrower, Sponsor and each other Borrower Party which information
includes the name, address, the tax identification number and other identifying
information that will allow such Lender, the Collateral Agent, the
Administrative Agent or the LC Issuer, as applicable, to identify Borrower,
Sponsor and each other Borrower Party in accordance with the Act.

      11.22 TREATMENT OF CERTAIN INFORMATION; CONFIDENTIALITY.

            Each Lender and each Agent agrees (on behalf of itself and each of
its Affiliates, directors, officers, employees and representatives) to keep
confidential any nonpublic information supplied to it by Borrower or any other
Calpine Entity; provided that nothing herein shall limit the disclosure of any
such information: (a) to the extent such information is required to be disclosed
by any Governmental Rule or judicial or administrative process, or to any
Governmental Authority in connection with a tax audit or dispute or otherwise,
(b) to counsel for any of the Lenders or any Agent, (c) to banking, securities
exchange or other regulatory or supervisory authorities, auditors or accountants
having proper jurisdiction and authority to require such disclosure, (d) to any
Agent or any other Lender, (e) to any entity in connection with a securitization
or proposed securitization of, among other things, all or a part of any amounts
payable to or for the benefit of any Lender or its Affiliates under the Credit
Documents so long as such entity first executes and delivers to Administrative
Agent a confidentiality agreement substantially in the form of Exhibit M, (f) in
connection with the exercise of any remedies hereunder or under any of the other
Credit Documents, including without limitation upon the occurrence of any Event
of Default and any enforcement or collection proceedings resulting therefrom or
in connection with the negotiation of any restructuring or "work-out", whether
or not consummated, of the obligations of Borrower under this Agreement or the
obligations of any Borrower Party or Major Project Participant under any other
Operative Document or any suit, action or proceeding relating to this Agreement
or any other Credit Document or the enforcement of rights hereunder or
thereunder, so long as such Borrower Party or Major Project Participant first
executes and delivers to the respective Lender and Borrower a confidentiality
agreement substantially in the form of Exhibit M, (g) to the Independent
Engineer, the Power Marketing Consultant, the Insurance Consultant or to other
experts engaged

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by Administrative Agent or any Lender in accordance with the provisions of this
Agreement and in connection with the transactions contemplated hereby so long as
such expert first executes and delivers to Administrative Agent and Borrower a
confidentiality agreement substantially in the form of Exhibit M, or (h) to any
assignee or participant (or prospective assignee or participant) so long as such
assignee or participant (or prospective assignee or participant) first executes
and delivers to the respective Lender and Borrower a confidentiality agreement
substantially in the form of Exhibit M. In no event shall any Lender,
Administrative Agent or Collateral Agent be obligated or required to return any
materials furnished by any Borrower Entity. Notwithstanding the foregoing
provisions of this Section 11.22, the foregoing obligation of confidentiality
shall not apply to any such information that (i) was known to any Lender or
Agent prior to the time it received such confidential information from any
Borrower Party or its respective Affiliates, or (ii) becomes part of the public
domain independently of any act of any Lender or Agent not permitted hereunder
(through publication or otherwise), or (iii) is received by any Lender or any
Agent, as applicable, without restriction as to its disclosure or use, from a
Person other than a Calpine Entity. Notwithstanding anything to the contrary set
forth herein or in any other agreement to which the parties hereto are parties
or by which they are bound, any obligations of confidentiality contained herein
and therein, as they relate to the transactions contemplated by this Agreement
(the "Loan Transactions"), shall not apply to the federal tax structure or
federal tax treatment of the Loan Transactions, and each party hereto (and any
employee, representative, or agent of any party hereto) may disclose to any and
all Persons, without limitation of any kind, the federal tax structure and
federal tax treatment of the Loan Transactions. The preceding sentence is
intended to cause the Loan Transactions not to be treated as having been offered
under conditions of confidentiality for purposes of Section 1.6011-4(b)(3) (or
any successor provision) of the Treasury Regulations promulgated under Section
6011 of the Code and shall be construed in a manner consistent with such
purpose. In addition, each party hereto acknowledges that it has no proprietary
or exclusive rights to any tax concept, tax matter or tax idea related to the
Loan Transactions. In addition, each party hereto acknowledges that it has no
proprietary or exclusive rights to any tax concept, tax matter or tax idea
related to the Loan Transactions. In addition, each Lender and each Agent
acknowledges that the Dow Documents contain various provisions on
confidentiality and each Lender and each Agent agree to be bound by the terms
thereof, including Article XIX (Confidential and Proprietary Information) of the
Capacity Sales Agreement to the extent applicable to the performance of its
obligations under this Agreement; provided that in connection with exercise of
remedies under the Credit Documents, each Lender and each Agent's obligations
under this sentence as to potential transferees of the Collateral shall be
limited to requiring the transferee to execute a confidentiality agreement.

      11.23 RELEASE OF PROJECT.

            At Borrower's option upon notice to Administrative Agent, without
the consent or approval of Administrative Agent, the Lenders or any other
Person, the Collateral and the Undertaking Support LC corresponding to either
Project will be released, one of the two Siemens Turbines or substitute cash and
letter of credit pursuant to the Borrower Security Agreement will be released
and related Subordinated Note deemed cancelled, the Guaranties corresponding to
such Project shall terminate, the Intercompany Note corresponding to such
Project shall be

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<PAGE>

deemed paid in full, and the financing continue in reliance on the single
remaining Project, provided that (a) the Debt Service Coverage Ratio after
giving effect to such Project release shall be a minimum of 1.60x and an average
of 1.70x through the Term Loan Maturity Date; and (b) the Term Loan will be
prepaid such that the Term Loan balance on the Term Loan Maturity Date will be
no more than 90% of the loan balance at scheduled Term Loan maturity in the Pro
Forma Project Projections. If the Purchase Option or Put Option is exercised,
the proceeds, in an amount equal to the lesser of (i) all of such proceeds, and
(ii) such amount as shall result in satisfaction of the criteria set forth in
clause (a) and clause (b) above, shall be applied to prepay the Loans (other
than the Security Fund LC Loans). The above tests will not be applied to a
prepayment related to an exercise of the Put Option or Purchase Option. Upon
exercise of either such option, the Collateral and Undertaking Support LC and
such Siemens Turbine or substitute cash and letter of credit corresponding to
the Freeport Project will be released and related Subordinated Note deemed
cancelled. Any proceeds from an exercise of the Put Option or Purchase Option,
in excess of the amounts required to be applied to a prepayment of the Loans
(other than the Security Fund LC Loans) to the levels as set forth in clauses
(a) and (b) will be released upon Term-Conversion, and until then held in the
Borrower Revenue Account as security for the Obligations of Borrower, or to the
extent received after Term-Conversion, released immediately to Sponsor without
condition.

      11.24 PROJECT EXPANSION.

            Notwithstanding any provision to the contrary contained herein or in
any other Credit Document (including Section 9.9 hereof), upon approval (in
their sole discretion) by Lenders holding at least 80% of Proportionate Shares,
any Borrower Party at its option may obtain secured financing for an expansion
of either or both Projects to accommodate an additional combustion turbine and
related equipment. No Lender commits hereby or shall be construed by any other
term of any Credit Document to have committed to finance any such expansion.

                                      119
<PAGE>

            IN WITNESS WHEREOF, the parties hereto, by their officers duly
authorized, intending to be legally bound, have caused this Credit Agreement to
be duly executed and delivered as of the day and year first above written.

                                           CALPINE STEAMBOAT HOLDINGS, LLC,
                                           a Delaware limited liability company

                                           By:    /s/ Brian J. Harenza
                                               _________________________________
                                               Brian J. Harenza
                                               Vice President

                       Signature page to Credit Agreement

                                      S-1
<PAGE>

                                           COBANK, ACB,
                                           as a Lead Arranger, Underwriter,
                                           Co-Syndication Agent,
                                           Co-Book Runner and a Lender

                                           By:    /s/ David Boyce
                                               _________________________________
                                               David Boyce
                                               Vice President

                       Signature page to Credit Agreement

                                      S-2
<PAGE>

                                           CALYON NEW YORK BRANCH,
                                           as a Lead Arranger, Underwriter,
                                           Administrative Agent, Collateral
                                           Agent, Co-Book Runner, LC Issuer
                                           and a Lender

                                           By:    /s/ Martin C. Livingston
                                               _________________________________
                                               Martin C. Livingston
                                               Director

                                           By:    /s/ Robert G. Colvin
                                               _________________________________
                                               Robert G. Colvin
                                               Director

                       Signature page to Credit Agreement

                                      S-3
<PAGE>

                                           UFJ BANK LIMITED,
                                           as a Lead Arranger, Co-Documentation
                                           Agent, Underwriter and a Lender

                                           By:    /s/ Junji Hasegawa
                                               _________________________________
                                               Junji Hasegawa
                                               Vice President

                       Signature page to Credit Agreement

                                      S-4
<PAGE>

                                           HSH NORDBANK AG,
                                           as a Lead Arranger, Co-Documentation
                                           Agent, Underwriter and a Lender

                                           By:   /s/ Thomas Emmons
                                               _________________________________
                                               Thomas Emmons
                                               Senior Vice President

                                           By:   /s/ Rohan Singh
                                               _________________________________
                                               Rohan Singh
                                               Assistant Vice President

                       Signature page to Credit Agreement

                                      S-5
<PAGE>

                                           BAYERISCHE HYPO- UND VEREINSBANK AG,
                                           NEW YORK BRANCH,
                                           as a Lead Arranger,
                                           Co-Syndication Agent,
                                           Underwriter and a Lender

                                           By:       /s/ Andrew G. Mathews
                                               _________________________________
                                               Name:  Andrew G. Mathews
                                               Title: Managing Director

                                           By:       /s/ Paul J. Colatrella
                                               _________________________________
                                               Name:  Paul J. Colatrella
                                               Title: Director

                       Signature page to Credit Agreement

                                      S-6
<PAGE>

                                                                       EXHIBIT A
                                                             to Credit Agreement

                                   DEFINITIONS

            "Accounts" means the FEC Construction Account, the MEC Construction
Account, the Borrower Revenue Account, the FEC Revenue Account, the MEC Revenue
Account, the Distribution Suspense Account, the Mandatory Prepayment Account,
the FEC O&M Account, the MEC O&M Account, the MEC Major Maintenance Reserve
Account, the FEC Major Maintenance Reserve Account, the Debt Service Reserve
Account, the FEC Loss Proceeds Account, the MEC Loss Proceeds Account, the FEC
Checking Account, the MEC Checking Account, the Security Fund LC Cash Collateral
Account, and each cash collateral account referred to in the Credit Documents,
including any sub-accounts within such accounts.

            "Act" has the meaning given in Section 11.21 of the Credit
Agreement.

            "Additional Borrower Equity" means any cash equity deposit made by
Borrower at its sole discretion, after the Closing Date, with Administrative
Agent which cash equity is to be applied to the payment of Project Costs.

            "Additional Project Documents" means MEC Additional Project
Documents and FEC Additional Project Documents.

            "Administrative Agent" means Calyon New York Branch, acting in its
capacity as administrative agent for the Secured Parties under the Credit
Documents.

            "Administrative Agent Fee Letter" means that certain letter
agreement regarding fees, dated as of the Closing Date, by and between
Administrative Agent and Borrower.

            "Adverse PUHCA Event" means that Borrower or any of its "affiliates"
(within the meaning of Section 2(a)(11)(B) of PUHCA) becomes an "electric
utility company", "public utility company", or "public utility holding company"
required to register as such within the meaning of PUHCA at a time at which
applicable provisions of PUHCA, or any successor statute thereof, and the rules
and regulations thereunder are in effect and such event or occurrence has, or
with the passage of time will have, a Material Adverse Effect or a material and
adverse effect on Administrative Agent or the Lenders.

            "Affiliate" of a specified Person means any other Person that (a)
directly, or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with the Person specified, or (b) only
with respect to matters relating to PUHCA, holds or beneficially owns 10% or
more of the equity interest in the Person specified or 10% or more of any class
of voting securities of the Person specified. When used with respect to
Borrower, "Affiliate" shall include Sponsor, FEC-LP, FEC-GP, FEC, MEC, CCMCI,
Operator, CES, and any Affiliate thereof (other than Borrower).

                                       1
<PAGE>

            "Affiliated Major Project Participant" has the meaning given in
Section 3.1.1 of the Credit Agreement.

            "Agent" means the Collateral Agent or the Administrative Agent.

            "Allocated Portion" means the FEC Allocated Portion or the MEC
Allocated Portion.

            "Amortization Schedule" means the schedule for repayment of the
principal of the Term Loans as set forth on Exhibit I to the Credit Agreement.

            "Annual Operating Budget" has the meaning given in Section 5.14.3 of
the Credit Agreement.

            "Applicable Permit" means, at any time, any Permit, including any
zoning, land use, environmental protection, pollution (including air, water or
noise), sanitation, FERC, Minnesota Public Utilities Commission, Minnesota
Pollution Control Agency, City of Mankato, U.S. Environmental Protection Agency,
Federal Aviation Administration, Department of Energy, Minnesota Environmental
Quality Board, State Fire Marshall, import, export, safety, siting or building
Permit (a) that is necessary under applicable Legal Requirements or any of the
Operative Documents to be obtained by or on behalf of any Borrower Party and/or
those permits required to be obtained by Dow under the Dow Agreements at such
time in light of the stage of development, construction or operation of the
Projects to construct, test, operate, maintain, repair, lease, own or use the
Projects as contemplated by the Operative Documents, to sell electricity from
the Projects or deliver fuel to the Projects, or for Borrower to enter into any
Operative Document or to consummate any transaction contemplated thereby, in
each case in accordance with all applicable Legal Requirements, or (b) that is
necessary so that none of Borrower Parties, Administrative Agent, Collateral
Agent, the Lead Arrangers or the Secured Parties nor any Affiliate of any of
them may be deemed by any Governmental Authority to be subject to regulation
under the FPA or PUHCA or treated as a public utility under the Constitution and
the laws of the State of Minnesota or Texas as presently constituted and as
construed by the courts of Minnesota or Texas, respectively, with respect to the
regulation of the rates of, or the financial or organizational regulation of,
electric utilities solely as a result of the development and construction or
operation of the Projects or the sale of electricity therefrom, except that (i)
MEC is subject to the compliance requirements under PUHCA applicable to an
Exempt Wholesale Generator and an owner of an Eligible Facility, (ii) FEC is
subject to the compliance requirements under PURPA applicable to a Qualifying
Facility and will be subject to state law and regulation with respect to rates
or the financial or organizational regulation of electric utilities to the
extent contemplated by 18 C.F.R Section 292.602(c), and (iii) each of MEC and
CES is a "public utility" under the FPA with authority to sell wholesale
electric power at market based rates and with all waivers of regulations and
blanket authorizations as are customarily granted by FERC to a "public utility"
that sells wholesale electric power and ancillary services at market based
rates.

            "Arrangement Fee Letter" means that certain letter agreement
regarding fees, dated as of the Closing Date, by and between Co-Book Runners and
Borrower.

                                       2
<PAGE>

            "Available Construction Funds" means, at any time and without
duplication, the sum of (a) amounts in the Construction Accounts after giving
effect to all permitted transfers therein on any given date, including from the
Borrower Revenue Account, (b) the then-applicable Available Construction Loan
Commitment, (c) undisbursed Insurance Proceeds or Eminent Domain Proceeds which
are available for payment of Project Costs, (d) any delay liquidated damages
which either Project Company has received under either Construction Contract and
which are not required to be paid to Dow or Construction Contractor, and (e) any
undisbursed amounts on deposit with Administrative Agent or Depositary Agent
constituting Additional Borrower Equity.

            "Available Construction Loan Commitment" means (a) during the
Construction Loan Availability Period, the total Construction Loan Commitment at
such time minus the aggregate principal amount of all Construction Loans
outstanding at such time, and (b) at any time after the Construction Loan
Availability Period, zero.

            "Banking Day" means any day other than a Saturday, Sunday or other
day on which banks are or Administrative Agent is authorized or required to be
closed in the State of Texas, the State of Minnesota or the State of New York
and, where such term is used in any respect relating to a LIBOR Loan, which is
also a day on which dealings in Dollar deposits are carried out in the London
interbank market.

            "Bankruptcy Event" shall be deemed to occur, with respect to any
Person, if that Person shall institute a voluntary case seeking liquidation or
reorganization under the Bankruptcy Law, or shall consent to the institution of
an involuntary case thereunder against it; or such Person shall file a petition
or consent or shall otherwise institute any similar proceeding under any other
applicable Federal or state law, or shall consent thereto; or such Person shall
apply for, or consent or acquiesce to, the appointment of, a receiver,
administrator, administrative receiver, liquidator, sequestrator, trustee or
other officer with similar powers for itself or any substantial part of its
assets; or such Person shall make a general assignment for the benefit of its
creditors; or such Person shall admit in writing its inability to pay its debts
generally as they become due; or if an involuntary case shall be commenced
seeking liquidation or reorganization of such Person under the Bankruptcy Law or
any similar proceedings shall be commenced against such Person under any other
applicable Federal or state law and (a) the petition commencing the involuntary
case is not timely controverted, (b) the petition commencing the involuntary
case is not dismissed within 60 days of its filing, (c) an interim trustee is
appointed to take possession of all or a portion of the property, and/or to
operate all or any part of the business of such Person and such appointment is
not vacated within 60 days, or (d) an order for relief shall have been issued or
entered therein; or a decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, administrator, administrative
receiver, liquidator, sequestrator, trustee or other officer having similar
powers, over such Person or all or a part of its property shall have been
entered; or any other similar relief shall be granted against such Person under
any applicable Bankruptcy Law.

            "Bankruptcy Law" means Title 11, United States Code, and any other
state or federal insolvency, reorganization, moratorium or similar law for the
relief of debtors, or any successor statute.

                                       3
<PAGE>

            "Base Case Project Projections" means a projection of operating
results for the Projects, showing at a minimum Borrower's reasonable good faith
estimates, as of the Closing Date, of revenues, operating expenses, the Debt
Service Coverage Ratio, and sources and uses of revenues over the forecast
period, which projection is attached as Exhibit G-3 to the Credit Agreement.

            "Base Equity Requirement" means cash equity funds equal to
$96,249,010.70.

            "Base Rate" means the greater of (a) the prime commercial lending
rate established from time to time by Administrative Agent at its New York
office, or (b) the Federal Funds Rate plus 0.50%. The Base Rate may not
necessarily be the highest or lowest rate of interest charged by Administrative
Agent to its commercial borrowers.

            "Base Rate Construction Loan" has the meaning given in Section
2.1.1(b)(i) of the Credit Agreement.

            "Base Rate Loans" means, collectively, the Base Rate Construction
Loans, the Base Rate Term Loans and the Base Rate Security Fund LC Loan.

            "Base Rate Security Fund LC Loan" means a Security Fund LC Loan that
shall bear interest at the rate set forth in Section 2.2.3(a) of the Credit
Agreement.

            "Base Rate Term Loan" has the meaning given in Section
2.1.2(b)(i)(A) of the Credit Agreement.

            "Benefiting Project Company" means (a) with respect to each Credit
Event consisting of Construction Loans, any Project Company receiving proceeds
of such Construction Loan, (b) with respect to issuance of the Security Fund LC,
MEC, and (c) with respect to all other Credit Events, both Project Companies.

            "Borrower" means Calpine Steamboat Holdings, LLC, a Delaware limited
liability company.

            "Borrower Closing Letter Agreements" means the Arrangement Fee
Letter, the Administrative Agent Fee Letter and the Upfront Fee Letter.

            "Borrower Depositary Agreement" means the Depositary Agreement,
dated as of the Closing Date, in substantially the form of Exhibit D-4 to the
Credit Agreement, among Borrower, Administrative Agent, Collateral Agent and
Depositary Agent.

            "Borrower Parties" means Borrower, FEC, FEC-GP, FEC-LP and MEC.

            "Borrower Revenue Account" means the "Revenue Account" as defined in
the Borrower Depositary Agreement.

            "Borrower Waterfall Level" means a "Waterfall Level" as defined in
the Borrower Depositary Agreement.

                                       4
<PAGE>

            "Borrowing" means a borrowing by Borrower of any Construction Loan
or Term Loan.

            "Calculation Period" means, as to a particular date, the 12 month
period (or, during the initial 12 months following Term-Conversion, the actual
number of calendar months or partial calendar months following Term-Conversion)
immediately preceding such date.

            "Calpine" means Calpine Corporation, a Delaware corporation.

            "Calpine Entity(ies)" has the meaning given in Section 3.1.1 of the
Credit Agreement.

            "Capacity Sales Agreement" means the Amended and Restated Capacity
Sales Agreement, dated May 27, 2004, between Dow and FEC.

            "Capital Adequacy Requirement" has the meaning given in Section
2.8.4(a) of the Credit Agreement.

            "CCMCI" means Calpine Construction Management Company, Inc., a
Delaware corporation.

            "CCMCI Subordination Agreement" means the Subordination Agreement,
dated as of February 25, 2005, by Construction Contractor in favor of
Administrative Agent, relating to the Subordinated Notes.

            "CDHI" means Calpine Development Holdings, Inc., a Delaware
corporation.

            "CES" means Calpine Energy Services, L.P., a Delaware limited
partnership.

            "CES PPA (FEC)" means the Index Based Power Purchase Agreement,
dated as of February 25, 2005, between FEC and CES.

            "Change of Law" has the meaning given in Section 2.8.2 of the Credit
Agreement.

            "City of Mankato" means the City of Mankato, Minnesota.

            "Closing Date" has the meaning given in Section 3.1 of the Credit
Agreement.

            "Co-Book Runners" means Calyon New York Branch and CoBank, ACB.

            "Code" means the Internal Revenue Code of 1986, as amended.

            "Co-Documentation Agents" means UFJ Bank Limited and HSH Nordbank
AG, each acting in its capacity as co-documentation agent for the Lenders under
the Credit Agreement..

                                       5
<PAGE>

            "Collateral" means all property which is subject or is intended to
become subject to the security interests or liens granted by any of the
Collateral Documents.

            "Collateral Agent" means Calyon New York Branch, acting in its
capacity as collateral agent for the Secured Parties under the Credit Documents.

            "Collateral Documents" means the Group Pledge and Security
Agreement, the MEC Mortgage, the MEC Security Agreement, the FEC Deed of Trust,
the FEC Security Agreement, the Depositary Agreements, the Control Agreements,
each Consent, the NSP Acknowledgment of Subordination, and any fixture filings,
financing statements, or other similar documents filed, recorded or delivered in
connection with the foregoing.

            "Collateral Replacement LC" means any Major Maintenance Reserve
Letter of Credit and any DSR Letter of Credit.

            "Commercial Operation" has the meaning given in the Capacity Sales
Agreement.

            "Commitment Fee" has the meaning given in Section 2.4.2(a) of the
Credit Agreement.

            "Commitments" means, with respect to each Lender, such Lender's
Construction Loan Commitment, Term Loan Commitment and Security Fund LC
Commitment and with respect to all Lenders, the Total Construction Loan
Commitment, the Total Term Loan Commitment and the Total Security Fund LC
Commitment.

            "Completion" means:

            (a) with respect to the Freeport Project, (i) all necessary
facilities for the transportation and receipt of the appropriate fuels to and by
the Freeport Project have been completed in accordance with the terms of the FEC
Project Documents, (ii) "Substantial Completion" of all "Phases" as defined in
the FEC Construction Contract shall have occurred, (iii) all facilities
necessary for the procurement, transportation and discharge of water to the
Freeport Project and wastewater from the Freeport Project have been obtained or
completed in accordance with the applicable FEC Project Documents and Applicable
Permits, (iv) necessary interconnection facilities sufficient to transmit all
power generated by the Freeport Project have been completed in accordance with
the Capacity Sales Agreement, (v) all real estate rights reasonably necessary
for completion of the foregoing and continued operations of the Freeport Project
have been obtained, (vi) all phases of the Freeport Project have achieved
Commercial Operation as described in the Capacity Sales Agreement, (vii) all
items listed on the Spare Parts Inventory (as such term is defined in the FEC
O&M Agreement) and which are otherwise budgeted in the Project Budget shall have
been purchased and be readily available, (viii) all Performance Tests under the
Dow Agreements have been performed and any required liquidated damages
thereunder have been paid, provided that as soon as the Capacity Payments
described in Section 11.1(c) of the Capacity Sales Agreement begin, the Freeport
Project will be deemed to have satisfied the requirements of this clause (viii)
and clauses (ii) and (ix), even if further performance testing remains, so long
as the Construction Contractor remains obligated to

                                       6
<PAGE>

perform and pass the tests, the Undertaking Support LCs remain outstanding in
the respective amounts required by the Completion Undertaking Agreements, and
the Completion Undertaking Agreements remain in full force and effect, and (ix)
all Demonstration Tests (as defined in the Capacity Sales Agreement) have been
performed; and

            (b) with respect to the Mankato Project, (i) all necessary
facilities for the transportation and receipt of the appropriate fuels to and by
the Mankato Project have been completed in accordance with the terms of the MEC
Project Documents, (ii) "Substantial Completion" as defined in the MEC
Construction Contract shall have occurred, (iii) all facilities necessary for
the procurement, transportation and discharge of water to the Mankato Project
and wastewater from the Mankato Project have been obtained or completed in
accordance with the applicable MEC Project Documents and Applicable Permits,
(iv) necessary interconnection facilities sufficient to transmit all power
generated by the Mankato Project have been completed in accordance with the MEC
Interconnection Agreement and the Power Purchase Agreement, (v) all real estate
rights reasonably necessary for completion of the foregoing and continued
operations of the Mankato Project have been obtained, (vi) the Mankato Project
has achieved its Facility Acceptance Date under the Power Purchase Agreement,
and (vii) all items in the Spare Parts Inventory (as such term is defined in the
MEC Construction Contract) and which are otherwise budgeted in the Project
Budget shall have been purchased and be readily available.

            "Completion Date" means, with respect to a Project, the date on
which Completion occurs with respect to such Project.

            "Completion Undertaking Agreements" means the FEC Completion
Undertaking Agreement and the MEC Completion Undertaking Agreement.

            "Confirmation of Interest Period Selection" has the meaning given in
Section 2.1.3(c)(ii) of the Credit Agreement.

            "Consents" means the consents required from each Major Project
Participant under Section 3.1.31 of the Credit Agreement and any other third
party consents to the assignments contemplated by the Collateral Documents.

            "Construction Account" has the meaning given in Section 1.1 of the
respective Project Company Depositary Agreements and does not include any
sub-accounts therein unless otherwise indicated in each provision.

            "Construction Contract Guaranties" means the FEC Construction
Contract Guaranty and the MEC Construction Contract Guaranty.

            "Construction Contractor" means CCMCI.

            "Construction Contractor Performance LDs" has the meaning given in
the FEC Depositary Agreement and the MEC Depositary Agreement, respectively.

                                       7
<PAGE>

            "Construction Contracts" means the FEC Construction Contract and the
MEC Construction Contract.

            "Construction Loan" has the meaning given in Section 2.1.1(a) of the
Credit Agreement.

            "Construction Loan Availability Period" means the period from the
Closing Date to the earlier to occur of (a) full utilization of the Total
Construction Loan Commitment and (b) the Construction Loan Maturity Date.

            "Construction Loan Commitment" means, at any time with respect to
each Lender, such Lender's Proportionate Share of the Total Construction Loan
Commitment at such time.

            "Construction Loan Maturity Date" means the date that is the
earliest to occur of (a) May 1, 2007, (b) Term-Conversion, or (c) an Event of
Default and acceleration of the Construction Loans pursuant to Section 7.2.3 of
the Credit Agreement.

            "Construction Note" has the meaning given in Section 2.1.4 of the
Credit Agreement.

            "Control Agreements" means the FEC Control Agreement and the MEC
Control Agreement.

            "Co-Syndication Agents" means CoBank, ACB and Bayerische HYPO- UND
Vereinsbank AG, New York Branch, each acting in its capacity as co-syndication
agent for the Lenders under the Credit Agreement.

            "COSCI Subordination Agreement" means the Subordination Agreement,
dated as of February 25, 2005, by Operator in favor of Administrative Agent.

            "Credit Agreement" means the Credit Agreement, dated as of February
25, 2005, by and among Borrower, Administrative Agent, Collateral Agent, the
Lead Arrangers, the other agents and arrangers listed on the signature pages
thereto and the Lenders.

            "Credit Documents" means the Credit Agreement, the Notes, the
Collateral Documents, the Interest Rate Agreements (including all Hedge
Transactions thereunder), the Borrower Closing Letter Agreements, any
Subordination Agreements, the Dow Payment Substitution Agreement, any Collateral
Replacement LCs, the FEC Guaranty, the FEC-LP Guaranty, the FEC-GP Guaranty, the
MEC Guaranties, and any other loan or security agreements or letter agreement or
similar document, entered into by Administrative Agent, Collateral Agent,
Depositary Agent, the Lead Arrangers or any Secured Party, on the one hand, and
the Borrower or one or more Borrower Parties, on the other hand, in connection
with the transactions contemplated by the Credit Documents.

            "Credit Event" has the meaning given in Section 3.2 of the Credit
Agreement.

                                       8
<PAGE>

            "Debt" of any Person at any date means, without duplication, (a) all
obligations (including contingent obligations) of such Person for borrowed
money, (b) all obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments, (c) all obligations of such Person to pay the
deferred purchase price of property or services, and other accrued expenses
arising in the ordinary course of business which in accordance with GAAP would
be shown on the liability side of the balance sheet of such Person, but
excluding trade accounts payable (d) all obligations of such Person under leases
which are or should be, in accordance with GAAP, recorded as capital leases in
respect of which such Person is liable, (e) all obligations of such Person to
purchase securities (or other property) which arise out of or in connection with
the sale of the same or substantially similar securities (or property), (f) all
deferred obligations of such Person to reimburse any bank or other Person in
respect of amounts paid or advanced under a letter of credit or other
instrument, (g) all Debt of others secured by a Lien on any asset of such
Person, whether or not such Debt is assumed by such Person, (h) all Debt of
others guaranteed directly or indirectly by such Person or as to which such
Person has an obligation substantially the economic equivalent of a guarantee,
and (i) obligations in respect of Hedge Transactions.

            "Debt Service" means, for any period, the sum of (a) all fees (other
than fees paid on the Closing Date) payable by Borrower hereunder during such
period to Administrative Agent, Collateral Agent, Depositary Agent and the
Lenders, (b) interest payable by Borrower on Term Loans less (for purposes of
calculating the Debt Service Coverage Ratio) net payments, if any, received by
Borrower during such period pursuant to Hedge Transactions, (c) scheduled Term
Loan principal payments payable by Borrower (as reduced to reflect actual
prepayments through the date of such calculation) payable during such period,
and (d) net payments, if any, payable during such period pursuant to Hedge
Transactions.

            "Debt Service Coverage Ratio" means, for any period, the ratio of
(a) Operating Cash Available for Debt Service for such period to (b) Debt
Service for such period.

            "Debt Service Reserve Account" has the meaning given in Section 1.1
of the Borrower Depositary Agreement.

            "Debt to Equity Ratio" means, as of any date of determination, the
ratio of (a) the aggregate outstanding principal amount of all Construction
Loans or Term Loans, as the case may be, to (b) all equity contributions made to
Borrower (in cash or property) and applied to Project Costs (as verified by the
Independent Engineer) as of such date of determination, to the extent such
contributions have not been reimbursed with the proceeds of any Loans (including
the Dow Change Order Drawing).

            "DEC" means Dow Engineering Company, a Delaware corporation.

            "Default Rate" has the meaning given in Section 2.6.3 of the Credit
Agreement.

            "Depositary Agent" means Wilmington Trust Company, not in its
individual capacity but solely as depositary agent, bank and securities
intermediary under the Depositary Agreements.

                                       9
<PAGE>

            "Depositary Agreements" means the Borrower Depositary Agreement, the
FEC Depositary Agreement and the MEC Depositary Agreement.

            "Distribution Suspense Account" has the meaning given in Section 1.1
of the Borrower Depositary Agreement.

            "Dollars" and "$" means United States dollars or such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts in the United States of
America.

            "Dow" means The Dow Chemical Company, a Delaware corporation.

            "Dow Agreements" means the Capacity Sales Agreement, the FEC Ground
Lease, the FEC O&M Agreement and the Site Services Agreement.

            "Dow Change" has the meaning given in the Capacity Sales Agreement.

            "Dow Change Order Drawing" has the meaning given in Section 3.3.3(b)
of the Credit Agreement.

            "Dow Consent" means the Consent and Agreement, dated as of February
25, 2005, executed by Dow, FEC, and Administrative Agent.

            "Dow/DEC Technical Requirements" has the meaning given in the
Capacity Sales Agreement.

            "Dow Delay Event" has the meaning given in the Capacity Sales
Agreement.

            "Dow Payment Substitution Agreement" means the Dow Payment
Substitution Agreement, dated as of February 25, 2005, by and between Sponsor
and Agent.

            "Dow Performance Test Drawing" means a drawing of Construction Loans
pursuant to Section 3.3.3(c) of the Credit Agreement.

            "Dow Performance Test Drawing Amount" has the meaning given in
Section 3.3.3(c) of the Credit Agreement.

            "Dow Performance Test Exposure" means (a) if the Independent
Engineer is able to estimate with a high degree of certainty the maximum
possible amount that FEC would have to expend to perform the tests (beyond the
already-budgeted testing costs) and to achieve the Performance Guarantees (under
and as defined in the FEC Construction Contract), then the Dow Performance Test
Exposure is such estimated amount, and (b) if the Independent Engineer is not
able to make such estimate with a high degree of certainty, then the Dow
Performance Test Exposure is infinity dollars

            "Dow Performance Test Pre-Completion Revenues" has the meaning given
in Waterfall Level 10 of the Borrower Depositary Agreement.

                                       10
<PAGE>

            "Dow Test Deferral" has the meaning given in Section 3.3.3(c) of the
Credit Agreement.

            "Drawdown Certificate" means a certificate delivered to
Administrative Agent substantially in the form of Exhibit C-5 to the Credit
Agreement.

            "Drawing Payment" means any payment by LC Issuer honoring a drawing
under the Security Fund LC.

            "Drawstop Funds" has the meaning given in Section 5.17 of the Credit
Agreement.

            "DSR Letter of Credit" has the meaning given in Section 1.1 of the
Borrower Depositary Agreement.

            "DSR Required Balance" means, as of any date, an amount equal to all
principal and interest in respect of the Term Loans due or to become due within
six months after such date.

            "Easements" means the FEC Easements and the MEC Easements.

            "Eligible Facility" means an "eligible facility" within the meaning
of PUHCA and FERC's implementing regulations pertaining thereto.

            "Emergency Operating Costs" means those amounts required to be
expended for the purchase of goods and services in order to prevent or mitigate
an unforeseeable event or circumstances that, in the good faith judgment of MEC
or FEC (or Dow as its Operator) as the case may be, necessitates the taking of
immediate measures to prevent or mitigate injury to Persons or injury to or loss
of property.

            "Eminent Domain Proceeds" has the meaning given in the applicable
Depositary Agreement.

            "Environmental Claim" means any and all liabilities, losses,
administrative, regulatory or judicial actions, suits, demands, decrees, claims,
liens, judgments, warning notices, notices of noncompliance or violation,
investigations, proceedings, removal or remedial actions or orders, or damages
(foreseeable and unforeseeable, including consequential and punitive damages),
penalties, fees, out-of-pocket costs, expenses, disbursements or attorneys' or
consultants' fees, relating in any way to (a) a violation or alleged violation
of any Hazardous Substance Law or Permit issued under any Hazardous Substance
Law, (b) a Release or threatened Release of Hazardous Substances, or (c) any
legal or administrative proceedings relating to any of the above.

            "Environmental Reports" means, collectively, with respect to the
Mankato Project (a) the Phase I Environmental Site Assessment, Wenck Associates,
dated September 2003, together with the update dated October 19, 2004, (b) the
Limited Phase II Environmental Site Assessment, Wenck Associates, dated December
2003, (c) the Phase I Environmental Site

                                       11
<PAGE>

Assessment (Baker Property), Wenck Associates, dated July 2004, (d) Critical
Environmental Issues Assessment, Wenck Associates, dated October 2003, (e)
Preliminary Subsurface Exploration, Laboratory Testing and Geotechnical
Engineering Analysis for Proposed Mankato Power Plant Site, STS Consultants,
Ltd., dated October 2003, (f) Site Permit Application for Mankato Energy Center
submitted by MEC to Minnesota Environmental Quality Board, dated March 2004, and
(g) Environmental Assessment, Minnesota Environmental Quality Board, dated July
2004.

            "ERCOT" has the meaning given in the Capacity Sales Agreement.

            "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.

            "ERISA Affiliate" means any corporation, trade or business (whether
or not incorporated) that is treated as a single employer together with any
Calpine Entity under Section 414 of the Code.

            "ERISA Plan" means any employee benefit plan (a) maintained by
Borrower or any ERISA Affiliate, or to which any of them contributes or has
contributed, or is or was obligated to contribute, and (b) subject to Section
302 or Title IV of ERISA, or Section 412 of the Code.

            "Event of Default" has the meaning given in Article 7 of the Credit
Agreement.

            "Event of Eminent Domain" means any compulsory transfer or taking by
condemnation, eminent domain or exercise of a similar power, or transfer under
threat of such compulsory transfer or taking, of any part of the Collateral or
any of the Mortgaged Property, by any agency, department, authority, commission,
board, instrumentality or political subdivision of the State of Minnesota, the
State of Texas, the United States or another Governmental Authority having
jurisdiction.

            "Exempt Wholesale Generator" means an "exempt wholesale generator"
within the meaning of PUHCA and FERC's implementing regulations pertaining
thereto.

            "Facility Acceptance Date" has the meaning given in Section 1.4 of
the Power Purchase Agreement.

            "Facility Acceptance Milestone" has the meaning given in Section 1.4
of the Power Purchase Agreement.

            "FEC" has the meaning given in the Recitals in the Credit Agreement.

            "FEC Additional Project Documents" means any material contracts or
agreements related to the construction, testing, maintenance, repair, operation
or use of the Freeport Project entered into by FEC and any other Person, or
assigned to FEC, subsequent to the Closing Date; provided that all such
contracts and agreements providing for the payment by FEC of less than $500,000
per annum individually, or the provision to FEC of less than $1,000,000 per
annum

                                       12
<PAGE>

individually in value of goods or services, or providing for a maximum term of
less than one year shall be deemed not to constitute a FEC Additional Project
Document; and provided, further, that the FEC Additional Project Documents shall
not include any Owner/Third Party Contracts (as defined in the FEC Construction
Contract).

            "FEC Allocated Portion" means the outstanding principal amount of
the Loans from time to time, deemed to be allocable to the Freeport Project by
virtue of having been initially designated as part of the FEC Allocated Portion
pursuant to a Notice of Construction Loan Borrowing (including Loans meeting the
conditions set forth in Section 3.4), and not deemed repaid pursuant to Sections
2.1.2(d), 2.1.7(a)(iii), 2.1.7(b), 11.23 or Section 3.6 of the Borrower
Depositary Agreement.

            "FEC Allocated Portion Percentage" has the meaning given in the FEC
Depositary Agreement.

            "FEC Checking Account" means the "Checking Account" as defined in
the FEC Depositary Agreement.

            "FEC Checking Account Bank" means the "Checking Account Bank" as
defined in the FEC Depositary Agreement.

            "FEC Completion Undertaking Agreement" means the Completion
Undertaking Agreement dated as of the Closing Date, between CCMCI and Borrower.

            "FEC Construction Account" means the "Construction Account" created
pursuant to the FEC Depositary Agreement.

            "FEC Construction Contract" means the Engineering, Procurement and
Construction Agreement, dated as of February 25, 2005, between the Construction
Contractor and FEC.

            "FEC Construction Contract Guaranty" means the Guaranty, dated as of
February 25, 2005, between Sponsor and FEC.

            "FEC Control Agreement" means that certain control agreement to be
entered into among FEC, Collateral Agent and FEC Checking Account Bank regarding
the perfection of Collateral Agent's Lien on the FEC Checking Account.

            "FEC Deed of Trust" means the Deed of Trust, Security Agreement and
Fixture Filing, dated on or about the Closing Date, in substantially the form of
Exhibit D-1 to the Credit Agreement, by FEC in favor of Collateral Agent.

            "FEC Depositary Agreement" means the Depositary Agreement, dated as
of the Closing Date, in substantially the form of Exhibit D-5 to the Credit
Agreement, among FEC, Administrative Agent, Collateral Agent and Depositary
Agent.

                                       13
<PAGE>

            "FEC Easements" shall have the meaning given in the FEC Deed of
Trust and shall include the Access Easement (as such term is defined in the FEC
Ground Lease).

            "FEC-GP" means Calpine Freeport GP, LLC a Delaware limited liability
company.

            "FEC-GP Guaranty" means the FEC-GP Guaranty, dated as of the Closing
Date, in substantially the form of Exhibit D-17 to the Credit Agreement, by and
between FEC-GP and Collateral Agent.

            "FEC Ground Lease" means the Ground Lease, dated May 27, 2004
between Dow and FEC.

            "FEC Guaranty" means the FEC Guaranty, dated as of the Closing Date,
in substantially the form of Exhibit D-13 to the Credit Agreement, by and
between FEC and Collateral Agent.

            "FEC Interconnection Agreement" has the meaning given in the
Capacity Sales Agreement.

            "FEC Loss Proceeds Account" means the "Loss Proceeds Account"
created pursuant to the FEC Depositary Agreement.

            "FEC-LP" means Calpine Freeport LP, LLC, a Delaware limited
liability company.

            "FEC-LP Guaranty" means the FEC-LP Guaranty, dated as of the Closing
Date, in substantially the form of Exhibit D-18 to the Credit Agreement, by and
between FEC-LP and Collateral Agent.

            "FEC Major Maintenance Agreement" means the Major Maintenance
Agreement, dated as of February 25, 2005, between FEC and Operator.

            "FEC Major Maintenance Reserve Account" means the "Major Maintenance
Reserve Account" created pursuant to the FEC Depositary Agreement.

            "FEC Major Project Documents" means the Dow Agreements, the FEC
Construction Contract, the FEC Completion Undertaking Agreement, the CES PPA
(FEC), the FEC Construction Contract Guaranty, the FEC Major Maintenance
Agreement, any guaranty agreements related to the foregoing executed by Persons
in favor of FEC and, unless otherwise agreed by Administrative Agent prior to
its execution and delivery, any FEC Additional Project Documents.

            "FEC Major Project Participants" means, without duplication,
Borrower, FEC, FEC-LP, FEC-GP, Sponsor (until CCMCI's obligations under FEC's
Construction Contract are fully performed), CCMCI (until CCMCI's obligations
under FEC's Construction Contract are fully performed), Dow, CES, Operator and
any Person other than those so listed which provides

                                       14
<PAGE>

any guaranty agreement with respect to a FEC Major Project Document, and any
counterparty to any FEC Additional Project Document which is a FEC Major Project
Document.

            "FEC Milestone" has the meaning given in the Capacity Sales
Agreement.

            "FEC Mortgaged Property" means the "Trust Property" as defined in
the FEC Deed of Trust.

            "FEC Note" means the promissory note in the form of Exhibit B-3 to
the Credit Agreement.

            "FEC O&M Account" means the "O&M Account" created pursuant to the
FEC Depositary Agreement.

            "FEC O&M Agreement" means the Operation and Maintenance Agreement,
dated as of May 27, 2004 between FEC and Dow.

            "FEC Partnership Agreement" means the Amended and Restated Agreement
of Partnership of Freeport Energy Center, LP, dated as of January 25, 2005.

            "FEC Phase 3 Work" has the meaning given in the Capacity Sales
Agreement.

            "FEC Project Documents" means, without duplication, the FEC Major
Project Documents, the FEC Easements, and any other agreement relating to the
development, construction or operation of the Freeport Project to which FEC is a
party, provided, that the FEC Project Documents shall not include any
Owner/Third Party Contracts (as defined in the FEC Construction Contract).

            "FEC Revenue Account" means the "Revenue Account" created pursuant
to the FEC Depositary Agreement.

            "FEC Security Agreement" means the Security Agreement, dated as of
the Closing Date, in substantially the form of Exhibit D-16 to the Credit
Agreement, between FEC and Borrower.

            "FEC Site" has the meaning given to the term "Facility Site" in the
FEC Ground Lease.

            "FEC Technical Requirements" has the meaning given in the Capacity
Sales Agreement.

            "FEC Waterfall Level" means a "Waterfall Level" as defined in the
FEC Depositary Agreement.

            "FEC Work Phase" has the meaning given in the Capacity Sales
Agreement.

                                       15
<PAGE>

            "Federal Funds Rate" means, for any day, the weighted average of the
per annum rates on overnight Federal funds transactions with member banks of the
Federal Reserve System arranged by Federal funds brokers as published by the
Federal Reserve Bank of New York for such day (or, if such rate is not so
published for any day, the average rate charged by Administrative Agent on such
day on such transactions as determined by Administrative Agent).

            "Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.

            "FERC" means the Federal Energy Regulatory Commission and its
successors.

            "Final Completion" means that Completion shall have occurred and the
Independent Engineer shall have confirmed that (a) "Final Project Completion"
(as such term is defined in the Construction Contracts) shall have occurred, and
(b) all other work under the Construction Contracts shall have been completed
(other than amounts in dispute with respect to Construction Contractor or any
other Person, so long as amounts reasonably satisfactory to Administrative Agent
(acting in consultation with the Independent Engineer) have been reserved in the
applicable Construction Account for payment of such amounts (and as to which any
associated Lien falls within the definition of clause (c) of Permitted Liens)).

            "First Amendment to PPA" means the First Amendment to PPA
substantially in the form of the draft provided to Administrative Agent on the
Closing Date.

            "FPA" means the Federal Power Act, as amended.

            "Freeport Project" has the meaning in the Recitals of the Credit
Agreement.

            "GAAP" means generally accepted accounting principles in the United
States of America.

            "Governing Documents" means, with respect to any Person, the
certificate or articles of incorporation, bylaws, operating agreement or other
organizational or governing documents of such Person.

            "Governmental Authority" means any national, state or local
government (whether domestic or foreign), any political subdivision thereof or
any other governmental, quasi-governmental, judicial, public or statutory
instrumentality, authority, body, agency, bureau or entity, (including, but not
limited to, any zoning authority, FERC, the Securities Exchange Commission, the
Minnesota Public Utilities Commission, the Public Utilities Commission of Texas,
the Comptroller of the Currency or the Federal Reserve Board, any central bank
or any comparable authority) or any arbitrator with authority to bind a party at
law.

            "Governmental Rule" means any law, rule, regulation, ordinance,
order, code interpretation, treaty, judgment, decree, directive, guidelines,
policy or similar form of decision of any Governmental Authority.

                                       16
<PAGE>

            "Granting Bank" has the meaning given in Section 9.13.2 of the
Credit Agreement.

            "Group Pledge and Security Agreement" means the Pledge and Security
Agreement, dated as of the Closing Date, in substantially the form of Exhibit
D-10 to the Credit Agreement by and among Borrower, CDHI, FEC-LP, FEC-GP and the
Collateral Agent.

            "Hazardous Substances" means (statutory acronyms and abbreviations
having the meaning given them in the definition of "Hazardous Substances Laws")
substances defined as "hazardous substances," "pollutants" or "contaminants" in
Section 101 of the CERCLA; those substances defined as "hazardous waste,"
"hazardous materials" or "regulated substances" by the RCRA; those substances
designated as a "hazardous substance" pursuant to Section 311 of the CWA; those
substances defined as "hazardous materials" in Section 103 of the HMTA; those
substances regulated as a hazardous chemical substance or mixture or as an
imminently hazardous chemical substance or mixture pursuant to Section 6 or 7 of
the TSCA; those substances defined as "contaminants" by Section 1401 of the
SDWA, if present in excess of permissible levels; those substances regulated by
the Oil Pollution Act; those substances defined as a pesticide pursuant to
Section 2(u) of the FIFRA; those substances defined as a source, special nuclear
or by-product material by Section 11 of the AEA; those substances defined as
"residual radioactive material" by Section 101 of the UMTRCA; those substances
defined as "toxic materials" or "harmful physical agents" pursuant to Section 6
of the OSHA); those substances defined as hazardous wastes in 40 C.F.R. Part
261.3; those substances defined as hazardous waste constituents in 40 C.F.R.
Part 260.10, specifically including Appendix VII and VIII of Subpart D of 40
C.F.R. Part 261; those substances designated as hazardous substances in 40
C.F.R. Parts 116.4 and 302.4; those substances defined as hazardous substances
or hazardous materials in 49 C.F.R. Part 171.8; those substances regulated as
hazardous materials, hazardous substances, or toxic substances in 40 C.F.R. Part
1910; those substances regulated as hazardous materials, hazardous substances,
or toxic substances in any other Hazardous Substances Laws; and those substances
regulated as hazardous materials, hazardous substances, or toxic substances in
the regulations adopted and publications promulgated pursuant to said laws,
whether or not such regulations or publications are specifically referenced
herein.

            "Hazardous Substances Law" means any of:

            (i) the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. Section 9601 et seq.) ("CERCLA");

            (ii) the Federal Water Pollution Control Act (33 U.S.C. Section 1251
et seq.) ("Clean Water Act" or "CWA");

            (iii) the Resource Conservation and Recovery Act (42 U.S.C. Section
6901 et seq.) ("RCRA");

            (iv) the Atomic Energy Act of 1954 (42 U.S.C. Section 2011 et seq.)
("AEA");

            (v) the Clean Air Act (42 U.S.C. Section 7401 et seq.) ("CAA");

                                       17
<PAGE>

            (vi) the Emergency Planning and Community Right to Know Act (42
U.S.C. Section 11001 et seq.) ("EPCRA");

            (vii) the Federal Insecticide, Fungicide, and Rodenticide Act (7
U.S.C. Section 136 et seq.) ("FIFRA");

            (viii) the Oil Pollution Act of 1990 (P.L. 101-380, 104 Stat. 486);

            (ix) the Safe Drinking Water Act (42 U.S.C. Section 300f et seq.)
("SDWA");

            (x) the Surface Mining Control and Reclamation Act of 1974 (30
U.S.C. Section 1201 et seq.) ("SMCRA");

            (xi) the Toxic Substances Control Act (15 U.S.C. Section 2601 et
seq.) ("TSCA");

            (xii) the Hazardous Materials Transportation Act (49 U.S.C. Section
1801 et seq.) ("HMTA");

            (xiii) the Uranium Mill Tailings Radiation Control Act of 1978 (42
U.S.C. Section 7901 et seq.) ("UMTRCA");

            (xiv) the Occupational Safety and Health Act (29 U.S.C. Section 651
et seq.) ("OSHA");

            (xv) the Texas Solid Waste Disposal Act (Tex. Health & Safety Code,
Section 361.001 et seq.);

            (xvi) the Texas Clean Air Act (Tex. Health & Safety Code, Section
382.001 et seq.);

            (xvii) Subtitle D of the Texas Water Code (Tex. Water Code, Section
26.001 et seq.);

            (xviii) the Texas Oil Spill Prevention and Response Act (Tex. Nat.
Res. Code, Section 40.001 et seq.);

            (xix) the Minnesota Environmental Response and Liability Act (Minn.
Stat. Chap. 115B) ("MERLA");

            (xx) the Minnesota Petroleum Tank Release Cleanup Act (Minn. Stat.
Chap. 115C);

            (xxi) the Minnesota Agricultural Chemical Liability Act (Minn. Stat.
Chap. 18D);

            (xxii) the Minnesota Oil and Hazardous Substance Discharge
Preparedness Act (Minn. Stat. Chap. 115E);

                                       18
<PAGE>

            (xxiii) the Minnesota Pollution Control Agency Act (Minn. Stat.
Chap. 116);

            (xxiv) the Minnesota Water Pollution Control Act (Minn. Stat. Chap.
115); and

            (xxv) all other Federal, state and local Governmental Rules relating
to the protection of human health or the environment or which otherwise govern
Hazardous Substances, and the regulations adopted and publications promulgated
pursuant to all such foregoing laws.

            "Hedge Bank" means a Lender, or any Affiliate thereof which, in any
case, is party to an Interest Rate Agreement with Borrower, in its capacity as
counterparty to such Interest Rate Agreement.

            "Hedge Breaking Fees" has the meaning given in Section 5.21.2 of the
Credit Agreement.

            "Hedge Transaction" means any "Transaction" (such as swaps, caps,
collars or floors) entered into under an Interest Rate Agreement.

            "High-Grade Collateral" or "HGC" has the meaning given in Section
11.1(C) of the Power Purchase Agreement.

            "HRSG Vendor" means Nooter/Eriksen, Inc., a Missouri corporation.

            "Improvements" has the meaning given in the FEC Deed of Trust or MEC
Mortgage.

            "Inchoate Default" or "Default" means any occurrence, circumstance
or event, or any combination thereof, which, with the lapse of time or the
giving of notice or both, would constitute an Event of Default.

            "Indemnitees" has the meaning given in Section 5.11.1 of the Credit
Agreement.

            "Independent Consultants" means, collectively, the Insurance
Consultant, the Power Market Consultant and the Independent Engineer.

            "Independent Engineer" means R.W. Beck, Inc.

            "Independent Engineer's Drawdown Certificate" has the meaning given
in Section 3.2.6(b) of the Credit Agreement.

            "Initial Allocated Portion" means the Initial FEC Allocated Portion
or the Initial MEC Allocated Portion.

            "Initial FEC Allocated Portion" has the meaning given in Section
2.1.1(a) of the Credit Agreement.

                                       19
<PAGE>

            "Initial MEC Allocated Portion" has the meaning given in Section
2.1.1(a) of the Credit Agreement.

            "Initial Principal Repayment Date" means March 31, 2007.

            "Insurance Consultant" means Moore-McNeil, LLC.

            "Insurance Proceeds" has the meaning given in the applicable
Depositary Agreement.

            "Interest Period" means, with respect to any LIBOR Loan, the time
period selected by Borrower or provided for pursuant to the Credit Agreement
which commences on the first day of such Loan, or the effective date of any
conversion (as the case may be) and ends on the last day of such time period.

            "Interest Rate" means the Base Rate or the LIBO Rate, as the case
may be.

            "Interest Rate Agreements" means one or more interest rate swap
agreements, caps, collars, or other master interest rate hedging mechanisms,
each in substantially the form of Exhibit D-12 to the Credit Agreement, with
such changes as are reasonably required by each Hedge Bank which do not
materially change the substance thereof, and in each case having a term that
does not extend beyond the Term Loan Maturity Date.

            "Interest Rate Determination Date" means, with respect to any
Interest Period, two Banking Days prior to the first day of such Interest
Period.

            "LC Issuer" has the meaning given in the Recitals of the Credit
Agreement.

            "Lead Arrangers" means CoBank, ACB, Calyon New York Branch, HSH
Nordbank AG, UFJ Bank Limited, and Bayerische Hypo- und Vereinsbank AG, New York
Branch.

            "Legal Requirements" means, as to any Person, the Governing
Documents of such Person, any requirement under a Permit, and any Governmental
Rule in each case applicable to or binding upon such Person or any of its
properties or to which such Person or any of its property is subject.

            "Lender" or "Lenders" means the banks and other similar financial
institutions (including any insurance company or other financial institution
(whether a corporation, partnership, trust or other entity) that is (a) engaged
in making, purchasing or otherwise investing in commercial loans in the ordinary
course of business, (b) reasonably experienced in project finance transactions
similar to the financing contemplated by the Credit Documents, and (c) capable
of advancing Loans, and in each case having total assets in excess of
$100,000,000) that are or become parties to the Credit Agreement and their
successors and assigns including each Lender. For purposes of determining
Obligations secured by the Collateral, each Hedge Bank shall be deemed a
"Lender" party to the Credit Agreement and Credit Documents to the extent so
specified in Section 5.21.3 of the Credit Agreement.

                                       20
<PAGE>

            "Lending Office" means, with respect to any Lender, the office
designated in writing as such to Administrative Agent and Borrower from time to
time.

            "LIBO Rate" means, with respect to any LIBOR Loan for any Interest
Period, the rate per annum determined by Administrative Agent at approximately
11:00 a.m. (London time) on the Interest Rate Determination Date by reference to
the British Bankers' Association Interest Settlement Rates for deposits in
Dollars (as set forth by any service selected by Administrative Agent which has
been nominated by the British Bankers' Association as an authorized information
vendor for the purpose of displaying such rates) for a period equal to such
Interest Period; provided that, to the extent that an interest rate is not
ascertainable pursuant to the foregoing provisions of this definition, the "LIBO
Rate" shall be the interest rate per annum determined by Administrative Agent to
be the average of the rates per annum at which deposits in Dollars are offered
for such Interest Period to major banks in the London interbank market in
London, England by Administrative Agent at approximately 11:00 a.m. (London
time) on the Interest Rate Determination Date. Each determination by
Administrative Agent pursuant to this definition shall be conclusive in the
absence of manifest error.

            "LIBOR Construction Loan" has the meaning given in Section
2.1.1(b)(i) of the Credit Agreement.

            "LIBOR Loans" means, collectively, the LIBOR Construction Loans and
the LIBOR Term Loans.

            "LIBOR Security Fund LC Loan" means a Security Fund LC Loan that
shall bear interest at the rate set forth in Section 2.2.3(b) of the Credit
Agreement.

            "LIBOR Term Loan" has the meaning given in Section 2.1.2(b)(i)(B) of
the Credit Agreement.

            "Lien" means, with respect to any property or asset, any mortgage,
deed of trust, lien, pledge, charge, security interest, or encumbrance of any
kind in respect of such asset, whether or not filed, recorded or otherwise
perfected or effective under applicable law, as well as the interest of a vendor
or lessor under any conditional sale agreement, capital lease or other title
retention agreement relating to such asset.

            "Liquidation Costs" has the meaning given in Section 2.9(f) of the
Credit Agreement.

            "Loan Transactions" has the meaning given the Section 11.22 of the
Credit Agreement.

            "Loans" means, collectively, the Construction Loans, the Term Loans
and the Security Fund LC Loan.

            "Loss Proceeds" has the meaning given in of the applicable
Depositary Agreement.

                                       21
<PAGE>

            "Loss Proceeds Account" means the "Loss Proceeds Account" as defined
in the respective Project Company Depositary Agreements.

            "Major Casualty Event" has the meaning given in the respective
Project Company Depositary Agreements.

            "Major Equipment Contracts" means, collectively, (a) the Purchase
Contract for One Heat Recovery Steam Generator & Accessories, dated as of May
17, 2004, between HRSG Vendor and MEC, (b) the Purchase Contract for Steam
Turbine Generator and Accessories, dated as of July 28, 2004, between Toshiba
International Corporation and MEC, (c) the Purchase Contract for One Gas Turbine
Generator & Accessories, dated as of August 30, 2004, between Siemens
Westinghouse Power Corporation and MEC, (d) the Purchase Contract for Four
Auxiliary Boilers and Accessories, dated as of December 8, 2003, between Rentech
and FEC, and (e) the Purchase Contract for Steam Turbine Generator and
Accessories, dated as of August 27, 2004, between Toshiba International
Corporation and Construction Contractor.

            "Major Maintenance" means labor, materials and other direct expenses
for any overhaul of, or major maintenance procedure for, the Projects which
require significant disassembly or shutdown of the Projects, (a) in accordance
with Prudent Utility Practices, (b) pursuant to manufacturers' requirements to
avoid voiding any such manufacturer's warranty, or (c) pursuant to any
applicable Legal Requirement, not including any subordinated major maintenance
fee.

            "Major Maintenance Plan" has the meaning given in Section 5.14.5 of
the Credit Agreement.

            "Major Maintenance Reserve Letter of Credit" has the meaning given
in Section 3.4.3(a) of the respective Project Company Depositary Agreements.

            "Major Maintenance Reserve Requirement" means, for each Project, the
"Major Maintenance Reserve Requirement" as defined in the applicable Project
Company Depositary Agreement.

            "Major Maintenance Service Arrangement" means Appendix E to the
Capacity Sales Agreement.

            "Major Project Documents" means FEC Major Project Documents and MEC
Major Project Documents.

            "Major Project Participants" means FEC Major Project Participants
and MEC Major Project Participants.

            "Majority Lenders" means, at any time, Lenders having Proportionate
Shares which in the aggregate exceed 50%.

            "Mandatory Prepayment" has the meaning given in Section 2.1.7(c) of
the Credit Agreement.

                                       22
<PAGE>

            "Mandatory Prepayment Account" has the meaning given in Section 1.1
of the Borrower Depositary Agreement.

            "Mankato Project" has the meaning in the Recitals of the Credit
Agreement.

            "Material Adverse Effect" or "Material Adverse Change" means (a) a
material adverse change in the business, property, prospects, results of
operation or financial condition of Borrower (b) any event or occurrence of
whatever nature which could reasonably be expected to materially and adversely
affect Borrower's, Dow's, NSP's or CCMCI's ability to perform its material
obligations under the Operative Documents, and (c) any event or occurrence of
whatever nature which could reasonably be expected to materially and adversely
affect the value, validity or priority of the Secured Parties' security
interests in the Collateral.

            "Maturity" or "maturity" means, with respect to any Loan, Borrowing,
interest, fee or other amount payable by Borrower under the Credit Agreement or
the other Credit Documents, the date such Loan, Borrowing, interest, fee or
other amount becomes due, whether upon the stated maturity or due date, upon
acceleration or otherwise.

            "MEC" has the meaning given in the Recitals of the Credit Agreement.

            "MEC Additional Project Documents" means any material contracts or
agreements related to the construction, testing, maintenance, repair, operation
or use of the Mankato Project entered into by MEC and any other Person, or
assigned to MEC, subsequent to the Closing Date; provided that all such
contracts and agreements providing for the payment by MEC of less than $500,000
per annum individually, or the provision to MEC of less than $1,000,000 per
annum individually in value of goods or services, or providing for a maximum
term of less than one year shall be deemed not to constitute a MEC Additional
Project Document; and provided, further, that the MEC Additional Project
Documents shall not include any Owner/Third Party Contracts (as defined in the
MEC Construction Contract).

            "MEC Allocated Portion" means the outstanding principal amount of
the Loans from time to time, deemed to be allocable to the Mankato Project by
virtue of having been initially designated as part of the MEC Allocated Portion
pursuant to a Notice of Construction Loan Borrowing (including Loans meeting the
conditions set forth in Section 3.4), and not deemed repaid pursuant to Sections
2.1.2(d), 2.1.7(a)(iii), 2.1.7(b) or 11.23 of the Credit Agreement.

            "MEC Checking Account" means the "Checking Account" as defined in
the MEC Depositary Agreement.

            "MEC Checking Account Bank" means the "Checking Account Bank" as
defined in the MEC Depositary Agreement.

            "MEC Completion Undertaking Agreement" means the Completion
Undertaking Agreement, dated as of the Closing Date between CCMCI and Borrower

                                       23
<PAGE>

            "MEC Construction Account" means the "Construction Account" created
pursuant to the MEC Depositary Agreement.

            "MEC Construction Contract" means the Engineering, Procurement and
Construction Agreement, dated as of February 25, 2005, between the Construction
Contractor and MEC.

            "MEC Construction Contract Guaranty" means the Guaranty, dated as of
February 25, 2005, between Sponsor and MEC.

            "MEC Control Agreement" means that certain control agreement to be
entered into among MEC, Collateral Agent and MEC Checking Account Bank regarding
the perfection of Collateral Agent's Lien on the MEC Checking Account.

            "MEC Depositary Agreement" means the Depositary Agreement, dated as
of the Closing Date, in substantially the form of Exhibit D-6 to the Credit
Agreement, among MEC, Administrative Agent, Collateral Agent and Depositary
Agent.

            "MEC Easements" means shall have the meaning given in the MEC
Mortgage.

            "MEC Gas Interconnection Agreement" means the Facility Interconnect,
Construction and Reimbursement Agreement, dated effective December 8, 2004,
between MEC and Northern Natural Gas.

            "MEC Guaranties" means the MEC Secured Guaranty and the MEC
Unsecured Guaranty.

            "MEC Interconnection Agreement" means the Interconnection and
Operating Agreement, dated November 17, 2004, among MEC, Midwest Independent
Transmission System Operator, Inc. and NSP, doing business as Xcel Energy.

            "MEC Loss Proceeds Account" means the "Loss Proceeds Account"
created pursuant to the MEC Depositary Agreement.

            "MEC Major Maintenance Reserve Account" means the "Major Maintenance
Reserve Account" created pursuant to the MEC Depositary Agreement.

            "MEC Major Project Documents" means the Power Purchase Agreement,
the MEC Interconnection Agreement, the MEC O&M/Major Maintenance Agreement, the
MEC Construction Contract, the Water Services Agreement, the MEC Gas
Interconnection Agreement, the MEC Completion Undertaking Agreement, the MEC
Construction Contract Guaranty, any guaranty agreements related to the foregoing
executed by Persons in favor of MEC and, unless otherwise agreed by
Administrative Agent prior to its execution and delivery, any MEC Additional
Project Documents.

            "MEC Major Project Participants" means, without duplication,
Borrower, MEC, Sponsor (until CCMCI's obligations under MEC's Construction
Contract are fully performed),

                                       24
<PAGE>

CCMCI (until CCMCI's obligations under MEC's Construction Contract are fully
performed), Operator, NSP, the City of Mankato, Northern Natural Gas, and any
Person other than those so listed which provides any guaranty agreement with
respect to a MEC Major Project Document, and any counterparty to any MEC
Additional Project Document which is a MEC Major Project Document.

            "MEC Mortgage" means the Mortgage, Security Agreement and Fixture
Filing, dated on or about the Closing Date, in substantially the form of Exhibit
D-2 to the Credit Agreement, by MEC in favor of Collateral Agent.

            "MEC Mortgaged Property" means the "Premises" as defined in the MEC
Mortgage.

            "MEC Note" means the promissory note in the form of Exhibit B-4 to
the Credit Agreement.

            "MEC O&M Account" means the "O&M Account" created pursuant to the
MEC Depositary Agreement.

            "MEC O&M/Major Maintenance Agreement" means the Operations and
Maintenance Services and Major Maintenance Work Agreement, dated as of October
1, 2004, between MEC and Operator.

            "MEC Project Documents" means, without duplication, the MEC Major
Project Documents, the MEC Easements, the NSP Subordinated Mortgage and any
other agreement relating to the development, construction or operation of the
Mankato Project to which MEC is a party, provided, that the MEC Project
Documents shall not include any Owner/Third Party Contracts (as defined in the
MEC Construction Contract).

            "MEC Revenue Account" means the "Revenue Account" created pursuant
to the MEC Depositary Agreement.

            "MEC Secured Guaranty" means the Guaranty, dated as of the Closing
Date, in substantially the form of Exhibit D-14 to the Credit Agreement between
MEC and Collateral Agent.

            "MEC Security Agreement" means the Security Agreement, dated as of
the Closing Date, in substantially the form of Exhibit D-15 to the Credit
Agreement between MEC and Borrower.

            "MEC Site" means the Land, as defined in the MEC Mortgage.

            "MEC Unsecured Guaranty" means the Guaranty, dated as of the Closing
Date, in substantially the form of Exhibit D-19 to the Credit Agreement between
MEC and Collateral Agent.

                                       25
<PAGE>

            "MEC Waterfall Level" means the "Waterfall Level" as defined in the
MEC Depositary Agreement.

            "Minimum Notice Period" means (a) at least three Banking Days before
the date of any Borrowing, Term-Conversion, continuation or conversion of a Type
of Loan resulting in whole or in part in one or more LIBOR Construction Loans or
LIBOR Term Loans, and (b) at least one Banking Day before any Borrowing,
Term-Conversion or conversion of a Type of Loan resulting in whole or in part in
one or more Base Rate Construction Loans or Base Rate Term Loans.

            "Moody's" means Moody's Investors Service, Inc.

            "Multiemployer Plan" means any Plan that is a "multiemployer plan"
(as such term is defined in Section 3(37) or 4001(a)(3) of ERISA).

            "Non-Advancing Bank" has the meaning given in Section 9.12 of the
Credit Agreement.

            "Nonrecourse Persons" has the meaning given in Article 8 of the
Credit Agreement.

            "NNG" means Northern Natural Gas Corporation, a Delaware
corporation.

            "Notes" means, collectively, any Construction Notes, any Term Notes
and any Security Fund LC Loan Notes.

            "Notice of Construction Loan Borrowing" has the meaning given in
Section 2.1.1(b) of the Credit Agreement.

            "Notice of Conversion of Loan Type" has the meaning given in Section
2.1.6 of the Credit Agreement.

            "Notice of Term-Conversion" has the meaning in Section 2.1.2(b) of
the Credit Agreement.

            "NSP" means Northern States Power Company, a Minnesota corporation.

            "NSP Acknowledgment of Subordination" means the Consent and
Agreement Concerning Subordinated Mortgage, Security Agreement and Financing
Statement, dated as of a date on or prior to the Closing Date, in substantially
the form of Exhibit D-8 to the Credit Agreement, among NSP, MEC and Collateral
Agent.

            "NSP Subordinated Mortgage" means the Subordinated Mortgage,
Assignment of Leases and Rents, Security Agreement and Financing Statement dated
August 23, 2004, by MEC in favor of NSP, as supplemented by the NSP
Acknowledgement of Subordination.

                                       26
<PAGE>

            "O&M Agreements" means the FEC O&M Agreement and the MEC O&M
Agreement.

            "O&M Costs" means, for any period, cash amounts incurred and paid by
FEC and/or MEC for the operation and maintenance of its respective Project or
any portion thereof (other than as funded from the MEC Major Maintenance Reserve
Account or the FEC Major Maintenance Reserve Account), in connection with MEC's
use of any Alternate Generation Source (as such term is defined in the Power
Purchase Agreement) and for the purchase of goods and services in connection
therewith, including (a) premiums for insurance policies, (b) fuel supply and
fuel transportation costs (to the extent incurred in connection with the sale of
electrical products under the Capacity Sales Agreement (in the case of the
Freeport Project) or the Power Purchase Agreement (in the case of the Mankato
Project)) and the cost of other consumables, (c) costs of obtaining any other
materials, supplies, utilities or services for the Projects, (d) costs of
maintaining, renewing and amending Permits, (e) franchise, licensing, property,
real estate, sales and excise taxes, (f) general and administrative expenses,
(g) employee salaries, wages and other employment-related costs, (h) business
management and administrative service fees, (i) costs required to be paid by
each Project under any Project Document or Credit Document (other than scheduled
Debt Service and Project Costs) or to satisfy any Legal Requirement or obtain or
maintain any Permit, (j) legal, accounting and consulting fees and other
transaction costs and all other fees payable to the Lenders allocable to FEC or
MEC, as the case may be (other than amounts constituting scheduled Debt
Service), (k) necessary capital expenditures (other than capital expenditures
made in connection with the repair or restoration of any casualty suffered by
the Projects to the extent funded with insurance or similar proceeds applied
pursuant to Section 3.5 of the FEC Depositary Agreement or Section 3.5 of the
MEC Depositary Agreement or infusions of equity pursuant to the Credit
Documents), (l) all other fees and expenses necessary for the continued
operation and maintenance of the Projects and the conduct of the business of the
Projects, and (m) Emergency Operating Costs (except for Emergency Operating
Costs in connection with the repair or restoration of any casualty suffered by
the Projects to the extent funded with insurance or similar proceeds applied
pursuant to Section 3.5 of the FEC Depositary Agreement or Section 3.5 of the
MEC Depositary Agreement or infusions of equity pursuant to the Credit
Documents), but exclusive in all cases of non-cash charges, including
depreciation or obsolescence charges or reserves therefor, amortization of
intangibles or other bookkeeping entries of a similar nature, and also exclusive
of all interest charges and charges for the payment or amortization of principal
of indebtedness of Borrower. O&M Costs shall not include (i) costs of Major
Maintenance to the extent paid with funds on deposit in the MEC Major
Maintenance Reserve Account or the Borrower Major Maintenance Account, (ii)
Subordinated Payments, (iii) depreciation, (iv) payments for restoration or
repair of the Projects from the Loss Proceeds Account in accordance with the
terms of the applicable Depositary Agreement, or (v) costs and fees associated
with the maintenance of the Undertaking Support LCs or any Collateral
Replacement LCs.

            "Obligations" means and includes, with respect to any Person, all
loans, advances, debts, liabilities, and obligations, howsoever arising, owed by
such Person to the Lead Arrangers, Administrative Agent, Depositary Agent,
Collateral Agent, the Hedge Banks or the Lenders of

                                       27
<PAGE>

every kind and description (whether or not evidenced by any note or instrument
and whether or not for the payment of money), direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, pursuant to
the terms of the Credit Agreement or any of the other Credit Documents,
including all interest, fees, charges, expenses, attorneys' fees and accountants
fees chargeable to such Person and payable by such Person hereunder or
thereunder.

            "Operating Budget Category" means (a) individually, any line item
category set forth in that portion of the then-current Annual Operating Budget
for a Project showing sources and uses of Project funds, and (b) collectively,
all line item categories set forth in that portion of the then-current Annual
Operating Budget for a Project showing sources and uses of Project funds.

            "Operating Cash Available for Debt Service" means, for any period,
Project Revenues during such period minus (a) O&M Costs during such period, and
(b) deposits into the MEC Major Maintenance Reserve Account or the FEC Major
Maintenance Reserve Account during such period.

            "Operative Documents" means, collectively, the Credit Documents and
the Project Documents.

            "Operator" means Calpine Operating Services Company, Inc., a
Delaware corporation.

            "Other Taxes" has the meaning given in Section 2.6.4(a) of the
Credit Agreement.

            "Payment Period" means the three-month period commencing on a
Quarterly Payment Date and ending on the day prior to the next Quarterly Payment
Date.

            "PBGC" means the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.

            "Performance Tests" means the Performance Tests as defined and
required under the Construction Contracts.

            "Permit" means any action, approval, consent, waiver, exemption,
variance, franchise, order, permit, authorization, right or license of or from a
Governmental Authority.

            "Permitted Debt" means (a) Debt incurred under the Credit Documents,
(b) Debt incurred by a Project Company pursuant to the terms of a Project
Document (but not for borrowed money), either not more than 90 days past due or
being contested in good faith, (c) trade or other similar Debt incurred by a
Project Company in the ordinary course of business (but not for borrowed money),
either not more than 90 days past due or being contested in good faith, (d)
contingent liabilities of Borrower and the Project Companies, to the extent
otherwise constituting Debt, including those relating to (i) the acquisition of
goods, supplies or merchandise in the normal course of business or normal trade
credit, (ii) the endorsement of negotiable instruments received in the normal
course of its business, and (iii) contingent

                                       28
<PAGE>

liabilities incurred with respect to any Applicable Permit or Operative
Document, (e) purchase money obligations incurred by a Project Company to
finance the purchase price of discrete items of equipment not comprising an
integral part of a Project that extend only to the equipment being financed in
an aggregate amount of secured principal and capital lease obligations not
exceeding $1,000,000 at any one time outstanding, (f) obligations of a Project
Company in respect of surety bonds or similar instruments in an aggregate amount
not exceeding $1,000,000 at any one time outstanding, (g) Debt incurred to
finance an expansion of either Project in accordance with Section 11.24 of the
Credit Agreement and (h) Debt incurred by Borrower in connection with the
purchase of two Siemens 501F combustion turbines from CCMCI, as evidenced by the
Subordinated Note.

            "Permitted Investments" means (a) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having a maturity not exceeding
one year from the date of issuance, (b) interest-bearing deposit accounts,
including time deposits and certificates of deposit, of any Lender or any
domestic or foreign commercial bank whose outstanding long-term debt is rated at
least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent
thereof by Moody's having capital and surplus in excess of $500,000,000 having a
maturity not exceeding 90 days from the date of acquisition, (c) commercial
paper issued by any domestic corporation rated at least A-1 or the equivalent
thereof by S&P or at least P-1 or the equivalent thereof by Moody's and, in each
case, having a maturity not exceeding 90 days from the date of acquisition, (d)
fully secured repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (a) above entered into
with any bank meeting the qualifications established in clause (b) above, (e)
high-grade corporate bonds rated at least AA or the equivalent thereof by S&P or
at least Aa2 or the equivalent thereof by Moody's having a maturity not
exceeding 90 days from the date of acquisition, (f) banker's acceptances drawn
on and accepted by any domestic or foreign commercial bank whose long-term
senior unsecured debt is rated at least A or the equivalent thereof by S&P or at
least A2 or the equivalent thereof by Moody's, (g) money market mutual funds
whose investment criteria are substantially similar to items (a) through (f) of
this definition, (h) instruments issued by an investment company rated at least
A or the equivalent thereof by S&P or at least A2 or the equivalent thereof by
Moody's having a portfolio consisting of 95% or more of the securities described
in items (a) through (g) of this definition, and (i) investment contracts
pursuant to which moneys are deposited (to bear interest at an agreed rate) with
a bank, insurance company or other financial institution whose long-term senior
unsecured debt is rated at least A or the equivalent thereof by S&P or at least
A2 or the equivalent thereof by Moody's.

            "Permitted Liens" means (a) the rights and interests of Collateral
Agent and any other Secured Party in Borrower, FEC-GP, FEC-LP, the Project
Companies and their respective assets as provided in the Credit Documents, (b)
Liens of Borrower and the Project Companies for any tax, assessment or other
governmental charge, either secured by a bond or other security reasonably
acceptable to Administrative Agent or not yet due or being contested in good
faith and by appropriate proceedings, so long as (i) such proceedings shall not
involve any substantial danger of the sale, forfeiture or loss of the Projects,
the Sites or any Easements, or ownership

                                       29
<PAGE>

interest in either Project Company, as the case may be, title thereto or any
interest therein and shall not interfere in any material respect with the use or
disposition of the Projects, the Sites or any Easements, or ownership interest
in either Project Company, (ii) a bond or other security reasonably acceptable
to Administrative Agent has been posted or provided in such manner and amount as
to assure Administrative Agent that any taxes, assessments or other charges
determined to be due will be promptly paid in full when such contest is
determined, or (iii) adequate cash reserves have been provided therefor, (c)
materialmen's, mechanics', workers', repairmen's, employees' or other like Liens
of the Project Companies, arising in the ordinary course of business or in
connection with the construction of the Projects, either for amounts not yet due
or for amounts being contested in good faith and by appropriate proceedings, so
long as (i) such proceedings shall not involve any substantial danger of the
sale, forfeiture or loss of the Projects, the Sites or any Easements, or
ownership interest in either Project Company, as the case may be, title thereto
or any interest therein and shall not interfere in any material respect with the
use or disposition of the Projects, the Sites or any Easements, or ownership
interest in either Project Company, (ii) a bond or other security reasonably
acceptable to Administrative Agent has been posted or provided in such manner
and amount as to assure Administrative Agent that any amounts determined to be
due will be promptly paid in full when such contest is determined, or (iii)
adequate cash reserves have been provided therefor, (d) Liens of Borrower and
the Project Companies arising out of judgments or awards so long as an appeal or
proceeding for review is being prosecuted in good faith and for the payment of
which adequate reserves, bonds or other security reasonably acceptable to
Administrative Agent have been provided or are fully covered by insurance, (e)
Title Exceptions with respect to the Project Companies, (f) Liens, deposits or
pledges of the Project Companies to secure statutory obligations or performance
of bids, tenders, contracts (other than for the repayment of borrowed money) or
leases, or for purposes of like general nature in the ordinary course of its
business, not to exceed $500,000 in the aggregate at any time, and with any such
Lien to be released as promptly as practicable, (g) other Liens of the Project
Companies incident to the ordinary course of business that are not incurred in
connection with the obtaining of any loan, advance or credit and that do not in
the aggregate materially impair the use of the property or assets of Borrower or
the value of such property or assets for the purposes of such business, (h)
involuntary Liens of Borrower or the Project Companies as contemplated by the
Operative Documents (including a lien of an attachment, judgment or execution)
securing a charge or obligation, on any of the applicable Borrower Party's
property, either real or personal, whether now or hereafter owned in the
aggregate sum of less than $500,000, (i) the rights and interests of NSP in MEC
as provided under the NSP Subordinated Mortgage (as supplemented by the NSP
Acknowledgement of Subordination), and (j) Liens created to secure Debt incurred
pursuant to clause (g) of the definition of Permitted Debt.

            "Person" means any natural person, corporation, partnership, limited
liability company, firm, association, Governmental Authority or any other entity
whether acting in an individual, fiduciary or other capacity.

            "Plans and Specifications" means the plans and specifications for
the construction and design of each Project as set forth in the applicable
Construction Contracts and, in the case

                                       30
<PAGE>

of FEC, the Dow Agreements, as updated from time to time, and any other similar
design, engineering or technical documents referred to in such Construction
Contracts.

            "Power Market Consultant" means Pace Global Energy Services.

            "Power Purchase Agreement" means the Purchased Power Agreement,
dated as of March 11, 2004, between NSP and MEC.

            "Principal Repayment Dates" means (a) the Initial Principal
Repayment Date and each three month anniversary thereof until the Term Loan
Maturity Date, and (b) the Term Loan Maturity Date.

            "Project Budget" has the meaning given in Section 3.1.18 of the
Credit Agreement.

            "Project Commercial Operation Date" has the meaning given in the
Capacity Sales Agreement.

            "Project Companies" has the meaning given in the Recitals of the
Credit Agreement.

            "Project Company Guaranties" means the FEC Guaranty and the MEC
Guaranties.

            "Project Costs" means, other than as set forth in the proviso below,
all costs associated with the development, design, engineering, construction,
testing, installation, equipping, assembly, inspection, completion, and start-up
of the Projects incurred prior to the Term Period Commencement Date, including:
(a) all amounts payable under the Construction Contracts, any state taxes on
equipment, site acquisition and preparation costs, any interconnection costs
payable by MEC pursuant to the Interconnection Agreement, any interconnection
costs payable by FEC pursuant to, or in connection with the FEC Interconnection
Agreement, all water and wastewater disposal interconnection and pumping station
or water well costs by FEC or MEC, (b) financing, advisory, legal and other
fees, (c) all other Project-related costs and other development costs, insurance
costs, management services fees and expenses and expenses to complete the
development, design, construction and financing of both Projects, (d)
contingency funds, start-up costs and initial working capital costs, (e) O&M
Costs due and payable prior to Term-Conversion, (f) interest and fees incurred
on or in respect of any Construction Loan or the Construction Loan Commitment
pursuant to the Credit Agreement prior to Term-Conversion, (g) payments and fees
under the Interest Rate Agreements payable prior to Term-Conversion, (h) amounts
necessary to fund the Debt Service Reserve Account up to 50% of the DSR Minimum
Balance as of the Term Period Commencement Date (i) costs incurred with
purchasing spare parts, and (j) amounts funded by each Project to its working
capital reserve as required under the applicable Depositary Agreement; provided,
that Project Costs shall not include (i) Subordinated Payments, and (ii) costs
and fees associated with the maintenance of the Undertaking Support LCs and any
Collateral Replacement LCs.

                                       31
<PAGE>

            "Project Document Modification" has the meaning given in Section
6.12.1 of the Credit Agreement.

            "Project Documents" means, without duplication, the FEC Project
Documents and the MEC Project Documents.

            "Project Revenues" means, without duplication, all income and cash
receipts of Borrower Parties derived from the ownership or operation of the
Projects, including payments received by Borrower under either Completion
Undertaking Agreement, MEC under the Power Purchase Agreement, the MEC
Construction Contract, the MEC Construction Contract Guaranty and the MEC O&M
Agreement, and payments received by FEC under the Capacity Sales Agreement, the
FEC Construction Contracts, the FEC Construction Contract Guaranty, the FEC O&M
Agreement, proceeds of any delay in start up or business interruption or
liability insurance (to the extent such liability insurance proceeds represent
reimbursement of third party claims previously paid by Borrower Parties), income
derived from the sale or use of electric capacity, energy or related products
transmitted or distributed or ancillary services or other related products
produced by the Projects, payments for remarketing of fuel or transportation
rights relating thereto and investment income on amounts in the Accounts (solely
to the extent deposited in the applicable Account), but excluding (a) net
payments, if any, received by Borrower Parties under Hedge Transactions, as
determined in conformity with cash accounting principles, (b) any receipts
derived from the sale of any property pertaining to the Projects or incidental
to the operation of the Projects, as determined in conformity with cash
accounting principles, (c) proceeds of casualty insurance, (d) performance
liquidated damages under the Construction Contracts or the Completion
Undertaking Agreements, (e) the proceeds of any condemnation awards relating to
the Projects, (f) proceeds from the Collateral Documents, and (g) any liquidated
damages under the Major Equipment Contracts, to the extent applied as a setoff
against amounts owed to the applicable Project Company by the Construction
Contractor.

            "Project Schedule" means the schedule for construction and
completion of the Projects as set forth in the schedule attached as Exhibit G-4
to the Credit Agreement.

            "Projects" has the meaning given in the Recitals of the Credit
Agreement.

            "Proportionate Share" means (a) in the context of voting in matters
requiring the vote of all or a percentage of the Lenders and indemnification
obligations of the Lenders under Section 9.5 of the Credit Agreement, with
respect to each Lender (including without duplication, to the extent provided
herein, each Hedge Bank in its capacity as a Lender under Section 5.21.3 of the
Credit Agreement) at any time, a percentage equal to the quotient of (i) the sum
of (A) the percentage interest of such Lender in the Total Construction Loan
Commitment (or, after Term-Conversion, the Total Term Loan Commitment), as set
forth on Exhibit H to the Credit Agreement (as may be amended pursuant to
Article 9 of the Credit Agreement), multiplied by the Total Construction Loan
Commitment (or, after Term-Conversion, the Total Term Loan Commitment) plus (B)
the percentage interest of such Lender in the Interest Rate Agreements, as set
forth on Exhibit H to the Credit Agreement, multiplied by the Hedge Breaking
Fees actually payable (and not on a "marked to market" basis) at such time
(determined upon the close of the applicable voting period), divided by (ii) the
sum of (A) the Total Construction Loan

                                       32
<PAGE>

Commitment (or, after Term-Conversion, the Total Term Loan Commitment) plus (B)
the Hedge Breaking Fees actually payable (and not on a "marked to market" basis)
at such time (determined upon the close of the applicable voting period), and
(b) with respect to each Lender at any time in the context of funding
Construction Loans or Term Loans, the percentage participation of such Lender in
the Total Construction Loan Commitment or Total Term Loan Commitment,
respectively, as set forth on Exhibit H to the Credit Agreement (as may be
amended pursuant to Article 9 of the Credit Agreement). Upon any transfer by a
Lender of all or part of its Commitments, Administrative Agent shall revise
Exhibit H to reflect the Lenders' Proportionate Shares after giving effect to
such transfer.

            "Prudent Utility Practices" means those practices, methods,
equipment, specifications and standards of safety and performance, as the same
may change from time to time, as are commonly used by electric generation
stations in Texas (in the case of the Freeport Project) or Minnesota (in the
case of the Mankato Project) of a type and size similar to the Projects as good,
safe and prudent engineering practices in connection with the design,
construction, operation, maintenance, repair and use of electrical and other
equipment, facilities and improvements of such electrical station, with
commensurate standards of safety, performance, dependability, efficiency and
economy, provided however, that, so long as the FEC O&M Agreement remains in
full force and effect, "Prudent Utility Practices" means, for FEC, the O&M
Standards (as such term is defined in the FEC O&M Agreement). "Prudent Utility
Practices" does not necessarily mean one particular practice, method, equipment
specification or standard in all cases, but is instead intended to encompass a
broad range of acceptable practices, methods, equipment specifications and
standards.

            "PUHCA" means the Public Utility Holding Company Act of 1935, as
amended.

            "Punchlist" means work under the applicable Construction Contracts,
the failure of which to be completed does not, whether individually or in the
aggregate, have, or otherwise cause, a Material Adverse Effect.

            "Punchlist Drawing" has the meaning given in Section 3.3.3(a) of the
Credit Agreement.

            "Purchase Option" has the meaning given in the Capacity Sales
Agreement.

            "PURPA" means the Public Utility Regulatory Policies Act of 1978, as
amended.

            "Put Option" has the meaning given in the Capacity Sales Agreement.

            "Qualified Letter of Credit" means one or more unconditional,
irrevocable letters of credit on terms and conditions, and in form and
substance, reasonably satisfactory to Administrative Agent and shall (a) name
Administrative Agent on behalf of the Secured Parties as the beneficiary
thereof, (b) have an aggregate amount available to be drawn at all times greater
than or equal to the amount being secured by such letter of credit, (c) be
issued from a bank, banks, trust company or trust companies not a party to the
Credit Agreement (and otherwise reasonably acceptable to Administrative Agent)
which bank, banks, trust company or

                                       33
<PAGE>

trust companies shall have a combined capital and surplus of at least
$1,000,000,000 and whose long-term senior unsecured indebtedness is rated at
least A by S&P and A2 by Moody's, (d) not be secured by any of the Collateral,
and (e) not impose on any Borrower Party any obligation to reimburse drawing
payments thereunder; provided that such letter of credit shall provide that it
shall (i) automatically renew upon the expiration thereof unless, at least 60
days prior to such expiration, the issuer thereof shall provide Administrative
Agent with a notice of non-renewal of such letter of credit, (ii) have an
initial expiration date of at least one year after issuance, and (iii) have a
stated amount equal from time to time to (or, to the extent of cash deposited,
less than) amounts required to be issued as set forth in the Credit Documents.

            "Qualifying Facility" means a "qualifying facility" within the
meaning of PURPA and FERC's implementing regulations pertaining thereto.

            "Quarterly Payment Date" means the last Banking Day of each calendar
quarter.

            "Rate Margin" means, for Construction Loans, 1.75%, and for Term
Loans, the applicable rate set forth below:

<TABLE>
<CAPTION>
TERM PERIOD                RATE MARGIN
-----------                -----------
<S>                        <C>
Years 1-2                    1.750%
Years 3-4                    1.875%
Year 5                       2.000%
</TABLE>

            "Register" has the meaning given in Section 2.1.8 of the Credit
Agreement.

            "Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System (or any successor).

            "Regulatory Change" means any change after the Closing Date in
federal, state, local or foreign laws, regulations, Legal Requirements or
requirements under Applicable Permits, or the adoption or making after such date
of any interpretations, directives or requests of or under any federal, state,
local or foreign laws, regulations, Legal Requirements or requirements under
Applicable Permits (whether or not having the force of law) by any Governmental
Authority charged with the interpretation or administration thereof.

            "Release" means disposing, discharging, injecting, spilling,
leaking, leaching, dumping, pumping, pouring, emitting, escaping, emptying,
seeping, placing or the like, into or upon any land or water or air, or
otherwise entering into the environment.

            "Remedial Plan" has the meaning given in Section 5.4.18 of the
Credit Agreement.

            "Rentech" means Rentech Boiler Systems, Inc, a state of Texas C
corporation.

                                       34
<PAGE>

            "Replacement Obligor" means (a) with respect to any Person party to
a Major Project Document in effect on the Closing Date, any Person satisfactory
to Administrative Agent acting at the direction of the Required Lenders, or (b)
with respect to any Person party to an Additional Project Document, any Person
satisfactory to Administrative Agent acting at the direction of the Required
Lenders, as the case may be, applying the approval standards set forth in
Section 6.18 of the Credit Agreement as would otherwise be applied to an
Additional Project Document, and in each case, having credit, or acceptable
credit support, equal to or greater than that of the replaced Person (or
otherwise acceptable to Administrative Agent, or Administrative Agent acting at
the direction of the Required Lenders, as the case may be, in its sole
discretion) on the date that the applicable Major Project Document was entered
into who, pursuant to any definitive agreement, definitive guarantee or
definitive backup arrangement, in each case reasonably satisfactory to
Administrative Agent or Administrative Agent acting at the direction of the
Required Lenders, as the case may be, assumes the obligation of providing the
services and products on terms and conditions no less favorable to such
applicable Borrower Party than those which such Person is obligated to provide
pursuant to the applicable Major Project Document.

            "Reportable Event" means any of the events set forth in Section
4043(b) or (c) of ERISA for which notice to the PBGC has not been waived.

            "Required Lenders" means, at any time, Lenders having Proportionate
Shares which in the aggregate equal or exceed 66-2/3%.

            "Reserve Requirement" means, for LIBOR Loans, the maximum rate
(expressed as a percentage) at which reserves (including any marginal,
supplemental or emergency reserves) are required to be maintained during the
Interest Period therefor under Regulation D by member banks of the Federal
Reserve System in New York City with deposits exceeding $1,000,000,000 against
"Eurocurrency liabilities" (as such term is used in Regulation D). Without
limiting the effect of the foregoing, the Reserve Requirement shall reflect any
other reserves required to be maintained by such member banks by reason of any
Regulatory Change against (a) any category of liabilities which includes
deposits by reference to which the LIBO Rate or LIBOR Loans is to be determined,
(b) any category of liabilities or extensions of credit or other assets which
include LIBOR Loans, or (c) any category of liabilities or extensions of credit
which are considered irrevocable commitments to lend.

            "Responsible Officer" means, as to any Person, its president, chief
executive officer, any vice president, treasurer, or secretary or any natural
Person who is a managing general partner or manager or managing member of a
limited liability company (or any of the preceding with regard to any such
managing general partner, manager or managing member).

            "Restricted Payment Conditions" has the meaning given in Section
6.6.2 of the Credit Agreement.

            "Revenue Accounts" means the Borrower Revenue Account, the FEC
Revenue Account and the MEC Revenue Account.

                                       35
<PAGE>

            "Rights of Way" has the meaning given in Section 3.1.23 of the
Credit Agreement.

            "S&P" means Standard & Poor's, a division of The McGraw-Hill
Companies, Inc.

            "Secured Parties" means Administrative Agent, the Lead Arrangers,
the Collateral Agent, the Depositary Agent, any Lender (or Affiliate of any
Lenders) which is a counterparty to an Interest Rate Agreement entered into by
Borrower in accordance with the Credit Agreement, each Lender and each of their
respective successors, transferees and assigns; provided, that no Affiliate of
Sponsor shall be a "Secured Party" hereunder or under any other Credit Document.

            "Security Agreement" means the Security Agreement, dated as of the
Closing Date, in substantially the form of Exhibit D-3 to the Credit Agreement,
between Borrower and Collateral Agent.

            "Security Fund" has the meaning given in Section 11.1 of the Power
Purchase Agreement.

            "Security Fund LC" has the meaning given in Section 2.2.1 of the
Credit Agreement.

            "Security Fund LC Cash Collateral Account" has the meaning given in
the Borrower Depositary Agreement.

            "Security Fund LC Commitment" means, at any time with respect to
each Lender, such Lender's Proportionate Share of the Total Security Fund LC
Commitment at such time.

            "Security Fund LC Fee" has the meaning given in Section 2.5.1 of the
Credit Agreement.

            "Security Fund LC Loan" has the meaning given in Section 2.2.2 of
the Credit Agreement.

            "Security Fund LC Loan Note" has the meaning given in Section 2.1.4
of the Credit Agreement.

            "Settlement Amount" has the meaning given in Section 5.11.6(b) of
the Credit Agreement.

            "Siemens Turbines" has the meaning given in the Borrower Security
Agreement.

            "Site" means the FEC Site and the MEC Site.

            "Site Services Agreement" means the Site Services Agreement, dated
as of May 27, 2004 between FEC and Dow.

                                       36
<PAGE>

            "SPC" has the meaning given in Section 9.13.2 of the Credit
Agreement.

            "Sponsor" means Calpine Corporation, a Delaware corporation.

            "Stated Amount" means with respect to the Security Fund LC, the
total amount available to be drawn thereunder at the time in question in
accordance with the terms of the Security Fund LC.

            "Subject Claims" has the meaning given in Section 5.11.1(a) of the
Credit Agreement.

            "Subordinated Notes" means each of the Subordinated Demand
Promissory Notes, dated as of February 25, 2005, issued by Borrower to
Construction Contractor in the original principal amount of $44,070,758.00 and
$43,971,622.00, respectively.

            "Subordinated Payments" means any fees, bonuses, profits and any
other amounts payable by either Project Company to any Affiliate under any
Project Document and which are subject to subordination under a Subordination
Agreement.

            "Subordination Agreements" means the COSCI Subordination Agreement,
the CCMCI Subordination Agreement and any other subordination agreement
substantially in the form of Exhibit D-7 to the Credit Agreement which is
approved by the Majority Lenders pursuant to Section 6.8 of the Credit
Agreement.

            "Subsidiary" means, as to any Person, a corporation, partnership,
limited liability company or other entity of which such Person: (a) owns 10% or
more of the shares of stock or other ownership interests having ordinary voting
power (other than stock or such other ownership interests having such power only
by reason of the happening of a contingency) to elect a majority of the board of
directors or other managers of such corporation, partnership or other entity
and/or (b) controls the management, directly or indirectly through one or more
intermediaries. Unless otherwise qualified, all references to a "Subsidiary" or
to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries
of a Person.

            "Target Debt to Equity Ratio" means a Debt to Equity Ratio equal to
(a) $466,500,000 divided by (b) the sum of (i) $96,249,010.70 and (ii) the Dow
Change Order Drawing (the amount in this clause (ii) expressed as a negative
number).

            "Taxes" has the meaning, with respect to the Loans, given in Section
2.6.4(a) of the Credit Agreement.

            "Template Operating Report" means an operating report required by
Section 5.8.2 of the Credit Agreement, in substantially the form of Exhibit G-8
to the Credit Agreement.

            "Term-Conversion" means satisfaction or waiver of the conditions set
forth in Section 3.3 of the Credit Agreement, causing conversion of Construction
Loans to Term Loans. "Term-Convert" is the verb form of "Term-Conversion."

                                       37
<PAGE>

            "Term Loan" has the meaning given in Section 2.1.2(a) of the Credit
Agreement.

            "Term Loan Commitment" means, at any time with respect to each
Lender, such Lender's Proportionate Share of the Total Term Loan Commitment at
such time.

            "Term Loan Maturity Date" means the earlier of (a) December 31,
2011, and (b) the date on which the entire outstanding principal balance of the
Term Loans, together with all unpaid interest, fees, charges and costs, becomes
due and payable under the Credit Agreement.

            "Term Note" has the meaning given in Section 2.1.4 of the Credit
Agreement.

            "Term Period Commencement Date" has the meaning given in Section 3.3
of the Credit Agreement.

            "Term Title Policy" has the meaning given in Section
6.6.2(h)(ii)(B).

            "Title Exception" means those exceptions to coverage listed on
Schedule B-II of the Title Policy, other than the standard printed exceptions
contained therein.

            "Title Insurer" means Stewart Title Guaranty Company.

            "Title Policies" means those certain policies of title insurance
issued by the Title Insurer dated as of the Closing Date, as provided in Section
3.1.22 of the Credit Agreement, including all amendments thereto, endorsements
thereof and substitutions or replacements therefor.

            "Total Construction Loan Commitment" has the meaning given in
Section 2.3.2(a)(ii) of the Credit Agreement.

            "Total Security Fund LC Commitment" means $36,500,000.

            "Total Term Loan Commitment" has the meaning given in Section
2.3.2(b) of the Credit Agreement.

            "True-Up Drawing" has the meaning given in Section 3.3.3(d) of the
Credit Agreement.

            "Type" means the type of Loan, whether a Base Rate Loan or LIBOR
Loan.

            "UCC" means the Uniform Commercial Code as the same may, from time
to time, be in effect in the State of New York; provided, however, in the event
that, by reason of mandatory provisions of law, any or all of the perfection or
priority of the security interest in any Collateral is governed by the Uniform
Commercial Code as in effect in a jurisdiction other than the State of New York
the term "UCC" shall mean the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof and of the other Credit
Documents relating to such perfection or priority and for purposes of
definitions related to such provisions.

                                       38
<PAGE>

            "Undertaking Support LCs" means the letters of credit provided to
Borrower pursuant to Section 2.2(a) of the respective Completion Undertaking
Agreements.

            "Underwriters" means CoBank, ACB, Calyon New York Branch, UFJ Bank
Limited, HSH Nordbank AG and Bayerische HYPO- Und Verinsbank AG, New York
Branch, each acting in its capacity as underwriters for the Lenders under the
Credit Agreement.

            "Unsatisfied Condition" means a condition in a Permit that has not
been satisfied and that either (a) must be satisfied before such Permit can be
come effective, (b) must be satisfied as of the date on which a representation
is made or a condition precedent must be satisfied under the Credit Agreement,
or (c) must be satisfied as of a future date but with respect to which facts or
circumstances exist which, to Borrower's knowledge, could reasonably be expected
to result in a failure to satisfy such Permit condition.

            "Unutilized Security Fund LC Commitment" means $18,250,000 minus any
increases in the Stated Amount of the Security Fund LC pursuant to Sections
2.2.1 and/or 2.2.4 of the Credit Agreement.

            "Upfront Fee Letter" means that certain letter agreement regarding
fees, dated as of the Closing Date, by and between Lead Arrangers and Borrower.

            "Variable O&M Costs" means, with respect to MEC, those O&M Costs
described in the line-items of the Base Case Project Projections entitled
"Reverse Osmosis - Water Treatment", "Demineralizer/EDI/Polishing - Water
Treatment", "Boiler/Steam Chemicals - Water Treatment", "Cooling Tower - Water
Treatment", "Gas Turbine Gases/Chemicals", "Waste Water Disposal", "Ammonia
(SCR)" and "Electricity Usage Cost."

            "Waterfall Levels" means the Borrower Waterfall Levels, the MEC
Waterfall Levels and the FEC Waterfall Levels.

            "Water Services Agreement" means the Water Services Agreement, dated
November 10, 2004, between MEC and the City of Mankato, Minnesota.

                                       39
<PAGE>

                             RULES OF INTERPRETATION

      1. The singular includes the plural and the plural includes the singular.

      2. "or" is not exclusive.

      3. A reference to a Governmental Rule includes any amendment or
modification to such Governmental Rule, and all regulations, rulings and other
Governmental Rules promulgated under such Governmental Rule.

      4. A reference to a Person includes its permitted successors, permitted
replacements and permitted assigns.

      5. Accounting terms have the meanings assigned to them by GAAP, as applied
by the accounting entity to which they refer.

      6. The words "include", "includes" and "including" are not limiting.

      7. A reference in a document to an Article, Section, Exhibit, Schedule,
Annex or Appendix is to the Article, Section, Exhibit, Schedule, Annex or
Appendix of such document unless otherwise indicated. Exhibits, Schedules,
Annexes or Appendices to any document shall be deemed incorporated by reference
in such document. In the event of any conflict between the provisions of the
Credit Agreement (exclusive of the Exhibits, Schedules, Annexes and Appendices
thereto) and any Exhibit, Schedule, Annex or Appendix thereto, the provisions of
the Credit Agreement shall control.

      8. References to any document, instrument or agreement (a) shall include
all exhibits, schedules and other attachments thereto, (b) shall include all
documents, instruments or agreements issued or executed in replacement thereof,
and (c) shall mean such document, instrument or agreement, or replacement or
predecessor thereto, as amended, amended and restated, modified and supplemented
from time to time and in effect at any given time.

      9. The words "hereof", "herein" and "hereunder" and words of similar
import when used in any document shall refer to such document as a whole and not
to any particular provision of such document.

      10. References to "days" shall mean calendar days, unless the term
"Banking Days" shall be used. References to a time of day shall mean such time
in New York, New York, unless otherwise specified.

      11. If, at any time after the Closing Date, Moody's or S&P shall change
its respective system of classifications, then any Moody's or S&P "rating"
referred to herein shall be considered to be at or above a specified level if it
is at or above the new rating which most closely corresponds to the specified
level under the old rating system.

      12. The Credit Documents are the result of negotiations between, and have
been reviewed by Borrower, each Affiliate of Borrower party thereto,
Administrative Agent, the Lead

                                       40
<PAGE>

Arrangers, each Lender and their respective counsel. Accordingly, the Credit
Documents shall be deemed to be the product of all parties thereto, and no
ambiguity shall be construed in favor of or against Borrower, any Affiliate of
Borrower party thereto, Administrative Agent or any Lender solely as a result of
any such party having drafted or proposed the ambiguous provision.

                                       41
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3.6.1
<SEQUENCE>5
<FILENAME>f05222exv10w3w6w1.txt
<DESCRIPTION>EXHIBIT 10.3.6.1
<TEXT>
<PAGE>
                                                                Exhibit 10.3.6.1

                               CONSULTING CONTRACT

                                     BETWEEN

                               CALPINE CORPORATION

                                       AND

                               GEORGE J. STATHAKIS


                              CALENDAR YEAR - 2005




<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            Page
<S>                                                                          <C>
1.  SCOPE OF SERVICES                                                          1

2.  TERM                                                                       1

3.  COMPENSATION                                                               1

4.  WARRANTY                                                                   2

5.  INDEPENDENT CONTRACTOR                                                     2

6.  INSURANCE                                                                  2

7.  INDEMNITY                                                                  2

8.  ASSIGNMENT AND SUBCONTRACTING                                              2

9.  CONFIDENTIALITY                                                            3

10. JURISDICTION                                                               3

11. PUBLICATION                                                                3

12. SURVIVAL                                                                   3

13. ENTIRE CONTRACT AND AMENDMENTS                                             3

14. BINDING EFFECT                                                             4
</TABLE>
<PAGE>
                               CONSULTING CONTRACT

     THIS CONSULTING CONTRACT ("Contract") is made and entered into effective as
of January 1, 2005 (the "Effective Date") between Calpine Corporation, a
Delaware corporation, of 50 West San Fernando Street, San Jose, California 95113
("CALPINE") and GEORGE J. STATHAKIS, 120 Montgomery Street, 13th Floor, San
Francisco, California 94104 ("CONSULTANT"), with reference to the following:

     In consideration of the mutual agreements herein contained, it is agreed as
follows:

1.   SCOPE OF SERVICES

     CONSULTANT agrees to provide advice and guidance on various management
     issues to the President and members of his senior staff.

2.   TERM

     2.0  This Contract shall be for a term lasting from the Effective Date
          until December 31, 2005, unless earlier terminated pursuant to this
          Contract or extended by mutual agreement of the parties.

     2.1  Notwithstanding the above, either party may terminate this Contract at
          any time by giving thirty (30) days written notice to the other party,
          provided, however, that any payments due and payable upon termination
          shall be paid.

3.   COMPENSATION

     Compensation to CONSULTANT for services rendered shall be as follows:

     (a)  CALPINE will pay CONSULTANT a monthly retainer (the "Retainer") of
          Five Thousand Dollars ($5,000.00), commencing January 1, 2005, which
          amount will be payable at the beginning of each month under the term
          hereof.

     (b)  In addition to the cash compensation stated in (a) above, CALPINE will
          grant to CONSULTANT stock options under the Discretionary Option Grant
          Program of the Calpine Corporation 1996 Stock Incentive Plan to
          purchase 10,000 shares. The grant will be effective on the first
          business day following January 1, 2005; the option price for this
          grant will be the fair market value of Calpine Corporation stock at
          the close of business on the effective date of the grant. The options
          will be vest in twelve monthly installments and have a ten-year term.

     (c)  In addition to the above, CALPINE agrees to reimburse CONSULTANT for
          all travel and other actual out-of-pocket expenses incurred in support
          of this Contract. Such expenses will not be incurred by CONSULTANT
          without prior approval of CALPINE. CONSULTANT shall furnish copies of
          all receipts with invoices for expenses incurred in support of this
          Contract.

4.   WARRANTY

     CONSULTANT assumes professional and technical responsibility for
     performance of Services to be provided hereunder in accordance with
     recognized professional standards. If within one year following completion
     of the Services, the Services fail to meet the aforesaid standards, and
     CALPINE promptly advises CONSULTANT in writing, CONSULTANT agrees to
     re-perform deficient Services without charge to CALPINE up to a maximum
     amount equivalent to the compensation received for the deficient Services
     rendered.

                                       2
<PAGE>
5.   INDEPENDENT CONTRACTOR

     5.1  CONSULTANT acknowledges and agrees that it enters into this Contract
          as an independent contractor. Under no circumstances shall CONSULTANT
          look to CALPINE as its employer, nor as a partner, agent or principal.
          CONSULTANT shall not be entitled to any benefits accorded to CALPINE's
          employees including, without limitation, workers compensation,
          disability insurance, and vacation or sick pay. CONSULTANT shall be
          responsible for providing, at its expense and in its name, disability,
          workers' compensation or other insurance as well as licenses and
          permits usual or necessary for conducting the Services hereunder.

     5.2  CONSULTANT shall pay, when and as due, any and all taxes incurred as a
          result of CONSULTANT's compensation hereunder, including estimated
          taxes. CONSULTANT hereby indemnifies CALPINE for any claims, lost
          costs, fees, liabilities, damages or injuries suffered by CALPINE
          arising out of CONSULTANT's breach of this section.

     5.3  CONSULTANT represents that he or she has the qualifications and
          ability to perform the Services in a professional manner, without the
          advice, control or supervision of CALPINE. CONSULTANT shall be solely
          responsible for the professional performance of the Services, and
          shall receive no assistance, direction or control from CALPINE.
          CONSULTANT shall have sole discretion and control of its work and the
          manner in which it is performed.

6.   INSURANCE

     6.1  CONSULTANT shall maintain in full force and effect during the term of
          this Contract, the insurance described below, as well as such other
          insurance as deemed reasonably necessary by CALPINE to insure the
          services performed hereunder.

          6.1.1 Automobile liability insurance covering owned, non-owned and
                hired automobiles for a combined single limit of
                $100,000/$300,000 for bodily injury and property damage.

     6.2  CONSULTANT shall, upon request, furnish certificates showing that the
          above insurance will be in effect during the term of this Contract and
          shall specify that CALPINE must be given, in writing, thirty (30) days
          notice of cancellation, termination, or alternation of the policies
          evidenced by certificates. It is acknowledged, understood and agreed
          that no payment shall be due from CALPINE under this Contract at any
          time when CONSULTANT is not in full compliance with this provision
          dealing with insurance.

7.   INDEMNITY

     7.1  CALPINE agrees to indemnify CONSULTANT and hold him harmless against
          any claim by any person that CONSULTANT's performance arising from or
          in connection with CONSULTANT's relationship with CALPINE renders
          CONSULTANT liable to such person, and against any losses or damages
          suffered by CALPINE and its affiliates as a result of any such claim
          (including legal fees and expenses); provided, however, that such
          indemnity will not extend to any action taken or omitted by CONSULTANT
          as a result of gross negligence or willful misconduct.

     7.2  CONSULTANT shall not be liable for any consequential or indirect
          damages occurring as a result of any recommendation, opinion or advice
          given by CONSULTANT, or from any implementation of CONSULTANT's
          recommendations by CALPINE, or from any other services performed
          hereunder by CONSULTANT for CALPINE.

8.   ASSIGNMENT AND SUBCONTRACTING

     CONSULTANT shall not have the right to assign this Contract or subcontract
     any of the work without the prior written consent of CALPINE. CONSULTANT
     shall supervise all work subcontracted by CONSULTANT in performing the
     Services and shall be responsible for all work performed by a subcontractor
     as if

                                       3
<PAGE>

CONSULTANT itself had performed such work. The assignment or subcontracting of
any work to subcontractors shall not relieve CONSULTANT from any of its
obligations under this Contract with respect to the Services.

9.   CONFIDENTIALITY

     All data, information, work papers, technology and reports furnished or
     disclosed by CALPINE to CONSULTANT or its personnel in the course of
     performing the Services ("Information") are and shall remain the sole
     property of CALPINE and shall be kept confidential by CONSULTANT, and shall
     be delivered over to CALPINE at CALPINE's request. CONSULTANT agrees not to
     divulge all or any part of the Information to third parties, without the
     prior written consent of CALPINE, unless:

     (a)  The Information is known to CONSULTANT prior to obtaining the same
          from CALPINE;

     (b)  The Information is, at the time of disclosure by CONSULTANT, then in
          the public domain; or

     (c)  The Information is obtained by CONSULTANT from a third party who did
          not receive same, directly or indirectly, from CALPINE and who has no
          obligation of secrecy with respect thereto.

     CONSULTANT further agrees that it will not, without the prior written
     consent of CALPINE, disclose to any third party any of such Information
     developed or obtained by CONSULTANT in the performance of this Contract. If
     so requested by CALPINE, CONSULTANT further agrees to require its employees
     to execute a nondisclosure agreement prior to performing Services under
     this Contract.

10.  JURISDICTION

     This Contract shall be governed by and be construed in accordance with the
     laws of the State of California.

11.  PUBLICATION

     CONSULTANT shall not use CALPINE's name or trademarks, photographs or
     otherwise claim any affiliation with CALPINE in any publication or public
     forum without obtaining prior written approval from CALPINE.

12.  SURVIVAL

     The rights and obligations of the parties, which, by their nature, are
     normally intended to survive the termination or completion of this Contract
     shall remain in full force and effect following termination of this
     Contract for any reason.

13.  ENTIRE CONTRACT AND AMENDMENTS

     This Contract, together with Exhibits and Schedules, if any, attached
     hereto, all of which are incorporated herein as part of this Contract by
     this reference, and together with all purchase orders, contain the entire
     agreement between the parties hereto with respect to the subject matter
     hereof. No amendment to this Contract or to any purchase order shall be
     binding upon either party hereto, unless it is in writing and executed on
     behalf of each party hereto by a duly authorized representative and
     expressly specified as such.

14.  BINDING EFFECT

     This Contract shall be binding upon and inure to the benefit of the parties
     hereto, and to their successors and permitted assigns.


                                       4
<PAGE>
IN WITNESS WHEREOF, this Contract is executed effective as of the day and year
first above written.


CALPINE:                                    CONSULTANT:

CALPINE CORPORATION                         GEORGE J. STATHAKIS

By:    /s/ Ann B. Curtis                    By:   /s/ George J. Stathakis
       ------------------------                   -----------------------
Title: Executive Vice President             Date: January 17, 2005

Date:  January 20, 2005



                                       5
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.3.13
<SEQUENCE>6
<FILENAME>f05222exv10w3w13.txt
<DESCRIPTION>EXHIBIT 10.3.13
<TEXT>
<PAGE>
                                                                 EXHIBIT 10.3.13


                               Calpine Corporation

                         2003 Management Incentive Plan

                                 April 18, 2003

I.    Purpose of the Plan

      The purpose of Calpine's ("Calpine" or the "Company") Management Incentive
      Plan ("MIP") is to reward and motivate Calpine employees for their
      contribution to the achievement of predetermined corporate business
      objectives, consistent with corporate values.

II.   Plan Eligibility

      All regular employees of the Company, except for Operations and
      Maintenance hourly employees, are eligible to participate in the Plan.
      Construction site employees who participate in the Construction Completion
      Bonus Program will be eligible for MIP program in years where no
      construction completion bonuses are payable.

III.  Administration

      Calpine's President and CEO, who may delegate certain elements of the
      program administration to other staff, will administer the Plan. The
      Office of the Chairman must approve any modifications, amendments, or
      adjustments to the plan or any of its key provisions and all award
      payments. The President and CEO shall have broad authority to interpret
      the Plan, subject to the following decisions reserved for the Compensation
      Committee of the Board of Directors of the Company (the "Committee"):

      1. The approval of the Company's financial and non-financial goals
      discussed in Section V of this document

      2. The approval of the funding of the MIP bonus pool

      3. Interpretation of the Plan on any matters in which the President and
      CEO is not a disinterested party

      Any decisions of the President and CEO in the interpretation of the Plan
      may be appealed in writing to the Committee. However, any decision of the
      majority of the Committee is final and binding on all parties.

IV.   Plan Effective Date

      The MIP is effective January 1, 2003.
<PAGE>
Calpine Corporation
2003 Management Incentive Plan
Page 2


V.    The Bonus Pool Funding

      The total Bonus Pool amount, which is approved by the Committee, is
      determined in four steps.

      1. The sum of all participants' bonus targets as described in Section VI
      (2), establishes the target bonus pool.

      2. At the beginning of each calendar year, the Company establishes
      financial and non-financial performance goals that are approved by the
      Committee.

      3. The first quarter of the following year, the Committee reviews how the
      actual results compare to the performance goals and determines the MIP
      bonus pool, based on its judgment of the overall Company achievements and
      goal attainment. The intent is for the bonus pool funding to be consistent
      with the percentage of goal achievement. For example, 100% achievement of
      established goals will generally result in 100% funding of the bonus pool.

      4. The percentage of goal achievement is applied to the target bonus pool,
      and may result in a final pool greater than, or less than, the sum of the
      participants' target bonus amounts.

VI.   Individual Bonus Determination

      Many factors are taken into consideration in determining an individual
      employee's bonus. Foremost are our overriding principles of ethical
      conduct and integrity. It is expected that each employee will conduct our
      business in an open and honest fashion and actions and decisions will
      represent the Company with honor and distinction in the face of public
      scrutiny. An employee's compliance with all applicable company policies,
      procedures and standards, including but not limited to the Code of
      Conduct, is an essential consideration in determining bonus eligibility
      and amount.

      The bonus amount an employee actually receives is based on four factors:

      1. The level of funding as approved by Committee as described in Section V
      (3).

      2. Position - Each position is assigned a target bonus based on the level
      of responsibility and market practices for the position. The target bonus
      is expressed as a percentage of base salary, assuming 100% funding of the
      bonus pool, and will be communicated to each participant upon hire or
      placement in
<PAGE>
Calpine Corporation
2003 Management Incentive Plan
Page 3


      any MIP eligible position. The target bonus award will be adjusted by the
      same percentage as the target bonus pool as described in Section V (4),
      above.

      3. Company Performance - A portion of an employee's individual MIP bonus
      is in recognition of his/her contribution to corporate goal attainment,
      and is fixed at 30% of his/her "adjusted target" award.

      4. Individual Job Performance - Seventy percent (70%) of an employee's
      individual MIP bonus is based on individual contribution, as determined
      through the Company's performance review system. An individual employee's
      bonus may be adjusted up or down based on an individual's contribution so
      long as the business unit does not exceed its total approved bonus pool.

VII.  Business Unit Incentive Plans

      Each year certain business units within the Company may establish business
      unit incentive plans to complement the overall objectives of the Company.
      The performance results within these business unit incentive plans will
      impact the overall success of corporate goals. Business unit incentive
      plans must be approved by the President and CEO of the Company and other
      members of senior management team.

      The degree to which the MIP bonus comprises a portion of an employee's
      overall annual incentive bonus is dependent upon the employee's business
      unit. MIP funding is adjusted for those business units that have
      business-specific incentive plans, based on the desired weight the Company
      places on corporate goals compared with business specific goals. Weighting
      may vary from one business unit to another. For example, fifty percent
      (50%) of a business unit's funding may be derived from the corporate MIP
      and fifty percent (50%) from the business unit. In this example, the
      corporate MIP portion, of the employees' target bonuses will be adjusted
      by the same weighting, 50%.

      Funding for business unit plans is independent of the corporate results
      and based on specific business unit performance measures. Employees who
      work in corporate functional departments - such as Legal, Information
      Services, Credit, Facilities Planning and Human Resources - but who
      support a business unit, are eligible to receive a supplemental incentive
      bonus out of the business unit pool on a discretionary basis, subject to
      joint approval by the business unit and corporate functional heads.

VIII. Bonus Checks
<PAGE>
Calpine Corporation
2003 Management Incentive Plan
Page 4


      Bonus checks are calculated and distributed following the close of the
      calendar year and are usually paid in March of the following year.
      Employees are eligible to participate in this plan provided they are still
      employed on the day bonus checks are awarded (subject to earlier death,
      long term disability or retirement as described below). Bonus amounts will
      be subject to all applicable taxes and any applicable and appropriate
      deductions for garnishments, Employee Stock Purchase Plan, 401(k)
      Retirement Savings Plan, Non-Qualified Deferred Compensation Plan, and
      other deductions or withholdings.

      For employees of Calpine's non-U.S. locations, MIP bonus checks are
      calculated and distributed following the close of the calendar year. Bonus
      amounts will be subject to all appropriate and applicable national taxes
      and deductions for Employee Stock Purchase Plan, Group Retirement Savings
      Plan or other deductions.

IX.   Transfers and New Hires

      In the event that a participant transfers from one position to another
      during the course of the year, or is a new hire, his/her award for the
      year will be calculated on a pro-rated basis to reflect the actual number
      of months spent in each position during the year.

X.    Retirements And Terminations

      In the event of a participant's retirement, long-term disability or death,
      his/her award will be pro-rated to reflect the actual number of months of
      service during the plan year. If a plan participant dies, retires or
      becomes subject to long-term disability after the conclusion of a plan
      year, but prior to the bonus pay-out for such year, the plan participant
      will still be eligible to participate in the plan for such year.

      No payments will be made to employees who are terminated for cause.

XI.   Company Discretion

      Distribution and payout of all MIP bonus amounts are at the sole
      discretion of Company management. The Company reserves the right to revise
      or rescind the plan at any time.

XII.  Employment Rights
<PAGE>
Calpine Corporation
2003 Management Incentive Plan
Page 5


      The selection of an employee of the Company as a participant will in no
      way enhance the employee's right to continued employment with the Company
      nor limit the Company in its right to terminate or otherwise change the
      employment relationship with the employee.

XIII. Governing Law

      The Plan shall be administered in accordance with California law, unless a
      superseding Federal law is applicable or, in the case of Canada, unless a
      superseding law under Canadian jurisdiction is applicable.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-12.1
<SEQUENCE>7
<FILENAME>f05222exv12w1.txt
<DESCRIPTION>EXHIBIT 12.1
<TEXT>
<PAGE>
                                                                               .
                                                                               .
                                                                               .
                                                                    EXHIBIT 12.1

                               CALPINE CORPORATION

                       RATIO OF EARNINGS TO FIXED CHARGES

                                    YTD 2004
<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31,
                                                 2000          2001          2002          2003          2004
                                              ----------    ----------    ----------    ----------    ----------
<S>                                            <C>          <C>            <C>           <C>           <C>
COMPUTATION OF EARNINGS:                                               (IN THOUSANDS)

Pretax income (loss) before adjustment for
minority interest in consolidated
subsidiaries and income or loss from
equity investees ..........................      486,841       799,707        23,722        46,131      (669,115)

Fixed Charges .............................      351,576       785,279     1,077,762     1,234,857     1,552,155

Amortization of capitalized interest ......          447         1,382        10,693        19,539        27,121

Distributed income of equity investees ....       29,979         5,983        14,117       141,627        29,869

Interest capitalized ......................     (206,973)     (498,723)     (575,446)     (444,584)     (376,058)

Distribution of HIGH TIDES ................      (45,076)      (62,412)      (62,632)      (46,610)         --
                                              ----------    ----------    ----------    ----------    ----------


Total Earnings ............................      616,794     1,031,216       488,216       950,960       563,972

COMPUTATION OF FIXED CHARGES:

Interest expensed and capitalized .........      285,346       689,694       978,123     1,150,890     1,516,860

Estimate of interest within rental expense        21,154        33,173        37,007        37,357        35,295

Distribution on HIGH TIDES ................       45,076        62,412        62,632        46,610          --
                                              ----------    ----------    ----------    ----------    ----------

Total fixed charges .......................      351,576       785,279     1,077,762     1,234,857     1,552,155

RATIO OF EARNINGS TO FIXED CHARGES ........        1.75x         1.31x          --            --          -- (i)
</TABLE>

---------------------------
(i)  For the year ended December 31, 2004, the Company had an earnings-
     to-fixed-charges coverage deficiency of approximately $988.2 million,
     primarily as a result of (1) a pre-tax charge to earnings of $202.1 million
     for oil and gas asset, (2) increased interest costs due to recent debt
     financings to support our growth, and (3) a decrease in average spark
     spreads per megawatt-hour and higher fuel expense in 2004 as compared with
     the same period in 2003.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21.1
<SEQUENCE>8
<FILENAME>f05222exv21w1.txt
<DESCRIPTION>EXHIBIT 21.1
<TEXT>
<PAGE>
                                                                    EXHIBIT 21.1

                       SUBSIDIARIES OF CALPINE CORPORATION
                            AS OF DECEMBER 31, 2004,
                    AT LEAST 50% OWNED BY CALPINE CORPORATION

<TABLE>
<CAPTION>
                                                                  State of
                                                                  Incorporation
                                                                  -------------
<S>                                                               <C>
1066917 Ontario Inc.                                              Ontario
3094479 Nova Scotia Company                                       Nova Scotia
985365 Alberta Ltd.                                               Alberta
Acadia Partners Pipeline, LLC                                     Louisiana
Acadia Power Partners, LLC                                        Delaware
Amelia Energy Center, LP                                          Delaware
Anacapa Land Company, LLC                                         Delaware
Anderson Springs Energy Company                                   California
Androscoggin Energy, Inc.                                         Illinois
Auburndale GP, LLC                                                Delaware
Auburndale Holdings, LLC                                          Delaware
Auburndale LP, LLC                                                Delaware
Auburndale Peaker Energy Center, LLC                              Delaware
Auburndale Power Partners, Limited Partnership                    Delaware
Augusta Development Company, LLC                                  Delaware
Aviation Funding Corp.                                            Delaware
Basento Energia S.r.l                                             Italy
Baytown Energy Center, LP                                         Delaware
Baytown Power GP, LLC                                             Delaware
Baytown Power, LP                                                 Delaware
Bellingham Cogen, Inc.                                            California
Berrien Energy Center, LLC                                        Delaware
Bethpage Energy Center 3, LLC                                     Delaware
Bethpage Fuel Management Inc.                                     Delaware
Blue Heron Energy Center, LLC                                     Delaware
Blue Spruce Energy Center, LLC                                    Delaware
Brazos Valley Energy LP                                           Delaware
Brazos Valley Technology LP                                       Delaware
Broad River Energy LLC                                            Delaware
Broad River Holdings, LLC                                         Delaware
CalGen Equipment Finance Company, LLC                             Delaware
CalGen Equipment Finance Holdings, LLC                            Delaware
CalGen Expansion Company, LLC                                     Delaware
CalGen Finance Corp.                                              Delaware
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                  State of
                                                                  Incorporation
                                                                  -------------
<S>                                                               <C>
CalGen Project Equipment Finance Company One, LLC                 Delaware
CalGen Project Equipment Finance Company Three, LLC               Delaware
CalGen Project Equipment Finance Company Two, LLC                 Delaware
Calpine (Jersey) Holdings Limited                                 Jersey Island
Calpine (Jersey) Limited                                          Jersey Island
Calpine Acadia Holdings, LLC                                      Delaware
Calpine Administrative Services Company, Inc.                     Delaware
Calpine Agnews, Inc.                                              California
Calpine Amelia Energy Center GP, LLC                              Delaware
Calpine Amelia Energy Center LP, LLC                              Delaware
Calpine Auburndale Holdings, LLC                                  Delaware
Calpine Auburndale, LLC                                           Delaware
Calpine Baytown Energy Center GP, LLC                             Delaware
Calpine Baytown Energy Center LP, LLC                             Delaware
Calpine Bethpage 3 Pipeline Construction Company, Inc.            New York
Calpine Bethpage 3, LLC                                           Delaware
Calpine Brazos Valley Energy Center GP, LLC                       Delaware
Calpine Brazos Valley Energy Center LP, LLC                       Delaware
Calpine c*Power, Inc.                                             Delaware
Calpine CalGen Holdings, Inc.                                     Delaware
Calpine California Development Company, LLC                       Delaware
Calpine California Energy Finance, LLC                            Delaware
Calpine California Equipment Finance Company, LLC                 Delaware
Calpine California Holdings, Inc.                                 Delaware
Calpine Calistoga Holdings, LLC                                   Delaware
Calpine Canada Energy Finance  ULC                                Nova Scotia
Calpine Canada Energy Finance II ULC                              Nova Scotia
Calpine Canada Energy Ltd.                                        Nova Scotia
Calpine Canada Natural Gas Partnership                            Alberta
Calpine Canada Power Ltd.                                         Alberta
Calpine Canada Resources Company                                  Nova Scotia
Calpine Canada TriGas, Ltd.                                       Alberta
Calpine Canada Whitby Holdings Company                            Alberta
Calpine Canadian Saltend L.P.                                     Alberta
Calpine Capital Trust                                             Delaware
Calpine Capital Trust II                                          Delaware
Calpine Capital Trust III                                         Delaware
Calpine Capital Trust IV                                          Delaware
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                  State of
                                                                  Incorporation
                                                                  -------------
<S>                                                               <C>
Calpine Capital Trust V                                           Delaware
Calpine CCFC GP, Inc.                                             Delaware
Calpine CCFC Holdings, Inc.                                       Delaware
Calpine CCFC LP, Inc.                                             Delaware
Calpine Central Texas GP, Inc.                                    Delaware
Calpine Central, Inc.                                             Delaware
Calpine Central, L.P.                                             Delaware
Calpine Central-Texas, Inc.                                       Delaware
Calpine Channel Energy Center GP, LLC                             Delaware
Calpine Channel Energy Center LP, LLC                             Delaware
Calpine Clear Lake Energy GP, LLC                                 Delaware
Calpine Clear Lake Energy, LP                                     Delaware
Calpine Cogeneration Corporation                                  Delaware
Calpine Construction Finance Company, L.P.                        Delaware
Calpine Construction Management Company, Inc.                     Delaware
Calpine Corpus Christi Energy GP, LLC                             Delaware
Calpine Corpus Christi Energy, LP                                 Delaware
Calpine Decatur Pipeline, Inc.                                    Delaware
Calpine Decatur Pipeline, L.P.                                    Delaware
Calpine Deer Park Partner LLC                                     Delaware
Calpine Deer Park, LLC                                            Delaware
Calpine Development Holdings, Inc.                                Delaware
Calpine Dighton, Inc.                                             Delaware
Calpine DP LLC                                                    Delaware
Calpine East Fuels, Inc.                                          Delaware
Calpine Eastern Corporation                                       Delaware
Calpine Edinburg, Inc.                                            Delaware
Calpine Energy Finance Luxembourg S.a.r.l.                        Luxembourg
Calpine Energy Holdings Limited                                   Alberta
Calpine Energy Management, L.P.                                   Delaware
Calpine Energy Services Canada Ltd.                               Alberta
Calpine Energy Services Canada Partnership                        Alberta
Calpine Energy Services Holdings, Inc.                            Delaware
Calpine Energy Services, L.P.                                     Delaware
Calpine European Finance LLC                                      Delaware
Calpine Finance Company                                           Delaware
Calpine Fox Holdings, LLC                                         Delaware
Calpine Fox LLC                                                   Wisconsin
Calpine Freeport GP, LLC                                          Delaware
Calpine Freeport LP, LLC                                          Delaware
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                  State of
                                                                  Incorporation
                                                                  -------------
<S>                                                               <C>
Calpine Freestone Energy GP, LLC                                  Delaware
Calpine Freestone Energy, LP                                      Delaware
Calpine Freestone, LLC                                            Delaware
Calpine Fuels Corporation                                         California
Calpine Generating Company, LLC                                   Delaware
Calpine Geysers Company, L.P.                                     Delaware
Calpine Gilroy 1, Inc.                                            Delaware
Calpine Gilroy 2, Inc.                                            Delaware
Calpine Gilroy Cogen, L.P.                                        Delaware
Calpine Global Investments, S.L.                                  Spain
Calpine Global Services Company, Inc.                             Delaware
Calpine Gordonsville GP Holdings, LLC                             Delaware
Calpine Gordonsville LP Holdings, LLC                             Delaware
Calpine Gordonsville, LLC                                         Delaware
Calpine Greenleaf Holdings, Inc.                                  Delaware
Calpine Greenleaf, Inc.                                           Delaware
Calpine Hermiston, LLC                                            Delaware
Calpine Hidalgo Design, L.P.                                      Delaware
Calpine Hidalgo Energy Center, L.P.                               Texas
Calpine Hidalgo Holdings, Inc.                                    Delaware
Calpine Hidalgo Power GP, LLC                                     Delaware
Calpine Hidalgo Power, LP                                         Delaware
Calpine Hidalgo, Inc.                                             Delaware
Calpine International Holdings, Inc.                              Delaware
Calpine International Indonesia B.V.                              The Netherlands
Calpine International Investment B.V.                             The Netherlands
Calpine International, LLC                                        Delaware
Calpine Investment Holdings, LLC                                  Delaware
Calpine Jersey Cogen, Inc.                                        Delaware
Calpine Kennedy Airport, Inc.                                     Delaware
Calpine Kennedy Operators Inc.                                    New York
Calpine KIA, Inc.                                                 New York
Calpine King City 1, LLC                                          Delaware
Calpine King City 2, LLC                                          Delaware
Calpine Securities Company, L.P.                                  Delaware
Calpine King City Cogen, LLC                                      Delaware
Calpine King City Cogen Inc.                                      California
Calpine King City, Inc.                                           Delaware
Calpine King City, LLC                                            Delaware
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                  State of
                                                                  Incorporation
                                                                  -------------
<S>                                                               <C>
Calpine Leasing Inc.                                              Delaware
Calpine Long Island, Inc.                                         Delaware
Calpine Lost Pines Operations, Inc.                               Delaware
Calpine Louisiana Pipeline Company                                Delaware
Calpine Magic Valley Pipeline, Inc.                               Delaware
Calpine Mankato, LLC                                              Delaware
Calpine Marketing LLC                                             Delaware
Calpine Monterey Cogeneration, Inc.                               California
Calpine Morris, LLC                                               Delaware
Calpine MVP, Inc.                                                 Delaware
Calpine Natural Gas GP, LLC                                       Delaware
Calpine Natural Gas Holdings, LLC                                 Delaware
Calpine Natural Gas L.P.                                          Delaware
Calpine Natural Gas Services Limited                              Alberta
Calpine NCTP GP, LLC                                              Delaware
Calpine NCTP, LP                                                  Delaware
Calpine Newark, LLC                                               Delaware
Calpine Northbrook Corporation of Maine, Inc.                     Illinois
Calpine Northbrook Energy Holdings, LLC                           Delaware
Calpine Northbrook Energy Marketing, LLC                          Delaware
Calpine Northbrook Energy, LLC                                    Delaware
Calpine Northbrook Holdings Corporation                           Delaware
Calpine Northbrook Investors, LLC                                 Delaware
Calpine Northbrook Project Holdings, LLC                          Delaware
Calpine Northbrook Services, LLC                                  Delaware
Calpine Northbrook Southcoast Investors, LLC                      Delaware
Calpine NTC, LP                                                   Delaware
Calpine Oneta Power I, LLC                                        Delaware
Calpine Oneta Power II, LLC                                       Delaware
Calpine Oneta Power, L.P.                                         Delaware
Calpine Operating Services Company, Inc.                          Delaware
Calpine Operations Management Company, Inc.                       Delaware
Calpine Parlin, LLC                                               Delaware
Calpine Pasadena Cogeneration, Inc.                               Delaware
Calpine Pasadena Energy GP, LLC                                   Delaware
Calpine Pasadena Energy, LP                                       Delaware
Calpine Pastoria Holdings, LLC                                    Delaware
Calpine Peaker Holdings 2, LLC                                    Delaware
Calpine Peaker Holdings, LLC                                      Delaware
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                  State of
                                                                  Incorporation
                                                                  -------------
<S>                                                               <C>
Calpine Philadelphia, Inc.                                        Delaware
Calpine Pittsburg, LLC                                            Delaware
Calpine Power Company                                             California
Calpine Power Equipment LP                                        Texas
Calpine Power Management, Inc.                                    Delaware
Calpine Power Management, LP                                      Texas
Calpine Power Services, Inc                                       Delaware
Calpine Power, Inc.                                               Virginia
Calpine PowerAmerica, Inc.                                        Delaware
Calpine PowerAmerica, LP                                          Texas
Calpine PowerAmerica-CA, LLC                                      Delaware
Calpine PowerAmerica-CT, LLC                                      Delaware
Calpine PowerAmerica-MA, LLC                                      Delaware
Calpine PowerAmerica-ME, LLC                                      Delaware
Calpine PowerAmerica-NH, LLC                                      Delaware
Calpine PowerAmerica-NY, LLC                                      Delaware
Calpine PowerAmerica-OR, LLC                                      Delaware
Calpine PowerAmerica-PA, LLC                                      Delaware
Calpine PowerAmerica-RI, LLC                                      Delaware
Calpine Producer Services, L.P.                                   Texas
Calpine Project Holdings, Inc.                                    Delaware
Calpine Pryor, Inc.                                               Delaware
Calpine Riverside Holdings, LLC                                   Delaware
Calpine Rumford I, Inc.                                           Delaware
Calpine Rumford, Inc.                                             Delaware
Calpine Schuylkill, Inc.                                          Delaware
Calpine Siskiyou Geothermal Partners, L.P.                        California
Calpine Sonoran Pipeline LLC                                      Delaware
Calpine Steamboat Holdings, LLC                                   Delaware
Calpine Stony Brook Operators, Inc.                               New York
Calpine Stony Brook Power Marketing, LLC                          Delaware
Calpine Stony Brook, Inc.                                         New York
Calpine Sumas, Inc.                                               California
Calpine TCCL Holdings, Inc.                                       Delaware
Calpine Texas Cogeneration, Inc.                                  Delaware
Calpine Texas Pipeline GP, Inc.                                   Delaware
Calpine Texas Pipeline LP, Inc.                                   Delaware
Calpine Texas Pipeline, L.P.                                      Delaware
Calpine Tiverton I, Inc.                                          Delaware
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                  State of
                                                                  Incorporation
                                                                  -------------
<S>                                                               <C>
Calpine Tiverton, Inc.                                            Delaware
Calpine UK Holdings Limited                                       United Kingdom
Calpine UK Operations Limited                                     United Kingdom
Calpine ULC I Holding, LLC                                        Delaware
Calpine University Power, Inc.                                    Delaware
Calpine Unrestricted Funding, LLC                                 Delaware
Calpine Unrestricted Holdings, LLC                                Delaware
Calpine Vapor, Inc.                                               California
Calpine Canada Power Services, Ltd.                               Ontario
Carville Energy LLC                                               Delaware
CCFC Development Company, LLC                                     Delaware
CCFC Equipment Finance Company, LLC                               Delaware
CCFC Finance Corp.                                                Delaware
CCFC Project Equipment Finance Company One, LLC                   Delaware
Celtic Power Corporation                                          Delaware
CES GP, LLC                                                       Delaware
CES Marketing V, L.P.                                             Delaware
CES Marketing VI, LLC                                             Delaware
CES Marketing VII, LLC                                            Delaware
CES Marketing VIII, LLC                                           Delaware
CES Marketing IX, LLC                                             Delaware
CES Marketing X, LLC                                              Delaware
CG Cogen, LLC                                                     Delaware
CGC Dighton, LLC                                                  Delaware
Channel Energy Center, LP                                         Delaware
Channel Power GP, LLC                                             Delaware
Channel Power, LP                                                 Delaware
Clear Lake Cogeneration Limited Partnership                       Texas
CNEM Holdings, LLC                                                Delaware
CogenAmerica Asia Inc.                                            Delaware
CogenAmerica Parlin Supply Corp.                                  Delaware
Columbia Energy LLC                                               Delaware
Corpus Christi Cogeneration L.P.                                  Delaware
CPN 3rd Turbine, Inc.                                             Delaware
CPN Acadia, Inc.                                                  Delaware
CPN Berks Generation, Inc.                                        Delaware
CPN Berks, LLC                                                    Delaware
CPN Bethpage 3rd Turbine, Inc.                                    Delaware
CPN Cascade, Inc.                                                 Delaware
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                  State of
                                                                  Incorporation
                                                                  -------------
<S>                                                               <C>
CPN Clear Lake, Inc.                                              Delaware
CPN Decatur Pipeline, Inc.                                        Delaware
CPN East Fuels, LLC                                               Delaware
CPN Energy Services GP, Inc.                                      Delaware
CPN Energy Services LP, Inc.                                      Delaware
CPN Freestone, LLC                                                Delaware
CPN Funding, Inc.                                                 Delaware
CPN Hermiston, LLC                                                Delaware
CPN Insurance Corporation                                         Hawaii
CPN Morris, Inc.                                                  Delaware
CPN Oxford, Inc.                                                  Delaware
CPN Pipeline Company                                              Delaware
CPN Pleasant Hill Operating, LLC                                  Delaware
CPN Pleasant Hill, LLC                                            Delaware
CPN Power Services GP, LLC                                        Delaware
CPN Power Services, LP                                            Delaware
CPN Pryor Funding Corporation                                     Delaware
CPN Telephone Flat, Inc.                                          Delaware
Creed Energy Center, LLC                                          Delaware
De Pere Energy L.L.C.                                             Wisconsin
Decatur Energy Center, LLC                                        Delaware
DEC-LMEC Pipeline, LLC                                            Delaware
Deer Park Energy Center Limited Partnership                       Delaware
Deer Park Energy Center, LLC                                      Delaware
Deer Park Power GP, LLC                                           Delaware
Deer Park Power, LP                                               Delaware
Delta Energy Center, LLC                                          Delaware
Dighton Power Associates Limited Partnership                      Massachusetts
East Altamont Energy Center, LLC                                  Delaware
EMI/Tiverton, Inc.                                                Delaware
Fergas S.r.L.                                                     Italy
Fond du Lac Energy Center, LLC                                    Wisconsin
Freeport Energy Center, LP                                        Delaware
Freestone Power Generation, LP                                    Texas
GEC Bethpage Inc.                                                 Delaware
GEC Holdings, LLC                                                 Delaware
Geothermal Energy Partners LLC                                    California
Geysers Power Company II, LLC                                     Delaware
Geysers Power Company, LLC                                        Delaware
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                  State of
                                                                  Incorporation
                                                                  -------------
<S>                                                               <C>
Geysers Power I Company                                           Delaware
Gilroy Energy Center, LLC                                         Delaware
Goldendale Energy Center, LLC                                     Delaware
Goose Haven Energy Center, LLC                                    Delaware
Grays Ferry Cogeneration Partnership                              Pennsylvania
Grays Ferry Services Partnership                                  Pennsylvania
Hammond Energy LLC                                                Delaware
Haywood Energy Center, LLC                                        Delaware
Healdsburg Energy Company, L.P.                                   California
Hermiston Power Partnership                                       Oregon
Hillabee Energy Center, LLC                                       Delaware
Idlewild Fuel Management Corp.                                    Delaware
Inland Empire Energy Center, LLC                                  Delaware
JMC Bethpage, Inc.                                                Delaware
KIAC Partners                                                     New York
King City Holdings, LLC                                           Delaware
Lake Wales Energy Center, LLC                                     Delaware
Lawrence Energy Center, LLC                                       Delaware
Lone Oak Energy Center, LLC                                       Delaware
Los Esteros Critical Energy Facility, LLC                         Delaware
Los Medanos Energy Center LLC                                     Delaware
Magic Valley Gas Pipeline GP, LLC                                 Delaware
Magic Valley Gas Pipeline, LP                                     Delaware
Magic Valley Pipeline, L.P.                                       Delaware
Mankato Energy Center, LLC                                        Delaware
MEP Pleasant Hill, LLC                                            Delaware
Metcalf Energy Center, LLC                                        Delaware
Moapa Energy Center, LLC                                          Delaware
Mobile Energy LLC                                                 Delaware
Modoc Power, Inc.                                                 California
Morgan Energy Center, LLC                                         Delaware
Mount Hoffman Geothermal Company, L.P.                            California
Mt. Vernon Energy LLC                                             Delaware
NewSouth Energy LLC                                               Delaware
Nissequogue Cogen Partners                                        New York
Northwest Cogeneration, Inc.                                      California
NTC Five, Inc.                                                    Delaware
NTC GP, LLC                                                       Delaware
Nueces Bay Energy LLC                                             Delaware
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                  State of
                                                                  Incorporation
                                                                  -------------
<S>                                                               <C>
O.L.S. Energy-Agnews, Inc.                                        Delaware
O'Brien Fuels, Inc.                                               Delaware
Odyssey Land Acquisition Company                                  Delaware
Otay Mesa Energy Center, LLC                                      Delaware
Pajaro Energy Center, LLC                                         Delaware
Pasadena Cogeneration L.P.                                        Delaware
Pastoria Energy Facility, L.L.C.                                  Delaware
PCF2 Holdings, LLC                                                Delaware
PCF2, LLC                                                         Delaware
Philadephia Biogas Supply, Inc.                                   Delaware
Phipps Bend Energy Center, LLC                                    Delaware
Pine Bluff Energy, LLC                                            Delaware
Polsky SCQ Services, Inc. aka "Les Services Polsky SCQ Inc."      Quebec
Power Contract Financing III, LLC                                 Delaware
Power Contract Financing, LLC                                     Delaware
Power Investors, L.L.C.                                           Wisconsin
Power Systems MFG., LLC                                           Delaware
Quintana Canada Holdings, LLC                                     Delaware
Riverside Energy Center, LLC                                      Wisconsin
RockGen Energy LLC                                                Wisconsin
Rocky Mountain Energy Center, LLC                                 Delaware
Rumford Power Associates Limited Partnership                      Maine
Russell City Energy Center, LLC                                   Delaware
Saltend Cogeneration Company Limited                              United Kingdom
San Joaquin Valley Energy Center, LLC                             Delaware
Silverado Geothermal Resources, Inc.                              California
Skipanon Natural Gas, LLC                                         Delaware
Sonoma Geothermal Partners, L.P.                                  California
South Point Energy Center, LLC                                    Delaware
South Point Holdings, LLC                                         Delaware
Stony Brook Cogeneration, Inc.                                    Delaware
Stony Brook Fuel Management Corp.                                 Delaware
Sutter Dryers, Inc.                                               California
Tahoma Energy Center, LLC                                         Delaware
TBG Cogen Partners                                                New York
Texas City Cogeneration, L.P.                                     Texas
Texas Cogeneration Company                                        Delaware
Texas Cogeneration Five, Inc.                                     Delaware
Texas Cogeneration One Company                                    Delaware
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                  State of
                                                                  Incorporation
                                                                  -------------
<S>                                                               <C>
Thermal Power Company                                             California
Thomassen Services Australia Pty Ltd.                             Australia
Thomassen Turbine Systems B.V.                                    The Netherlands
Tiverton Power Associates Limited Partnership                     Rhode Island
Towantic Energy, L.L.C.                                           Delaware
Turner Energy Center, LLC                                         Delaware
Valladolid International Investments, S. de R.L. de C.V.          Mexico
VEC Holdings, LLC                                                 Delaware
Venture Acquisition Company                                       Delaware
Vineyard Energy Center, LLC                                       Delaware
Wawayanda Energy Center, LLC                                      Delaware
Westbrook,  L.L.C.                                                Delaware
Whatcom Cogeneration Partners, L.P.                               Delaware
Whitby Cogeneration Limited Partnership                           Canada
Zion Energy LLC                                                   Delaware
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>9
<FILENAME>f05222exv23w1.txt
<DESCRIPTION>EXHIBIT 23.1
<TEXT>
<PAGE>
                                                                    EXHIBIT 23.1

            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Amendment No. 3 to Registration
Statement No. 333-87427 on Form S-3, Amendment No. 2 to Registration Statement
No. 333-72583, 333-59786, and 333-116510 on Form S-3, Post-Effective Amendment
No. 2 to Registration Statement No. 333-40652 and 333-76880 on Form S-3,
Amendment No. 1 to Registration Statement No. 333-71966 and 333-85654 on Form
S-3, Registration Statement No. 333-16529, 333-37366, 333-59200, 333-106729,
333-106733, 333-115487, 333-117460, and 333-117461 on Form S-8, and
Post-Effective Amendment No. 1 to Registration Statement No. 333-34002 on Form
S-8 of Calpine Corporation of our report dated March 10, 2003 (October 21, 2003
as to paragraph two of Note 10, March 22, 2004 as to paragraphs six and thirteen
of Note 10, and March 31, 2005 as to paragraphs seven and eight of Note 10),
which report expresses an unqualified opinion and includes emphasis relating to
the adoption of a new accounting standard in 2002 and divestitures, appearing in
this Form 10-K of Calpine Corporation.

/s/ DELOITTE & TOUCHE LLP

San Jose, California
March 31, 2005
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.2
<SEQUENCE>10
<FILENAME>f05222exv23w2.txt
<DESCRIPTION>EXHIBIT 23.2
<TEXT>
<PAGE>

                                                                    Exhibit 23.2


           CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in Registration Statements
Nos. 333-72583, 333-87427, 333-40652, 333-59786, 333-71966, 333-76880,
333-116510 and 333-85654 on Form S-3; and Registration Statements Nos.
333-16529, 333-34002, 333-37366, 333-59200, 333-106729, 333-106733, 333-115487,
333-117460 and 333-117461 on Form S-8 of Calpine Corporation of our report dated
March 31, 2005 relating to the financial statements, financial statement
schedule, management's assessment of the effectiveness of internal control over
financial reporting and the effectiveness of internal control over financial
reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Los Angeles, California
March 31, 2005
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.3
<SEQUENCE>11
<FILENAME>f05222exv23w3.txt
<DESCRIPTION>EXHIBIT 23.3
<TEXT>
<PAGE>
                                                                    EXHIBIT 23.3


              [NETHERLAND, SEWELL & ASSOCIATES, INC. LETTERHEAD]



                CONSENT OF NETHERLAND, SEWELL & ASSOCIATES, INC.

We hereby consent to the incorporation by reference on Form 10-K of Calpine
Corporation (the "Company") and to the references to this firm for the
Company's estimated domestic proved reserves contained on Form 10-K for the year
ended December 31, 2004.


                                NETHERLAND, SEWELL & ASSOCIATES, INC.

                                BY: \s\ Danny D. Simmons
                                    --------------------
                                    Danny D. Simmons
                                    Executive Vice President



Houston, Texas
March 31, 2005

Please be advised that the digital document you are viewing is provided by
Netherland, Sewell & Associates, Inc. (NSAI) as a convenience to our clients.
The digital document is intended to be substantively the same as the original
signed document maintained by NSAI. The digital document is subject to the
parameter,s, limitations, and conditions stated in the original document. In the
event of any difference between the digital document and the original
document the original document shall control and supersede the digital document.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.4
<SEQUENCE>12
<FILENAME>f05222exv23w4.txt
<DESCRIPTION>EXHIBIT 23.4
<TEXT>
<PAGE>
                                                                    EXHIBIT 23.4

                       [Gilbert Laustsen Jung Letterhead]






                               LETTER OF CONSENT



We hereby consent to the incorporation by reference on Form 10-K of Calpine
Corporation (the "Company") and to the said references to this firm for the
Company's estimated Canadian proved reserves contained on form 10-K dated
December 31, 2004.

                                                Yours truly,

                                                GILBERT LAUSTSEN JUNG
                                                ASSOCIATES LTD.

                                                ORIGINALLY SIGNED BY

                                                Myron J. Hladyshevsky, P. Eng.
                                                Vice-President


Calgary, Alberta
March 31, 2005
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>13
<FILENAME>f05222exv31w1.txt
<DESCRIPTION>EXHIBIT 31.1
<TEXT>
<PAGE>
                                                                    Exhibit 31.1

                                 CERTIFICATIONS

I, Peter Cartwright, certify that:

      1.    I have reviewed this annual report on Form 10-K of Calpine
Corporation (the "registrant");

      2.    Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;

      3.    Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

      4.    The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:

            a) Designed such disclosure controls and procedures, or caused such
      disclosure controls and procedures to be designed under our supervision,
      to ensure that material information relating to the registrant, including
      its consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this report is being
      prepared;

            b) Designed such internal control over financial reporting, or
      caused such internal control over financial reporting to be designed under
      our supervision, to provide reasonable assurance regarding the reliability
      of financial reporting and the preparation of financial statements for
      external purposes in accordance with generally accepted accounting
      principles;

            c) Evaluated the effectiveness of the registrant's disclosure
      controls and procedures and presented in this report our conclusions about
      the effectiveness of the disclosure controls and procedures, as of the end
      of the period covered by this report based on such evaluation; and

            d) Disclosed in this report any change in the registrant's internal
      control over financial reporting that occurred during the registrant's
      most recent fiscal quarter (the registrant's fourth fiscal quarter in the
      case of an annual report) that has materially affected, or is reasonably
      likely to materially affect, the registrant's internal control over
      financial reporting; and

      5.    The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):

            a) All significant deficiencies and material weaknesses in the
      design or operation of internal control over financial reporting which are
      reasonably likely to adversely affect the registrant's ability to record,
      process, summarize and report financial information; and

            b) Any fraud, whether or not material, that involves management or
      other employees who have a significant role in the registrant's internal
      control over financial reporting.

Date:  March 31, 2005

                              /s/ Peter Cartwright
                              --------------------
                                Peter Cartwright
                 Chairman, President and Chief Executive Officer
                               Calpine Corporation
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>14
<FILENAME>f05222exv31w2.txt
<DESCRIPTION>EXHIBIT 31.2
<TEXT>
<PAGE>
                                                                    Exhibit 31.2

                                 CERTIFICATIONS

I, Robert D. Kelly, certify that:

      1.    I have reviewed this annual report on Form 10-K of Calpine
Corporation (the "registrant");

      2.    Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;

      3.    Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects the
financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;

      4.    The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:

            a) Designed such disclosure controls and procedures, or caused such
      disclosure controls and procedures to be designed under our supervision,
      to ensure that material information relating to the registrant, including
      its consolidated subsidiaries, is made known to us by others within those
      entities, particularly during the period in which this report is being
      prepared;

            b) Designed such internal control over financial reporting, or
      caused such internal control over financial reporting to be designed under
      our supervision, to provide reasonable assurance regarding the reliability
      of financial reporting and the preparation of financial statements for
      external purposes in accordance with generally accepted accounting
      principles;

            c) Evaluated the effectiveness of the registrant's disclosure
      controls and procedures and presented in this report our conclusions about
      the effectiveness of the disclosure controls and procedures, as of the end
      of the period covered by this report based on such evaluation; and

            d) Disclosed in this report any change in the registrant's internal
      control over financial reporting that occurred during the registrant's
      most recent fiscal quarter (the registrant's fourth fiscal quarter in the
      case of an annual report) that has materially affected, or is reasonably
      likely to materially affect, the registrant's internal control over
      financial reporting; and

      5.    The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):

            a) All significant deficiencies and material weaknesses in the
      design or operation of internal control over financial reporting which are
      reasonably likely to adversely affect the registrant's ability to record,
      process, summarize and report financial information; and

            b) Any fraud, whether or not material, that involves management or
      other employees who have a significant role in the registrant's internal
      control over financial reporting.

Date:  March 31, 2005

                               /s/ Robert D. Kelly
                               -------------------
                                 Robert D. Kelly
              Executive Vice President and Chief Financial Officer
                               Calpine Corporation
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>15
<FILENAME>f05222exv32w1.txt
<DESCRIPTION>EXHIBIT 32.1
<TEXT>
<PAGE>
                                                                    Exhibit 32.1

                            CERTIFICATION PURSUANT TO
                             18 U.S.C. SECTION 1350,
                             AS ADOPTED PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

      In connection with the Annual Report of Calpine Corporation (the
"Company") on Form 10-K for the period ending December 31, 2004, as filed with
the Securities and Exchange Commission on the date hereof (the "Report"), each
of the undersigned does hereby certify, pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the
best of his knowledge, based upon a review of the Report:

      (1)   The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

      (2)   The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operation of the
Company.

/s/ Peter Cartwright                       /s/ Robert D. Kelly
-------------------------------------      -------------------------------------
Peter Cartwright                           Robert D. Kelly
Chairman, President and                    Executive Vice President and
Chief Executive Officer                    Chief Financial Officer
Calpine Corporation                        Calpine Corporation

Dated:  March 31, 2005

A signed original of this written statement required by Section 906 has been
provided to Calpine Corporation and will be retained by Calpine Corporation and
furnished to the Securities and Exchange Commission or its staff upon request.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>16
<FILENAME>f05222exv99w1.txt
<DESCRIPTION>EXHIBIT 99.1
<TEXT>
<PAGE>
                                                                    EXHIBIT 99.1

ACADIA POWER PARTNERS, LLC
AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2004, 2003 AND 2002
<PAGE>
ACADIA POWER PARTNERS, LLC AND SUBSIDIARY
INDEX
DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------
                                                                         PAGE(S)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM....................    1

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheets................................................    2

Consolidated Statements of Operations......................................    3

Consolidated Statements of Members' Capital................................    4

Consolidated Statements of Cash Flows......................................    5

Notes to Consolidated Financial Statements................................. 6-14
<PAGE>
[PRICEWATERHOUSECOOPERS LOGO]


                                                      PRICEWATERHOUSECOOPERS LLP
                                                      1201 Louisiana
                                                      Suite 2900
                                                      Houston TX 77002-5678
                                                      Telephone (713) 356 4000
                                                      Facsimile (713) 356 4717


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Members of
Acadia Power Partners, LLC and subsidiary:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, of members' capital and of cash flows
present fairly, in all material respects, the financial position of Acadia Power
Partners, LLC and subsidiary (the "Company") at December 31, 2004 and 2003, and
the results of their operations and their cash flows for each of the two years
in the period ended December 31, 2004 in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

As discussed in Notes 9 and 10, Calpine Energy Services ("CES") has asserted
certain claims related to dispute resolution under provisions of two tolling
agreements between CES and the Company. The ultimate resolution of this dispute
may have a significant adverse effect on the Company's financial position,
results of operations and cash flows in future periods.

As discussed in Note 5, the Company's revenues are received from transactions
with CES, a related party and certain other transactions are executed with
various entities of Calpine Corporation and Cleco Corporation, all of which are
related parties.

/s/PricewaterhouseCoopers LLP

Houston, Texas
March 25, 2005
<PAGE>
ACADIA POWER PARTNERS, LLC AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2004 AND 2003
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                        2004             2003
                                                   ------------     ------------
<S>                                                <C>              <C>
 ASSETS
 Current assets
    Cash and cash equivalents                      $  3,462,436     $  3,286,987
    Accounts receivable -- related parties            6,450,902        6,187,895
    Inventory                                         1,775,097        1,773,860
    Other current assets                              2,240,378        2,967,907
                                                   ------------     ------------
      Total current assets                           13,928,813       14,216,649
 Plant and equipment, net (Note 4)                  462,653,850      474,560,519
 Other noncurrent assets                              7,631,952        4,167,438
                                                   ============     ============
      Total assets                                 $484,214,615     $492,944,606
                                                   ============     ============

LIABILITIES AND MEMBERS' CAPITAL
Current liabilities
   Accounts payable -- trade                       $    547,310     $  2,600,697
   Accounts payable -- related parties                  389,770          324,978
   Accrued liabilities                                8,132,870          784,810
                                                   ------------     ------------
     Total current liabilities                        9,069,950        3,710,485

 Commitments and Contingencies (Note 9)

 Members' capital                                   475,144,665      489,234,121
                                                   ------------     ------------
      Total liabilities and members' capital       $484,214,615     $492,944,606
                                                   ============     ============
</TABLE>

                   The accompanying notes are an integral part
                  of these consolidated financial statements.


                                       2
<PAGE>
ACADIA POWER PARTNERS, LLC AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                 2004              2003               2002
                                                            -------------     -------------      -------------
                                                                                                   (Unaudited)
<S>                                                         <C>               <C>                <C>
REVENUES
Nonaffiliated                                                          $-     $  16,053,598      $  23,784,443
Related parties                                                74,692,887        65,024,892         25,317,550
                                                            -------------     -------------      -------------
Total revenues                                                 74,692,887        81,078,490         49,101,993

POWER, PLANT GENERATING AND MARKETING EXPENSE
Plant operating expense                                        18,196,308        12,750,635          4,997,390
Depreciation expense                                           14,257,335        13,919,584          6,579,496
Purchased power expense -- related parties                        951,041           149,961          7,839,121
                                                            -------------     -------------      -------------
Total power plant generating and marketing expense             33,404,684        26,820,180         19,416,007
                                                            -------------     -------------      -------------
Income from operations                                         41,288,203        54,258,310         29,685,986

OTHER INCOME AND EXPENSES
Contract termination gain (Note 7)                                      -       105,500,000                  -
Other income (expense)                                             13,367           (49,898)             3,139
                                                            -------------     -------------      -------------
Net income                                                  $  41,301,570     $ 159,708,412      $  29,689,125
                                                            =============     =============      =============
</TABLE>

                   The accompanying notes are an integral part
                  of these consolidated financial statements.


                                       3
<PAGE>
ACADIA POWER PARTNERS, LLC AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF MEMBERS' CAPITAL
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                              CALPINE ACADIA     ACADIA POWER       TOTAL MEMBERS'
                                              HOLDINGS, LLC      HOLDINGS, LLC        CAPITAL
                                              -------------      -------------      --------------
<S>                                           <C>                <C>                <C>
BALANCES AT DECEMBER 31, 2001 (UNAUDITED)     $ 210,375,160      $ 210,375,160      $ 420,750,320

Cash contributions (unaudited)                   40,284,962         40,284,962         80,569,924
Distributions (unaudited)                       (11,969,341)       (11,969,341)       (23,938,682)
Net income (unaudited)                           14,844,562         14,844,563         29,689,125
                                              -------------      -------------      -------------
BALANCES AT DECEMBER 31, 2002 (UNAUDITED)       253,535,343        253,535,344        507,070,687

Distributions                                  (136,977,283)       (40,567,695)      (177,544,978)
Net income                                       79,854,206         79,854,206        159,708,412
Interest on distributions                        (3,822,083)         3,822,083                 --
                                              -------------      -------------      -------------
BALANCES AT DECEMBER 31, 2003                   192,590,183        296,643,938        489,234,121

Distributions                                   (20,695,513)       (34,695,513)       (55,391,026)
Net income                                       20,650,785         20,650,785         41,301,570
Interest on distributions                        (5,739,330)         5,739,330                 --
                                              -------------      -------------      -------------
BALANCES AT DECEMBER 31, 2004                 $ 186,806,125      $ 288,338,540      $ 475,144,665
                                              =============      =============      =============
</TABLE>

                   The accompanying notes are an integral part
                  of these consolidated financial statements.


                                       4
<PAGE>
ACADIA POWER PARTNERS, LLC AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                 2004               2003               2002
                                                             -------------      -------------      -------------
                                                                                                     (Unaudited)
<S>                                                          <C>                <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                   $  41,301,570      $ 159,708,412      $  29,689,125
Adjustments to reconcile net income to net cash provided
by operating activities
    Depreciation                                                14,257,335         13,919,584          6,579,496
Changes in operating assets and liabilities
    Accounts receivable
      Trade                                                             --          3,625,690         (3,625,690)
      Related parties                                             (263,007)        (2,628,042)         1,785,637
    Inventory                                                       (1,237)          (491,252)        (1,282,608)
    Other current assets                                           727,529            (86,487)        (2,881,420)
    Noncurrent assets                                           (3,464,514)        (1,698,933)        (2,468,505)
    Accounts payable and accrued liabilities
      Trade                                                     (2,053,387)          (121,720)       (13,386,296)
      Related parties                                               64,792            324,978         (5,345,490)
      Accrued Liabilities                                        7,348,059           (700,543)
                                                             -------------      -------------      -------------
    Net cash provided by operating activities                   57,917,140        171,851,687          9,064,249
                                                             -------------      -------------      -------------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of plant and equipment                                (2,350,665)        (6,294,795)       (76,011,435)
Cash proceeds from sales and use tax refund                             --         13,913,014                 --
                                                             -------------      -------------      -------------
    Net cash provided by (used for) investing activities        (2,350,665)         7,618,219        (76,011,435)
                                                             -------------      -------------      -------------

CASH FLOWS FROM FINANCING ACTIVITIES
Contributions                                                           --                 --         80,569,924
Distributions                                                  (55,391,026)      (177,544,978)       (23,938,682)
                                                             -------------      -------------      -------------
    Net cash provided by (used for) investing activities       (55,391,026)      (177,544,978)        56,631,242
                                                             -------------      -------------      -------------
    Net increase (decrease) in cash and cash equivalents           175,449          1,924,928        (10,315,944)

CASH AND CASH EQUIVALENTS
Beginning                                                        3,286,987          1,362,059         11,678,003
                                                             -------------      -------------      -------------
Ending                                                       $   3,462,436      $   3,286,987      $   1,362,059
                                                             =============      =============      =============
</TABLE>

                   The accompanying notes are an integral part
                  of these consolidated financial statements.


                                       5
<PAGE>
ACADIA POWER PARTNERS, LLC AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------


1.    ORGANIZATION AND OPERATIONS OF THE COMPANY

      These financial statements consolidate the accounts of Acadia Power
      Partners, LLC (the "Company"), a Delaware limited liability company, and
      its wholly owned subsidiary, Acadia Partners Pipeline, LLC (the
      "Subsidiary"). All intercompany balances have been eliminated. All
      information for the year ended December 31, 2002 included in these
      financial statements is unaudited.

      The Company, an electric generation company, was formed on October 8,
      1999, for the purpose of designing, developing, constructing, owning, and
      operating a power generation project located in Louisiana. At formation,
      Cleco Midstream Resources, LLC ("Cleco"), a Louisiana limited liability
      company, and IEP USA Holdings, LLC ("IEP"), a Delaware limited liability
      company, owned 70 percent and 30 percent interests in the Company,
      respectively. The Subsidiary was formed on June 26, 2000, with the Company
      as the sole member.

      In February 2000 Cleco and IEP transferred their respective ownership
      interests in the Company to Acadia Power Holdings, LLC ("Acadia
      Holdings"), a Louisiana limited liability company, and Calpine Acadia
      Holdings, LLC ("CAH"), a Delaware limited liability company and subsidiary
      of Calpine Corporation ("Calpine"). CAH and Acadia Holdings (collectively,
      the "Members") entered into the Amended and Restated Limited Liability
      Company Agreement (the "Agreement") dated February 29, 2000. Under the
      Agreement, the Company constructed, owns and operates a 1,160-megawatt
      (MW) natural gas-fired electric generation plant (the "Facility") located
      in Acadia Parish, Louisiana. Each member holds a 50 percent interest in
      the Company as of December 31, 2004 and 2003. The Members share in profits
      and losses of the Company in proportion of their ownership interests. The
      Company is governed by an executive committee with two representatives
      from each Member.

      Construction on the Facility began in mid 2000 and the dates of commercial
      operations for Phase I and Phase II were July 2002, and August 2002,
      respectively. The Agreement will continue 49 years after the date that
      commercial operations begin. The Company was in the development stage
      until July 2002, when commercial operations began.

2.    BUSINESS RISKS

      Several current issues in the power industry could have an effect on the
      Company's financial performance. Some of the business risks which could
      cause future results to differ from expectations include (1) legislative
      and regulatory initiatives regarding deregulation, regulation or
      restructuring of the electric utility industry; (2) the extent and timing
      of the entry of additional competition in the market in which the Company
      operates; (3) state, federal and other rate regulations in the areas in
      which the Company does business; (4) changes in or application of
      environmental and other laws and regulations to which the Company is
      subject to; (5) changes in market conditions, including developments in
      energy and commodity supply, volume and pricing; (6) weather and other
      natural phenomena; (7) and the direct or indirect effects on the business
      resulting from the financial difficulties of competitors of the Company,
      including but not limited to, their effects on liquidity in the trading
      and power industry, and its effects on the views of the capital markets
      regarding the energy or trading industry.


                                       6
<PAGE>
ACADIA POWER PARTNERS, LLC AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------


3.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      USE OF ESTIMATES
      The preparation of financial statements in conformity with accounting
      principles generally accepted in the United States of America requires
      management to make estimates and assumptions that affect the reported
      amounts of assets and liabilities and disclosure of contingent assets and
      liabilities at the date of the financial statements and the reported
      amounts of revenues and expenses during the reporting period. Actual
      results could differ from these estimates. The most significant estimates
      with regard to these financial statements relate to the useful lives and
      carrying value of the generation facility and related assets and
      depreciation. Additionally, the Company periodically reviews its assets
      for impairment requiring the Company to estimate future revenues and cash
      flows over the useful lives of the assets.

      OPERATIONAL DATA
      Operational data including, but not limited to, megawatt ("MW") and
      megawatt hours ("MWh") throughout these financial statements are
      unaudited.

      CASH AND CASH EQUIVALENTS
      The Company considers all highly liquid investments purchased with an
      original maturity of three months or less to be cash equivalents. The
      carrying amount of these instruments approximates fair value because of
      their short maturity.

      ACCOUNTS RECEIVABLE AND ACCOUNTS PAYABLE
      Accounts receivable and payable represent amounts due from customers and
      owed to vendors, respectively.

      INVENTORY
      The Company's inventories primarily include small parts. Inventory is
      valued at the lower of cost or market using the average cost method. Costs
      for large replacement parts estimated to be used within one year are
      determined using the specific identification method. For other replacement
      parts, costs are generally determined using the weighted average cost
      method.

      OTHER CURRENT ASSETS
      Other current assets include prepaid expenses for insurance and long-term
      service agreement (LTSA) payments (See Note 6 for further discussion of
      LTSA).

      MAJOR MAINTENANCE
      As major maintenance occurs, and as parts are replaced on the plants'
      steam and combustion turbines, the costs are either expensed or
      transferred to property, plant and equipment and depreciated over the
      parts' estimated useful lives, generally three to six years, depending on
      the nature of maintenance activity performed under the service agreement
      (See Note 8).

      LONG-LIVED ASSETS
      In accordance with Financial Accounting Standards Board ("FASB") Statement
      of Financial Accounting Standards ("SFAS") No. 144, Accounting for the
      Impairment or Disposal of Long-Lived Assets, the Company evaluates the
      impairment of long-lived assets, based on the projection of undiscounted
      pre-interest expense and pre-tax expense cash flows whenever events or
      changes in circumstances indicate that the carrying amounts of such assets
      may not be recoverable. In the


                                       7
<PAGE>
ACADIA POWER PARTNERS, LLC AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------


      event such cash flows are not expected to be sufficient to recover the
      recorded value of the assets, the assets are written down to their
      estimated fair values. No impairment was identified in 2004 and 2003.

      CONCENTRATION OF CREDIT RISK
      The financial instruments that potentially subject the Company to
      concentration of credit risk consist primarily of accounts receivable. The
      Company's revenues are primarily from sales to Calpine Energy Services,
      L.P. ("CES"), a subsidiary of Calpine (See Notes 5 and 9).

      FAIR VALUE OF FINANCIAL INSTRUMENTS
      The carrying amounts of accounts receivable and accounts payable,
      approximate their respective fair value because of their short maturity.

      INCOME TAXES
      The Company is a limited liability company and, for income tax purposes,
      is treated as a partnership. The Company's taxable income or loss is
      therefore passed through to its members and reported on the respective
      members' tax returns. Accordingly, there is no income tax provision or
      current or deferred taxes in these financial statements.

      REVENUE RECOGNITION
      The Company has entered into tolling agreements that have been accounted
      for as operating leases. The Company recognizes revenue based on a rate
      that is straight-lined over the term of the lease (See Notes 5, 6 and 7).

      RECLASSIFICATIONS
      We have made certain reclassifications in the consolidated financial
      statements for the prior year to conform to the current year's
      presentation.

      NEW ACCOUNTING PRONOUNCEMENTS
      In November 2004, the Financial Accounting Standards Board ("FASB") issued
      Statement of Financial Accounting Standards No. 151 ("SFAS 151"),
      Inventory Costs, an amendment of ARB No. 43, Chapter 4. This Statement
      amends the guidance in ARB No. 43, Chapter 4, "Inventory Pricing," to
      clarify the accounting for abnormal amounts of idle facility expense,
      freight, handling costs, and wasted material (spoilage). Paragraph 5 of
      ARB 43, Chapter 4, previously stated that "under some circumstances, items
      such as idle facility expense, excessive spoilage, double freight, and
      rehandling costs may be so abnormal as to require treatment as current
      period charges". This Statement requires those items to be recognized as a
      current-period charge regardless of whether they meet the criterion of "so
      abnormal". In addition, this Statement requires that fixed production
      overhead costs to be allocated to the costs of conversion be based on the
      normal capacity of the production facilities. The provisions of SFAS 151
      are applicable to inventory costs incurred during fiscal years beginning
      after June 15, 2005. Adoption of this statement is not expected to
      materially impact the Company's results of operations, financial position,
      or cash flows.

      In December 2004, the Financial Accounting Standards Board ("FASB") issued
      Statement of Financial Accounting Standards No. 153 ("SFAS 153"),
      Exchanges of Nonmonetary Assets -Accounting Principles Board Opinion No.
      29, Accounting for Nonmonetary Transactions ("APB No. 29"). This standard
      eliminates the exception in APB No. 29 for nonmonetary exchanges of
      similar productive assets and replaces it with a general exception for
      exchanges of nonmonetary assets that do not have commercial substance. It
      requires exchanges of productive assets to be


                                       8
<PAGE>
ACADIA POWER PARTNERS, LLC AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------


      accounted for at fair value, rather than at carryover basis, unless (1)
      neither the asset received nor the asset surrendered has a fair value that
      is determinable within reasonable limits or (2) the transaction lacks
      commercial substance (as defined). A nonmonetary exchange has commercial
      substance if the future cash flows of the entity are expected to change
      significantly as a result of the exchange.

      The new standard SFAS 153 will not apply to the transfers of interests in
      assets in exchange for an interest in a joint venture and amends FASB 66,
      Accounting for Sales of Real Estate, to clarify that exchanges of real
      estate for real estate should be accounted for under APB No. 29. It also
      amends FASB Statement No. 140, Accounting for Transfers and Servicing of
      Financial Assets and Extinguishments of Liabilities (SFAS 140) to remove
      the existing scope exception relating to exchanges of equity method
      investments for similar productive assets to clarify that such exchanges
      are within the scope of SFAS 140 and not APB 29. SFAS 153 is effective for
      nonmonetary asset exchanges occurring in fiscal periods beginning after
      June 15, 2005. Adoption of this statement is not expected to materially
      impact the Company's results of operations, financial position, or cash
      flows.

4.    PLANT AND EQUIPMENT, NET

      Plant and equipment, net is stated at cost less accumulated depreciation.
      Depreciation is computed on a straight-line basis over the estimated
      useful lives of the assets, generally 35 years for our power plant assets,
      including interconnect pipelines, with an estimated salvage value of 10
      percent of the original cost. For all power plant assets with useful life
      of 5 years no salvage value is estimated. As of December 31, 2004 and
      2003, the components of property, plant and equipment were as follows:

<TABLE>
<CAPTION>
                                                     2004               2003
                                                -------------      -------------
<S>                                             <C>                <C>
        Power plant and related equipment
           Buildings, Machinery & Equipment     $ 494,337,534      $ 492,281,981
           Land                                     2,777,618          2,777,618
        Less: Accumulated depreciation            (34,461,302)       (20,499,080)
                                                -------------      -------------
        Plant and equipment, net                $ 462,653,850      $ 474,560,519
                                                =============      =============
</TABLE>

      In 2002, the Company filed for refunds of sales and use taxes paid during
      construction, pursuant to Louisiana's Enterprise Zone Program. The sales
      and use taxes were paid over a period from January 2001 through December
      2002 and capitalized as a part of the cost for plant and equipment
      acquired by the Company. Total refunds of $13,913,014 were recorded as a
      reduction of plant and equipment in 2003.

5.    RELATED PARTIES

      The Company entered into a tolling agreement dated July 27, 2001, with
      Calpine Energy Services ("CES"), which is effective for 20 years beginning
      July 1, 2002. Under the agreement, the Company has granted CES the right
      to receive the output of one train of the Facility consisting of


                                       9
<PAGE>
ACADIA POWER PARTNERS, LLC AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------


      approximately one-half of the full capacity. In accordance with the terms
      of the contract, CES will supply all fuel necessary to generate the energy
      it takes and will pay the Company a capacity charge as well as an
      operation and maintenance fee. This arrangement is being accounted for as
      an operating lease. The rate established in this agreement varies in the
      future, and therefore the Company recognizes revenue based on a rate that
      is straight-lined over the life of the lease. The Company recognized
      revenues of $44,726,537, $44,166,692, and $25,317,550 in 2004, 2003 and
      2002, respectively, based on this agreement, of which $7,631,952, and
      $4,167,438 were recorded as other noncurrent asset as of December 31, 2004
      and 2003, respectively.

      On May 10, 2003, the Company entered into a second tolling agreement with
      CES effective through June 30, 2022. The agreement was completed
      concurrently with the termination of a previous tolling agreement dated
      October 9, 2000, with Aquila Energy Marketing Corporation ("Aquila"),
      which was effective for 20 years beginning July 1, 2002 (See Notes 6 and
      7). This CES agreement is similar in nature to the agreement described
      above. Under this agreement, the Company has granted CES the right to
      receive the output of the second train of the Facility consisting of
      approximately one-half of the full capacity of the Facility. In accordance
      with the terms of the contract, CES will supply fuel necessary to generate
      the energy it takes and will pay the Company a capacity charge as well as
      an operation and maintenance fee. This agreement is being accounted for as
      an operating lease. The rate established in the agreement is fixed and
      therefore the lease revenues are recognized on a straight-line basis. The
      Company recorded revenues of $29,966,350, $20,858,200, and $0 in 2004,
      2003 and 2002, respectively, based on this agreement.

      The Company's revenue from the agreements above includes $870,041,
      $149,961 and $7,260,033 in 2004, 2003, and 2002, respectively, for the
      sale of purchased power to CES. The cost of this power was recorded as
      purchase power expense - related parties.

      As a result of the two 20-year tolling agreements with CES, all of the
      output from the Acadia Power Plant is currently marketed by CES.

      The Company's accounts receivable related to the agreements noted above
      were $6,450,902 and $6,187,895 as of December 31, 2004 and 2003,
      respectively.

      The minimum lease rentals to be received by the Company in connection with
      the above tolling agreements are $64 million, $64 million, $66 million,
      $68 million and $68 million for the years 2005 through 2009, respectively.
      Minimum lease rentals for 2010 and thereafter are $848 million.

      The Company has contracted with Calpine Central, LP ("CCLP"), a subsidiary
      of Calpine, to provide project management services, which have included
      the design, construction, and operation of the Facility. The project
      management agreement dated February 29, 2000, terminates at the fiftieth
      anniversary of the commercial operation date (See Note 1). The Company
      agrees to reimburse costs incurred by CCLP included in the approved
      operating budget and future operating budgets. Based on this agreement,
      the Company reimbursed CCLP for $5,436,243, $2,934,888, and $1,575,505 in
      2004, 2003 and 2002, respectively.

      The Subsidiary has a Pipeline Operating Agreement with Cleco Energy, LLC,
      a subsidiary of Cleco, dated March 1, 2002. The agreement covers all
      operations, repair, improvements, alterations, inspections, testing,
      protection and other operations and activities that are necessary to
      maintain the facility in accordance with federal safety and maintenance
      standards promulgated


                                       10
<PAGE>
ACADIA POWER PARTNERS, LLC AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------


      under CFR part 192 and the regulations of the Louisiana Office of
      Conservation, and to accomplish the business objectives of the Subsidiary.
      Based on this agreement, the Subsidiary was reimbursed for these services
      which totaled $106,853, $96,061, and $209,819 in 2004, 2003 and 2002,
      respectively.

      The Company has an Agreement for Electric Service with Cleco Power, LLC
      ("Cleco Power"), the successor to Cleco Utility Group, Inc., an affiliate
      of Cleco, dated December 15, 2001. The agreement covers electrical
      purchases of the Facility for a five-year period pursuant to Cleco Power's
      Louisiana Public Service Commission ("LPSC") Rate Schedule GS and its
      Rider Schedule for Long-Term Economic Development Services, subject to
      approval by the LPSC. Based on this agreement, the Company paid
      $1,081,173, $2,117,600, and $7,839,121 for services received in 2004, 2003
      and 2002, respectively from Cleco Power.

      The Company has a Phase Shifting Transformer Funding Agreement with Cleco
      Power, dated January 4, 2001. The agreement covers the purchase and
      installation of a Phase Shifting Transformer. The installation of this
      project concluded in 2003. Based on this agreement, the Company paid $0,
      $1,052,238, and $0 for the purchase and installation of the transformer in
      2004, 2003 and 2002, respectively to Cleco Power.

      The Company has an Interconnection and Operating Agreement with Cleco
      Power, dated February 25, 2000, pursuant to which the Company's generation
      facilities are interconnected to Cleco Power's adjacent transmission
      facilities and the transmission system of Entergy Services, Inc. The
      Company is obligated to construct, own, operate and maintain all the
      interconnection facilities and equipment on its side of the point of
      interconnections, and Cleco Power is obligated to construct, own, operate,
      and maintain the interconnection facilities and equipment on its side of
      the point of interconnection. Based on this agreement, the Company has
      reimbursed Cleco Power its construction costs and operating costs for
      these customer specific interconnection facilities. The Company reimbursed
      Cleco Power for those costs which totaled $45,594, $67,478, and $68,584,
      in 2004, 2003 and 2002, respectively.

6.    OTHER SIGNIFICANT AGREEMENTS

      On October 9, 2000, the Company entered into a tolling agreement with
      Aquila that was effective for 20 years beginning July 1, 2002. Under the
      agreement, the Company granted Aquila the right to receive the output of
      one train of the facility. In accordance with the terms of the contract,
      Aquila supplied all fuel necessary to generate the energy it took and paid
      the Company a capacity charge as well as an operation and maintenance fee.
      Revenues recognized under this agreement were $0, $16,053,598, and
      $23,784,443 in 2004, 2003 and 2002, respectively. Revenue includes $0, $0,
      and $579,087 in 2004, 2003 and 2002, respectively, for sale of purchased
      power to Aquila. The cost of this purchased power was recorded as purchase
      power expense - related parties (See Note 5). On May 9, 2003, the Company
      terminated its tolling agreement with Aquila (See Note 7).

      The Company entered into an interconnection and operating agreement with
      Entergy Gulf States, Inc. ("Entergy"), as amended and restated January 4,
      2001. The agreement states that Entergy will reimburse the Company for
      costs incurred by the Company for transmission system upgrades, totaling
      approximately $4,740,000. Entergy will reimburse the Company for these
      costs through future transmission credits or cash payments, as applicable.
      The Company received in a combination of cash and credit reimbursements of
      $484,934, $1,593,122, and $1,538,727 in 2004,


                                       11
<PAGE>
ACADIA POWER PARTNERS, LLC AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------


      2003 and 2002, respectively, based on this agreement. Total deferred
      transmission credit balances as of December 31, 2004 and 2003 were
      $1,123,217, and $1,608,151 respectively, which were included in Other
      Current Assets.

      The Company entered into a Procurement and Marketing Agreement dated
      October 9, 2003 with ONEOK Energy Marketing and Trading Company, L.P.
      ("ONEOK"), pursuant to which ONEOK shall arrange for the provision of
      replacement power and test fuel, and the sale of test power and natural
      gas that is not used by the Company's generation facility, as requested by
      the Company from time to time. The Company shall pay ONEOK for all actual
      costs incurred for this service (as defined in the agreement) plus a
      service fee applicable to each MWh of replacement power and each MMBtu of
      test fuel procured and/or sold during such month and a fixed fee. No
      expenses were incurred by the Company in relation to this agreement in
      2004, 2003 and 2002.

7.    CONTRACT TERMINATION

      The Company had previously entered into a tolling agreement dated October
      9, 2000, with Aquila, which was effective for 20 years beginning July 1,
      2002. Under the agreement, the Company had granted Aquila the right to
      receive the output of one train of the Facility, consisting of
      approximately one-half of the full capacity of the 1,160-MW Facility. On
      May 9, 2003, the Company terminated its 580-MW, 20-year tolling agreement
      with Aquila in return for a cash settlement of $105.5 million, which was
      recognized as a gain in other income and expenses. CAH and Acadia Holdings
      agreed to allocate the distributions as follows: (i) CAH received $105.5
      million cash distribution in 2003; (ii) Acadia Holdings is entitled to
      receive an annual priority cash distribution of $14.0 million starting
      from July 2003 through June 30, 2022; (iii) all distributions in excess of
      the first $14.0 million are allocated between members in accordance with
      their respective interest; (iv) the priority distributions include imputed
      interest based on the rate of approximately 11.6%. Imputed interest for
      2004 and 2003 of $5.7 and $3.8 million was recorded as an adjustment to
      the Members' capital balances.

8.    SIGNIFICANT EVENTS

      UNSCHEDULED OUTAGES

      On June 30, 2004, Combustion Gas Turbine CT-12 failed. This Siemens
      Westinghouse turbine was not under warranty at the time of failure.
      However, the replacement cost for the damaged components are described
      under the terms of the Long Term Service Agreement between the Company and
      Siemens Westinghouse, which will be escalated as a result of the forced
      outage. The cost of repairs performed by the third party contractors of
      $5.5 million was included in plant operating expense for 2004.

      On August 3, 2004, it was discovered that the exhaust cylinder for CT-12
      had two cracked struts, requiring a second forced outage to replace the
      cracked cylinder. The cost of repairs performed by the third party
      contractors of $2.7 million was included in plant operating expense for
      2004.


                                       12
<PAGE>
ACADIA POWER PARTNERS, LLC AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------


9.    COMMITMENTS AND CONTINGENCIES

      The Company entered into a long-term service agreement for spare parts,
      maintenance and related technical services on May 3, 2002. The term of the
      agreement, with respect to each of the Company's four combustion turbines
      began upon the commercial operation date, and terminates on an individual
      combustion turbine basis, at the end of the scheduled maintenance
      following the second major inspection of each respective combustion
      turbine or sixteen years, whichever comes first. The maintenance and
      payment schedules are based on estimates of when maintenance will occur on
      the turbines based on the number of run hours. The actual timing of
      maintenance may vary based on actual hours run versus estimated hours run
      due to operational and performance considerations. The agreement is
      cancelable by the Company in whole or part at any time by providing
      written notice to the counterparty. Upon notice to cancel by the Company,
      the Company is subject to a declining cancellation fee. At December 31,
      2004, the contingent cancellation fee was $2,000,000.

      CES DISPUTE

      IN a series of written notices commencing in May 2004, CES notified the
      Company that CES was invoking certain rights regarding dispute resolution
      under the two CES tolling agreements mentioned in Note 5 above and
      requested that the Company conduct a simultaneous capacity test of both
      Power Blocks of the Company's electric generation facility in the manner
      specified within the notices. CES notified the Company that it may
      withhold up to one-half of the monthly payments due to the Company under
      the two CES tolling agreements, and may take other action, including,
      without limitation, (i) unwinding Calpine's interest in the Company, (ii)
      terminating the two CES tolling agreements, (iii) asserting claims against
      Cleco Power for alleged flawed interconnection studies, and/or (iv)
      seeking reimbursement for the alleged overpayment of capacity fees from
      August 2003. CES has indicated that the dispute is primarily based upon
      transmission constraints that, according to CES' allegations, limit CES'
      ability to deliver the Company's capacity and energy to the wholesale
      market. On September 27, 2004, CES sent a letter to the Company claiming
      to be a notice of default under the two tolling agreements. In the letter,
      CES claimed that the Company's refusal to conduct the requested
      simultaneous capacity test was a default under the two CES tolling
      agreements. Although CES did not expressly so state, the Company believed
      that CES might attempt to use the test results as an alleged basis to
      reduce its monthly payments to the Company under the two CES tolling
      agreements. The Company performed the requested simultaneous test under
      protest on October 12, 2004, while reserving all of its rights to assert
      that such capacity test is not required by the testing provisions of the
      two CES tolling agreements and does not entitle CES to any reduction in
      its monthly capacity payments to the Company. Standard capacity test
      results were comparable to previous tests and were within the parameters
      of the two CES tolling agreements. Supplemental capacity testing was
      suspended due to a minor mechanical problem with one of the Power Blocks.
      Since the test, CES has sent a letter to the Company requesting that it
      maintain, preserve and in some instances, produce records specified in the
      letter relating to the test. The two CES tolling agreements allow CES and
      the Company the right, under current conditions, to require up to four
      capacity tests in any given contract year. The Company can give no
      assurance as to the results of any such testing in the future. Under the
      tolling agreements, binding arbitration is a means of resolving the
      alleged dispute, although neither party has invoked arbitration to date.
      The Company and CES are actively discussing resolution of the transmission
      constraints with the regional transmission providers. There is no
      assurance that these


                                       13
<PAGE>
ACADIA POWER PARTNERS, LLC AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2004, 2003 AND 2002
--------------------------------------------------------------------------------


      discussions will resolve any of CES's allegations of transmission
      constraints. Through December 2004 and continuing in 2005, CES has
      remitted full payment of the monthly tolling fees to the Company.

      At this point, the Company is not aware of any formal arbitration
      initiated by CES against the Company in connection with this dispute, but
      in the event that it cannot avoid arbitration, the Company intends to
      defend itself vigorously. In connection with any such arbitration (whether
      instigated by the Company or CES), or upon the development of additional
      material information, the Company expects to become able to estimate the
      range of potential losses related to this dispute. Currently, the Company
      is not able to develop such estimates. There is no assurance, however,
      that the Company will not be liable for all or a portion of CES' claims or
      any additional amount under the provisions of the two CES tolling
      agreements, and a final adverse arbitration decision awarding substantial
      monetary damages could have a material adverse impact on the Company's
      financial condition, cash flows and results of operations.

10.   SUBSEQUENT EVENT

      On March 8, 2005, the Company received a letter from CES requesting a
      refund of approximately $3.1 million less the $0.8 million outstanding
      receivable from CES. CES claims errors in calculating the heat rate
      performance of the Company's facility from January 2003 through July 2004.
      The Company is reviewing the information supplied by CES and plans to
      resolve this issue, including a refund if necessary, in 2005. The
      Company's cost, and the timing of any accrual that the Company may be
      required to make in connection with this matter cannot be estimated at
      this time. As of December 31, 2004 the Company had reserved $0.4 million
      for its receivable from CES. Based upon the limited information available,
      the loss is currently estimated at a range of $0 to $2.7 million.


                                       14
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>17
<FILENAME>f05222exv99w2.txt
<DESCRIPTION>EXHIBIT 99.2
<TEXT>
<PAGE>

                                                                    Exhibit 99.2


           CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration
Statements on Form S-3 (Nos. 333-72583, 333-87427, 333-40652, 333-59786,
333-71966, 333-76880, 333-116510 and 333-85654) and Form S-8 (Nos. 333-16529,
333-34002, 333-37366, 333-59200, 333-106729, 333-106733, 333-115487, 333-117460
and 333-117461) of Calpine Corporation of our report dated March 25, 2005
relating to the consolidated financial statements of Acadia Power Partners, LLC
and Subsidiary, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Houston, Texas
March 31, 2005
</TEXT>
</DOCUMENT>
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