<SUBMISSION>
<ACCESSION-NUMBER>0000950123-05-007590
<TYPE>424B2
<PUBLIC-DOCUMENT-COUNT>3
<FILING-DATE>20050622
<DATE-OF-FILING-DATE-CHANGE>20050622
<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>424B2
<ACT>33
<FILE-NUMBER>333-76880
<FILM-NUMBER>05909041
</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>424B2
<SEQUENCE>1
<FILENAME>f09939b2e424b2.htm
<DESCRIPTION>FILED PURSUANT TO RULE 424B2
<TEXT>
<HTML>
<HEAD>
<TITLE>CALPINE CORP.</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<FONT face="helvetica,arial">

<DIV align="right" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Filed Pursuant to Rule 424(b)(2)
</DIV>

<DIV align="right" style="font-size: 10pt;">
Registration No.&nbsp;333-76880
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>Prospectus Supplement to Prospectus dated September&nbsp;23,
2004.</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>[Calpine Corporation Logo]</B>
</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>$650,000,000</B>
</DIV>

<DIV align="center" style="font-size: 22pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Calpine Corporation</B>
</DIV>

<DIV align="center" style="font-size: 14pt; margin-top: 9pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
7.75% Contingent Convertible Notes&nbsp;Due June 1, 2015
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 6pt; 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="left" style="font-size: 9pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
 The notes are convertible, at your option, prior to the
maturity date into cash and shares of our common stock in the
following circumstances:
</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: 9pt;">

<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    at any time following May&nbsp;31, 2014;</TD>
</TR>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    during any calendar quarter commencing after the issuance of the
    notes, if the closing sale price of our common stock over a
    specified number of trading days during the previous calendar
    quarter is more than 120% of the Conversion Price of the notes
    in effect on the last trading day of the previous calendar
    quarter;</TD>
</TR>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    during the five trading day period after any five consecutive
    trading day period in which the average 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 on that day multiplied by the
    Conversion Rate described below; or</TD>
</TR>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    upon the occurrence of specified corporate transactions, as
    discussed under &#147;Description of the
    Notes&nbsp;&#151;&nbsp;Conversion
    Rights&nbsp;&#151;&nbsp;Conversion upon Specified Corporation
    Transactions.&#148;</TD>
</TR>

</TABLE>

<DIV align="left" style="font-size: 9pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Holders may convert any outstanding notes into cash and shares
of our common stock at an initial Conversion Price per share of
$4.00, which represents an initial Conversion Rate of
250.0000&nbsp;shares of common stock per $1,000 principal amount
of notes. Subject to certain exceptions described under
&#147;Description of the Notes,&#148; at the time notes are
tendered for conversion, the value (the &#147;Conversion
Value&#148;) of the cash and shares of our common stock, if any,
to be received by the tendering holders will be determined by
multiplying the Conversion Rate by the Five Day Average Closing
Stock Price, which equals the average of the five consecutive
trading day closing stock prices including and immediately
following the second trading day following the day the notes are
submitted for conversion. We will deliver the Conversion Value
to holders as follows: (1)&nbsp;an amount in cash (the
&#147;Principal Return&#148;) equal to the lesser of
(a)&nbsp;the Conversion Value and (b)&nbsp;the principal amount
of the notes to be converted and (2)&nbsp;if the Conversion
Value is greater than the Principal Return, an amount in shares
(the &#147;Net Shares&#148;), determined as set forth below,
equal to the difference between the Conversion Value and the
Principal Return (the &#147;Net Share Amount&#148;). We will pay
the Principal Return and deliver the Net Shares as promptly as
practicable after determination of the Conversion Value. The
number of Net Shares to be paid will be determined by dividing
the Net Share Amount by the Five Day Average Closing Stock
Price. If you convert your notes prior to maturity, we may
choose, under certain circumstances (including if delivery of
the Principal Return were prohibited under our other outstanding
indentures), to redeem your notes rather than convert them for a
redemption price equal to the Principal Return, to be paid in
cash, and a number of shares equal to the Net Shares, calculated
as described above. See &#147;Risk Factors&#148; and
&#147;Description of the Notes.&#148;
</DIV>

<DIV align="left" style="font-size: 9pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The notes will bear interest at a rate of 7.75% per annum on
$1,000 per note, payable semiannually on June 1 and December 1
of each year, beginning on December 1, 2005. The notes will
mature on June 1, 2015. Upon a Change of Control, as defined in
the indenture governing the notes, holders may require us to
repurchase all of their notes for a repurchase price in cash
equal to the principal amount of the notes plus accrued and
unpaid interest up to but not including the date of repurchase.
</DIV>

<DIV align="left" style="font-size: 9pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The notes will be unsecured and subordinate and junior in right
of payment to all of our Senior Debt (as defined herein). At
March&nbsp;31, 2005, on an as adjusted basis as set forth under
&#147;Capitalization,&#148; we would have had approximately
$5.3&nbsp;billion of debt that would expressly rank senior to
the notes (approximately $4.5&nbsp;billion of which would have
been secured). In addition, we would have had approximately
$12.8&nbsp;billion of debt and liabilities of our subsidiaries
to which the notes would be effectively subordinated. See
&#147;Description of the Notes &#151; Subordination.&#148;
</DIV>

<DIV align="left" style="font-size: 9pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We do not intend to apply for listing of the notes on any
national securities exchange or for inclusion of the notes in
any automated quotation system. Our common stock trades on the
New York Stock Exchange under the symbol &#147;CPN.&#148; The
last reported sale price for our common stock on June 17, 2005
was $3.10.
</DIV>

<DIV align="left" style="font-size: 9pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>See &#147;Risk Factors&#148; beginning on page S-24 to read
about important factors you should consider before buying any
notes.</I>
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 6pt; 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="left" style="font-size: 9pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
 <B>Neither the Securities and Exchange Commission nor any other
regulatory body has approved or disapproved of these securities
or passed upon the accuracy or adequacy of this prospectus
supplement or the accompanying prospectus. Any representation to
the contrary is a criminal offense.</B>
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 5pt; 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>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; margin-top: 9pt; ">

<TR style="font-size: 1pt;">
    <TD width="70%">&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="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="3" align="center" nowrap><FONT face="helvetica,arial">Per Note</FONT></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Total</FONT></B></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="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">
    <FONT face="helvetica,arial">Initial public offering price
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">$650,000,000</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Underwriting discount
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2.25</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">$14,625,000</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Proceeds, before expenses, to
    Calpine Corporation
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">97.75</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">%</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">$635,375,000</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 9pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The initial public offering price set forth above does not
include accrued interest, if any. Interest on the notes will
accrue from June&nbsp;23, 2005 and must be paid by the
purchasers if the notes are delivered after June&nbsp;23, 2005.
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 6pt; 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="left" style="font-size: 9pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The underwriter expects to deliver the notes through the
facilities of The Depository Trust&nbsp;Company against payment
in New York, New York on June&nbsp;23, 2005.
</DIV>

<DIV align="center" style="font-size: 16pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Goldman, Sachs &#38; Co.</B>
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 3pt; 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: 10pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
Prospectus Supplement dated June&nbsp;20, 2005.
</DIV>

</FONT>

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

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
<A name='101'></A>
</DIV>

<!-- link1 "ABOUT THIS PROSPECTUS SUPPLEMENT" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>ABOUT THIS PROSPECTUS SUPPLEMENT</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;&nbsp;
This document is in two parts. The first is this prospectus
supplement, which describes the specific terms of the notes
being offered by us. The second part, the accompanying
prospectus, gives more general information, some of which may
not apply to this 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;&nbsp;
If the description of the offering varies between this
prospectus supplement and the accompanying prospectus, you
should rely on the information in this prospectus supplement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Unless we have indicated otherwise, references in this
prospectus supplement or the accompanying prospectus to
&#147;Calpine,&#148; &#147;the Company,&#148; &#147;we,&#148;
&#147;us&#148; and &#147;our&#148; or similar terms are to
Calpine Corporation and its consolidated subsidiaries, excluding
Calpine Capital Trust&nbsp;V, Calpine Capital Trust&nbsp;IV,
Calpine Capital Trust&nbsp;III, Calpine Capital Trust&nbsp;II
and Calpine Capital Trust. Unless we have indicated otherwise,
references hereafter in this prospectus supplement or the
accompanying prospectus to &#147;$&#148; or &#147;dollar&#148;
are to the lawful currency of the United States.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='102'></A>
</DIV>

<!-- link1 "FORWARD-LOOKING STATEMENTS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>FORWARD-LOOKING STATEMENTS</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;&nbsp;
Some of the statements contained or incorporated by reference in
this prospectus supplement and the prospectus to which it
relates are 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, and are subject to the safe harbor created by the
Private Securities Litigation Reform Act of 1995. These
statements include declarations regarding our or our
management&#146;s intents, beliefs or current expectations. In
some cases, you can identify forward-looking statements by
terminology such as &#147;may,&#148; &#147;will,&#148;
&#147;should,&#148; &#147;expects,&#148; &#147;plans,&#148;
&#147;anticipates,&#148; &#147;believes,&#148;
&#147;estimates,&#148; &#147;predicts,&#148;
&#147;potential,&#148; or &#147;continue&#148; or the negative
of these terms or other comparable terminology. Any
forward-looking statements are not guarantees of future
performance and actual results could differ materially from
those indicated by the forward-looking statements.
Forward-looking statements involve known and unknown risks,
uncertainties, and other factors that may cause our or our
industry&#146;s actual results, levels of activity, performance,
or achievements to be materially different from any future
results, levels of activity, performance, or achievements
expressed or implied by such forward-looking statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Among the important factors that could cause actual results to
differ materially from those indicated by such forward-looking
statements are the following:
</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="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the timing and extent of deregulation of energy markets and the
    rules and regulations adopted with respect thereto;</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 extent of changes in commodity prices for energy,
    particularly natural gas and electricity and the impact of
    related derivatives transactions;</TD>
</TR>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    unscheduled outages of operating 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">
    unseasonable weather patterns that reduce demand for power;</TD>
</TR>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    economic slowdowns that can adversely affect consumption of
    power by businesses and consumers;</TD>
</TR>

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

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

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    uncertainties associated with cost estimates, that actual costs
    may be higher than estimated;</TD>
</TR>

</TABLE>

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

</FONT>

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

<FONT face="helvetica,arial">

<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="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    development of lower-cost power plants or of a lower-cost means
    of operating a fleet of power plants by our competitors;</TD>
</TR>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    risks associated with marketing and selling power from power
    plants in the evolving energy market;</TD>
</TR>

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

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

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    uncertainties associated with estimates of oil and gas 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">
    the effects on our business resulting from reduced liquidity in
    the trading and power industry;</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 ability to access the capital markets on attractive terms or
    at all;</TD>
</TR>

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

<TR valign="top">
    <TD>&nbsp;</TD>
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    our ability to successfully implement the various components of
    our strategic initiative to increase liquidity and reduce debt;</TD>
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    <TD style="font-size: 6pt">&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
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    uncertainties associated with estimates of sources and uses of
    cash, that actual sources may be lower and actual uses may be
    higher than estimated;</TD>
</TR>

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    <TD style="font-size: 6pt">&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    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;</TD>
</TR>

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    <TD style="font-size: 6pt">&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
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    present and possible future claims, litigation and enforcement
    actions;</TD>
</TR>

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    <TD style="font-size: 6pt">&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    effects of the application of regulations, including changes in
    regulations or the interpretation thereof;</TD>
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    <TD style="font-size: 6pt">&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    other risks identified in this prospectus supplement and the
    prospectus to which it relates; and</TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    other risks identified from time to time in our reports and
    registration statements filed with the Securities and Exchange
    Commission, or SEC, including the risk factors and other risks
    identified in our Annual Report on Form&nbsp;10-K for the year
    ended December 31, 2004, and in our Quarterly Report on
    Form&nbsp;10-Q for the quarter ended March&nbsp;31, 2005, which
    are incorporated by reference in this prospectus supplement.</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;&nbsp;
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee
future results, levels of activity, performance or achievements.
</DIV>

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

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<A name='103'></A>
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<B>SUMMARY</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;&nbsp;
<I>This summary highlights information contained elsewhere, or
incorporated by reference, in this prospectus supplement and the
prospectus to which it relates. This summary is not complete and
does not contain all of the information that you should consider
before investing in our securities. You should carefully read
the entire prospectus supplement and the prospectus to which it
relates and the information incorporated by reference herein and
therein, including the risk factors and the financial statements
and the related notes thereto.</I>
</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>Our Business</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;&nbsp;
We are an integrated power company with a comprehensive and
growing power services business. Based in San 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. We also
own one power generation facility in the United Kingdom but
recently entered into an agreement to sell the facility. See
&#147;&#151; Recent Developments&nbsp;&#151; Sale of Saltend
Energy Centre.&#148; 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 95 clean burning natural gas
and geothermal power plants capable of producing 27,799
megawatts (&#147;MW&#148;) and an additional 10 plants in
construction. We recently announced that we are contemplating
the sale of up to eight plants, and in connection therewith,
have entered into non-binding asset sale agreements with respect
to four of our plants. See &#147;&#151;&nbsp;Recent
Developments&nbsp;&#151; Potential Sales of Certain Gas-Fired
Power Plants.&#148; 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, which
includes Power Systems Mfg., LLC (&#147;PSM&#148;), located in
Jupiter, Florida, and Netherlands-based Thomassen Turbine
Systems B.V. We also offer engineering, procurement,
construction management, commissioning and operations and
maintenance (&#147;O&#38;M&#148;) services through Calpine Power
Services, Inc.
</DIV>

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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>

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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 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>

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We also have in place an experienced gas production and
management team which gives us a broad range of fuel sourcing
options and, as of December&nbsp;31, 2004, we owned
</DIV>
</DIV>

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approximately 389&nbsp;billion cubic feet equivalent of net
proved natural gas reserves and 499 net wells located primarily
in the Sacramento Basin of California and Gulf Coast regions of
the United States. For the four months ended April&nbsp;30,
2005, our natural gas assets produced, net to Calpine&#146;s
interest, an average of approximately 90&nbsp;million cubic feet
equivalent of natural gas per day. We recently commenced a
process with potential buyers to sell our oil and natural gas
assets. See &#147;&#151; Recent Developments&nbsp;&#151;
Potential Sale of Certain Oil and Natural Gas Assets.&#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;&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 over 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. As of May 2005, we had 58% of our
available capacity sold or hedged for 2005. In addition, we
recently announced that we are in discussions with a leading
financial institution to form a partnership that we anticipate
would lower our collateral requirements and establish a
significant third party customer business. See
&#147;&#151;&nbsp;Recent Developments&nbsp;&#151; Strategic
Initiative to Accelerate Debt Reduction and Increase Cash
Flow.&#148;
</DIV>

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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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<B>The Market for Electricity</B>
</DIV>

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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>

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The North American Electric Reliability Council estimates that
in the United States, peak summer electric demand in 2004
totaled approximately 729,000 MW, while summer generating
capacity in 2004 totaled approximately 872,000 MW, creating a
peak summer reserve margin of 143,000 MW, or 19.6%, which
compares to an estimated peak summer reserve margin of 144,000
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>

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Even though most new power plants are fueled by natural gas, the
majority of power generated in the U.S. is still produced by
coal and nuclear power plants. The EIA has estimated that
approximately 50% of the electricity generated in the U.S. 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>

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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>

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According to Edison Electric Institute 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 per million British thermal unit (&#147;MMBtu&#148;) in
2005 through February, compared to averages of approximately
$5.72 and $6.20 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 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>

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<B>Our Strategy</B>
</DIV>

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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.
</DIV>

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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>

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<B>Near-Term Objectives</B>
</DIV>

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

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

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    <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>

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

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    <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>

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</DIV>

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

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

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    <TD style="font-size: 6pt">&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Utilize our marketing and sales capabilities to selectively
    increase our power contract portfolio; and</TD>
</TR>

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    <TD style="font-size: 6pt">&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Grow our services businesses to complement our integrated power
    operations.</TD>
</TR>

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<B>Longer-Term Objectives</B>
</DIV>

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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>

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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 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>

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The integration of 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 CES risk management organization provides procurement and
price risk management activities associated with our gas supply
using a portfolio of physical gas supply contracts and both
financial exchange traded and over the counter products.
</DIV>

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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 to negotiate directly with buyers (end users and
load-serving entities) that need power.
</DIV>

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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
</DIV>
</DIV>

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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 June&nbsp;2, 2005, our marketing and sales team is
pursuing 20,688 MW of active opportunities with
142&nbsp;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;&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>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For more information about our near-term and longer-term
objectives, and the challenges facing us in achieving those
objectives, see &#147;Risk Factors&#148; below, and see our
Annual Report on Form&nbsp;10-K for the year ended
December&nbsp;31, 2004, and our Quarterly Report on
Form&nbsp;10-Q for the quarter ended March&nbsp;31, 2005, which
are incorporated by reference herein.
</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>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;&nbsp;
<I>In addition to the recent developments described below,
please see the recent developments described in our Annual
Report on Form&nbsp;10-K for the year ended December&nbsp;31,
2004, and our Quarterly Report on Form&nbsp;10-Q for the quarter
ended March&nbsp;31, 2005, which are incorporated by reference
in this prospectus supplement.</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;&nbsp;
<B><I>Credit Rating Actions. </I></B>On May&nbsp;9, 2005,
Standard &#38; Poor&#146;s lowered its corporate credit rating
on Calpine Corporation to single B- from single B and maintained
its negative outlook. In addition, the ratings on Calpine&#146;s
debt and the ratings on the debt of its subsidiaries were also
lowered by one notch, with a few exceptions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On May&nbsp;12, 2005, Moody&#146;s Investor Service lowered its
senior implied issuer rating on Calpine Corporation to B3 from
B2 and maintained its negative outlook. In addition,
Moody&#146;s ratings on our debt and the debt of our
subsidiaries were also lowered by either one or two notches,
with a few exceptions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On May&nbsp;25, 2005, following the announcement of our
strategic initiative described below under
&#147;&nbsp;&#151;&nbsp;Strategic Initiative to Accelerate Debt
Reduction and Increase Cash Flow,&#148; Fitch Ratings placed our
credit ratings on &#147;rating watch evolving,&#148; which means
that Fitch may lower, maintain or raise its credit ratings of
our debt securities in the near-term.
</DIV>
</DIV>

<P align="center" style="font-size: 10pt;">S-5

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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;&nbsp;
Such downgrades, and any further downgrades, could increase the
cost of future borrowings and other costs of doing business. See
&#147;Risk Factors&nbsp;&#151;&nbsp;Capital Resources;
Liquidity&nbsp;&#151;&nbsp;Our credit ratings have been
downgraded and could be downgraded further.&#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;&nbsp;
<B><I>Strategic Initiative to Accelerate Debt Reduction and
Increase Cash Flow.</I></B> On May&nbsp;25, 2005, we announced a
strategic initiative aimed at enhancing our financial strength
by:
</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="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Optimizing our power plant portfolio by selling certain power
    and natural gas assets to reduce debt, lower annual interest
    cost and increase cash flow. In addition to previously announced
    potential asset sales (including the sale of Saltend Energy
    Centre and the potential sale of certain oil and natural gas
    assets described below), we announced that we are targeting the
    sale of up to eight plants (including the four plants described
    below), however there can be no assurance that we will be
    successful in selling all or any of such additional 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">
    Decreasing operating and maintenance costs and lowering fuel
    costs to improve the operating performance of our power plants,
    which would boost operating cash flow and liquidity. In
    addition, we are considering temporarily shutting down power
    plants with negative cash flow until market conditions warrant
    start-up to further reduce costs and more effectively focus our
    financial and sales resources.</TD>
</TR>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Enhancing our credit. We announced that we are in discussions
    with a leading financial institution to form a partnership that
    we anticipate would lower our collateral requirements and
    establish a significant third party customer business.</TD>
</TR>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    Reducing total debt by more than $3&nbsp;billion, or 16%, by the
    end of 2005, which we estimate would result in $275&nbsp;million
    of annual interest savings, through such asset sales, credit
    enhancement, and fuel and operating cost reductions.</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;&nbsp;
There can be no assurance, however, that we will be successful
in achieving all or any of such asset sales, credit enhancements
and cost reductions to the extent anticipated, or at all. If we
do not, then we may not be able to reduce our debt to the extent
planned.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Potential Sale of Certain Oil and Natural Gas Assets.
</I></B>On May&nbsp;17, 2005, we announced that we are
evaluating strategic alternatives for our natural gas assets,
including the potential sale of all or a portion of such assets.
On June&nbsp;9, 2005, in connection with the tender offer for
our
9<FONT style="font-size: 70%"><SUP>5</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%
First Priority Senior Secured Notes due 2014, we announced that
we commenced a process with potential buyers to sell our oil and
natural gas assets but have not entered into definitive
documentation related to any such sale. There can be no
assurance that we will be able to consummate any such sale on
terms acceptable to us or at all, or that we will not make a
determination to abandon the sale process. Our oil and natural
gas assets include land interests consisting of 386,674 net
developed and undeveloped acres located primarily in the
Sacramento Basin of California, south Texas and the Gulf of
Mexico, with additional significant activity in Colorado, New
Mexico and Utah. As of December&nbsp;31, 2004, we owned
approximately 389&nbsp;billion cubic feet equivalent of net
proved natural gas reserves and 499 net wells. For the four
months ended April 30, 2005, we produced, net to Calpine&#146;s
interest, an average of approximately 90&nbsp;million cubic feet
equivalent of natural gas per day. These assets had a book value
of approximately $604.8&nbsp;million at December&nbsp;31, 2004,
and contributed $57.6&nbsp;million in third party revenues in
2004. For more information concerning our oil and natural gas
assets, see our Annual Report on Form&nbsp;10-K for the year
ended December&nbsp;31, 2004, which is incorporated by reference
herein, including Item&nbsp;2. &#147;Properties&#148; and
Note&nbsp;26 of the Notes to Consolidated Financial Statements
included therein. Net proceeds from any sale of the oil and
natural gas assets will be used in accordance with our existing
bond indentures. See &#147;&nbsp;&#151;&nbsp;Tender Offer for
First Priority Notes&#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;&nbsp;
<B><I>Sale of Saltend Energy Centre.</I></B> On May&nbsp;28,
2005, we entered into a Share Sale and Purchase Agreement for
the sale of our 1,200 megawatt Saltend Energy Centre cogeneration
</DIV>
</DIV>

<P align="center" style="font-size: 10pt;">S-6

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<DIV align="left" style="font-size: 10pt;">
plant located in Hull, England, to Normantrail (UK CO 3)
Limited, a partnership between International Power plc and
Mitsui &#38; Co., Ltd, for a total purchase price of
&#163;490&nbsp;million, or approximately US$906&nbsp;million,
plus adjustments for working capital expected to be
approximately US$19&nbsp;million. The expected closing date for
the sale is July&nbsp;26, 2005, subject to the receipt of
regulatory approvals and the satisfaction of other conditions of
closing. We plan to use the net proceeds from the sale to redeem
the existing $360.0&nbsp;million of Two-Year Redeemable
Preferred Shares and $260.0&nbsp;million of Redeemable Preferred
Shares Due July&nbsp;30, 2005. The remaining net proceeds will
be used as permitted by 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;&nbsp;
<B><I>Tender Offer for First Priority Notes. </I></B>On
June&nbsp;9, 2005, we commenced a tender offer for any and all
of our $785&nbsp;million aggregate principal amount 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, or the First
Priority Notes, as are validly tendered and not withdrawn, at a
price of $1,000 per $1,000 principal amount of First Priority
Notes, plus accrued and unpaid interest up to, and including,
the purchase date for the tender offer. The expiration date will
be July&nbsp;8, 2005, unless extended or earlier terminated. As
described above under &#147;&nbsp;&#151;&nbsp;Potential Sale of
Certain Oil and Gas Assets,&#148; we recently commenced a
process with potential buyers to sell our oil and natural gas
assets. If that sale is consummated, it will qualify as an
&#147;Asset Sale&#148; under the indenture governing the First
Priority Notes and would require us to make an offer to purchase
the First Priority Notes with the net proceeds of the sale not
applied in accordance with the other permitted uses under the
First Priority Notes indenture. The tender offer for our First
Priority Notes is being made in order to comply with our
obligations under the First Priority Notes indenture and to
reduce our indebtedness by applying the proceeds of the
potential sale of our United States oil and natural gas assets
to the purchase of the First Priority Notes. We currently
anticipate using any net proceeds arising from such potential
oil and natural gas asset sale remaining after consummation of
the tender offer to acquire new natural gas and/or geothermal
energy assets permitted to be acquired under the First Priority
Notes indenture; however, we are not required to acquire such
new assets under the First Priority Notes indenture, and there
can be no assurance that we will be successful in identifying or
acquiring any new assets on acceptable terms, or at all. If we
do not, within 180&nbsp;days of receipt of the net proceeds from
the potential oil and natural gas asset sale, acquire such new
assets, or do not, at our option, use all of the net proceeds
arising from the potential oil and natural gas asset sale
remaining after consummation of the tender offer in the
purchase, redemption or prepayment of First Priority Notes
remaining outstanding after consummation of the tender offer,
then we will, to the extent that the remaining net proceeds
exceed $50&nbsp;million, be required under the terms of our
second lien secured financing documents to use all remaining net
proceeds to make an offer to purchase our outstanding second
priority senior secured indebtedness.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Although we expect to consummate the sale of the United States
oil and natural gas assets on or prior to the purchase date
under the First Priority Notes tender offer, we have not yet
entered into definitive documentation related to the sale of the
oil and natural gas assets and there can be no assurance that we
(i)&nbsp;will be able to do so by the purchase date, or at all,
or be able to do so on terms acceptable to us or (ii)&nbsp;will
not make a determination to abandon the sale of the United
States oil and natural gas assets. In any such event, we may,
among other things, extend or otherwise amend or terminate the
First Priority Notes tender offer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>SEC Informal Inquiry and Request for Documents and
Information. </I></B>On June&nbsp;9, 2005, we filed a Current
Report on Form&nbsp;8-K with the SEC to disclose that, in April
2005, the Division of Enforcement of the SEC informed us that it
was conducting an informal inquiry and asked us to voluntarily
provide documents and information related to: (a)&nbsp;our
downward revision of our proved oil and gas reserve estimates at
year-end 2004 as compared to such estimates at year-end 2003,
and a corresponding impairment of the value of certain assets,
all previously disclosed by us, (b)&nbsp;certain statements made
to various regulatory agencies by a terminated former employee
regarding our determination of state sales and use taxes, and
(c)&nbsp;our upward restatement in April 2005 of our previously
disclosed net income for the third quarter, and the
</DIV>
</DIV>

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<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
first three quarters, of 2004. We are fully cooperating with the
SEC&#146;s request for documents and 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;&nbsp;
<B><I>Potential Sales of Certain Gas-Fired Power Plants.
</I></B>On June&nbsp;14, 2005, we announced that we have entered
into four separate, non-binding asset sale agreements for the
sale of four of our gas-fired power plants for a total price of
approximately $357&nbsp;million. These potential power plant
sales are part of our strategic initiative, described above, to
accelerate debt reduction and increase cash flow. Three of the
four agreements are with Tenaska Power Fund, L.P. The fourth
agreement is with Diamond Generating Corporation. Completion of
these four asset sales is dependent upon the execution of
definitive purchase and sale agreements for each plant and other
terms and conditions, including regulatory approvals. Net
proceeds from any power plantsale would be used to reduce debt
and as permitted by our indentures. Preliminarily, we estimate
that we will record a loss of approximately $250&nbsp;million as
a result of these asset 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;&nbsp;
<B><I>$155&nbsp;Million Redeemable Preferred Share Offering and
$100 Million Loan Refinancing. </I></B>On June&nbsp;20, 2005,
our indirect subsidiary Metcalf Energy Center, LLC, consummated
the sale of $155&nbsp;million of 5.5-Year Redeemable Preferred
Shares priced at LIBOR plus 900 basis points. The proceeds will
ultimately be used as permitted by our existing bond indentures.
Concurrent with the closing of the sale of the Redeemable
Preferred Shares, Metcalf entered into a five-year, $100 Million
Senior Term Loan at LIBOR plus 300 basis points. Proceeds from
the Senior Term Loan were used to refinance all outstanding
indebtedness under the existing $100&nbsp;million non-recourse
construction credit facility, and will be used to pay fees and
expenses related to the transaction, and as otherwise permitted
by our existing bond indentures. The Redeemable Preferred Shares
were offered in the United States in a private placement
transaction pursuant to Regulation&nbsp;D under the Securities
Act. The Redeemable Preferred Shares have not been registered
under the Securities Act, and may not be offered or sold in the
United States absent registration or an applicable exemption
from registration requirements.
</DIV>

<DIV align="left" style="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><I>Amendment of Certificate of Incorporation.</I></B> On
June&nbsp;20, 2005, we filed with the Secretary of State of the
State of Delaware an amendment to our Certificate of
Incorporation declassifying our board of directors.
</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>Repurchases of Outstanding Debt</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;&nbsp;
During the second quarter of 2005 (through June&nbsp;15, 2005),
we repurchased in open market transactions $116.3&nbsp;million
of the principal amount of our outstanding debt as listed below:
</DIV>
<FONT face="times new roman,times">

<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="78%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="8%">&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">
    <FONT face="helvetica,arial">10<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT>%
    Senior Notes&nbsp;Due 2006
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,485,000</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">7<FONT style="font-size: 70%"><SUP>5</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%
    Senior Notes&nbsp;Due 2006
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,335,000</FONT></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">
    <FONT face="helvetica,arial">8<FONT style="font-size: 70%"><SUP>3</SUP></FONT>/<FONT style="font-size: 60%">4</FONT>%
    Senior Notes&nbsp;Due 2007
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,000,000</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">7<FONT style="font-size: 70%"><SUP>3</SUP></FONT>/<FONT style="font-size: 60%">4</FONT>%
    Senior Notes&nbsp;Due 2009
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">35,000,000</FONT></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">
    <FONT face="helvetica,arial">8<FONT style="font-size: 70%"><SUP>5</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%
    Senior Notes&nbsp;Due 2010
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37,468,000</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">8<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT>%
    Senior Notes&nbsp;Due 2011
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36,000,000</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <FONT face="helvetica,arial">Total
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">116,288,000</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The securities, which were trading at a discount to par value,
were repurchased for approximately $69.6&nbsp;million in cash.
</DIV>

<DIV align="left" style="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 agreed, subject to the completion of this offering, to
repurchase a total of $338.0&nbsp;million in principal amount of
our
8<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT>%
Senior Notes due 2011, the holders of which are expected to
purchase a portion of the notes offered hereby. We will use
approximately $232.3&nbsp;million of the net proceeds of this
offering to repurchase approximately $313.9&nbsp;million of that
total.
</DIV>
</DIV>

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

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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 addition, we have separately agreed, in a transaction not
subject to the completion of this offering, to issue to certain
of the anticipated purchasers of the notes up to approximately
29,000,000 shares of our common stock pursuant to
Section&nbsp;3(a)(9) of the Securities Act in exchange for
approximately $94,315,000 in aggregate principal amount at
maturity of our outstanding Contingent Convertible Notes due
2014 held by such purchasers. We expect to complete this
transaction shortly after the anticipated closing date of the
sale of the notes.
</DIV>
</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>The Offering</B>
</DIV>

<DIV style="margin-top: 6pt; 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="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
</TR>

<TR>
    <TD valign="top">
    Notes&nbsp;Offered</TD>
    <TD></TD>
    <TD valign="top">
    $650.0 million aggregate principal amount of
    7.75%&nbsp;Contingent Convertible Notes due 2015.</TD>
</TR>

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

<TR>
    <TD valign="top">
    Issuer</TD>
    <TD></TD>
    <TD valign="top">
    Calpine Corporation.</TD>
</TR>

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

<TR>
    <TD valign="top">
    Maturity of the Notes</TD>
    <TD></TD>
    <TD valign="top">
    The notes will mature on June&nbsp;1, 2015.</TD>
</TR>

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

<TR>
    <TD valign="top">
    Ranking</TD>
    <TD></TD>
    <TD valign="top">
    The notes will be our general unsecured obligations and will be
    expressly subordinated in right of payment to all of our
    existing and future secured debt, including debt under our
    secured term loans and our various series of outstanding secured
    senior notes, and to certain designated series of senior
    unsecured notes which were issued prior to January&nbsp;1, 2000.
    Except for such designated series of senior unsecured notes, the
    notes will rank equal in right of payment with all of our
    existing and future senior unsecured obligations, including our
    obligations under our existing convertible notes.</TD>
</TR>

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

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    In addition, because the notes will not be guaranteed by our
    subsidiaries, they will be effectively junior to all
    indebtedness and other liabilities, including trade payables, of
    our subsidiaries. The indenture will permit us and our
    subsidiaries to incur unlimited additional indebtedness other
    than with respect to certain restrictions on liens and sale and
    leaseback transactions.</TD>
</TR>

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

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    As of March&nbsp;31, 2005, on an as adjusted basis as described
    under &#147;Capitalization,&#148; we would have had
    approximately $4.7&nbsp;billion of unsecured debt that would
    rank equally with the notes and approximately $5.3&nbsp;billion
    of debt that would expressly rank senior to the notes
    (approximately $4.5&nbsp;billion of which would have been
    secured). In addition, we would have had approximately
    $12.8&nbsp;billion of indebtedness and liabilities of our
    subsidiaries, including trade payables and excluding deferred
    tax liabilities, to which the notes would be effectively
    subordinated, of which approximately $2.1&nbsp;billion
    constitutes debt of Calpine Canada Energy Finance ULC and
    Calpine Canada Energy Finance&nbsp;II ULC, which is guaranteed
    by us. See &#147;Description of the Notes&nbsp;&#151;
    Subordination.&#148;</TD>
</TR>

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

<TR>
    <TD valign="top">
    Interest</TD>
    <TD></TD>
    <TD valign="top">
    The notes will bear interest at a rate of 7.75% per annum,
    payable semi-annually on June&nbsp;1 and December&nbsp;1 of each
    year, beginning on December 1, 2005. See &#147;Description of
    the Notes&nbsp;&#151;&nbsp;General.&#148;</TD>
</TR>

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

<TR>
    <TD valign="top">
    Conversion Rights</TD>
    <TD></TD>
    <TD valign="top">
    Holders may surrender notes for conversion into cash and shares
    of our common stock prior to the maturity date under the
    following circumstances:</TD>
</TR>

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

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    &#149;&nbsp;at any time following May&nbsp;31, 2014;</TD>
</TR>

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

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    &#149;&nbsp;during any calendar quarter commencing after the
    issuance of the notes, if the closing sale price of our common
    stock for at least 20 trading days in the period</TD>
</TR>

</TABLE>
</DIV>

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    <TD width="71%"></TD>
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</TD>
    <TD></TD>
    <TD valign="top">
    of 30 consecutive trading days ending on the last trading day of
    the calendar quarter preceding the calendar quarter in which the
    conversion occurs is more than 120% of the Conversion Price in
    effect on that 30th trading day;</TD>
</TR>

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

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    &#149;&nbsp;during the five trading day period after any five
    consecutive trading day period in which the average 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 on that day multiplied by
    the Conversion Rate; or</TD>
</TR>

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

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    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    &#149;&nbsp;upon the occurrence of specified corporate
    transactions described under &#147;Description of the
    Notes&nbsp;&#151;&nbsp;Conversion
    Rights&nbsp;&#151;&nbsp;Conversion upon Specified Corporate
    Transactions.&#148;</TD>
</TR>

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

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    Upon the occurrence of the circumstances described above,
    holders may convert any outstanding notes into cash and shares
    of our common stock at an initial &#147;Conversion Price&#148;
    per share of $4.00 which represents an initial &#147;Conversion
    Rate&#148; of 250.0000&nbsp;shares of common stock per $1,000
    principal amount of notes. Subject to certain exceptions
    described in &#147;Description of the Notes,&#148; at the time
    notes are tendered for conversion, the value (the
    &#147;Conversion Value&#148;) of the cash and shares of our
    common stock, if any, to be received by the tendering holder
    will be determined by multiplying the Conversion Rate by the
    Five Day Average Closing Stock Price (as defined below). We will
    deliver the Conversion Value to holders as follows: (1)&nbsp;an
    amount in cash (the &#147;Principal Return&#148;) equal to the
    lesser of (a)&nbsp;the Conversion Value and (b)&nbsp;the
    principal amount of the notes to be converted and, (2)&nbsp;if
    the Conversion Value is greater than the Principal Return, an
    amount in shares (the &#147;Net Shares&#148;), determined as set
    forth below, equal to the difference between the Conversion
    Value and the Principal Return (the &#147;Net Share
    Amount&#148;). We will pay the Principal Return and deliver the
    Net Shares as promptly as practicable after determination of the
    Conversion Value. The number of Net Shares to be paid will be
    determined by dividing the Net Share Amount by the Five Day
    Average Closing Stock Price. The &#147;Five Day Average Closing
    Stock Price&#148; will be the average of the five consecutive
    trading day closing stock prices for our common stock including
    and immediately following the second trading day following the
    day the notes are submitted for conversion.</TD>
</TR>

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

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    Under certain circumstances including if payment of the
    Principal Return were prohibited under any of our outstanding
    indentures, we may, in lieu of delivering the Principal Return
    and Net Shares upon a conversion, elect to redeem the notes
    tendered for conversion at a redemption price equal to the
    Principal Return, which shall be paid</TD>
</TR>

</TABLE>
</DIV>

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</TD>
    <TD></TD>
    <TD valign="top">
    in cash, and a number of shares of our common stock equal to the
    Net Shares. As of the date hereof, the restricted payment
    covenants under the instruments or agreements governing certain
    of our outstanding indebtedness would prevent us from settling
    the notes upon conversion without redeeming the notes and
    treating such redemption as a refinancing. See &#147;Risk
    Factors&#148; and &#147;Description of the
    Notes&nbsp;&#151;&nbsp;Conversion Rights.&#148;</TD>
</TR>

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

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    If you elect to convert your notes in connection with certain
    changes of control, we will adjust the Conversion Price to
    increase the number of common shares you will receive upon
    conversion. See &#147;Description of the
    Notes&nbsp;&#151;&nbsp;Conversion
    Rights&nbsp;&#151;&nbsp;Adjustment for Certain Changes of
    Control.&#148;</TD>
</TR>

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

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    In certain circumstances the Conversion Price will be subject to
    adjustment. See &#147;Description of the
    Notes&nbsp;&#151;&nbsp;Conversion Price Adjustments.&#148; In
    addition, if we declare a cash dividend or distribution to all
    or substantially all of the holders of our common stock, the
    Conversion Price shall be decreased to equal the number
    determined by multiplying the Conversion Price in effect
    immediately prior to the record date for such dividend or
    distribution by the following fraction:</TD>
</TR>

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    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="28%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" valign="top"><FONT face="helvetica,arial">(Pre-Dividend&nbsp;Sale&nbsp;Price&nbsp;&#151;&nbsp;Dividend&nbsp;Adjustment&nbsp;Amount)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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="center" valign="top"><FONT face="helvetica,arial">Pre-Dividend Sale Price</FONT></TD>
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    <TD width="28%"></TD>
    <TD width="1%"></TD>
    <TD width="71%"></TD>
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    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    &#147;Pre-Dividend Sale Price&#148; means the average common
    stock price for the three consecutive trading days ending on the
    trading day immediately preceding the ex-dividend date for such
    dividend or distribution.</TD>
</TR>

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

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    &#147;Dividend Adjustment Amount&#148; means the full amount of
    the dividend or distribution to the extent payable in cash
    applicable to one share of common stock.</TD>
</TR>

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

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    A &#147;trading day&#148; means any regular or abbreviated
    trading day of The New York Stock Exchange.</TD>
</TR>

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

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    Upon conversion, the holder will not receive any additional cash
    payment representing accrued but unpaid interest.</TD>
</TR>

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

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    Any shares of common stock received by holders upon conversion
    of the notes will convey the same rights as all of the other
    outstanding shares of our common stock.</TD>
</TR>

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

<TR>
    <TD valign="top">
</TD>
    <TD></TD>
    <TD valign="top">
    See &#147;Description of the Notes&nbsp;&#151;&nbsp;Conversion
    Rights.&#148;</TD>
</TR>

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

<TR>
    <TD valign="top">
    Change of Control</TD>
    <TD></TD>
    <TD valign="top">
    If we undergo a Change of Control, you will have the option to
    require us to repurchase all of your notes for cash at a
    repurchase price equal to the principal amount plus accrued but
    unpaid interest up to, but not including, the date of repurchase.</TD>
</TR>

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

<TR>
    <TD valign="top">
    Sinking Fund</TD>
    <TD></TD>
    <TD valign="top">
    None.</TD>
</TR>

</TABLE>
</DIV>

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    <TD width="71%"></TD>
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    <TD valign="top">
    Use of Proceeds</TD>
    <TD></TD>
    <TD valign="top">
    We estimate that the net proceeds from the offering of the notes
    will be approximately $634.8&nbsp;million after deducting fees
    and expenses. We intend to use $402.5&nbsp;million of the net
    proceeds to repurchase or redeem all of the outstanding 5.0%
    HIGH TIDES III trust preferred securities issued by our Calpine
    Capital Trust&nbsp;III subsidiary that are not held by us. All
    of the remaining net proceeds of approximately
    $232.3&nbsp;million will be used to repurchase approximately
    $313.9&nbsp;million in aggregate principal amount of our
    8<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT>%&nbsp;Senior
    Notes due 2011 from certain of the anticipated purchasers of the
    notes offered hereby. See
    &#147;Summary&nbsp;&#151;&nbsp;Repurchases of Outstanding
    Debt.&#148;</TD>
</TR>

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

<TR>
    <TD valign="top">
    Book-Entry Form</TD>
    <TD></TD>
    <TD valign="top">
    The notes will be issued in book-entry form and will be
    represented by permanent global certificates deposited with, or
    on behalf of, the Depositary Trust&nbsp;Company, or DTC, and
    registered in the name of a nominee of DTC. Beneficial interests
    in any of the securities will be shown on, and transfers will be
    effected only through, records maintained by DTC or its nominee
    and any such interest may not be exchanged for certificated
    securities, except in limited circumstances. See
    &#147;Description of the Notes&nbsp;&#151;&nbsp;Book-Entry,
    Delivery and Form&#148; and &#147;Description of the
    Notes&nbsp;&#151;&nbsp;Depositary Procedures.&#148;</TD>
</TR>

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

<TR>
    <TD valign="top">
    Listing</TD>
    <TD></TD>
    <TD valign="top">
    Our common stock is listed on The New York Stock Exchange under
    the symbol &#147;CPN.&#148; We do not intend to apply for
    listing of the notes on any national securities exchange or for
    inclusion of the notes in any automated quotation system.</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>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;&nbsp;
Investing in the notes involves substantial risk. See the
&#147;Risk Factors&#148; section of this prospectus supplement,
as well as the risk factors and other risks described in our
Annual Report on Form&nbsp;10-K for the year ended
December&nbsp;31, 2004, and our Quarterly Report on
Form&nbsp;10-Q for the quarter ended March&nbsp;31, 2005, which
are incorporated by reference herein, for a description of
certain of the risks you should consider before investing in the
notes.
</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>Additional 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;&nbsp;
We are a Delaware corporation. Our principal executive office is
located at 50 West San Fernando Street, San Jose, California
95113, and our telephone number is (408)&nbsp;995-5115.
</DIV>
</DIV>

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<!-- link1 "SUMMARY OF CONSOLIDATED FINANCIAL DATA AND OTHER DATA" -->

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<B>SUMMARY OF CONSOLIDATED FINANCIAL DATA AND OTHER DATA</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;&nbsp;
We have derived the following summary historical financial data
from our consolidated financial statements. The income statement
data for the years ended December&nbsp;31, 2002, 2003 and 2004
has been derived from our audited consolidated financial
statements and related notes, which appear in our Annual Report
on Form&nbsp;10-K for the year ended December&nbsp;31, 2004,
which is incorporated by reference in this prospectus
supplement. The income statement data for the three months ended
March&nbsp;31, 2005 and 2004 and the balance sheet data as of
March&nbsp;31, 2005 have been derived from our unaudited
consolidated condensed financial statements and related notes,
which appear in our Quarterly Report on Form&nbsp;10-Q for the
quarter ended March&nbsp;31, 2005, which is incorporated by
reference in this prospectus supplement. In the opinion of
management, all adjustments considered necessary for a fair
presentation have been included in our unaudited consolidated
condensed financial statements. However, the results for the
quarters presented below are not necessarily indicative of the
results that may be expected for the full fiscal year. The
summary of consolidated financial data has not been revised to
reflect the pending disposition of Saltend Cogeneration Company
Limited and Calpine UK Operations Limited. You should read this
information in conjunction with &#147;Management&#146;s
Discussion and Analysis of Financial Condition and Results of
Operations&#148; and our financial statements and the related
notes included in our Annual Report on Form&nbsp;10-K for the
year ended December&nbsp;31, 2004 and our Quarterly Report on
Form&nbsp;10-Q for the quarter ended March&nbsp;31, 2005.
</DIV>
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    <TD>&nbsp;</TD>
    <TD colspan="11">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap><B><FONT face="helvetica,arial">Quarter Ended</FONT></B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="center" nowrap><B><FONT face="helvetica,arial">Year Ended December&nbsp;31,</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</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">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></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="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="center" nowrap><B><FONT face="helvetica,arial">(Dollars in thousands)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Summary Income Statement
    Data:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Revenue
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Electric generation and marketing
    revenue
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,383,501</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,409,931</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,354,833</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,631,590</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,763,423</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Oil and gas production and
    marketing revenue
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">933,980</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,380,058</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,791,454</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">366,872</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">431,116</FONT></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">
    <FONT face="helvetica,arial">Mark to market activities, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21,485</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(26,439</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13,532</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12,518</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,531</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other revenue
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,787</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">107,483</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70,069</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21,312</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21,670</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <FONT face="helvetica,arial">Total revenue
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,349,753</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,871,033</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,229,888</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,032,292</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,212,678</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cost of Revenue
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Electric generation and marketing
    expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,184,452</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,424,501</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,397,182</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">573,081</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">518,252</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Oil and gas operating and marketing
    expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">890,905</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,355,021</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,773,557</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">373,723</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">426,259</FONT></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">
    <FONT face="helvetica,arial">Fuel expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,792,323</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,665,620</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,731,108</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">789,749</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">921,349</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Depreciation, depletion and
    amortization expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">398,889</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">504,383</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">574,200</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">129,407</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">143,228</FONT></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">
    <FONT face="helvetica,arial">Oil and gas impairment
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,399</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,931</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">202,120</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Operating lease expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">111,022</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">112,070</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">105,886</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">27,799</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,777</FONT></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">
    <FONT face="helvetica,arial">Other cost of revenue
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,279</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">42,270</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">90,742</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26,380</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">38,171</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <FONT face="helvetica,arial">Total cost of revenue
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,388,269</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,106,796</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,874,795</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,920,139</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,072,036</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <FONT face="helvetica,arial">Gross profit
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">961,484</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">764,237</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">355,093</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">112,153</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">140,642</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Sales, general and administrative
    expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">186,056</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">216,471</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">239,347</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">54,328</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">57,137</FONT></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">
    <FONT face="helvetica,arial">Equipment cancellation and
    impairment cost
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">404,737</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">64,384</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">42,374</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,360</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(73</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">(Income) loss from unconsolidated
    investments
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(16,552</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(75,804</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13,525</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,185</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(6,064</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Long-term service agreement
    cancellation charge
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,355</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11,334</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Project development expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">66,981</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21,803</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,409</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,717</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,720</FONT></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">
    <FONT face="helvetica,arial">Research and development expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,986</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,630</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18,396</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,816</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,034</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

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

</TR>

</TABLE>
</CENTER>
</FONT>
</DIV>

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

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<FONT face="helvetica,arial">
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; ">

<TR style="font-size: 1pt;">
    <TD width="3%">&nbsp;</TD>
    <TD width="41%">&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>
    <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="11">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap><B><FONT face="helvetica,arial">Quarter Ended</FONT></B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="center" nowrap><B><FONT face="helvetica,arial">Year Ended December&nbsp;31,</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31,</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</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">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></B></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="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>


<TR style="font-size: 8pt;">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="11" align="center" nowrap><B><FONT face="helvetica,arial">(Dollars in thousands)</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income from operations
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">310,276</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">510,398</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,708</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">45,117</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">73,888</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">402,677</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">706,307</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,140,802</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">248,466</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">348,937</FONT></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">
    <FONT face="helvetica,arial">Distributions on trust preferred
    securities
    <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">62,632</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">46,610</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest (income)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(43,086</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(39,716</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(56,412</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(12,060</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(14,331</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Minority interest expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,716</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">27,330</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34,735</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,435</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,614</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">(Income) from repurchase of various
    issuances of debt
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(118,020</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(278,612</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(246,949</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(835</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(21,772</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other (income) expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(34,200</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(46,126</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(149,093</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(18,425</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,980</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <FONT face="helvetica,arial">Income (loss) before provision
    (benefit) for income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37,557</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">94,605</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(717,375</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(180,464</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(253,540</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Provision (benefit) for income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,835</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,495</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(276,549</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(73,232</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(84,809</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <FONT face="helvetica,arial">Income (loss) before discontinued
    operations and cumulative effect of a change in accounting
    principle
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26,722</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">86,110</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(440,826</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(107,232</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(168,731</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Discontinued operations, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">91,896</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14,969</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">198,365</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36,040</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Cumulative effect of a change in
    accounting principle, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">180,943</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <FONT face="helvetica,arial">Net income (loss)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">118,618</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">282,022</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(242,461</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(71,192</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(168,731</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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><FONT face="helvetica,arial">Reconciliation of GAAP cash
    provided from operating activities to EBITDA, as adjusted
    <SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Cash provided by operating
    activities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,068,466</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">290,559</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,895</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(173,230</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(114,592</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Less: Changes in operating assets
    and liabilities, excluding the effects of acquisitions
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">480,193</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(609,840</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(137,614</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(137,745</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(82,826</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Less: Additional adjustments to
    reconcile net income to net cash provided by operating activities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">469,655</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">618,377</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">389,970</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">35,707</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">136,965</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <FONT face="helvetica,arial">GAAP net income (loss)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">118,618</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">282,022</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(242,461</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(71,192</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(168,731</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">(Income) from unconsolidated
    investments
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(16,552</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(75,804</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13,525</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,185</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(6,064</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Distributions from unconsolidated
    investments
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14,117</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">141,627</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29,869</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,140</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,872</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <FONT face="helvetica,arial">Subtotal
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">116,183</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">347,845</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(199,067</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(67,237</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(169,923</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">402,677</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">706,307</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,140,802</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">248,466</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">348,937</FONT></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">
    <FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">3</FONT>
    <FONT face="helvetica,arial">of operating lease expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37,007</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37,357</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">35,295</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,266</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,259</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Distributions on trust preferred
    securities
    <SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">62,632</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">46,610</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></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">
    <FONT face="helvetica,arial">Provision (benefit) for income taxes
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,835</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,495</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(276,549</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(73,232</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(84,809</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Depreciation, depletion and
    amortization expense (&#147;DD&#38;A&#148;)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">423,102</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">568,204</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">840,916</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">151,396</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">159,954</FONT></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">
    <FONT face="helvetica,arial">Interest expense, provision
    (benefit) for income taxes, DD&#38;A and income from
    unconsolidated investments from discontinued operations
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">128,900</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">84,489</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">112,487</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,633</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <FONT face="helvetica,arial">EBITDA, as
    adjusted<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,181,336</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,799,307</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,653,884</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">293,292</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">262,418</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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><FONT face="helvetica,arial">Operating Statistics</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Generating (baseload plus peaking)
    capacity, net (MW) (period ending)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19,056</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22,130</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26,560</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23,179</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26,649</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<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>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

<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 FASB Interpretation No.&nbsp;46
    (revised 2003), our Remarketable Term Income Deferred Equity
    Securities, or HIGH TIDES, were accounted for as a minority
    interest in our balance sheet and reflected as
    &#147;Company-obligated mandatorily redeemable convertible
    preferred securities of subsidiary trusts.&#148; Distributions
    on the HIGH TIDES were reflected in the statements of operations
    as &#147;distributions on trust preferred securities&#148;
    through the third quarter of 2003. Upon the adoption of FIN</TD>
</TR>

</TABLE>
</DIV>

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

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<FONT face="helvetica,arial">

<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></TD>
    <TD align="left">
    <FONT style="font-size: 9pt">46-R, the Calpine Capital Trusts,
    which are the issuers of the HIGH TIDES and our wholly owned
    subsidiaries, were deconsolidated from our financial statements.
    Consequently, effective as of December&nbsp;31, 2003, the HIGH
    TIDES are no longer shown on our consolidated balance sheet.
    Instead, the debentures issued by Calpine to the Calpine Capital
    Trusts in connection with the issuance of the HIGH TIDES are
    shown on our balance sheet as &#147;notes payable to Calpine
    Capital Trusts.&#148; The interest payments on the debentures
    are reflected in our statements of operations as interest
    expense.
    </FONT></TD>
</TR>

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

<TR valign="top">
    <TD><FONT style="font-size: 9pt">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT style="font-size: 9pt">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 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 provision for tax, plus DD&#38;A. The
    interest, tax, DD&#38;A and income from unconsolidated
    investments components of discontinued operations are added back
    in calculating EBITDA, as adjusted.
    </FONT></TD>
</TR>

</TABLE>
<FONT face="times new roman,times">

<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="64%">&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="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
</TR>


<TR style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap><B><FONT face="helvetica,arial">As of March&nbsp;31, 2005</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Actual</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">As Adjusted<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></FONT></B></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="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>


<TR style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap><B><FONT face="helvetica,arial">(Dollars in thousands)</FONT></B></TD>
</TR>


<TR style="font-size: 10pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Summary Balance Sheet
    Data:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">812,612</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">848,022</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes receivable
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">212,411</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">212,411</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Property, plant and equipment, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">20,712,038</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">20,712,038</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">27,579,467</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">27,483,477</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes payable and borrowings under
    lines of credit
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">892,081</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">892,081</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Convertible debentures payable to
    Calpine Capital
    Trust&nbsp;III<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">517,500</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Preferred interests
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">762,190</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">762,190</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Capital lease obligation
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">287,536</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">287,536</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">CCFC I financing
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">785,228</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">785,228</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">CalGen/CCFC&nbsp;II financing
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,395,795</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,395,795</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Construction/project financing
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,104,216</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,223,650</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes offered hereby
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">650,000</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Convertible Senior Notes due 2006
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,311</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,311</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Convertible Notes due 2014
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">623,429</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">623,429</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Convertible Senior Notes due 2023
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">633,775</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">633,775</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Senior notes and term loans
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,140,897</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,711,184</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total
    debt<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18,143,958</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17,966,179</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Minority interests
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">388,499</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">388,499</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Total stockholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,349,855</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,417,472</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3pt; margin-top: 12pt; 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>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 9pt;">

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

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    Adjusted to reflect the net effect of (a)&nbsp;the sale of notes
    offered hereby and the use of the proceeds therefrom,
    (b)&nbsp;the repurchase of our senior notes and (c)&nbsp;draws
    under the Fox, Metcalf, Freeport and Mankato finance facilities.
    The table does not adjust for the pending sale of the Saltend
    Energy Centre, the exchange of shares of our common stock for
    certain of our other outstanding securities pursuant to Section
    3(a)(9)under the Securities Act or the closing of the Metcalf
    refinancing. For more information, see &#147;Use of
    Proceeds&#148; and &#147;Summary&nbsp;&#151; Recent
    Developments.&#148;</TD>
</TR>

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

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    &#147;Notes payable to Calpine Capital Trust&#148; constitutes
    the debentures issued by Calpine to Calpine Capital
    Trust&nbsp;III, our wholly owned subsidiary, in connection with
    the issuance of the HIGH TIDES&nbsp;III by Calpine Capital
    Trust&nbsp;III. As of March&nbsp;31, 2005, the liquidation
    amount outstanding of the HIGH TIDES&nbsp;III was
    $517.5&nbsp;million of which $115.0&nbsp;million was held by
    Calpine. Following consummation of this offering, the HIGH TIDES
    III will be redeemed in full by first redeeming notes payable to
    Calpine Capital Trust III in full; the proceeds of such
    redemption will then immediately be applied by Calpine Capital
    Trust III to the redemption in full of the HIGH TIDES III.</TD>
</TR>

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

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    Additionally, we had operating leases with an aggregate present
    value of future minimum lease payments of $1.2&nbsp;billion.</TD>
</TR>

</TABLE>
</DIV>

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

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<FONT face="helvetica,arial">

<!-- link1 "UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL
STATEMENTS</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;&nbsp;
The following Unaudited Pro Forma Consolidated Condensed
Financial Statements give effect to the pending disposition of
Saltend Cogeneration Company Limited (&#147;SCCL&#148;) and
Calpine UK Operations Limited (&#147;UK&nbsp;OpCo&#148;) to be
accounted for as a discontinued operation in accordance with
Financial Accounting Standards Board (&#147;FASB&#148;)
Statement of Financial Accounting Standards (&#147;SFAS&#148;)
No.&nbsp;144, &#147;Accounting for the Impairment or Disposal of
Long-Lived Assets&#148; (&#147;SFAS&nbsp;No.&nbsp;144&#148;).
The Unaudited Pro Forma Consolidated Condensed Balance Sheet
reflects the pending disposition of SCCL and UK OpCo at
March&nbsp;31, 2005. Such pro forma information is based upon
the historical balance sheet data of Calpine Corporation, SCCL
and UK OpCo as of that date. The Unaudited Pro Forma
Consolidated Condensed Statements of Operations give effect to
the disposition of SCCL and UK OpCo as if the disposition
occurred on January&nbsp;1, 2002. The Unaudited Pro Forma
Consolidated Condensed Financial Statements should be read in
conjunction with Calpine&#146;s Financial Statements and related
Notes included in Calpine Corporation&#146;s Report on
Form&nbsp;10-Q for the quarter ended March&nbsp;31, 2005 and the
Report on Form&nbsp;10-K for the year ended December&nbsp;31,
2004 filed with the SEC and incorporated by reference herein.
</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>Calpine Corporation and Subsidiaries</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>Unaudited Pro Forma Consolidated Condensed Balance
Sheet<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>March&nbsp;31, 2005</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(In thousands, except for per share amounts and unaudited)</B>
</DIV>
<FONT face="times new roman,times">

<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="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="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Actual</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Adjustments</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Pro Forma</FONT></B></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="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</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><FONT face="helvetica,arial">Assets:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <B><FONT face="helvetica,arial">Current assets</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Cash and cash equivalents
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">812,612</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(38,542</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">774,070</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accounts receivable, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,034,141</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(51,295</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">982,846</FONT></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">
    <FONT face="helvetica,arial">Margin deposits and other prepaid
    expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">461,097</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(19,762</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">441,335</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Inventories
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">148,770</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(5,374</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">143,396</FONT></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">
    <FONT face="helvetica,arial">Restricted cash
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">513,753</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">513,753</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Current derivative assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">472,643</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">472,643</FONT></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">
    <FONT face="helvetica,arial">Current assets held for sale
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">114,973</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">114,973</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other current assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">169,068</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">169,068</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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><FONT face="helvetica,arial">Total current assets</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,612,084</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,612,084</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <FONT face="helvetica,arial">Restricted cash, net of current
    portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">194,476</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">194,476</FONT></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">
    <FONT face="helvetica,arial">Notes receivable, net of current
    portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">200,443</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">200,443</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Project development costs
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">152,407</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">152,407</FONT></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">
    <FONT face="helvetica,arial">Unconsolidated investments
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">387,639</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">387,639</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred financing costs
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">423,122</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">423,122</FONT></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">
    <FONT face="helvetica,arial">Prepaid lease, net of current
    portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">431,600</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(12,930</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">418,670</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Property, plant and equipment, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">20,712,038</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,056,269</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19,655,769</FONT></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">
    <FONT face="helvetica,arial">Goodwill
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">45,160</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">45,160</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other intangible assets, net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">72,009</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(4,544</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">67,465</FONT></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">
    <FONT face="helvetica,arial">Long-term derivative assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">658,440</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">658,440</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Long-term assets held for sale
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,077,263</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,077,263</FONT></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">
    <FONT face="helvetica,arial">Other assets
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">690,049</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,520</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">686,529</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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><FONT face="helvetica,arial">Total assets</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">27,579,467</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">27,579,467</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

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

</TR>

</TABLE>
</CENTER>
</FONT>
</DIV>

<P align="center" style="font-size: 10pt;">S-17

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<FONT face="helvetica,arial">
<FONT face="times new roman,times">

<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="53%">&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="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>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Actual</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Adjustments</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Pro Forma</FONT></B></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="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="14">&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="14" align="left" valign="top">
    <B><FONT face="helvetica,arial">Liabilities and
    stockholders&#146; equity:</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Current liabilities</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Accounts payable
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">945,578</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(42,127</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">903,451</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accrued payroll and related expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">65,555</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(291</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">65,264</FONT></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">
    <FONT face="helvetica,arial">Accrued interest payable
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">396,175</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">396,175</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income taxes payable
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">79,163</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">79,163</FONT></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">
    <FONT face="helvetica,arial">Notes payable and borrowings under
    lines of credit, current portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">209,652</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">209,652</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Preferred interests, current
    portion<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">268,794</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">268,794</FONT></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">
    <FONT face="helvetica,arial">Capital lease obligation, current
    portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,780</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,780</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">CCFC I financing, current portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,208</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,208</FONT></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">
    <FONT face="helvetica,arial">Construction/project financing,
    current portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100,773</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100,773</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Senior notes and term loans,
    current portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">922,489</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">922,489</FONT></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">
    <FONT face="helvetica,arial">Current derivative liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">626,125</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(43,291</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">582,834</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Current liabilities held for sale
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">93,169</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">93,169</FONT></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">
    <FONT face="helvetica,arial">Other current liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">287,940</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(7,460</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">280,480</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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><FONT face="helvetica,arial">Total current
    liabilities</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,911,232</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,911,232</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <FONT face="helvetica,arial">Notes payable and borrowings under
    lines of credit, net of current portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">682,429</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">682,429</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Convertible debentures payable to
    Calpine Capital Trust&nbsp;III
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">517,500</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">517,500</FONT></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">
    <FONT face="helvetica,arial">Preferred interests, net of current
    portion<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">493,396</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">493,396</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Capital lease obligation, net of
    current portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">281,756</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">281,756</FONT></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">
    <FONT face="helvetica,arial">CCFC I financing, net of current
    portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">782,020</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">782,020</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">CalGen/ CCFC&nbsp;II financing
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,395,795</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,395,795</FONT></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">
    <FONT face="helvetica,arial">Construction/project financing, net
    of current portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,003,443</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,003,443</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Convertible Senior Notes Due 2006
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,311</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,311</FONT></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">
    <FONT face="helvetica,arial">Convertible Notes Due 2014
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">623,429</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">623,429</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Convertible Senior Notes Due 2023
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">633,775</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">633,775</FONT></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">
    <FONT face="helvetica,arial">Senior notes and term loans, net of
    current portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,218,408</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,218,408</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Deferred income taxes, net of
    current portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">925,365</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(51,725</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">873,640</FONT></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">
    <FONT face="helvetica,arial">Deferred revenue
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">116,041</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">116,041</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Long-term derivative liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">903,824</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(13,006</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">890,818</FONT></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">
    <FONT face="helvetica,arial">Long-term liabilities held for sale
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">82,611</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">82,611</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other liabilities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">351,389</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(17,880</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">333,509</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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><FONT face="helvetica,arial">Total liabilities</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22,841,113</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22,841,113</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <FONT face="helvetica,arial">Minority Interests
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">388,499</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">388,499</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

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

</TR>

</TABLE>
</CENTER>
</FONT>
</DIV>

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

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<FONT face="helvetica,arial">
<FONT face="times new roman,times">

<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="53%">&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="3%">&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>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Actual</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Adjustments</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Pro Forma</FONT></B></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="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</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><FONT face="helvetica,arial">Stockholders&#146;
    equity</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Preferred stock, $.001&nbsp;par
    value per share; authorized 10,000,000&nbsp;shares; none issued
    and outstanding in 2005
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></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">
    <FONT face="helvetica,arial">Common stock, $.001&nbsp;par value
    per share; authorized 2,000,000,000&nbsp;shares; issued and
    outstanding 538,017,458&nbsp;shares in 2005
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">538</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">538</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Additional paid-in capital
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,159,385</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,159,385</FONT></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">
    <FONT face="helvetica,arial">Additional paid-in capital, loaned
    shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">258,100</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">258,100</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Additional paid-in capital,
    returnable shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(258,100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(258,100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Retained earnings
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,157,317</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,157,317</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accumulated other comprehensive
    income
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32,615</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32,615</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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><FONT face="helvetica,arial">Total stockholders&#146;
    equity</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,349,855</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,349,855</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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><FONT face="helvetica,arial">Total liabilities and
    stockholders&#146; equity</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">27,579,467</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">27,579,467</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

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

</TR>

</TABLE>
</CENTER>
</FONT>

<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 Pro Forma Consolidated Condensed Balance Sheet reflects the
    pending disposition of SCCL and UK OpCo at March&nbsp;31, 2005.
    The balances of SCCL and UK OpCo as of March&nbsp;31, 2005 have
    been reclassified as &#147;held for sale&#148; on the Pro Forma
    Consolidated Condensed Balance Sheet. Gross proceeds from the
    sale are expected to be &#163;490&nbsp;million plus an
    adjustment for working capital which was estimated to be
    US$19&nbsp;million as of May&nbsp;28, 2005, the date the Share
    Sale and Purchase Agreement was entered into. Actual sales
    proceeds in U.S.&nbsp;dollars may fluctuate due to exchange rate
    variances and changes in working capital prior to the close of
    the sale, which is expected to occur on July&nbsp;26, 2005.</TD>
</TR>

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

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Includes $260&nbsp;million of Redeemable Preferred Shares due
    July&nbsp;30, 2005. The offerings of the $260&nbsp;million
    Redeemable Preferred Shares due July&nbsp;30, 2005 and the
    two-year, $360&nbsp;million Redeemable Preferred Shares will be
    redeemed using the proceeds of the sale of SCCL and UK OpCo,
    which is currently anticipated to close on July&nbsp;26, 2005.
    Remaining proceeds from the sale will be used as permitted by
    our existing bond indentures.</TD>
</TR>

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

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    Includes $360&nbsp;million of two-year Redeemable Preferred
    Shares. The offerings of the two-year, $360&nbsp;million
    Redeemable Preferred Shares and the $260&nbsp;million Redeemable
    Preferred Shares due July&nbsp;30, 2005 will be redeemed using
    the proceeds of the sale of SCCL and UK OpCo as described in
    Note&nbsp;2.</TD>
</TR>

</TABLE>
</DIV>

<P align="center" style="font-size: 10pt;">S-19

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<FONT face="helvetica,arial">

<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="center" style="font-size: 10pt;">
<B>Unaudited Pro Forma Consolidated Condensed Statement of
Operations<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>For the Three Months Ended March&nbsp;31, 2005</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(In thousands, except for per share amounts)</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8pt; margin-top: 3pt; ">

<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="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="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Actual</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Adjustments<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Pro Forma</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</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="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Revenue:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <B><FONT face="helvetica,arial">Electric generation and
    marketing revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Electricity and steam revenue
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,403,549</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(125,270</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,278,279</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Transmission sales revenue
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,744</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,744</FONT></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">
    <FONT face="helvetica,arial">Sales of purchased power for
    hedging and optimization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">356,130</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(8,720</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">347,410</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Total electric generation and
    marketing revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,763,423</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(133,990</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,629,433</FONT></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><FONT face="helvetica,arial">Oil and gas production and
    marketing revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Oil and gas sales
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,820</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,820</FONT></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">
    <FONT face="helvetica,arial">Sales of purchased gas for hedging
    and optimization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">420,296</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">420,296</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Total oil and gas production and
    marketing revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">431,116</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">431,116</FONT></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><FONT face="helvetica,arial">Mark-to-market activities,
    net</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,531</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,531</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Other revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21,670</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(484</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21,186</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Total revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,212,678</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(134,474</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,078,204</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Cost of revenue:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <B><FONT face="helvetica,arial">Electric generation and
    marketing expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Plant operating expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">195,626</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(13,377</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">182,249</FONT></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">
    <FONT face="helvetica,arial">Transmission purchase expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23,510</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,636</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">20,874</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Royalty expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,329</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,329</FONT></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">
    <FONT face="helvetica,arial">Purchased power expenses for
    hedging and optimization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">288,787</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(7,592</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">281,195</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Total electric generation and
    marketing expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">518,252</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(23,605</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">494,647</FONT></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><FONT face="helvetica,arial">Oil and gas operating and
    marketing expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Oil and gas operating expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13,000</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13,000</FONT></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">
    <FONT face="helvetica,arial">Purchased gas expense for hedging
    and optimization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">413,259</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">413,259</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Total oil and gas operating and
    marketing expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">426,259</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">426,259</FONT></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><FONT face="helvetica,arial">Fuel expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">921,349</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(66,817</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">854,532</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Depreciation, depletion and
    amortization expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">143,228</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(7,398</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">135,830</FONT></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><FONT face="helvetica,arial">Operating lease
    expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,777</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,777</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Other cost of revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">38,171</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">38,171</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Total cost of revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,072,036</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(97,820</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,974,216</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Gross Profit</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">140,642</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(36,654</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">103,988</FONT></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">
    <FONT face="helvetica,arial">(Income) loss from unconsolidated
    investments
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(6,064</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(6,064</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Equipment cancellation and
    impairment cost
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(73</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(73</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Project development expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,720</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,720</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Research and development expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,034</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,034</FONT></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">
    <FONT face="helvetica,arial">Sales, general and administrative
    expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">57,137</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(723</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">56,414</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Income (loss) from
    operations</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">73,888</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(35,931</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37,957</FONT></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">
    <FONT face="helvetica,arial">Interest expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">348,937</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(14,479</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">334,458</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest (income)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(14,331</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">340</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(13,991</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Minority interest expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,614</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,614</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">(Income) from repurchase of various
    issuances of debt
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(21,772</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(21,772</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other expense (income), net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,980</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(9,122</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(5,142</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Income (Loss) before provision
    or benefit for income taxes</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(253,540</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(12,670</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(266,210</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Provision (Benefit) for income
    taxes<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(84,809</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,801</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(88,610</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Income (Loss) from continuing
    operations<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(168,731</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(8,869</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(177,600</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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><FONT face="helvetica,arial">Basic and diluted loss per
    common share:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Weighted average shares of common
    stock outstanding
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">447,599</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">447,599</FONT></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">
    <FONT face="helvetica,arial">Loss from continuing
    operations<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.38</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(0.40</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<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: 2pt; 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: 8pt;">

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

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    The Pro Forma Consolidated Condensed Statement of Operations
    assumes that SCCL and UK OpCo were sold by Calpine on
    January&nbsp;1, 2002. The results of SCCL and UK OpCo have been
    removed from the Pro Forma Consolidated Condensed Statement of
    Operations. The anticipated gain/loss associated with the sales
    transaction is not included within Pro Forma Consolidated
    Condensed Statement of Operations.</TD>
</TR>

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

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    The Pro Forma adjustments in the Pro Forma Consolidated
    Condensed Statement of Operations are tax effected at a rate of
    30%, which represents Calpine&#146;s statutory tax rate in the
    United Kingdom. Actual adjustments to Calpine&#146;s
    Consolidated Financial Statements to reflect this disposition
    may reflect a different effective tax rate.</TD>
</TR>

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

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    Represents income before discontinued operations and cumulative
    effect of a change in accounting principle.</TD>
</TR>

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

<TR valign="top">
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    The Pro Forma adjustments in the Unaudited Pro Forma
    Consolidated Condensed Statement of Operations include certain
    sales, general and administrative expenses allocated to SCCL and
    UK OpCo based on a proportion of base wages. These expenses were
    originally recorded in the accounts of other Calpine
    subsidiaries. Accordingly, these expenses have been included
    within the SCCL and UK&nbsp;OpCo income figures to determine the
    Pro Forma totals. For the three months ended March&nbsp;31,
    2005, these expenses totaled $0.6&nbsp;million. The Pro Forma
    adjustments also include interest expense that we expect to
    allocate to discontinued operations in accordance with Emerging
    Issues Task Force (&#147;EITF&#148;) Issue No.&nbsp;87-24,
    &#147;Allocation of Interest to Discontinued Operations&#148;
    (&#147;EITF Issue No.&nbsp;87-24&#148;). We include 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 Calpine is allocated based on the ratio of 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 Calpine plus the consolidated debt of Calpine,
    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 Calpine.
    For the three months ended March&nbsp;31, 2005, the interest
    expense allocated within the Unaudited Pro Forma Consolidated
    Condensed Statement of Operations is $12.4&nbsp;million.</TD>
</TR>

</TABLE>
</DIV>

<P align="center" style="font-size: 10pt;">S-20

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<FONT face="helvetica,arial">

<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="center" style="font-size: 10pt;">
<B>Unaudited Pro Forma Consolidated Condensed Statement of
Operations<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></B>
</DIV>

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

<DIV align="center" style="font-size: 10pt;">
<B>(In thousands, except for per share amounts)</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8pt; margin-top: 3pt; ">

<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="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&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="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Actual</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Adjustments<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Pro Forma</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</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="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Revenue:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <B><FONT face="helvetica,arial">Electric generation and
    marketing revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Electricity and steam revenue
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,683,063</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(385,244</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,297,819</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Transmission sales revenue
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">20,003</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">20,003</FONT></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">
    <FONT face="helvetica,arial">Sales of purchased power for
    hedging and optimization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,651,767</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(3,775</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,647,992</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Total electric generation and
    marketing revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,354,833</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(389,019</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,965,814</FONT></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><FONT face="helvetica,arial">Oil and gas production and
    marketing revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Oil and gas sales
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">63,153</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">63,153</FONT></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">
    <FONT face="helvetica,arial">Sales of purchased gas for hedging
    and optimization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,728,301</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,728,301</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Total oil and gas production and
    marketing revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,791,454</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,791,454</FONT></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><FONT face="helvetica,arial">Mark-to-market activities,
    net</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13,532</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(127</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13,405</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Other revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70,069</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(880</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">69,189</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Total revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,229,888</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(390,026</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,839,862</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Cost of revenue:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <B><FONT face="helvetica,arial">Electric generation and
    marketing expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Plant operating expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">795,975</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(50,271</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">745,704</FONT></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">
    <FONT face="helvetica,arial">Transmission purchase expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">85,514</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(10,697</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">74,817</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Royalty expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">28,673</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">28,673</FONT></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">
    <FONT face="helvetica,arial">Purchased power expenses for
    hedging and optimization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,487,020</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(4,758</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,482,262</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Total electric generation and
    marketing expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,397,182</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(65,726</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,331,456</FONT></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><FONT face="helvetica,arial">Oil and gas operating and
    marketing expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Oil and gas operating expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">56,843</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">56,843</FONT></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">
    <FONT face="helvetica,arial">Purchased gas expense for hedging
    and optimization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,716,714</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,716,714</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Total oil and gas operating and
    marketing expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,773,557</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,773,557</FONT></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><FONT face="helvetica,arial">Fuel expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,731,108</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(228,279</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,502,829</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Depreciation, depletion and
    amortization expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">574,200</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(28,862</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">545,338</FONT></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><FONT face="helvetica,arial">Oil and gas impairment</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">202,120</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">202,120</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Operating lease
    expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">105,886</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">105,886</FONT></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><FONT face="helvetica,arial">Other cost of revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">90,742</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">90,742</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Total cost of revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,874,795</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(322,867</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,551,928</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Gross Profit</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">355,093</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(67,159</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">287,934</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">(Income) loss from unconsolidated
    investments
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13,525</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13,525</FONT></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">
    <FONT face="helvetica,arial">Equipment cancellation and
    impairment cost
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">42,374</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">42,374</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Long-term service agreement
    cancellation charge
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11,334</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11,334</FONT></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">
    <FONT face="helvetica,arial">Project development expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,409</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,409</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Research and development expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18,396</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18,396</FONT></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">
    <FONT face="helvetica,arial">Sales, general and administrative
    expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">239,347</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,870</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">237,477</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Income (loss) from
    operations</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,708</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(65,289</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(59,581</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,140,802</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(16,384</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,124,418</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Interest (income)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(56,412</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,598</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(54,814</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Minority interest expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34,735</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34,735</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">(Income) from repurchase of various
    issuances of debt
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(246,949</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(246,949</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other expense (income), net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(149,093</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,520</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(124,573</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Income (Loss) before provision
    or (benefit) for income taxes</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(717,375</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(75,023</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(792,398</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Provision (Benefit) for income
    taxes<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(276,549</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(22,507</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(299,056</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Income (Loss) from continuing
    operations<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(440,826</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(52,516</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(493,342</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <FONT face="helvetica,arial">Basic and diluted loss per common
    share:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Weighted average shares of common
    stock outstanding
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">430,775</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">430,775</FONT></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">
    <FONT face="helvetica,arial">Loss from continuing
    operations<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1.02</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1.15</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<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>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 8pt;">

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

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    The Pro Forma Consolidated Condensed Statement of Operations
    assumes that SCCL and UK OpCo were sold by Calpine on
    January&nbsp;1, 2002. The results of SCCL and UK OpCo have been
    removed from the Unaudited Pro Forma Consolidated Condensed
    Statement of Operations. The anticipated gain/loss associated
    with the sales transaction is not included within the Unaudited
    Pro Forma Consolidated Condensed Statement of Operations.</TD>
</TR>

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

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    The Pro Forma adjustments in the Unaudited Pro Forma
    Consolidated Condensed Statement of Operations are tax effected
    at a rate of 30%, which represents Calpine&#146;s statutory tax
    rate in the United Kingdom. Actual adjustments to Calpine&#146;s
    Consolidated Financial Statements to reflect this disposition
    may reflect a different effective tax rate.</TD>
</TR>

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

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    Represents income before discontinued operations and cumulative
    effect of a change in accounting principle.</TD>
</TR>

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

<TR valign="top">
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    The Pro Forma adjustments in the Unaudited Pro Forma
    Consolidated Condensed Statement of Operations include certain
    sales, general and administrative expenses allocated to SCCL and
    UK&nbsp;OpCo based on a proportion of base wages. These expenses
    were originally recorded in the accounts of other Calpine
    subsidiaries. Accordingly, these expenses have been included
    within the SCCL and UK&nbsp;OpCo income figures to determine the
    Pro Forma totals. In 2004, these expenses totaled
    $1.7&nbsp;million. The Pro Forma adjustments also include
    interest expense that we expect to allocate to discontinued
    operations in accordance with EITF Issue No.&nbsp;87-24. We
    include 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 Calpine is allocated based on
    the ratio of 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 Calpine plus the consolidated debt of
    Calpine, 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 Calpine. For 2004, the interest expense allocated
    within the Unaudited Pro Forma Consolidated Condensed Statement
    of Operations is $14.8&nbsp;million.</TD>
</TR>

</TABLE>
</DIV>

<P align="center" style="font-size: 10pt;">S-21

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<FONT face="helvetica,arial">

<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="center" style="font-size: 10pt;">
<B>Unaudited Pro Forma Consolidated Condensed Statement of
Operations<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>Year Ended December&nbsp;31, 2003</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(In thousands, except for per share amounts)</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8pt; margin-top: 3pt; ">

<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="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="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Actual</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Adjustments<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Pro Forma</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</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="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Revenue:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <B><FONT face="helvetica,arial">Electric generation and
    marketing revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Electricity and steam revenue
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,680,397</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(286,936</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,393,461</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Transmission sales revenue
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15,347</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15,347</FONT></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">
    <FONT face="helvetica,arial">Sales of purchased power for
    hedging and optimization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,714,187</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,896</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,712,291</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Total electric generation and
    marketing revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,409,931</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(288,832</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,121,099</FONT></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><FONT face="helvetica,arial">Oil and gas production and
    marketing revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Oil and gas sales
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">59,156</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">59,156</FONT></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">
    <FONT face="helvetica,arial">Sales of purchased gas for hedging
    and optimization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,320,902</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,320,902</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Total oil and gas production and
    marketing revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,380,058</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,380,058</FONT></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><FONT face="helvetica,arial">Mark-to-market activities,
    net</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(26,439</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(26,439</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Other revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">107,483</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(1,246</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">106,237</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Total revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,871,033</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(290,078</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,580,955</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Cost of revenue:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <B><FONT face="helvetica,arial">Electric generation and
    marketing expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Plant operating expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">663,045</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(46,607</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">616,438</FONT></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">
    <FONT face="helvetica,arial">Transmission purchase expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">46,455</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(11,765</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34,690</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Royalty expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,932</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,932</FONT></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">
    <FONT face="helvetica,arial">Purchased power expenses for
    hedging and optimization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,690,069</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(6,781</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,683,288</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Total electric generation and
    marketing expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,424,501</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(65,153</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,359,348</FONT></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><FONT face="helvetica,arial">Oil and gas operating and
    marketing expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Oil and gas operating expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">75,453</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">75,453</FONT></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">
    <FONT face="helvetica,arial">Purchased gas expense for hedging
    and optimization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,279,568</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,279,568</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Total oil and gas operating and
    marketing expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,355,021</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,355,021</FONT></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><FONT face="helvetica,arial">Fuel expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,665,620</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(185,696</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,479,924</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Depreciation, depletion and
    amortization expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">504,383</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(31,511</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">472,872</FONT></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><FONT face="helvetica,arial">Oil and gas impairment</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,931</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,931</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Operating lease
    expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">112,070</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">112,070</FONT></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><FONT face="helvetica,arial">Other cost of revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">42,270</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">42,296</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Total cost of revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,106,796</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(282,334</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,824,462</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Gross Profit</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">764,237</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(7,744</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">756,493</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">(Income) loss from unconsolidated
    investments
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(75,804</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(75,804</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Equipment cancellation and
    impairment cost
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">64,384</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">64,384</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Long-term service agreement
    cancellation charge
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,355</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,355</FONT></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">
    <FONT face="helvetica,arial">Project development expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21,803</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21,803</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Research and development expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,630</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,630</FONT></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">
    <FONT face="helvetica,arial">Sales, general and administrative
    expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">216,471</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,225</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">214,246</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Income from operations</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">510,398</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(5,519</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">504,879</FONT></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">
    <FONT face="helvetica,arial">Interest expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">706,307</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(6,313</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">699,994</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Distributions on trust preferred
    securities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">46,610</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">46,610</FONT></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">
    <FONT face="helvetica,arial">Interest (income)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(39,716</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">425</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(39,291</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Minority interest expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">27,330</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">27,330</FONT></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">
    <FONT face="helvetica,arial">(Income) from repurchase of various
    issuances of debt
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(278,612</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(278,612</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other expense (income), net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(46,126</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(925</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(47,051</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Income (loss) before provision
    or benefit for income taxes</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">94,605</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,294</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">95,899</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Provision (benefit) for income
    taxes<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,495</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">388</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,883</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Income from continuing
    operations<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">86,110</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">906</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">87,016</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <FONT face="helvetica,arial">Basic earnings per common share:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Weighted average shares of common
    stock outstanding
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">390,772</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">390,772</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income from continuing
    operations<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.22</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.22</FONT></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">
    <FONT face="helvetica,arial">Diluted earnings per common share:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Weighted average shares of common
    stock outstanding before dilutive effect of certain convertible
    securities
    <SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">396,219</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">396,219</FONT></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">
    <FONT face="helvetica,arial">Income from continuing
    operations<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.22</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.22</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<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: 2pt; 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: 8pt;">

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

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    The Unaudited Pro Forma Consolidated Condensed Statement of
    Operations assumes that SCCL and UK OpCo were sold by Calpine on
    January&nbsp;1, 2002. The results of SCCL and UK OpCo have been
    removed from the Unaudited Pro Forma Consolidated Condensed
    Statement of Operations. The anticipated gain/loss associated
    with the sales transaction is not included within the Unaudited
    Pro Forma Consolidated Condensed Statement of Operations.</TD>
</TR>

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

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    The Pro Forma adjustments in the Unaudited Pro Forma
    Consolidated Condensed Statement of Operations are tax effected
    at a rate of 30%, which represents Calpine&#146;s statutory tax
    rate in the United Kingdom. Actual adjustments to Calpine&#146;s
    Consolidated Financial Statements to reflect this disposition
    may reflect a different effective tax rate.</TD>
</TR>

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

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    Represents income before discontinued operations and cumulative
    effect of a change in accounting principle.</TD>
</TR>

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

<TR valign="top">
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    The Pro Forma adjustments in the Unaudited Pro Forma
    Consolidated Condensed Statement of Operations include certain
    sales, general and administrative expenses allocated to SCCL and
    UK OpCo based on a proportion of base wages. These expenses were
    originally recorded in the accounts of other Calpine
    subsidiaries. Accordingly, these expenses have been included
    within the SCCL and UK&nbsp;OpCo income figures to determine the
    Pro Forma totals. In 2003, these expenses totaled
    $2.1&nbsp;million. The Pro Forma adjustments also include
    interest expense that we expect to allocate to discontinued
    operations in accordance with EITF Issue No.&nbsp;87-24. We
    include 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 Calpine is allocated based on
    the ratio of 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 Calpine plus the consolidated debt of
    Calpine, 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) debt that can be directly attributed to other operations of
    Calpine. For 2003, the interest expense allocated within the
    Unaudited Pro Forma Consolidated Condensed Statement of
    Operations is $6.3&nbsp;million.</TD>
</TR>

</TABLE>
</DIV>

<P align="center" style="font-size: 10pt;">S-22

</FONT>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="width: 100%; border: 1px solid black; padding: 12px;">

<FONT face="helvetica,arial">

<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="center" style="font-size: 10pt;">
<B>Unaudited Pro Forma Consolidated Condensed Statement of
Operations<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>Year Ended December&nbsp;31, 2002</B>
</DIV>

<DIV align="center" style="font-size: 10pt;">
<B>(In thousands, except for per share amounts)</B>
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 8pt; margin-top: 3pt; ">

<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="4%">&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="8%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Actual</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Adjustments<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Pro Forma</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</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="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Revenue:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <B><FONT face="helvetica,arial">Electric generation and
    marketing revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Electricity and steam revenue
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,237,510</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(205,779</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,031,731</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Sales of purchased power for
    hedging and optimization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,145,991</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,145,989</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Total electric generation and
    marketing revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,383,501</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(205,781</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,177,720</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Oil and gas production and
    marketing revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Oil and gas sales
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">63,514</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">63,514</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Sales of purchased gas for hedging
    and optimization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">870,466</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">870,467</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Total oil and gas production and
    marketing revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">933,980</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">933,981</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Mark-to-market activities,
    net</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21,485</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21,485</FONT></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><FONT face="helvetica,arial">Other revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,787</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(104</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,683</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Total revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,349,753</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(205,884</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,143,869</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Cost of revenue:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <B><FONT face="helvetica,arial">Electric generation and
    marketing expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Plant operating expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">522,906</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(39,740</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">483,166</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Transmission purchase expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25,486</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(10,179</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15,307</FONT></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">
    <FONT face="helvetica,arial">Royalty expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17,615</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17,615</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Purchased power expenses for
    hedging and optimization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,618,445</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,618,445</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Total electric generation and
    marketing expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,184,452</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(49,919</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,134,533</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Oil and gas operating and
    marketing expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Oil and gas operating expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">69,840</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">69,840</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Purchased gas expense for hedging
    and optimization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">821,065</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">821,065</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Total oil and gas operating and
    marketing expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">890,905</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">890,905</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Fuel expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,792,323</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(161,048</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,631,275</FONT></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><FONT face="helvetica,arial">Depreciation, depletion and
    amortization expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">398,889</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(32,082</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">366,807</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Oil and gas impairment</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,399</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,399</FONT></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><FONT face="helvetica,arial">Operating lease
    expense</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">111,022</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">111,022</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Other cost of revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,279</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,279</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Total cost of revenue</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,388,269</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(243,049</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6,145,220</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Gross Profit</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">961,484</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37,165</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">998,649</FONT></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">
    <FONT face="helvetica,arial">(Income) loss from unconsolidated
    investments
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(16,552</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(16,552</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Equipment cancellation and
    impairment cost
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">404,737</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">404,737</FONT></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">
    <FONT face="helvetica,arial">Project development expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">66,981</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">66,981</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Research and development expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,986</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9,986</FONT></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">
    <FONT face="helvetica,arial">Sales, general and administrative
    expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">186,056</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,057</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">183,999</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Income from operations</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">310,276</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">39,222</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">349,498</FONT></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">
    <FONT face="helvetica,arial">Interest expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">402,677</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(5,295</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">397,382</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Distributions on trust preferred
    securities
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">62,632</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">62,632</FONT></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">
    <FONT face="helvetica,arial">Interest (income)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(43,086</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">654</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(42,432</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Minority interest expense
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,716</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,716</FONT></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">
    <FONT face="helvetica,arial">(Income) from repurchase of various
    issuances of debt
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(118,020</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(118,020</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Other expense (income), net
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(34,200</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(2,130</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(36,330</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Income (loss) before provision
    or benefit for income taxes</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37,557</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">45,993</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">83,550</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Provision (benefit) for income
    taxes<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10,835</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13,797</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24,632</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Income (loss) from continuing
    operations<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26,722</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32,196</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">58,918</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 3pt double #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <FONT face="helvetica,arial">Basic earnings per common share:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Weighted average shares of common
    stock outstanding
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">354,822</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">354,822</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Income from continuing
    operations<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.07</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.17</FONT></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">
    <FONT face="helvetica,arial">Diluted earnings per common share:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Weighted average shares of common
    stock outstanding before dilutive effect of certain convertible
    securities
    <SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">362,533</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">362,533</FONT></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">
    <FONT face="helvetica,arial">Income from continuing
    operations<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.07</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.16</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 3pt; margin-top: 4pt; 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: 2pt; 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: 8pt;">

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

<TR valign="top">
    <TD>(1)&nbsp;</TD>
    <TD align="left">
    The Unaudited Pro Forma Consolidated Condensed Statement of
    Operations assumes that SCCL and UK OpCo were sold by Calpine on
    January&nbsp;1, 2002. The results of SCCL and UK OpCo have been
    removed from the Unaudited Pro Forma Consolidated Condensed
    Statement of Operations. The anticipated gain/loss associated
    with the sales transaction is not included within the Unaudited
    Pro Forma Consolidated Condensed Statement of Operations.</TD>
</TR>

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

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    The Pro Forma adjustments in the Unaudited Pro Forma
    Consolidated Condensed Statement of Operations are tax effected
    at a rate of 30%, which represents Calpine&#146;s statutory tax
    rate in the United Kingdom. Actual adjustments to Calpine&#146;s
    Consolidated Financial Statements to reflect this disposition
    may reflect a different effective tax rate.</TD>
</TR>

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

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    Represents income before discontinued operations and cumulative
    effect of a change in accounting principle.</TD>
</TR>

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

<TR valign="top">
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    The Pro Forma adjustments in the Unaudited Pro Forma
    Consolidated Condensed Statement of Operations include certain
    sales, general and administrative expenses allocated to SCCL and
    UK OpCo based on a proportion of base wages. These expenses were
    originally recorded in the accounts of other Calpine
    subsidiaries. Accordingly, these expenses have been included
    within the SCCL and UK&nbsp;OpCo income figures to determine the
    Pro Forma totals. In 2002, these expenses totaled
    $2.1&nbsp;million. The Pro Forma adjustments also include
    interest expense that we expect to allocate to discontinued
    operations in accordance with EITF Issue No.&nbsp;87-24. We
    include 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 Calpine is allocated based on
    the ratio of 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 Calpine plus the consolidated debt of
    Calpine, 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 Calpine. For 2002, the interest expense allocated
    within the Unaudited Pro Forma Consolidated Condensed Statement
    of Operations is $5.1&nbsp;million.</TD>
</TR>

</TABLE>
</DIV>

<P align="center" style="font-size: 10pt;">S-23

</FONT>

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

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
<A name='104'></A>
</DIV>

<!-- link1 "RISK FACTORS" -->

<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: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I>Investing in the notes involves risk. Before making an
investment decision, you should carefully consider the following
risks, as well as other information contained or incorporated by
reference in this prospectus supplement, including the risk
factors described in our Annual Report on Form&nbsp;10-K for the
year ended December&nbsp;31, 2004, and the risks described in
our Quarterly Report on Form&nbsp;10-Q for the quarter ended
March&nbsp;31, 2005. Any of the risks described could materially
adversely affect our business, financial condition or results of
operations. You could lose all or part of your investment if any
of the risks and uncertainties described actually occurs.</I>
</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>Risks Relating to the Notes</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;&nbsp;
<B><I>To service our indebtedness and other potential liquidity
requirements, including our obligations under these notes, we
will require a significant amount of cash. Our cash requirements
(including our refinancing obligations) are expected to exceed
our unrestricted cash on hand and cash from operations for the
next twelve months. Our ability to generate cash depends on many
factors beyond our control. </I></B>Our ability to make payments
on and to refinance our indebtedness, including these notes, and
to fund planned capital expenditures and research and
development efforts will depend on our ability to generate cash
in the future. This, to a certain extent, is subject to industry
conditions, as well as general economic, financial, competitive,
legislative, regulatory and other factors that are beyond our
control. We may not be able to generate sufficient cash to meet
all of our commitments, including our obligations under these
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;&nbsp;
Satisfying all obligations under our outstanding indebtedness,
and funding anticipated capital expenditures and working capital
requirements for the next twelve months presents us with several
challenges over the near term 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 of certain of our assets, and
whether we will have sufficient liquidity will depend in part on
the success of that program. See
&#147;Summary&nbsp;&#151;&nbsp;Recent
Developments&nbsp;&#151;&nbsp;Strategic Initiative to Accelerate
Debt Reduction and Increase Cash Flow.&#148; No assurance can be
given that our liquidity-enhancing program will be successful.
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, including the notes
offered hereby. 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. See the remaining risk factors set
forth under &#147;&#151; Capital Resources; Liquidity&#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;&nbsp;
<B><I>Despite current indebtedness levels, we and our
subsidiaries may still be able to incur substantially more debt,
some of which may be secured. This could further increase the
risks associated with our already substantial leverage.
</I></B>The indenture governing the notes will provide that we
may incur substantial additional indebtedness in the future,
which may rank equal or senior in right of payment to the notes.
Under certain circumstances, we may also be permitted to incur
additional secured debt that would be senior in right of payment
to the notes. The indenture governing the notes will also permit
unlimited additional borrowings by our subsidiaries that will be
effectively senior to the notes. We expect to incur substantial
additional debt in the future and currently anticipate a number
of additional financing transactions during the
</DIV>

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<DIV align="left" style="font-size: 10pt;">
next several months. If new debt 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;&nbsp;
<B><I>The notes will be expressly subordinated to all of our
secured indebtedness and certain of our senior unsecured
indebtedness, and will be effectively subordinated to other
liabilities of our subsidiaries and other affiliates.</I></B>
The notes will be subordinated in right of payment to all of our
existing and future secured indebtedness and to certain
designated series of senior unsecured notes which were issued
prior to January&nbsp;1, 2000. This means that we must make
payments on all of such indebtedness before we can make payments
on the notes. As of March&nbsp;31, 2005, on an as adjusted basis
as set forth under &#147;Capitalization,&#148; we would have had
approximately $5.3&nbsp;billion of indebtedness that would
expressly rank senior to the notes, approximately
$4.5&nbsp;billion of which was secured. If we cannot make all
payments on such indebtedness when due, then we will not be able
to make payments on the notes. The indenture governing the notes
permits us to incur an unlimited amount of additional debt,
which may be secured, to finance capital expenditures and for
other 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;&nbsp;
The notes will rank pari passu in right of payment with all of
our senior unsecured obligations, except for certain designated
series of senior unsecured notes as described above. However, in
the event of bankruptcy, liquidation, workout or other
reorganization of the Company, some or all of any distribution
to holders of the notes could be required to be paid over to
holders of the indebtedness to which the notes are expressly
subordinated. Even if the collateral securing the secured
indebtedness is sufficient to pay the secured indebtedness in
full, holders of the notes may be required to pay some or all of
any distribution to holders of the designated series of senior
unsecured notes to which the notes are expressly subordinated.
Holders of our other senior unsecured notes, which are not
similarly subordinated (other than holders of our Contingent
Convertible Notes due 2014, which are expressly subordinated to
all of our secured debt), would not be similarly obligated to
pay over a portion of any distribution to them. The indenture
governing the notes will permit us to incur an unlimited amount
of additional unsecured debt that would rank pari passu with the
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;&nbsp;
In addition, substantially 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 on and principal of these 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 other obligations, including operating expenses,
lease payments and reserves.
</DIV>

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None of our subsidiaries or affiliates will guarantee these
notes. Because our subsidiaries and other affiliates are
separate and distinct legal entities, they will have no
obligation to pay any amounts due on these notes. We will also
be 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, the holders
of these notes will be effectively subordinated to all present
and future debts and other liabilities (including trade
payables) of our subsidiaries and other affiliates upon their
liquidation or reorganization.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of March&nbsp;31, 2005, on an as adjusted basis as set forth
under the heading &#147;Capitalization,&#148; our subsidiaries
had approximately $12.8&nbsp;billion of structurally senior
indebtedness and other liabilities (including trade payables and
excluding deferred tax liabilities). The indenture governing the
notes permits our subsidiaries to incur an unlimited amount of
additional debt for construction, project development and other
purposes. All future financing of our subsidiaries will be
effectively senior to these notes. See also
&#147;&#151;&nbsp;Capital Resources;
Liquidity&nbsp;&#151;&nbsp;Our senior notes and our other senior
debt, as well as the notes offered hereby, 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.&#148;
</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;&nbsp;
<B><I>If an active trading market does not develop for these
notes you may not be able to resell them.</I></B> As we do not
intend to apply to list the notes for trading on any national
securities exchange or to include the notes in any automated
quotation system, we cannot assure you that an active trading
market will develop for the notes. If no active trading market
develops, you may not be able to resell your notes at their fair
market value or at all. We have been informed by the underwriter
that it currently intends to make a market for the notes after
this offering is completed. However, the underwriter may cease
its market-making at any time. In addition, such market-making
activity will be subject to the limits imposed by the Securities
Act and the Securities Exchange Act. Further, the liquidity of
and trading market for the notes may be adversely affected by
declines and volatility in the market for high yield securities
generally. Historically, the market for non-investment grade
debt has been subject to disruptions that have caused
substantial volatility in the prices of securities similar to
the notes. Future trading prices of the notes may also fluctuate
significantly depending on factors including, among other
things, prevailing interest rates, our operating results, our
prospects and the prospects of companies in the industry
generally and changes in perceptions of our creditworthiness.
There can be no assurance that the market for these notes will
not be subject to the above disruptions and fluctuations, which
may have an adverse effect on the holders of the 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;&nbsp;
<B><I>We may not have the ability to raise the funds necessary
to purchase, or may otherwise be restricted from purchasing, the
notes if a change in control event triggers a requirement for us
to purchase the notes.</I></B> Upon a change in control as
defined in the indenture, we will be required to offer to
repurchase all of the notes then outstanding for cash at a
repurchase price equal to the principal amount plus accrued but
unpaid interest up to but not including the date of repurchase.
Since the events that constitute a change in control under the
indenture will also constitute a change in control under certain
of our other outstanding debt, upon each occurrence, we will be
required to offer to repurchase such other debt then
outstanding. If a change in control under our outstanding debt
(including the notes) containing a change in control provision
requiring us to repurchase, or causing a default under, such
debt were to occur, as of March&nbsp;31, 2005, on an as adjusted
basis as described under &#147;Capitalization,&#148; we could be
required to repay up to an aggregate principal amount of
approximately $10.4&nbsp;billion (including the notes) plus
accrued and unpaid interest thereon. If any of our debt were
accelerated in connection with a change of control, it could
cause defaults under our other debt obligations. We may not have
the financial resources available, or may be unable to raise the
funds necessary, to repay all of our debt that could become
payable upon a change in control and to repurchase all of the
notes. See also &#147;&#151;&nbsp;Capital Resources;
Liquidity&nbsp;&#151;&nbsp;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.&#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;&nbsp;
<B><I>Upon conversion of the notes, you may receive less than
expected because the value of our common stock may decline
between the day that you exercise your conversion right and the
day the value of your shares is determined or because of the
maximum number of shares deliverable.</I></B> The conversion
value that you will receive upon conversion of your notes is in
part determined by the average of the closing price per share of
our common stock for the five trading days following the second
trading day after which the notes are tendered for conversion.
Accordingly, if the price of our common stock decreases after
you tender your notes for conversion, the conversion value you
receive will be adversely affected.
</DIV>

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<B><I>We may not have sufficient funds to pay the Principal
Return or the principal due at maturity on the notes.</I></B>
Upon conversion of the notes, and at maturity if not converted,
we will be required to pay the Principal Return, or the
principal due at maturity, as applicable, on such notes. See
&#147;Description of the Notes.&#148; If a significant number of
holders were to tender their notes for conversion at any given
time, we may not have the financial resources available to pay
the Principal Return or principal due at maturity on all such
notes tendered for conversion.
</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;&nbsp;
In addition, under the terms of our outstanding indebtedness, we
are restricted from making any payments on any indebtedness that
is contractually subordinated to such indebtedness, except for
payments of interest or payments of principal at the maturity
thereof, unless we maintain specified ratios of consolidated
cash flow to fixed charges. Currently, we do not satisfy these
ratios, and we cannot guarantee you that we will be able to
satisfy these ratios in the future. Since the notes are
contractually subordinated to such indebtedness, if you tender
your notes for conversion prior to the maturity date, we may be
restricted under the terms of such indebtedness from paying the
Principal Return on your notes. Although we may, at our option,
choose to redeem your notes if you tender your notes for
conversion prior to their maturity, we may not have the ability
to raise the funds necessary to redeem your notes. See
&#147;&#151; Capital Resources; Liquidity&nbsp;&#151;&nbsp;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.&#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;&nbsp;
<B><I>Before conversion, holders of the notes will not be
entitled to any stockholder rights, but will be subject to all
changes affecting our shares.</I></B> If you hold notes, you
will not be entitled to any rights with respect to shares of our
common stock, including voting rights and rights to receive
dividends or other distributions. However, the common stock you
receive upon conversion of your notes will be subject to all
changes affecting our common stock. Except for limited cases
under the adjustments to the conversion price, you will only be
entitled to rights that we may grant with respect to shares of
our common stock if and when we deliver shares to you upon your
election to convert your notes into shares. For example, if we
seek stockholder approval for a potential merger, or a proposed
amendment to our certificate of incorporation or by-laws that
requires such stockholder approval, holders of notes will not be
entitled to vote.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I>Future issuances of our securities could dilute your
ownership.</I></B> A substantial number of shares of our common
stock are subject to stock options, and these notes and our
other outstanding series of convertible notes may be converted
into shares of common stock. As of March&nbsp;31, 2005, there
were 2,043,030 shares of our common stock underlying vested
stock options eligible for sale and shares to be issued under
our 2000 Employee Stock Purchase Plan, or ESPP, and there were
an additional 9,338,193 shares of our common stock issuable upon
conversion of our other outstanding convertible securities
(which includes the outstanding HIGH TIDES III and our remaining
outstanding 4% convertible notes due 2006; it also includes our
two outstanding series of contingent convertible notes, each of
which, like the notes offered hereby, if converted at
March&nbsp;31, 2005 prices for our common stock would result in
no shares being issued but, if the price of our common stock
rises above the applicable conversion price for each series,
could result in a substantial number of additional shares of
common stock being issuable upon conversion). As of
March&nbsp;31, 2005, on an as adjusted basis that assumes that
all of the HIGH TIDES III will be repurchased or redeemed
following the issuance of the notes offered hereby, there would
have been 72,643&nbsp;shares of our common stock issuable upon
conversion of our outstanding convertible securities (including
our remaining outstanding 4% convertible notes due 2006; it also
includes our two series of contingent convertible notes, which
as described above would not have resulted in any shares being
issued if converted at the March&nbsp;31, 2005 prices for our
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;&nbsp;
We may also decide to raise additional funds through public or
private debt or equity financing to fund our operations. If we
raise funds by issuing equity securities, the percentage
ownership of current stockholders will be reduced and the new
equity securities may have rights prior to those of the common
stock issuable upon conversion of the notes. We cannot predict
the effect, if any, that future sales of our common stock, other
equity securities or securities convertible into our common
stock or other equity securities (including the notes offered
hereby) or the availability of any of the foregoing for future
sale, will have on the market price of our common stock or
notes. Sales of substantial amounts of our common stock
(including shares issued upon the exercise of stock options or
warrants or the conversion of the notes or any
</DIV>

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<DIV align="left" style="font-size: 10pt;">
other convertible securities outstanding now or in the future),
or the perception that such sales could occur, may adversely
affect prevailing market prices for our common stock and 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;&nbsp;
<B><I>The effect of the issuance of our shares upon conversion
of the notes may lower the market price of our common stock,
which may prevent you from exercising your conversion option on
the notes.</I></B> The effect of the increase in the number of
shares of our common stock issued or issuable upon conversion of
the notes could have a negative effect on the market price of
our common stock. Because your right to convert your notes into
cash and shares of our common stock depends, in part, on the
market price of our common stock, you may not be able to convert
your notes or may receive fewer shares upon conversion. The
market price of our common stock also could be negatively
affected by short sales of our common stock by the purchasers of
the notes to hedge investments in the 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;&nbsp;
<B><I>Accounting rules may require us to treat the notes as a
derivative and would require us to include the effects of the
conversion of the notes (if dilutive) in our earnings per share,
which could significantly impact our earnings per share.
</I></B>As of March&nbsp;31, 2005, we had outstanding
$1.3&nbsp;billion of contingent convertible notes in addition to
the notes offered hereby. Accounting rules require certain
conversion provisions of contingent convertible notes, such as
the notes offered hereby, to be separated from the debt
agreements in which the conversion features are contained and
accounted for as a derivative instrument, and therefore
reflected in our financial statements based upon the fair market
value of the derivative. Due to our current stock price and the
number of shares into which such contingent convertible notes
would currently convert, the conversion provisions in our
contingent convertible notes are not considered a derivative
instrument and/or have no significant value. However,
significant changes in the fair value of these provisions would
be required to be reflected in our 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;&nbsp;
Also, our earnings per share may be significantly impacted due
to the issuance of our contingently convertible instruments.
EITF Issue No.&nbsp;04-08, &#147;The Effect of Contingently
Convertible Debt on Diluted Earnings per Share&#148; 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 it is dilutive,
regardless of whether the price trigger had been met.
</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>Risks Relating to Our Common Stock</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;&nbsp;
<B><I>The price of our common stock is volatile.</I></B> 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>

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    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></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: 3pt">&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: 3pt">&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: 3pt">&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: 3pt">&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>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    issuances, including through 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, such as the offering of the notes hereby, relating
    to the outstanding HIGH TIDES 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>

</TABLE>

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    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
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<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    changes in analysts&#146; recommendations or projections; 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;&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="left" style="font-size: 10pt; margin-top: 9pt; 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;&nbsp;
<B><I>We must meet ongoing debt obligations. </I></B>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 March&nbsp;31, 2005, on an as adjusted basis as set forth
in the summary balance sheet under &#147;Summary&#151;Summary of
Consolidated Financial Data and Other Data,&#148; our total
consolidated funded debt was $18.0&nbsp;billion, our total
consolidated assets were $27.5&nbsp;billion and our
stockholders&#146; equity was $4.4&nbsp;billion. Whether we will
be able to meet our debt service obligations and repay, extend,
or refinance our outstanding indebtedness will depend primarily
upon the operational performance of our power generation
facilities and of our oil and natural gas properties to the
extent we continue to own them (see
&#147;Summary&nbsp;&#151;&nbsp;Recent
Developments&nbsp;&#151;&nbsp;Potential Sale of Certain Oil and
Natural Gas Assets&#148; and
&#147;Summary&nbsp;&#151;&nbsp;Recent
Developments&nbsp;&#151;&nbsp;Strategic Initiative to Accelerate
Debt Reduction and Increase Cash Flow&#148;), movements in
electric and natural gas prices over time, our marketing and
risk management activities and our ability to successfully
implement our strategic initiative to increase liquidity and
reduce debt, 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;&nbsp;
This high level of indebtedness has important consequences,
including:
</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="1%"></TD>
    <TD width="95%"></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: 3pt">&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: 3pt">&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: 3pt">&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: 3pt">&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; 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">
    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;&nbsp;
<B><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></B> 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: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></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: 3pt">&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: 3pt">&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: 3pt">&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: 3pt">&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: 3pt">&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>

</TABLE>

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<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></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: 3pt">&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>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    engage in certain business activities; 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">
    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;&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: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;"></DIV>

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<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></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, such as the notes
    offered hereby, 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
    March&nbsp;31, 2005, such interest coverage ratio was below
    1.75:1.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&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
    incurred in reliance on provisions in certain of our existing
    indentures pursuant to which we are able to incur indebtedness
    if, after giving effect to the incurrence and the repayment of
    other indebtedness with the proceeds therefrom, our interest
    coverage ratio (as defined in those indentures) is greater than
    2:1. In order to satisfy the interest coverage ratio requirement
    in connection with the 2004 issuance, the proceeds are required
    to be used to repurchase or redeem other existing indebtedness.
    While we completed a substantial 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 and expect to do so as soon as practicable. 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 estimate that, as of
    March&nbsp;31, 2005, as adjusted for market conditions and
    financial covenant calculations, we would be required to spend
    approximately $294.0&nbsp;million on additional repurchases in
    order to fully satisfy this requirement. This amount has been
    classified as Senior Notes, current portion, on our Consolidated
    Condensed Balance Sheet as of March 31, 2005. Subsequent to
    March&nbsp;31, 2005, we satisfied a portion of such requirement
    such that, as of June&nbsp;1, 2005, as adjusted as described
    above, we would be required to spend approximately
    $211.0&nbsp;million on additional repurchases.</TD>
</TR>

<TR>
    <TD style="font-size: 3pt">&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
    subsequent to March&nbsp;31, 2005, 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
    by our Calpine (Jersey) Limited subsidiary on October&nbsp;26,
    2004 and approximately $180.0&nbsp;million of the net proceeds
    of the</TD>
</TR>

</TABLE>

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<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD></TD>
    <TD align="left">
    $260.0&nbsp;million Redeemable Preferred Shares issued by our
    Calpine European Funding (Jersey) Limited subsidiary on
    January&nbsp;31, 2005, to repurchase or repay certain subsidiary
    indebtedness. Accordingly, $430.0&nbsp;million of long-term debt
    has been reclassified as Senior Notes, current portion, on our
    Consolidated Condensed Balance Sheet as of March&nbsp;31, 2005.
    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. In addition, the net proceeds from the sale
    of the Saltend Energy Centre, after repayment of the two
    outstanding series of Redeemable Preferred Shares, as well as
    the proceeds of the offering by Metcalf of Redeemable Preferred
    Shares, will similarly be required to be used within
    365&nbsp;days of the applicable closing date to make capital
    expenditures or to repurchase or repay certain subsidiary
    indebtedness. We expect that the proceeds of the sale of our
    remaining United States oil and natural gas assets, if any such
    sale is consummated, will be used as described above under
    &#147;Summary&nbsp;&#151;&nbsp;Recent
    Developments&nbsp;&#151;&nbsp;Potential Sale of Certain Oil and
    Natural Gas Assets&#148; and &#147;&#151;&nbsp;Tender Offer for
    First Priority Notes.&#148;</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;&nbsp;
In addition: (a)&nbsp;if Calpine Corporation&#146;s ownership
changes, as of March&nbsp;31, 2005, on an as adjusted basis as
described under &#147;Capitalization,&#148; the indentures and
other instruments governing approximately $10.4&nbsp;billion of
our outstanding notes (including the notes offered hereby) and
term loans may require us to make an offer to purchase those
notes and term loans, (b)&nbsp;pursuant to the terms of the
indentures under which our contingent convertible notes were
issued, and the terms of the indenture under which the notes
offered hereby are to be 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 and the notes offered hereby, 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 restricted from purchasing those 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;&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;&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, including the notes offered hereby. 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
</DIV>

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<DIV align="left" style="font-size: 10pt;">
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;&nbsp;
<B><I>We must either repay or refinance our debt maturing in
2005 and 2006.</I></B> 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 2005, 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;&nbsp;
In 2005, the following payments will be due on our outstanding
debt as of March&nbsp;31, 2005: (i) $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>%
Senior Notes&nbsp;Due 2005, (ii) $74.0&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)
$260.0&nbsp;million in Redeemable Preferred Shares issued by our
subsidiary Calpine European Funding (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>%
Senior Notes&nbsp;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>%
Senior Notes&nbsp;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 March&nbsp;31, 2005, we have approximately
$136.0&nbsp;million and $161.3&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, as of March&nbsp;31,
2005, we are also required to repurchase or redeem approximately
$724&nbsp;million of indebtedness (current estimate) in the
aggregate pursuant to our indentures, approximately
$543.0&nbsp;million and $181.0&nbsp;million which we expect will
be repurchased or redeemed during 2005 and 2006, respectively.
See &#147;&#151; 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.&#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;&nbsp;
In addition, our $517.5&nbsp;million of outstanding HIGH TIDES
III (of which $115.0&nbsp;million have been repurchased and are
currently held by us) are scheduled to be remarketed during July
2005, which would cause certain terms thereof to be reset on
August&nbsp;1, 2005. We currently anticipate repurchasing or
redeeming all of the outstanding HIGH TIDES III not held by us
prior to the remarketing with the proceeds from the issuance of
the notes offered hereby. In the event that any HIGH TIDES III
are not repurchased or redeemed by the scheduled remarketing
date, such remaining HIGH TIDES III will be remarketed and, if
the remarketing fails, will remain outstanding as convertible
securities at a term rate equal to the treasury rate plus 6% 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 final failed remarketing date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&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. See
&#147;Summary&nbsp;&#151; Recent Developments&nbsp;&#151;
Strategic Initiative to Accelerate Debt Reduction and Increase
Cash Flow.&#148;
</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;&nbsp;
<B><I>We may not have sufficient cash to service our
indebtedness and other liquidity requirements.</I></B> 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 of certain of our assets. See &#147;Summary&nbsp;&#151;
Recent Developments&nbsp;&#151; Strategic Initiative to
Accelerate Debt Reduction and Increase Cash Flow,&#148; and
&#147;&#151;&nbsp;Potential Sale of Certain Oil and Natural Gas
Assets.&#148; 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 the near term and the future. 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>

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<B><I>We may be unable to secure additional financing in the
future. </I></B>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>

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<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></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; 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;&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
March&nbsp;31, 2005, we had approximately $18.1&nbsp;billion of
total consolidated funded debt, consisting of $5.3&nbsp;billion
of secured construction/project financing (including the Calpine
Construction Finance Company, L.P. (&#147;CCFC&nbsp;I&#148;) and
Calpine Generating Company, LLC (&#147;CalGen,&#148; formerly
Calpine Construction Finance Company II, LLC
(&#147;CCFC&nbsp;II&#148;)) financings described below),
$0.3&nbsp;billion of capital lease obligations,
$9.1&nbsp;billion in senior notes and institutional term loans,
$1.3&nbsp;billion in convertible senior notes, $0.8&nbsp;billion
in preferred interests,
</DIV>

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$0.5&nbsp;billion of HIGH TIDES III and $0.9&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
$1.2&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 associated with our substantial leverage that we now face
could intensify.
</DIV>

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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;&nbsp;
<B><I>Our credit ratings have been downgraded and could be
downgraded further.</I></B> On May&nbsp;9, 2005, Standard &#38;
Poor&#146;s lowered its corporate credit rating on Calpine
Corporation to single B- from single B. The outlook remains
negative. In addition, the ratings on Calpine&#146;s debt and
the ratings on the debt of its subsidiaries were also lowered by
one notch, with a few exceptions. The ratings for the following
debt issues remained unchanged: the BBB- SPUR rating on Gilroy
Energy Center bonds, the BB- rating on the Rocky Mountain Energy
Center and the Riverside Energy Center loans, the CCC+ rating on
the third lien debt of CalGen and the BBB rating on the PCF
bonds.
</DIV>

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On May&nbsp;12, 2005, Moody&#146;s Investor Service lowered its
senior implied issuer rating on Calpine Corporation to B3 from
B2. The outlook remains negative. In addition, the ratings on
Calpine&#146;s debt and the ratings on the debt of its
subsidiaries were also lowered by two notches, with a few
exceptions, including the ratings for CalGen debt (which were
lowered one notch as follows: its first priority senior secured
revolving credit and term loan facilities were lowered to B2
from B1, its second priority term loans and floating rate notes
lowered to B3 from B2, and its third priority term loans and
floating rate notes lowered to Caa1 from B3), and the ratings
for the pass through certificates issued by each of South Point
Energy Center, LLC, Broad River Energy, LLC, and RockGen Energy
Center, LLC, which were also lowered to B3 from B2. Ratings for
the following debt issues were affirmed with the outlook changed
to negative from stable: Rocky Mountain Energy Center and the
Riverside Energy Center at Ba3. The ratings for the following
debt issues remain unchanged: the Gilroy Energy Center, LLC
senior secured notes at Baa3, and the PCF senior secured notes
at Baa2.
</DIV>

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On October&nbsp;4, 2004, Fitch Ratings 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.
On May&nbsp;25, 2005 following the announcement of our strategic
plan to accelerate the $3&nbsp;billion debt reduction target to
year-end, Fitch Ratings placed the credit ratings of Calpine
Corporation on &#147;rating watch evolving,&#148; which means
that Fitch may lower, maintain, or raise their ratings on
Calpine&#146;s debt securities in the near-term.
</DIV>

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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
</DIV>

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<DIV align="left" style="font-size: 10pt;">
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;&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. On May&nbsp;25, 2005, we announced, among
other things, that we are in discussions with a leading
financial institution to form a partnership that we anticipate
would lower our collateral requirements. See
&#147;Summary&nbsp;&#151;&nbsp;Recent
Developments&nbsp;&#151;&nbsp;Strategic Initiative to Accelerate
Debt Reduction and Increase Cash Flow.&#148; Such alternative
arrangements could, however, also add to our cost of doing
business.
</DIV>

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<B><I>Our ability to repay our debt depends upon the performance
of our subsidiaries.</I></B> 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>

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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>

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<B><I>Our senior notes and our other senior debt, as well as the
notes offered hereby, 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></B> 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
</DIV>

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<DIV align="left" style="font-size: 10pt;">
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,
including the notes offered hereby, 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
March&nbsp;31, 2005, our subsidiaries had $5.3&nbsp;billion of
secured construction/project financing (including the CCFC I and
CalGen 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,
including the notes offered hereby.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, our unsecured notes, including the notes offered
hereby, 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 First Priority Notes and our
$3.7&nbsp;billion second-priority senior secured term loans and
notes. As described above, we have commenced a tender offer for
our First Priority Notes. See &#147;Summary&nbsp;&#151; Recent
Developments&nbsp;&#151; Tender Offer for First Priority
Notes.&#148; The First Priority Notes and second-priority senior
secured 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 $785.2&nbsp;million of CCFC&nbsp;I
secured institutional term loans and notes as of March&nbsp;31,
2005 are secured by the assets and contracts associated with the
seven natural gas-fired electric generating facilities owned by
CCFC&nbsp;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&nbsp;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&nbsp;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 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;&nbsp;
<B><I>Revenue may be reduced significantly upon expiration or
termination of our PSAs.</I></B> Some of the electricity we
generate from our existing portfolio is sold under long-term
power sales agreements (&#147;PSAs&#148;) that expire at various
times. We also sell power under short to intermediate term (one
to five year) PSAs. 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>

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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.
Values for our long-term commodity contracts are calculated
using discounted cash flows derived as the difference between
contractually based cash flows and the cash flows to buy or sell
similar amounts of the commodity on at market terms. Inherent in
these valuations are significant assumptions regarding future
price curves, correlations and volatilities, as applicable.
Because our power sales contracts are marked to market, the
aggregate value of the contracts noted above could decrease in
response to changes in the market. 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
</DIV>

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<DIV align="left" style="font-size: 10pt;">
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 Pacific Gas and
Electric Company, or 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>

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<B><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></B> 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. In the three months ended March&nbsp;31, 2005 and 2004, we
recognized $3.5&nbsp;million in mark-to-market losses and
$12.5&nbsp;million in mark-to-market gains, respectively, on
electric power and natural gas derivatives. 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 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; 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; in our Annual
Report on Form&nbsp;10-K for the year ended December&nbsp;31,
2004, which is incorporated by reference herein, for a detailed
discussion of the accounting requirements relating to electric
power and natural gas derivatives. In addition, U.S. 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>

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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 March&nbsp;31,
2005, we had $291.2&nbsp;million in margin deposits with
counterparties, net of deposits posted by counterparties with
us, $82.7&nbsp;million in prepaid gas and power payments and had
posted $109.0&nbsp;million of letters of credit, compared to
$248.9&nbsp;million, $78.0&nbsp;million and $115.9&nbsp;million,
respectively, at December&nbsp;31, 2004. 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. On May&nbsp;25, 2005, we
announced, among other things, that we are in discussions with a
leading financial institution to form a partnership that we
anticipate would lower our collateral requirements. See
&#147;Summary&nbsp;&#151; Recent Developments&nbsp;&#151;
Strategic Initiative to Accelerate Debt Reduction and Increase
Cash Flow.&#148;
</DIV>

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<B><I>We may be unable to obtain an adequate supply of natural
gas in the future.</I></B> 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 full term of the facilities&#146; PSAs,
and gas prices may increase significantly.
</DIV>

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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. In
addition, we recently announced that we may sell all or a
portion of our United States natural gas assets. See
&#147;Summary&nbsp;&#151;&nbsp;Recent
Developments&nbsp;&#151;&nbsp;Potential Sale of Certain Oil and
Natural Gas Assets.&#148; Any such sales could potentially
exacerbate these issues.
</DIV>

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For the year ended December&nbsp;31, 2004, we obtained
approximately 7% of our physical natural gas supply needs
through owned natural gas reserves. However, if the potential
sale of our oil and natural gas assets is completed, upon the
transfer of our oil and natural gas assets, we expect that we
will not obtain any of our natural gas supply needs through
owned natural gas reserves. See
&#147;Summary&nbsp;&#151;&nbsp;Recent
Developments&nbsp;&#151;&nbsp;Potential Sale of Certain Oil and
Natural Gas Assets.&#148; 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;&nbsp;
<B><I>Our power project development and acquisition activities
may not be successful.</I></B> 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="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></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; 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;&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>

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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;&nbsp;
<B><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></B> 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 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. See also &#147;Summary&nbsp;&#151; Recent
Developments&nbsp;&#151; Strategic Initiative to Accelerate Debt
Reduction and Increase Cash Flow&#148; for a discussion of
potential asset 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;&nbsp;
<B><I>Our projects under construction may not commence operation
as scheduled.</I></B> 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="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></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; 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;&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;&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 10&nbsp;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>

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<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></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>

</TABLE>

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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="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></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; 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;&nbsp;
<B><I>Our power generation facilities may not operate as
planned.</I></B> Upon completion of our projects currently under
construction, we will operate 100 of the 103 power plants in
which we currently 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>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&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;&nbsp;
<B><I>We cannot assure you that our estimates of oil and gas
reserves are accurate.</I></B> 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. See
also &#147;&#151;&nbsp;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.&#148;
</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;&nbsp;
<B><I>Our geothermal energy reserves may be inadequate for our
operations.</I></B> 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="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></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; 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;&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;&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>

<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;&nbsp;
<B><I>Competition could adversely affect our performance.
</I></B>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;&nbsp;
<B><I>Our international investments may face uncertainties.
</I></B>We have investments in operating power projects in
Canada, an investment in an energy service business in the
Netherlands and an investment in a power generation facility in
construction in Mexico. In addition, we recently
</DIV>

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<DIV align="left" style="font-size: 10pt;">
entered into an agreement to sell our power generation facility
in the U.K. See &#147;Summary&nbsp;&#151; Recent
Developments&nbsp;&#151; Sale of Saltend Energy Centre.&#148; 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>

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<TR>
    <TD width="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></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: 3pt">&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: 3pt">&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: 3pt">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    increased regulation; 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">
    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;&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;&nbsp;
<B><I>We may be required to make refund payments to the CalPX
and CAISO as a result of the California Refund
Proceeding.</I></B> On August&nbsp;2, 2000, the California
Refund Proceeding was initiated by a complaint made at the
Federal Energy Regulatory Commission, or FERC, by SDG&#38;E
under Section&nbsp;206 of the FPA alleging, among other things,
that the markets operated by the California Independent System
Operator Corporation, or 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;&nbsp;
On December&nbsp;12, 2002, an Administrative Law Judge issued a
Certification of Proposed Finding on California Refund Liability
(&#147;December&nbsp;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 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. 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>

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<B><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></B> On February&nbsp;13, 2002, FERC initiated an
investigation of potential
</DIV>

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

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On June&nbsp;25, 2003, FERC issued a number of orders based on
the Final Report, 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 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 our business.
</DIV>

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<B><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></B> Our
qualifying facility, or 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. No final decision 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
</DIV>

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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>

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<B><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></B> 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. On June&nbsp;3, 2005, FERC
dismissed the complaint brought by the Buyers Coalition. The
Buyers Coalition may appeal FERC&#146;s order, but it has not
yet done so.
</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;&nbsp;
<B><I>We are subject to complex government regulation which
could adversely affect our operations. </I></B>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>

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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
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>

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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;&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>

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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>

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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; in our Annual Report on
Form&nbsp;10-K for the year ended December&nbsp;31, 2004. 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;&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>

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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
</DIV>

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bankruptcies of both PG&#38;E and Enron, the pace and direction
of further deregulation at the state level in many jurisdictions
is uncertain. See &#147;&#151;&nbsp;California Power
Market.&#148;
</DIV>

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<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;&nbsp;
<B><I>We depend on our management and employees. </I></B>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>

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<B><I>Seismic disturbances could damage our projects.
</I></B>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>

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<B><I>Our results are subject to quarterly and seasonal
fluctuations. </I></B>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>

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

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    <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; and</TD>
</TR>

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    <TD style="font-size: 6pt">&nbsp;</TD>
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    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    the completion of development and construction projects.</TD>
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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>

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<B><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></B>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 contained in our
Annual Report on Form&nbsp;10-K for the year ended
December&nbsp;31, 2004, and in Note&nbsp;11 of the Notes to
Consolidated Financial Statements contained in our Quarterly
Report on Form&nbsp;10-Q for the quarter ended March&nbsp;31,
2005, which are incorporated by reference herein. These matters
include securities class action lawsuits, such as Hawaii
Structural Ironworkers Pension Fund v. Calpine et al., which
relate to our April 2002 equity offering and also named the
underwriters of that offering as defendants.
</DIV>

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Harbert Distressed Investment Master Fund, Ltd. has brought a
suit against us and certain of our subsidiaries that alleges
violations or potential violations of certain Nova Scotia and
Canadian laws in connection with certain financing transactions
and in connection with the proposed sale of the Saltend Energy
Centre. The Harbert Fund, which holds two series of notes issued
by one of our subsidiaries and guaranteed by us, seeks interim
and permanent injunctive relief freezing, or tracing and
returning to Calpine Canada Resources Company, the indirect
parent company of the owner of the Saltend Energy Centre,
assets, including the proceeds of financing transactions and the
proceeds of any sale of the Saltend Energy Centre. We have been
advised by the trustee under the indenture governing the notes
held by the Harbert Fund that it intends to file an
</DIV>

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<DIV align="left" style="font-size: 10pt;">
application to intervene in the suit. A hearing on the merits of
this suit has been scheduled for July&nbsp;7 and 8, 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 April 2005, the Division of Enforcement of the SEC commenced
an informal inquiry into the facts and circumstances relating
to: (a)&nbsp;our downward revision of our proved oil and gas
reserve estimates at year-end 2004 as compared to such estimates
at year-end 2003, and a corresponding impairment of the value of
certain assets, all previously disclosed by us, (b)&nbsp;certain
statements made to various regulatory agencies by a terminated
former employee regarding our determination of state sales and
use taxes, and (c)&nbsp;our upward restatement in April 2005 of
our previously disclosed net income for the third quarter, and
the first three quarters, of 2004. We are fully cooperating with
this informal inquiry. The ultimate outcome of this inquiry
cannot presently be determined, however, it is possible that the
SEC could conclude that our estimate of continuing proved
reserves, as revised, requires further downward revision, or
could require that we take other actions.
</DIV>

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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 business or to our financial condition and
results of operations.
</DIV>

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<A name='105'></A>
</DIV>

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<B>CALPINE CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES</B>
</DIV>

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The following table sets forth our consolidated ratio of
earnings to fixed charges for each of the last five years and
for the three months ended March&nbsp;31, 2005.
</DIV>
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    <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="12%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
</TR>

<TR>
    <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" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="19">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Three Months</FONT></B></TD>
</TR>

<TR>
    <TD colspan="19" align="center" nowrap><B><FONT face="helvetica,arial">Year Ended December 31,</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="19" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">March 31,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2000</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2001</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2002</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2003</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2004</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">2005</FONT></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 colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" 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><FONT face="helvetica,arial">1.75x</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1.31x</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(1)</FONT></SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(2)</FONT></SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(3)</FONT></SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><SUP style="font-size: 85%; vertical-align: text-top"><FONT face="helvetica,arial">(4)</FONT></SUP></TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
For purposes of computing our consolidated ratio of earnings to
fixed charges, earnings consist of pre-tax income before
adjustment for minority interests in our consolidated
subsidiaries and income or loss from equity investees, plus
fixed charges, amortization of capitalized interest and
distributed income of equity investees, reduced by interest
capitalized, the minority interest in pre-tax income of
subsidiaries that have not incurred fixed charges and
distributions on our HIGH TIDES. Fixed charges consist of
interest expensed and capitalized (including amortized premiums,
discounts and capitalized expenses related to indebtedness), an
estimate of the interest within rental expense and the
distributions on our HIGH TIDES.
</DIV>

<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">
    For the year ended December&nbsp;31, 2002, we had an
    earnings-to-fixed-charges coverage deficiency of approximately
    $589.5&nbsp;million, primarily as a result of (i)&nbsp;a pre-tax
    charge to earnings of $404.7&nbsp;million for equipment
    cancellation and asset impairment, (ii)&nbsp;increased interest
    expense costs due to recent debt financings to support our
    growth, and (iii)&nbsp;a significant decrease in electricity
    prices, gas prices and spark spreads, primarily as a result of
    weak market fundamentals as compared to the year ended
    December&nbsp;31, 2001.</TD>
</TR>

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

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    For the year ended December&nbsp;31, 2003, we had an
    earnings-to-fixed-charges coverage deficiency of approximately
    $283.9&nbsp;million, primarily as a result of (i)&nbsp;a pre-tax
    charge to earnings of $64.4&nbsp;million for equipment
    cancellation and asset impairment and $16.4&nbsp;million for
    long-term service agreement cancellation charges,
    (ii)&nbsp;increased interest expense costs due to recent debt
    financings to support our growth, and (iii)&nbsp;a decrease in
    average spark spreads per megawatt-hour and higher fuel expense
    in 2003 as compared with the same period in 2002.</TD>
</TR>

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

<TR valign="top">
    <TD>(3)&nbsp;</TD>
    <TD align="left">
    For the year ended December&nbsp;31, 2004, we had an
    earnings-to-fixed-charges coverage deficiency of approximately
    $988.2&nbsp;million, primarily as a result of (i)&nbsp;a
    $202.1&nbsp;million pre-tax impairment charge as a result of
    decreases in proved undeveloped resources, (ii)&nbsp;increased
    interest expense costs due to recent debt financings to support
    our growth, and (iii)&nbsp;a decrease in average spark spreads
    per megawatt-hour and higher fuel expense in 2004 as compared
    with the same period in 2003.</TD>
</TR>

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

<TR valign="top">
    <TD>(4)&nbsp;</TD>
    <TD align="left">
    For the quarter ended March&nbsp;31, 2005, we had an
    earnings-to-fixed charges coverage deficiency of approximately
    $306.7&nbsp;million, primarily as a result of (i)&nbsp;increased
    interest expense costs due to recent debt financings to support
    our growth and (ii)&nbsp;a decrease in average spark spreads per
    megawatt-hour and higher fuel expenses in 2005 as compared with
    2004.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">S-48

</FONT>

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

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
<A name='106'></A>
</DIV>

<!-- link1 "USE OF PROCEEDS" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>USE OF PROCEEDS</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;&nbsp;
We estimate that the net proceeds to us from the offering of the
notes will be approximately $634.8&nbsp;million after deducting
fees and expenses. We intend to use these proceeds 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="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    $402.5&nbsp;million to repurchase or redeem all of the
    outstanding 5.0% HIGH TIDES&nbsp;III trust preferred securities
    issued by our Calpine Capital Trust&nbsp;III subsidiary that are
    not held by us; 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">
    all of the remaining net proceeds of approximately
    $232.3&nbsp;million will be used to repurchase approximately
    $313.9&nbsp;million in aggregate principal amount of our
    8<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT>%&nbsp;Senior
    Notes due 2011 from certain of the anticipated purchasers of the
    notes offered hereby. See &#147;Summary&nbsp;&#151; Repurchases
    of Outstanding Debt.&#148;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">S-49

</FONT>

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

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
<A name='106'></A>
</DIV>

<!-- link1 "CAPITALIZATION" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>CAPITALIZATION</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 sets forth, as of March&nbsp;31, 2005,
(i)&nbsp;our actual consolidated capitalization and
(ii)&nbsp;our consolidated capitalization, as adjusted to
reflect the net effect of (a)&nbsp;the sale of notes offered
hereby and the use of the proceeds therefrom, (b)&nbsp;the
repurchase of senior notes and (c)&nbsp;draws under the Fox,
Metcalf, Freeport and Mankato finance facilities. The table does
not adjust for the pending sale of the Saltend Energy Centre,
the exchange of shares of our common stock for certain of our
other outstanding securities pursuant to Section&nbsp;3(a)(9)
under the Securities Act or the closing of the Metcalf
refinancing. For more information, see &#147;Use of
Proceeds&#148; and &#147;Summary&nbsp;&#151; Recent
Developments.&#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;
You should read this table in conjunction with our consolidated
financial statements and the notes thereto,
&#147;Management&#146;s Discussion and Analysis of Financial
Condition and Results of Operations&#148; and other financial
information contained in our Annual Report on Form&nbsp;10-K for
the year ended December&nbsp;31, 2004, and in our Quarterly
Report on Form&nbsp;10-Q for the quarter ended March&nbsp;31,
2005, which are incorporated by reference herein.
</DIV>
<FONT face="times new roman,times">

<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="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 colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31, 2005</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</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="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">As</FONT></B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Actual</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Adjusted</FONT></B></TD>
</TR>

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


<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap><B><FONT face="helvetica,arial">(Dollars in thousands)</FONT></B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Cash and cash
    equivalents</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">812,612</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">848,022</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Short-term debt:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Notes payable and borrowings under
    lines of credit, current portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">209,652</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">209,652</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Preferred interests, current portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">268,794</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">268,794</FONT></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">
    <FONT face="helvetica,arial">Capital lease obligation, current
    portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,780</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5,780</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">CCFC I financing, current portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,208</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,208</FONT></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">
    <FONT face="helvetica,arial">Construction/project financing,
    current portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100,773</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">100,773</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Senior notes and term loans,
    current portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">922,489</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">922,489</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <FONT face="helvetica,arial">Total short-term debt
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,510,696</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,510,696</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Long-term debt:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Notes payable and borrowings under
    lines of credit, net of current portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">682,429</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">682,429</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Convertible debentures payable to
    Calpine Capital Trust&nbsp;III
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">517,500</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></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">
    <FONT face="helvetica,arial">Preferred Interests, net of current
    portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">493,396</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">493,396</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Capital lease obligation, net of
    current portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">281,756</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">281,756</FONT></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">
    <FONT face="helvetica,arial">CCFC I financing, net of current
    portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">782,020</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">782,020</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">CalGen/ CCFC&nbsp;II financing
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,395,795</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,395,795</FONT></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">
    <FONT face="helvetica,arial">Construction/project financing, net
    of current portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,003,443</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2,122,877</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Notes offered hereby
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">650,000</FONT></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">
    <FONT face="helvetica,arial">Convertible Senior Notes due 2006
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,311</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,311</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Convertible Notes due 2014
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">623,429</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">623,429</FONT></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">
    <FONT face="helvetica,arial">Convertible Senior Notes due 2023
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">633,775</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">633,775</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Senior notes and term loans, net of
    current portion
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8,218,408</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7,788,695</FONT></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">
    <FONT face="helvetica,arial">Total long-term debt
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,633,262</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16,455,483</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <B><FONT face="helvetica,arial">Total debt</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">18,143,958</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17,966,179</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

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

</TR>

</TABLE>
</CENTER>
</FONT>

<P align="center" style="font-size: 10pt;">S-50

</FONT>

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

<FONT face="helvetica,arial">
<FONT face="times new roman,times">

<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="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: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap><B><FONT face="helvetica,arial">March&nbsp;31, 2005</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</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="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">As</FONT></B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Actual</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Adjusted</FONT></B></TD>
</TR>

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


<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap><B><FONT face="helvetica,arial">(Dollars in thousands)</FONT></B></TD>
</TR>

<TR style="font-size: 8pt;">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap><B><FONT face="helvetica,arial">(Unaudited)</FONT></B></TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Minority interests</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">388,499</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">388,499</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="3" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Stockholders&#146;
    equity:</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">Preferred stock, $.001&nbsp;par
    value per share:
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">10,000,000&nbsp;shares authorized;
    none issued and outstanding, actual and as adjusted
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">&#151;</FONT></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">
    <FONT face="helvetica,arial">Common stock, $.001&nbsp;par value
    per share: 2,000,000,000&nbsp;shares authorized;
    538,017,458&nbsp;shares issued and outstanding, actual and as
    adjusted<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">538</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">538</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Additional paid-in capital
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,159,385</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3,159,385</FONT></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">
    <FONT face="helvetica,arial">Additional paid-in capital, loaned
    shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">258,100</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">258,100</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Additional paid-in capital,
    returnable shares
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(258,100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">(258,100</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT face="helvetica,arial">)</FONT></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">
    <FONT face="helvetica,arial">Retained earnings
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,157,317</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1,226,214</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Accumulated other comprehensive loss
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32,615</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">31,335</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <FONT face="helvetica,arial">Total stockholders&#146; equity
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,349,855</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4,417,472</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD 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">
    <FONT face="helvetica,arial">Total capitalization
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22,882,312</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom"><FONT face="helvetica,arial">$</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22,772,150</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

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

</TR>

</TABLE>
</CENTER>
</FONT>

<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">
    &#147;Notes payable to Calpine Capital Trust&#148; constitutes
    the debentures issued by Calpine to Calpine Capital
    Trust&nbsp;III, our wholly owned subsidiary, in connection with
    the issuance of the HIGH TIDES&nbsp;III by Calpine Capital
    Trust&nbsp;III. As of March&nbsp;31, 2005, the liquidation
    amount outstanding of the HIGH TIDES&nbsp;III was
    $517.5&nbsp;million of which $115.0&nbsp;million was held by
    Calpine. Following consummation of this offering, the HIGH
    TIDES&nbsp;III will be redeemed in full by first redeeming notes
    payable to Calpine Capital Trust&nbsp;III in full; the proceeds
    of such redemption will then immediately be applied by Calpine
    Capital Trust&nbsp;III to the redemption in full of the HIGH
    TIDES&nbsp;III.</TD>
</TR>

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

<TR valign="top">
    <TD>(2)&nbsp;</TD>
    <TD align="left">
    Includes 89&nbsp;million shares that we have loaned to Deutsche
    Bank AG, London Branch reflected as outstanding in
    stockholders&#146; equity; based on current accounting
    principles, we believe that the shares will not be considered
    outstanding for the purpose of computing earnings per share.</TD>
</TR>

</TABLE>

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<DIV align="left" style="font-size: 10pt;">
<A name='108'></A>
</DIV>

<!-- link1 "DESCRIPTION OF THE NOTES" -->

<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 THE NOTES</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;&nbsp;
We will issue the notes under a supplemental indenture between
us and Wilmington Trust&nbsp;Company, as trustee. The
supplemental indenture supplements the indenture between us and
Wilmington Trust&nbsp;Company (together with the supplemental
indenture, the &#147;indenture&#148;), dated as of
August&nbsp;10, 2000, and as supplemented as of
September&nbsp;28, 2000. The terms of the notes include those
stated in the indenture and those made part of the indenture by
reference to the Trust&nbsp;Indenture Act of 1939, as amended.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The following description is only a summary of the material
provisions of the indenture and the notes. We urge you to read
the indenture and the notes because they, and not this summary,
define your rights as holders of the notes. Copies of the
indenture and the form of note are available as set forth below
under &#147;Where You Can Find More Information About Us and
This Offering.&#148; For purposes of this Description of the
Notes, references to &#147;Calpine,&#148; &#147;we,&#148;
&#147;our,&#148; or &#147;us&#148; refer solely to Calpine
Corporation and not to any of its subsidiaries. As used in this
Description of the Notes, the word &#147;including&#148; means
&#147;including, without limitation.&#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;&nbsp;
The registered holder of a note will be treated as the owner of
it for all purposes. Only registered holders will have rights
under the indenture and the 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;">
<B>General</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;&nbsp;
We will issue the notes in an aggregate principal amount of
$650.0&nbsp;million. The notes will mature on June&nbsp;1, 2015
unless earlier repurchased by us at a holder&#146;s option upon
a Change of Control of Calpine as described under
&#147;&nbsp;&#151; Change of Control&#148; or converted at a
holder&#146;s option as described under
&#147;&#151;&nbsp;Conversion Rights.&#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;&nbsp;
Interest on the notes will accrue at a rate per annum equal to
7.75% and will be payable semiannually on June&nbsp;1 and
December&nbsp;1 (each, an &#147;interest payment date&#148;) of
each year, commencing on December&nbsp;1, 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;&nbsp;
Interest on the notes will accrue from the date of original
issuance, or if interest has already been paid, from the date it
was most recently paid. We will make each such interest payment
to holders of record of the notes on the immediately preceding
May&nbsp;15 and November&nbsp;15 (each, a &#147;regular record
date&#148;). Interest on the notes will be computed on the basis
of a 360-day year comprised of twelve 30-day months.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The notes will be our general unsecured obligations and will be
expressly subordinated in right of payment to all of our
existing and future secured debt, including debt under our
secured term loans and our various series of outstanding secured
senior notes, and to certain designated series of senior
unsecured notes which were issued prior to January&nbsp;1, 2000.
Except for such designated series of senior unsecured notes, the
notes will rank equal in right of payment with all of our
existing and future senior unsecured obligations, including our
obligations under our existing convertible notes. See
&#147;&#151;Subordination&#148; and &#147;Risk
Factors&#151;Risks Relating to the Notes.&#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 addition, because the notes will not be guaranteed by our
subsidiaries, they will be effectively subordinated to all
existing and future indebtedness and other liabilities,
including trade payables, of our subsidiaries. Because the notes
are unsecured, they also will be effectively junior to all of
our existing and future secured debt. Under the indenture, we
and our subsidiaries will be permitted to incur unlimited
additional indebtedness other than with respect to certain
restrictions on liens and sale and leaseback transactions. See
&#147;&#151;&nbsp;Limitation on Liens&#148; and
&#147;&#151;&nbsp;Limitation on Sale and Leaseback
Transactions.&#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;&nbsp;
As of March&nbsp;31, 2005, on an as adjusted basis as described
under &#147;Capitalization,&#148; we would have had
approximately $4.7&nbsp;billion of unsecured debt that would
rank equally with the notes and approximately $5.3&nbsp;billion
of debt that would expressly rank senior to the notes, (of which
approximately $4.5&nbsp;billion would have been secured). In
addition we would have had approximately $12.8&nbsp;billion of
indebtedness and liabilities of our subsidiaries, including trade
</DIV>

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<DIV align="left" style="font-size: 10pt;">
payables and excluding deferred tax liabilities, to which the
notes would be effectively subordinated, of which approximately
$2.1&nbsp;billion constitutes debt of Calpine Canada Energy
Finance ULC and Calpine Canada Energy Finance&nbsp;II ULC, which
is guaranteed 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;">
<B>Conversion Rights</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;&nbsp;
Subject to the restrictions described in this Description of the
Notes, a holder may convert any outstanding notes into cash and
shares of our common stock based on an initial &#147;Conversion
Price&#148; per share of $4.00 in accordance with the conversion
mechanism set forth below. The Conversion Rate on any day is
1,000&nbsp;divided by the Conversion Price in effect on such
day. The Conversion Price is, however, subject to adjustment as
described below under &#147;&#151;&nbsp;Conversion Price
Adjustments.&#148; A holder may convert notes only in
denominations of $1,000 and integral multiples of $1,000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>General</I></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;&nbsp;
Holders may surrender notes for conversion into cash and shares
of our common stock prior to the maturity date in the following
circumstances:
</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="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;at any time following May&nbsp;31, 2014;</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;&nbsp;
    (2)&nbsp;during any calendar quarter commencing after the
    issuance of the notes, if our common stock price for at least
    20&nbsp;trading days in the period of 30&nbsp;consecutive
    trading days ending on the last trading day of the calendar
    quarter preceding the calendar quarter in which the conversion
    occurs is more than 120% of the Conversion Price then in effect
    on that 30th&nbsp;trading day;</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;&nbsp;
    (3)&nbsp;during the five trading day period after any five
    consecutive trading day period in which the average trading
    price of $1,000&nbsp;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 the common stock price on that day
    multiplied by the Conversion Rate;&nbsp;or</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;&nbsp;
    (4)&nbsp;upon the occurrence of specified corporate transactions
    described below under &#147;&#151;&nbsp;Conversion Upon
    Specified Corporate Transactions.&#148;</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;&nbsp;
Subject to certain exceptions described below under
&#147;&#151;&nbsp;Conversion Upon Satisfaction of Trading Price
Condition&#148; and &#147;&#151;&nbsp;Conversion Upon Specified
Corporate Transactions,&#148; once notes are tendered for
conversion, holders tendering the notes will be entitled to
receive cash and shares of our common stock, the value of which
(the &#147;Conversion Value&#148;) will be equal to the product
of:
</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="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;the Conversion Rate;&nbsp;and</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;&nbsp;
    (2)&nbsp;the average of the closing prices per share of our
    common stock for the five consecutive trading days
    (appropriately adjusted to take into account the occurrence
    during such period of stock splits and similar events) including
    and immediately following the second trading day following the
    day the notes are tendered for conversion (the &#147;Five Day
    Average Closing Stock Price&#148;).</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;&nbsp;
Subject to certain exceptions described below and under
&#147;&#151;&nbsp;Conversion Upon Satisfaction of Trading Price
Condition&#148; and &#147;&#151;&nbsp;Conversion Upon Specified
Corporate Transactions,&#148; we will deliver the Conversion
Value to tendering holders 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="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;an amount in cash (the &#147;Principal Return&#148;)
    equal to the lesser of (a)&nbsp;the Conversion Value and
    (b)&nbsp;the principal amount of the notes to be converted;</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;&nbsp;
    (2)&nbsp;subject to the limitation described below, if the
    Conversion Value is greater than the Principal Return, an amount
    in shares (the &#147;Net Shares&#148;), determined as set forth</TD>
</TR>

</TABLE>

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<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>&nbsp;</TD>
    <TD align="left">
    below, equal to the difference between the Conversion Value and
    the Principal Return (the &#147;Net Share Amount&#148;);&nbsp;and</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;&nbsp;
    (3)&nbsp;an amount paid in cash to account for any fractional
    shares of common stock.</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;&nbsp;
The number of Net Shares to be paid will be determined by us by
dividing the Net Share Amount by the Five Day Average Closing
Stock Price. The cash payment for fractional shares will be
based on the Five Day Average Closing Stock 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;&nbsp;
The Conversion Value, Principal Return and Net Share Amount will
be determined by us at the end of the fifth consecutive trading
day including and immediately following the second trading day
after the day the notes are tendered for conversion (the
&#147;Determination Date&#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;&nbsp;
We will pay the Principal Return and cash for fractional shares
and deliver the Net Shares as promptly as practicable after the
Determination Date, but in no event later than four business
days thereafter. Notwithstanding the foregoing, if, on the date
the notes are tendered for conversion, we determine, in our sole
judgment, that our then outstanding indebtedness would prevent
us from making such payments upon conversion, we may elect, at
our option, to redeem the notes tendered for conversion for a
payment equal to the Principal Return, to be paid in cash, and a
number of shares of our common stock equal to the Net Shares
together with cash in lieu of any fractional shares. The
redemption date for any such election will be the seventh
business day following the Determination Date. As of the date
hereof, the restricted payment covenants under the instruments
or agreements governing certain of our outstanding indebtedness
would prevent us from settling the notes upon conversion without
redeeming the notes and treating such redemption as a
refinancing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Delivery of the Principal Return, Net Shares and cash in lieu of
fractional shares will be deemed to satisfy our obligation to
pay the principal amount of the notes, as well as accrued
interest payable on the notes, except as described below.
Accrued interest will be deemed paid in full rather than
canceled, extinguished or forfeited. We will not adjust the
Conversion Price to account for the accrued 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;&nbsp;
Except as described below, upon conversion of any notes on a
date that is not an interest payment date, holders will not be
entitled to receive any additional cash payment representing
accrued and unpaid interest for the period from the immediately
preceding interest payment date to the conversion date with
respect to the converted notes, and, as provided above, such
interest will be deemed paid in full. Nonetheless, if notes are
converted after a regular record date and prior to the opening
of business on the next interest payment date, including the
date of maturity, holders of such notes at the close of business
on the regular record date will receive the interest payable on
such notes on the corresponding interest payment date
notwithstanding the conversion. Such notes, upon surrender for
conversion, must be accompanied by funds equal to the amount of
interest payable on that interest payment date on the notes so
converted.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If you wish to exercise your conversion right, you must deliver
an irrevocable conversion notice in accordance with the
provisions of the indenture, together, if the notes are in
certificated form, with the certificated security, to the
conversion agent who will, on your behalf, convert the notes
into cash and shares of our common stock. You may obtain copies
of the required form of the conversion notice from the
conversion agent. If a holder of a note has delivered notice of
its election to have such note repurchased as a result of a
Change of Control, such note may be converted only if the notice
of election is withdrawn as described under
&#147;&#151;&nbsp;Change of Control.&#148; If an event of
default due to certain events of bankruptcy, insolvency or
reorganization of Calpine, as described in paragraph&nbsp;7
under &#147;&#151;&nbsp;Events of Default,&#148; has occurred
and is continuing, we may not pay cash upon conversion of any
notes (other than cash in lieu of fractional shares) and instead
will make payment only through the delivery of shares. The
</DIV>

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<DIV align="left" style="font-size: 10pt;">
number of shares to be delivered will be equal to the Conversion
Rate, provided that you will receive an amount in cash in lieu
of any fractional shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Any shares of common stock received by holders upon conversion
of the notes will convey the same rights as all of the other
outstanding shares of our 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;&nbsp;
The &#147;common stock price&#148; on any date means the closing
sale price per share (or if no closing sale price is reported,
the average of the bid and ask prices or, if more than one in
either case, the average of the average bid and the average ask
prices) on such date for our common stock as reported in
composite transactions on the principal United States securities
exchange on which our common stock is traded or, if our common
stock is not listed on a United States national or regional
securities exchange, as reported by The Nasdaq System.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A &#147;trading day&#148; means any regular or abbreviated
trading day of The New York Stock 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;&nbsp;
The &#147;trading price&#148; of the notes on any date of
determination means the average of the secondary market bid
quotations per $1,000&nbsp;principal amount of notes obtained by
the bid solicitation agent for $5,000,000&nbsp;principal amount
of the notes at approximately 3:30&nbsp;p.m., New York City
time, on such determination date from three independent
nationally recognized securities dealers we select, which may
include the underwriter; <I>provided </I>that if at least three
such bids cannot reasonably be obtained by the bid solicitation
agent, but two such bids are obtained, then the average of the
two bids shall be used, and if only one such bid can reasonably
be obtained by the bid solicitation agent, this one bid shall be
used. If the bid solicitation agent cannot reasonably obtain at
least one such bid or, in our reasonable judgment, the bid
quotations are not indicative of the secondary market value of
the notes, then the trading price of the notes will be
determined in good faith by the bid solicitation agent, taking
into account in such determination such factors as it, in its
sole discretion after consultation with us, deems appropriate.
The bid solicitation agent shall not be required to determine
the trading price of the notes unless requested in writing by us.
</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><I>Adjustment for Certain Changes of Control</I></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;&nbsp;
If you elect to convert your notes in connection with a
corporate transaction as described under
&#147;&#151;&nbsp;Conversion Upon Specified Corporate
Transactions&#148; that constitutes a Change of Control as
defined under &#147;&#151;&nbsp;Change of Control&#148; (whether
or not you have a right to put your notes upon such Change of
Control) and 10% or more of the fair market value of the
consideration for the common stock in the corporate transaction
consists of (i)&nbsp;cash, (ii)&nbsp;other property or
(iii)&nbsp;securities that are not traded or scheduled to be
traded immediately following such transaction on a U.S. national
securities exchange or the Nasdaq National Market, we will
decrease the Conversion Price for the notes surrendered for
conversion, which will increase the number of shares of common
stock issuable upon conversion (the &#147;additional
shares&#148;) 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;&nbsp;
The number of additional shares will be determined by reference
to the table below, based on the date on which the corporate
transaction becomes effective (the &#147;effective date&#148;)
and the share price (the &#147;share price&#148;) paid per share
of common stock in the corporate transaction. If holders of our
common stock receive only cash in the corporate transaction, the
share price shall be the cash amount paid per share of our
common stock. Otherwise, the share price shall be the average of
the closing sale prices of our common stock on the five trading
days prior to but not including the effective date of the
corporate 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;&nbsp;
The share prices set forth in the first row of the table below
(i.e., column headers) will be adjusted as of any date on which
the Conversion Price of the notes is adjusted, as described
below under &#147;&#151;&nbsp;Conversion Price
Adjustments.&#148; The adjusted share prices will equal the
share prices applicable immediately prior to such adjustment,
multiplied by a fraction, the numerator of
</DIV>

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

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<DIV align="left" style="font-size: 10pt;">
which is the Conversion Rate immediately prior to the adjustment
giving rise to the share price adjustment and the denominator of
which is the Conversion Rate as so adjusted. The number of
additional shares will be adjusted in the same manner as the
Conversion Price as set forth under &#147;&#151;&nbsp;Conversion
Price Adjustments.&#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;&nbsp;
The following table sets forth the hypothetical share price and
number of additional shares to be received per
$1,000&nbsp;principal amount of notes.
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<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="31%">&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="1%">&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="1%">&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="1%">&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="1%">&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="1%">&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="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&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: 7pt;">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="51" align="center" nowrap><B><FONT face="helvetica,arial">Stock Price</FONT></B></TD>
</TR>

<TR style="font-size: 7pt;">
    <TD align="left" nowrap><B><FONT face="helvetica,arial">Effective Date of</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="51" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR style="font-size: 7pt;">
    <TD align="center" nowrap><B><FONT face="helvetica,arial">Change of Control</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">$3.10</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">$3.50</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">$4.00</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">$4.50</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">$5.00</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">$5.50</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">$6.00</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">$6.50</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">$7.00</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">$7.50</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">$10.00</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">$15.00</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">$20.00</FONT></B></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="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</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 align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">June&nbsp;23, 2005
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">72.58</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">63.00</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">53.82</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">46.74</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">41.12</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36.57</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32.80</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29.64</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26.96</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24.64</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16.71</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.15</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.63</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">June&nbsp;1, 2006
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">72.00</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">62.44</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">53.27</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">46.23</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40.65</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36.12</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32.40</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29.26</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26.59</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24.31</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16.46</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.00</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.53</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">June&nbsp;1, 2007
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">71.58</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">61.97</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">52.79</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">45.74</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">40.19</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">35.69</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">31.97</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">28.88</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26.24</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23.96</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">16.22</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8.86</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.44</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">June&nbsp;1, 2008
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">71.11</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">61.35</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">52.15</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">45.10</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">39.55</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">35.08</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">31.41</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">28.32</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25.73</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23.50</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15.86</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8.66</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.32</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">June&nbsp;1, 2009
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">70.47</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">60.61</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">51.24</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">44.20</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">38.66</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">34.23</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">30.58</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">27.56</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24.99</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22.80</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15.37</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8.38</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.14</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">June&nbsp;1, 2010
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">69.67</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">59.56</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">50.05</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">42.87</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37.38</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32.95</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">29.39</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">26.39</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23.92</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">21.78</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14.62</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.96</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.89</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">June&nbsp;1, 2011
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">68.78</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">58.10</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">48.28</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">41.01</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">35.40</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">31.09</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">27.56</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24.70</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22.27</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">20.26</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">13.51</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.35</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.52</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">June&nbsp;1, 2012
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">67.70</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">56.09</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">45.63</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">38.13</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">32.51</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">28.15</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">24.79</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">22.03</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19.79</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17.90</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11.81</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6.42</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3.97</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">June&nbsp;1, 2013
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">66.59</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">53.12</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">41.47</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">33.47</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">27.76</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">23.53</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">20.30</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17.78</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15.81</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14.17</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.19</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.02</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3.15</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">June&nbsp;1, 2014
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">65.05</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">47.84</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">33.91</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">25.03</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">19.24</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">15.38</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12.68</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10.74</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">9.30</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8.20</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.24</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2.96</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1.90</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" bgcolor="#cceeff">
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">June&nbsp;1, 2015
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.00</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.00</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.00</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.00</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.00</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.00</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.00</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.00</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.00</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.00</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.00</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.00</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">0.00</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The share prices and additional share amounts set forth above
are based upon a common stock reference price of $3.10 and an
initial Conversion Price of $4.00.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The maximum amount of additional shares payable is 72.5806 per
$1,000&nbsp;principal amount of notes, subject to applicable
adjustments. Notwithstanding the foregoing, in no event will the
total number of shares of common stock issuable upon conversion
exceed approximately 322.5806&nbsp;shares per
$1,000&nbsp;principal amount of notes, subject to adjustments in
the same manner as the Conversion Price as set forth under
&#147;&#151;&nbsp;Conversion Price Adjustments.&#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;&nbsp;
The exact share prices and effective dates may not be set forth
in the table above, in which case:
</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="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    If the share price is between two share price amounts in the
    table or the effective date is between two effective dates in
    the table, the number of additional shares will be determined by
    a straight-line interpolation between the number of additional
    shares set forth for the higher and lower share price amounts
    and the two dates, as applicable, based on a 365-day year.</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 share price is equal to or in excess of $20.00 per share
    (subject to adjustment), no additional shares will be issued
    upon conversion.</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 share price is less than $3.10 per share (subject to
    adjustment), no additional shares will be issued upon conversion.</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;&nbsp;
Our obligation to deliver the additional shares could be
considered a penalty, in which case the enforceability thereof
would be subject to general principles of reasonableness of
economic remedies.
</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><I>Conversion Triggers</I></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;&nbsp;
You may surrender notes for conversion prior to the stated
maturity only under the following circumstances:
</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><I>Conversion After May&nbsp;31, 2014</I></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;&nbsp;
A holder may surrender any of its notes for conversion at any
time following May&nbsp;31, 2014.
</DIV>

<P align="center" style="font-size: 10pt;">S-56

</FONT>

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

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B><I>Conversion Upon Satisfaction of Common Stock Price
Condition</I></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;&nbsp;
A holder may surrender any of its notes for conversion during
any calendar quarter commencing after the issuance of the notes
by delivering the notes to the conversion agent, if the closing
sale price of our common stock for at least 20&nbsp;trading days
in the period of 30 consecutive trading days ending on the last
trading day of the calendar quarter preceding the calendar
quarter in which the conversion occurs is more than 120% of the
Conversion Price on that 30th&nbsp;trading day.
</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><I>Conversion Upon Satisfaction of Trading Price
Condition</I></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;&nbsp;
A holder may surrender any of its notes for conversion during
the five trading day period immediately after any five
consecutive trading day period in which the average trading
price of $1,000&nbsp;principal amount of the notes (as
determined following a request by a holder of the notes in
accordance with the procedures described below) for each day of
such five-day period was less than 95% of the product of the
closing sale price of the common stock on that day multiplied by
the Conversion Rate (the &#147;trading price condition&#148;);
<I>provided</I> that if on the date of any conversion pursuant
to the trading price condition, our common stock price is
greater than the Conversion Price on such date but less than
120% of the Conversion Price on such date, then the Conversion
Value you will be entitled to receive will be equal to the
principal amount of your notes plus accrued and unpaid interest
as of the conversion date (&#147;principal value
conversion&#148;). Shares of our common stock (and any cash in
lieu of fractional shares) delivered upon a principal value
conversion will be valued at the greater of the Conversion Price
on the conversion date and our common stock price as of the
conversion date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The bid solicitation agent shall have no obligation to determine
the trading price of the notes unless we have requested such
determination, and we shall have no obligation to make such
request unless a holder of the notes provides us with reasonable
evidence that the trading price of the notes would be less than
95% of the product of the common stock price and the Conversion
Rate. At such time, we shall instruct the bid solicitation agent
in writing to determine the trading price beginning on the next
trading day and on each successive trading day until the trading
price of the notes is greater than or equal to 95% of the
product of the common stock price and the Conversion Rate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The bid solicitation agent will initially be American Stock
Transfer&nbsp;&#38; Trust Company, but we may select any bank,
trust company or similar fiduciary agent to serve as bid
solicitation agent.
</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><I>Conversion Upon Specified Corporate Transactions</I></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;&nbsp;
If we elect to:
</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="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;distribute to all or substantially all holders of our
    common stock rights, warrants or options entitling them to
    subscribe for or purchase, for a period expiring within
    60&nbsp;days of the date of distribution, shares of our common
    stock at less than the closing price per share of our common
    stock on the day prior to the date upon which such a
    distribution is announced; or</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;&nbsp;
    (2)&nbsp;distribute to all or substantially all holders of
    shares of our common stock any assets, debt securities or
    certain rights to purchase our securities, which distribution
    has a per share value exceeding 12.5% of the closing price of
    our common stock on the day preceding the declaration date for
    such distribution,</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;">
we must notify the holders of notes at least 20&nbsp;days prior
to the ex-dividend date for such distribution. Once we have
given such notice, holders may surrender their notes for
conversion by delivering the notes to the conversion agent until
the earlier of the close of business on the business day prior
to the ex-dividend date or our announcement that such
distribution will not
</DIV>

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<DIV align="left" style="font-size: 10pt;">
take place. This provision shall not apply if we provide that
holders of notes will participate in the distribution without
conversion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
In addition, if we are a party to a consolidation, merger, share
exchange, sale of all or substantially all of our assets or
other similar transaction, in each case pursuant to which the
shares of our common stock would be converted into cash,
securities or other property, a holder may surrender its notes
for conversion by delivering the notes to the conversion agent
at any time from and after the date that is 15&nbsp;days prior
to the anticipated date of such transaction, until and including
the date that is 15&nbsp;days after the actual date of such
transaction. If we are a party to a consolidation, merger, share
exchange, sale of all or substantially all of our assets or
other similar transaction, in each case pursuant to which the
shares of our common stock are converted into cash, securities,
or other property, then at the effective time of the
transaction, a holder&#146;s right to receive any shares of our
common stock upon conversion of its notes will be changed into a
right to receive the kind and amount of cash, securities and
other property that such holder would have received for such
shares if such holder had converted such notes immediately prior
to the transaction. Alternatively, if the transaction also
constitutes a Change of Control, such holder may instead require
us to repurchase all or a portion of its notes as described
under &#147;&#151;&nbsp;Change of Control.&#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;&nbsp;
If you elect to convert your notes in connection with a
corporate transaction that constitutes a Change of Control as
defined under &#147;&#151;&nbsp;Change of Control&#148; and 10%
or more of the consideration for our common stock in the
corporate transaction consists of (i)&nbsp;cash, (ii)&nbsp;other
property or (iii)&nbsp;securities that are not traded or
scheduled to be traded immediately following such transaction on
a U.S. national securities exchange or the Nasdaq National
Market, upon any conversion of the notes as described above, we
will decrease the Conversion Price by the additional shares as
described above under &#147;&#151;&nbsp;Adjustment for Certain
Changes of Control&#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>Conversion Price Adjustments</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;&nbsp;
The Conversion Price and, as a result, the Conversion Rate will
be subject to adjustment (without duplication) upon the
following events:
</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="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;the payment of dividends and other distributions on our
    common stock that are payable exclusively in shares of our
    common stock;</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;&nbsp;
    (2)&nbsp;the issuance to all holders of our common stock of
    rights, warrants or options that allow the holders to purchase
    shares of our common stock at less than the current market
    price; <I>provided </I>that no adjustment will be made if
    holders of the notes may participate in the transaction on a
    basis and with notice that our board of directors determines to
    be fair and appropriate, where &#147;market price&#148; means,
    subject to certain adjustments, the average closing price of our
    shares for the five trading day period immediately preceding and
    including the third trading day prior to the date fixed for the
    determination of holders entitled to receive such rights,
    warrants or options;</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;&nbsp;
    (3)&nbsp;the subdivision or combination of our common stock;</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;&nbsp;
    (4)&nbsp;the declaration of a cash dividend or distribution to
    all or substantially all of the holders of our common stock. If
    we declare such a cash dividend or distribution, the Conversion
    Price shall be decreased to equal the number determined by
    multiplying the Conversion Price in effect immediately prior to
    the record date for such dividend or distribution by the
    following fraction:</TD>
</TR>

</TABLE>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<U>(Pre-Dividend Sale Price&nbsp;&#151;&nbsp;Dividend Adjustment
Amount)</U>
</DIV>

<DIV align="center" style="font-size: 10pt;">
(Pre-Dividend Sale Price)
</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>provided </I>that no adjustment to the Conversion Price or
    the ability of a holder of a note to convert will be made if we
    provide that holders of notes will participate in the cash
    dividend</TD>
</TR>

</TABLE>

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<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">
    or distribution without conversion; <I>provided, further,</I>
    that if the numerator of the foregoing fraction is less than
    $1.00 (including a negative amount), then in lieu of any
    adjustment under this clause (4), we shall make adequate
    provision so that each holder of notes shall have the right to
    receive upon conversion, in addition to the shares of common
    stock (and any cash in lieu of fractional shares) deliverable
    upon such conversion, the amount of cash such holder would have
    received had such holder converted such notes on the record date
    for such cash dividend or distribution at the Conversion Rate
    and for the Conversion Value in effect on such record date.</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;
&#147;Pre-Dividend Sale Price&#148; means the average common
stock price for the three consecutive trading days ending on the
trading day immediately preceding the ex-dividend date for such
dividend or distribution. &#147;Dividend Adjustment Amount&#148;
means the full amount of the dividend or distribution to the
extent payable in cash applicable to one share of common stock;
</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="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (5)&nbsp;the payment of dividends and other distributions to all
    holders of our common stock, consisting of evidences of our
    indebtedness, securities or capital stock, cash or assets,
    except for (a)&nbsp;any dividend or distribution referred to in
    clause (1)&nbsp;above, (b)&nbsp;those rights, warrants or
    options referred to in clause (2)&nbsp;above or (c)&nbsp;any
    cash dividend or distribution referred to in clause
    (4)&nbsp;above; <I>provided </I>that no adjustment will be made
    if all holders of the notes may participate in the transactions;
    and</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;&nbsp;
    (6)&nbsp;the payment to holders of our common stock in respect
    of a tender or exchange offer, other than an odd-lot offer, by
    us or any of our subsidiaries for our common stock to the extent
    that the offer involves aggregate consideration that, together
    with any cash and the fair market value of any other
    consideration payable in respect of any tender offer by us or
    any of our subsidiaries for shares of our common stock
    consummated within the preceding 12&nbsp;months not triggering a
    Conversion Price adjustment, and all-cash distributions to all
    or substantially all holders of our common stock made within the
    preceding 12&nbsp;months not triggering a Conversion Price
    adjustment, exceeds an amount equal to 12.5% of the market
    capitalization of our common stock on the expiration date of the
    tender offer.</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;&nbsp;
The applicable Conversion Price will not be adjusted:
</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="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;upon the issuance of any shares of our common stock
    pursuant to any present or future plan providing for the
    reinvestment of dividends or interest payable on securities of
    Calpine and the investment of additional optional amounts in
    shares of our common stock under any plan,</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;&nbsp;
    (2)&nbsp;upon the issuance of any shares of our common stock or
    options or rights to purchase those shares pursuant to any
    present or future employee, director or consultant benefit plan
    or program of Calpine,</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;&nbsp;
    (3)&nbsp;upon the issuance of any shares of our common stock
    pursuant to any option, warrant, right, or exercisable,
    exchangeable or convertible security outstanding as of the date
    the notes were first issued, or</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;&nbsp;
    (4)&nbsp;upon the issuance of any rights, any distribution of
    separate certificates representing the rights, any exercise or
    redemption of any rights or any termination or invalidation of
    the rights pursuant to our stockholders rights plan.</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;&nbsp;
We may decrease the Conversion Price for at least 20&nbsp;days,
so long as the decrease is irrevocable during that 20-day
period. No adjustment in the applicable Conversion Price will be
required unless the adjustment would require an increase or
decrease of at least 1% of the applicable Conversion Price
(other than an adjustment described in paragraph
(6)&nbsp;above). If the adjustment is not made because the
adjustment does not change the applicable Conversion Price by
more than 1%, then the adjustment that is not made will be
carried forward and taken into account in any future adjustment.
Except as specifically described above, the applicable
</DIV>

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<DIV align="left" style="font-size: 10pt;">
Conversion Price will not be subject to adjustment in the case
of the issuance of any of our common stock, or securities
convertible into or exchangeable for our common stock. For a
discussion of the United States federal income tax treatment of
an increase in the Conversion Rate (which would occur as a
result of a decrease in the Conversion Price), see
&#147;Material United States Federal Income Tax
Consequences,&#148; 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>Change of Control</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;&nbsp;
If a Change of Control (as defined below) occurs, a holder of
notes will have the right, at its option, to require us to
repurchase all of its notes, or any portion thereof that is
equal to $1,000 principal amount or an integral multiple of
$1,000 principal amount, except as otherwise provided below. The
price we will be required to pay is equal to the principal
amount plus any accrued and unpaid interest up to but excluding
the date of repurchase. As of the date hereof, the restricted
payment covenants under the instruments or agreements governing
certain of our outstanding indebtedness would prevent us from
redeeming the notes without treating such redemption as a
refinancing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Within 30&nbsp;days after the occurrence of a Change of Control,
we are obligated to give to the holders of notes notice of the
Change of Control and of the repurchase right arising as a
result of the Change of Control. We must also deliver a copy of
this notice to the trustee. To exercise the repurchase right, a
holder of notes must deliver on or before the 30th day after the
date of our notice irrevocable written notice to the trustee of
the holder&#146;s exercise of its repurchase right, together
with the notes with respect to which the right is being
exercised. We are required to repurchase the notes on the date
that is 45&nbsp;days after the date of our notice.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Simultaneously with such notice of the Change of Control, we
will disseminate a press release through Dow Jones &#38;
Company, Inc., Business Wire, Bloomberg Business News or Reuters
(or, if such organizations are not in existence at the time of
issuance of such press release, such other news or press
organization as is reasonably calculated to broadly disseminate
the relevant information to the public) containing this
information and publish the information on our website or
through such other public medium as we may use at that time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A &#147;Change of Control&#148; will be deemed to have occurred
if any of the following occurs:
</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="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;any person, including any syndicate or group deemed to
    be a &#147;person&#148; under Section&nbsp;13 (d) (3)&nbsp;of
    the Securities Exchange Act, acquires beneficial ownership,
    directly or indirectly, through a purchase, merger or other
    acquisition transaction or series of transactions, of shares of
    our capital stock entitling the person to exercise 50% or more
    of the total voting power of all shares of our capital stock
    that is entitled to vote generally in elections of directors,
    other than an acquisition by us, any of our subsidiaries or any
    of our employee benefit plans; or</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;&nbsp;
    (2)&nbsp;we merge or consolidate with or into any other person,
    any merger of another person into us, or we convey, sell,
    transfer or lease all or substantially all of our assets to
    another person, other than any transaction:</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="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (a)&nbsp;that does not result in any reclassification,
    conversion, exchange or cancellation of outstanding shares of
    our capital stock,</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;&nbsp;
    (b)&nbsp;pursuant to which the holders of our common stock
    immediately prior to the transaction have the entitlement to
    exercise, directly or indirectly, 50% or more of the total
    voting power of all shares of capital stock entitled to vote
    generally in the election of directors of the continuing or
    surviving corporation immediately after the transaction, or</TD>
</TR>

</TABLE>

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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="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (c)&nbsp;which is effected solely to change our jurisdiction of
    incorporation and results in a reclassification, conversion or
    exchange of outstanding shares of our common stock solely into
    shares of common stock of the surviving 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;&nbsp;
However, investors will not have the right to require us to
repurchase their notes if a Change of Control occurs, and either
(A)&nbsp;the closing price per share of our common stock on the
New York Stock Exchange for any five trading days within the
period of 10 consecutive trading days ending immediately after
the later of the event that constitutes a Change of Control or
the public announcement of such event, in the case of a Change
of Control relating to an acquisition of capital stock, or the
period of 10 consecutive trading days ending immediately before
such event, in the case of Change of Control relating to a
merger, consolidation or asset sale, equals or exceeds 105% of
the Conversion Price of the notes in effect on each of those
trading days or (B)&nbsp;all of the consideration (excluding
cash payments for fractional shares and cash payments made
pursuant to dissenters&#146; appraisal rights) in a merger or
consolidation constituting a Change of Control under clause
(1)&nbsp;and/or (2)&nbsp;above consists of shares of common
stock traded on a national securities exchange or quoted on the
Nasdaq National Market (or will be so traded or quoted
immediately following the merger or consolidation) and as a
result of the merger or consolidation the notes become
convertible into such 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;&nbsp;
For purposes of these provisions:
</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="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;whether a person is a &#147;beneficial owner&#148; will
    be determined in accordance with Rule&nbsp;13d-3 under the
    Securities Exchange Act; and</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;&nbsp;
    (2)&nbsp;&#147;person&#148; includes any syndicate or group that
    would be deemed to be a &#147;person&#148; under
    Section&nbsp;13(d)(3) of the Securities Exchange Act.</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;&nbsp;
Rule&nbsp;13e-4 under the Securities Exchange Act requires the
dissemination of prescribed information to security holders in
the event of an issuer tender offer and may apply in the event
that the repurchase option becomes available to the holders of
notes. We will comply with this rule to the extent it applies at
that time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The definition of Change of Control includes a phrase relating
to the conveyance, transfer, sale, lease or disposition of
&#147;all or substantially all&#148; of our assets. There is no
precise, established definition of the phrase
&#147;substantially all&#148; under applicable law. Accordingly,
the ability of a holder of notes to require us to repurchase its
notes as a result of the conveyance, transfer, sale, lease or
other disposition of less than all of our assets may be
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;&nbsp;
The foregoing provisions would not necessarily provide the
holders of notes with protection if we are involved in a highly
leveraged transaction or other transaction that may adversely
affect the holders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If a Change of Control were to occur, we may not have enough
funds to pay the repurchase price. We have previously incurred,
and may in the future incur, other indebtedness with similar
Change of Control provisions permitting its holders to
accelerate or to require us to repurchase our indebtedness upon
the occurrence of similar events or on some specified dates. If
we fail to repurchase the notes when required following a Change
of Control, we will be in default under the indenture.
</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>Merger and Sales of Assets by Calpine</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;&nbsp;
We may not consolidate with or merge with or into any other
person or sell, assign, convey, transfer, or otherwise dispose
of all or substantially all of our properties and assets as an
</DIV>

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<DIV align="left" style="font-size: 10pt;">
entirety to any person unless immediately after giving effect to
the transaction, no event of default with respect to the notes
will have occurred and be continuing and either:
</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="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;we shall be the surviving corporation; or</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;&nbsp;
    (2)&nbsp;the person formed by the consolidation or into which we
    are merged or the person to which our properties and assets are
    so sold, assigned, conveyed, transferred, leased or otherwise
    disposed of, shall be a corporation organized and existing under
    the laws of the United States, any state within the United
    States or the District of Columbia and shall expressly assume,
    in a form reasonably satisfactory to the trustee, all of our
    obligations under the indenture and the notes.</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;&nbsp;
In addition, we may not, directly or indirectly, lease all or
substantially all of our properties or assets, in one or more
related transactions, to any other person.
</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>Limitation on Sale and Leaseback Transactions</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;&nbsp;
Under the terms of the indenture, we shall not, and shall not
permit any of our Restricted Subsidiaries to, enter into any
Sale and Leaseback Transaction unless:
</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="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;we or the Restricted Subsidiary would be entitled to
    create a Lien on the property or asset subject to the Sale and
    Leaseback Transaction securing Indebtedness in an amount equal
    to the Attributable Debt with respect to that transaction
    without equally and ratably securing the notes pursuant to the
    covenant described below under &#147;&#151; Limitation on
    Liens;&#148; or</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;&nbsp;
    (2)&nbsp;the net proceeds of the sale are at least equal to the
    fair value (as determined by board of directors of Calpine) of
    the property or asset subject to the Sale and Leaseback
    Transaction and Calpine, or the Restricted Subsidiary, applies
    or causes to be applied, within 180&nbsp;days of the effective
    date of the Sale and Leaseback Transaction, an amount in cash
    equal to the net proceeds of the sale to the retirement of
    Indebtedness of Calpine, or of the Restricted Subsidiary.</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;&nbsp;
In addition to the transactions permitted pursuant to the
clauses (1)&nbsp;and (2)&nbsp;above, we or any of our Restricted
Subsidiaries may enter into a Sale and Leaseback Transaction as
long as the sum of:
</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="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;the Attributable Debt with respect to that Sale and
    Leaseback Transaction and all other Sale and Leaseback
    Transactions entered into pursuant to this provision, plus</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;&nbsp;
    (2)&nbsp;the amount of outstanding Indebtedness secured by Liens
    incurred pursuant to the final paragraph of the covenant
    described under &#147;&nbsp;&#151; Limitation on Liens&#148;
    below, does not exceed 15% of Calpine&#146;s Consolidated Net
    Tangible Assets as determined based on Calpine&#146;s
    consolidated balance sheet as of the end of the most recent
    fiscal quarter for which financial statements are available. In
    addition, any Restricted Subsidiary may enter into a Sale and
    Leaseback Transaction with respect to property or assets owned
    by that Restricted Subsidiary so long as the proceeds of that
    Sale and Leaseback Transaction are used to explore, drill,
    develop, construct, purchase, repair, improve, or add to
    property or assets of any Restricted Subsidiary, or to repay
    (within 365&nbsp;days of the commencement of full commercial
    operation of any such property or assets) Indebtedness incurred
    to explore, drill, develop, construct, purchase, repair, improve
    or add to property or assets of any Restricted Subsidiary.</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;&nbsp;
As used in the indenture, the following terms are defined as
follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;Attributable Debt,&#148; in respect of any Sale and
Leaseback Transaction, means, as of the date of determination,
the present value (discounted at the rate of interest set forth
or implicit in terms of the lease (or, if not practicable to
determine that rate, the weighted average rate of
</DIV>

<P align="center" style="font-size: 10pt;">S-62

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<DIV align="left" style="font-size: 10pt;">
interest borne by the securities outstanding under the
indenture), compounded annually) of the total obligations of the
lessee for rental payments during the remaining term of the
lease included in such Sale and Leaseback Transaction (including
any period for which such lease has been extended).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;Capitalized Lease Obligations&#148; of a person means the
rental obligations under any lease of any property (whether
real, personal or mixed) of which the discounted present value
of the rental obligations of that person as lessee, in
conformity with generally accepted accounting principles, is
required to be capitalized on the balance sheet of that person.
The stated maturity of any such lease shall be the date of the
last payment of rent or any other amount due under such lease
prior to the first date upon which such lease may be terminated
by the lessee without payment of a penalty.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;Consolidated Current Liabilities&#148; means, as of the
date of determination, our aggregate amount of consolidated
liabilities, and those of our Restricted Subsidiaries, which may
properly be classified as current liabilities (including taxes
accrued as estimated), after eliminating (i)&nbsp;all
inter-company items between Calpine and its subsidiaries and
(ii)&nbsp;all current maturities of long-term Indebtedness, all
as determined in accordance with generally accepted accounting
principles.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;Consolidated Net Tangible Assets&#148; means, as of the
date of determination, the total amount of consolidated assets
(less accumulated depreciation or amortization, allowances for
doubtful receivables, other applicable reserves and other
properly deductible items) under generally accepted accounting
principles which would appear on our consolidated balance sheet
and that of our subsidiaries, determined in accordance with
generally accepted accounting principles, and after giving
effect to purchase accounting and after deducting therefrom, to
the extent otherwise included, the amounts of:
</DIV>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (a)&nbsp;Consolidated Current Liabilities;</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;&nbsp;
    (b)&nbsp;minority interests in our Restricted Subsidiaries held
    by a third person or another Restricted Subsidiary;</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;&nbsp;
    (c)&nbsp;excess of cost over fair value of assets of businesses
    acquired, as determined in good faith by Calpine&#146;s board of
    directors;</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;&nbsp;
    (d)&nbsp;any revaluation or other write-up in value of assets
    subsequent to December&nbsp;31, 1993 as a result of a change in
    the method of valuation in accordance with generally accepted
    accounting principles;</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;&nbsp;
    (e)&nbsp;unamortized debt discount and expenses and other
    unamortized deferred charges, goodwill, patents, trademarks,
    service marks, trade names, copyrights, licenses, organization
    or developmental expenses and other intangible items;</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;&nbsp;
    (f)&nbsp;treasury stock; and</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;&nbsp;
    (g)&nbsp;any cash set apart and held in a sinking fund or other
    analogous fund established for the purpose of redemption or
    other retirement of capital stock to the extent such obligation
    is not reflected in Consolidated Current Liabilities.</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;&nbsp;
&#147;Indebtedness&#148; of any person means, without
duplication:
</DIV>

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<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>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (a)&nbsp;the principal of and premium (if any premium is then
    due and owing) in respect of indebtedness of that person for
    money borrowed;</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;&nbsp;
    (b)&nbsp;all Capitalized Lease Obligations of that person;</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;&nbsp;
    (c)&nbsp;all obligations of that person for the reimbursement of
    any obligor on any letter of credit, banker&#146;s acceptance or
    similar credit transaction, other than obligations with respect
    to letters of credit securing obligations (other than
    obligations described in clauses (a)&nbsp;and</TD>
</TR>

</TABLE>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    (b)&nbsp;above) entered into in the ordinary course of business
    of that person to the extent such letters of credit are not
    drawn upon or, if and to the extent drawn upon, that drawing is
    reimbursed no later than the tenth business day following
    receipt by that person of a demand for reimbursement following
    payment on the letter of credit;</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;&nbsp;
    (d)&nbsp;all obligations of the type referred to in clauses
    (a)&nbsp;through (c) above of other persons and all dividends of
    other persons for the payment of which, in either case, that
    person is responsible or liable, directly or indirectly, as
    obligor, guarantor or otherwise; and</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;&nbsp;
    (e)&nbsp;all obligations of the type referred to in clauses
    (a)&nbsp;through (d) above of other persons secured by any Lien
    on any property or asset of that person (whether or not such
    obligation is assumed by that person), the amount of the
    obligation on any date of determination being deemed to be the
    lesser of the value of the property or assets or the amount of
    the obligation so secured.</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;&nbsp;
The amount of Indebtedness of any person at any date shall be,
with respect to unconditional obligations, the outstanding
balance at such date of all such obligations as described above
and, with respect to any contingent obligations at such date,
the maximum liability determined by that person&#146;s board of
directors, in good faith, in light of the facts and
circumstances existing at the time, as reasonably likely to be
incurred upon the occurrence of the contingency giving rise to
such obligation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;Lien&#148; means any mortgage, lien, pledge, charge, or
other security interest or encumbrance of any kind (including
any conditional sale or other title retention agreement and any
lease in the nature thereof).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;Restricted Subsidiary&#148; means any subsidiary of a
person that is not designated an Unrestricted Subsidiary by that
person&#146;s board of directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&#147;Sale and Leaseback Transaction&#148; means an arrangement
relating to property now owned or later acquired whereby a
person or one of such person&#146;s subsidiaries transfers that
property to another person and then leases it back from that
person, other than leases for a term of not more than 36 months
or leases between such person and a wholly-owned subsidiary of
such person or between such person&#146;s wholly-owned
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;&nbsp;
&#147;Unrestricted Subsidiary&#148; means (i)&nbsp;any
subsidiary that at the time of determination shall be designated
an Unrestricted Subsidiary by a person&#146;s board of directors
in the manner provided below and (ii)&nbsp;any subsidiary of an
Unrestricted Subsidiary. A person&#146;s board of directors may
designate any subsidiary (including any newly acquired or newly
formed subsidiary) to be an Unrestricted Subsidiary unless such
subsidiary owns any capital stock of, or owns or holds any Lien
on any property of, that person or any other subsidiary of that
person that is not a subsidiary of the subsidiary to be so
designated, so long as the subsidiary to be designated an
Unrestricted Subsidiary and all other subsidiaries previously so
designated at the time of any determination hereunder shall, in
the aggregate, have total assets not greater than 5% of
Calpine&#146;s Consolidated Net Tangible Assets as determined
based on the consolidated balance sheet of such person as of the
end of the most recent financial quarter for which financial
statements are available. A person&#146;s board of directors may
designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; <I>provided, however,</I> that immediately after
giving effect to that designation no Default or Event of Default
under the indenture shall have occurred and be continuing. Any
such designation by a person&#146;s board of directors shall be
evidenced to the trustee by promptly filing with the trustee a
copy of the board resolution giving effect to the designation
and a certificate signed by two of that person&#146;s officers
certifying that the designation complied with these provisions.
However, the failure to file the resolution and/or certificate
with the trustee shall not impair or affect the validity of the
designation.
</DIV>

<P align="center" style="font-size: 10pt;">S-64

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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>Limitation on Liens</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;&nbsp;
Under the terms of the indenture, we shall not, and shall not
permit any of our Restricted Subsidiaries to, directly or
indirectly, incur any Lien upon any properties or assets
(including capital stock), whether owned at the date of issuance
of the notes or thereafter acquired, in each case to secure
Indebtedness of the Company or any Restricted Subsidiary,
without effectively providing that the notes shall be secured
equally and ratably with (or prior to) that Indebtedness, so
long as that Indebtedness shall be so secured. The above
restriction on Liens will not, however, apply to:
</DIV>

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<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>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;(a)&nbsp;Liens on assets or property incurred by
    Calpine or any Restricted Subsidiary to secure Indebtedness
    incurred to finance the exploration, drilling, development,
    construction or purchase of or by, or repairs, improvements or
    additions to, property or assets of Calpine or such Restricted
    Subsidiary, which Liens may include Liens on the capital stock
    of a Restricted Subsidiary or (b)&nbsp;Liens incurred by any
    Restricted Subsidiary that does not own, directly or indirectly,
    at the time of such original incurrence of such Lien under this
    clause (1)(b) any operating properties or assets securing
    Indebtedness incurred to finance the exploration, drilling,
    development, construction or purchase of, or repairs,
    improvements or additions to, property or assets of any
    Restricted Subsidiary that does not, directly or indirectly, own
    any operating properties or assets at the time of such original
    incurrence of such Lien, which Liens contemplated by this clause
    (1)&nbsp;may include Liens on the capital stock of one or more
    Restricted Subsidiaries that do not, directly or indirectly, own
    any operating properties or assets at the time of such original
    incurrence of such Lien, <I>provided, however,</I> that the
    Indebtedness secured by any such Lien may not be issued more
    than 365&nbsp;days after the later of the exploration, drilling,
    development, completion of construction, purchase, repair,
    improvement, addition or commencement of full commercial
    operation of the property or assets being so financed;</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;&nbsp;
    (2)&nbsp;Liens existing on the date of issuance of the notes,
    other than Liens relating to Indebtedness or other obligations
    being repaid, or Liens that are otherwise extinguished with the
    proceeds of the notes;</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;&nbsp;
    (3)&nbsp;Liens on property, assets or shares of stock of a
    person at the time that person becomes a subsidiary of ours;
    <I>provided, however,</I> that any such Lien may not extend to
    any other property or assets owned by us or any of its
    Restricted Subsidiaries;</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;&nbsp;
    (4)&nbsp;Liens on property or assets existing at the time that
    we or one of our subsidiaries acquires the property or asset,
    including any acquisition by means of a merger or consolidation
    with or into us or one of our subsidiaries; <I>provided,
    however,</I> that such Liens are not incurred in connection
    with, or in contemplation of, that merger or consolidation; and
    <I>provided, further,</I> that the Lien may not extend to any
    other property or asset owned by us or any of our Restricted
    Subsidiaries;</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;&nbsp;
    (5)&nbsp;Liens securing Indebtedness or other obligations of one
    of our subsidiaries that is owing to us or any of our Restricted
    Subsidiaries, or Liens securing our Indebtedness or other
    obligations that are owing to one of our subsidiaries;</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;&nbsp;
    (6)&nbsp;Liens incurred on assets that are the subject of a
    Capitalized Lease Obligation to which we or any of our
    subsidiaries is a party, which shall include Liens on the stock
    or other ownership interest in one or more of our Restricted
    Subsidiaries leasing such assets;</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;&nbsp;
    (7)&nbsp;Liens to secure any refinancing, refunding, extension,
    renewal or replacement (or successive refinancings, refundings,
    extensions, renewals or replacements) as a whole, or in part, of
    any Indebtedness secured by any Lien referred to in clauses (1),
    (2), (3), (4)&nbsp;or (6)&nbsp;above; <I>provided, however,</I>
    that (a)&nbsp;such new Lien shall be limited to all or part of
    the same property or assets that secured the original Lien (plus
    repairs, improvements or additions to that property or assets
    and Liens on the stock or other ownership interest in</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">S-65

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<FONT face="helvetica,arial">

<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>&nbsp;</TD>
    <TD align="left">
    one or more Restricted Subsidiaries beneficially owning that
    property or assets) and (b) the amount of Indebtedness secured
    by such Lien at such time (or, if the amount that may be
    realized in respect of such Lien is limited, by contract or
    otherwise, such limited lesser amount) is not increased, other
    than by an amount necessary to pay fees and expenses, including
    premiums, related to the refinancing, refunding, extension,
    renewal or replacement of the Indebtedness; and</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;&nbsp;
    (8)&nbsp;Liens by which the notes are secured equally and
    ratably with other Indebtedness pursuant to this covenant.</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;&nbsp;
However, we and any of our Restricted Subsidiaries may incur
other Liens to secure Indebtedness as long as the sum of:
</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="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;the lesser of (a)&nbsp;the amount of outstanding
    Indebtedness secured by Liens incurred pursuant to this
    provision (or, if the amount that may be realized in respect of
    such Lien is limited, by contract or otherwise, such limited
    lesser amount) and (b)&nbsp;the fair market value of the
    property securing that item of Indebtedness, plus</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;&nbsp;
    (2)&nbsp;the Attributable Debt with respect to all Sale and
    Leaseback Transactions entered into pursuant to clause
    (1)&nbsp;described in the second paragraph under the covenant
    &#147;&#151; Limitation on Sale and Leaseback Transactions,&#148;</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;">
does not exceed 15% of Calpine&#146;s Consolidated Net Tangible
Assets as determined based on our consolidated balance sheet as
of the end of the most recent fiscal quarter for which financial
statements are available.
</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>Subordination</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;&nbsp;
The notes will be subordinate and junior in right of payment to
all of our existing and future Senior Debt. Upon any payment or
distribution of our assets to creditors upon any liquidation,
dissolution, winding-up, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency or
similar proceedings relating to Calpine, the holders of Senior
Debt will first be entitled to receive payment of the Senior
Debt in full before the holders of the notes, or the trustee (or
any other person or entity) on behalf of the holders of the
notes, will be entitled to receive or retain any payment or
distribution in respect of the 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;&nbsp;
If the maturity of the notes is accelerated, the holders of all
Senior Debt outstanding at the time of the acceleration will
first be entitled to receive payment of the Senior Debt in full
(including any amounts due upon acceleration) before the holders
of the notes will be entitled to receive or retain any payment
or distribution in respect of the 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;&nbsp;
In the event that:
</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="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    we default in the payment of any principal of, premium, if any,
    interest on, or any other amount with respect to, any Senior
    Debt when the same becomes due and payable (a &#147;payment
    default&#148;), whether or not at a date fixed for prepayment or
    by declaration of acceleration or otherwise; 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">
    such payment default continues beyond the period of grace, if
    any, specified in the instrument evidencing said Senior Debt;</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;">
then, unless and until the default is cured or waived or ceases
to exist or all Senior Debt is paid in full in cash, no direct
or indirect payment or distribution (in cash, property,
securities, by set-off or otherwise) will be made or agreed to
be made for or in respect of the notes, or in respect of any
redemption, repayment, retirement, purchase or other acquisition
of any of the notes.
</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;&nbsp;
The term &#147;Senior Debt&#148; means:
</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="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (A)&nbsp;all of the existing and future secured Indebtedness of
    Calpine;</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;&nbsp;
    (B)&nbsp;all of the following series of Calpine&#146;s
    outstanding senior unsecured Indebtedness:</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="8%"></TD>
    <TD width="92%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;Calpine&#146;s
    10<FONT style="font-size: 70%"><SUP>1</SUP></FONT>/<FONT style="font-size: 60%">2</FONT>%
    Senior Notes due 2006,</TD>
</TR>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (2)&nbsp;Calpine&#146;s
    8<FONT style="font-size: 70%"><SUP>3</SUP></FONT>/<FONT style="font-size: 60%">4</FONT>%
    Senior Notes due 2007,</TD>
</TR>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (3)&nbsp;Calpine&#146;s
    7<FONT style="font-size: 70%"><SUP>7</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%
    Senior Notes due 2008,</TD>
</TR>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (4)&nbsp;Calpine&#146;s
    7<FONT style="font-size: 70%"><SUP>5</SUP></FONT>/<FONT style="font-size: 60%">8</FONT>%
    Senior Notes due 2006, and</TD>
</TR>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (5)&nbsp;Calpine&#146;s
    7<FONT style="font-size: 70%"><SUP>3</SUP></FONT>/<FONT style="font-size: 60%">4</FONT>%
    Senior Notes due 2009; and</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="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (C)&nbsp;any deferrals, renewals or extensions of any of the
    foregoing.</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>Events of Default</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;&nbsp;
The following are events of default with respect to the notes
(each, an &#147;Event of Default&#148;):
</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="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;default for 30&nbsp;days in payment of any interest
    installment due and payable on the notes;</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;&nbsp;
    (2)&nbsp;default in payment of principal of the notes and
    interest at maturity, or following a Change of Control, when the
    same becomes due and payable;</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;&nbsp;
    (3)&nbsp;default in the payment of the Principal Return (and
    cash in lieu of fractional shares) or failure to deliver the Net
    Shares, in each case when due;</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;&nbsp;
    (4)&nbsp;material default in our performance of any other
    covenants or agreements in the notes or the indenture which
    default continues for 30&nbsp;days after the date on which
    written notice of such default is given to us by the trustee or
    to us and trustee by the holders of at least 25% in aggregate
    principal amount of the then-outstanding notes;</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;&nbsp;
    (5)&nbsp;default by us under any instrument or instruments under
    which there is or may be secured or evidenced any of our
    indebtedness (other than the notes) having an outstanding
    principal amount of $50,000,000 (or its equivalent in any other
    currency or currencies) or more, individually or in the
    aggregate, that has caused the holders thereof to declare such
    indebtedness to be due and payable prior to its stated maturity,
    unless such declaration has been rescinded within 30&nbsp;days;</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;&nbsp;
    (6)&nbsp;default in the payment of the principal of any bond,
    debenture, note or other evidence of our indebtedness, in each
    case for money borrowed, or in the payment of principal under
    any mortgage, indenture, agreement or instrument under which
    there may be issued or by which there may be secured or
    evidenced any indebtedness of ours for money borrowed, which
    default for payment of principal is individually or in an
    aggregate principal amount exceeding $50,000,000 (or its
    equivalent in any other currency or currencies) when such
    indebtedness becomes due and payable (whether at maturity, upon
    redemption or acceleration or otherwise), if such default shall
    continue unremedied or unwaived for more than 30&nbsp;days after
    the expiration of any grace period or extension of the time for
    payment applicable thereto; and</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;&nbsp;
    (7)&nbsp;certain events of bankruptcy, insolvency and
    reorganization of Calpine.</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;&nbsp;
The indenture requires that we file annually with the trustee a
certificate describing any default by us in the performance of
any condition or covenant that has occurred under the indenture
and its status. We must give the trustee, within 30&nbsp;days
after the occurrence thereof, written notice of any event which
with the giving of notice or lapse of time or both would become
an Event of Default described in clauses (4), (5)&nbsp;or
(6)&nbsp;above.
</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;&nbsp;
The indenture provides that if an Event of Default (other than
an Event of Default relating to certain events of bankruptcy,
insolvency and reorganization) occurs and is continuing with
respect to the notes, either the trustee or the registered
holders of at least 25% in aggregate principal amount of the
notes may declare the principal amount plus accrued and unpaid
interest on the notes to be due and payable immediately. If an
Event of Default relating to certain events of bankruptcy,
insolvency or reorganization occurs, the principal amount plus
accrued and unpaid interest on the notes will become immediately
due and payable without any action on the part of the trustee or
any holder. At any time after a declaration of acceleration, but
before a judgment or decree for payment of money has been
obtained, if all Events of Default with respect to the notes
have been cured or waived (other than the nonpayment of the
issue price or accrued and unpaid interest on the notes which
has become due solely by reason of the declaration of
acceleration), then the declaration of acceleration shall be
automatically annulled and rescinded.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
A holder of notes may pursue any remedy under the indenture only
if:
</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="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;the holder gives the trustee written notice of a
    continuing Event of Default for the notes;</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;&nbsp;
    (2)&nbsp;the registered holders of at least 25% in aggregate
    principal amount of the outstanding notes make a written request
    to the trustee to pursue the remedy;</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;&nbsp;
    (3)&nbsp;the registered holder offers to the trustee security
    and indemnity reasonably satisfactory to the trustee against any
    loss, liability or expense;</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;&nbsp;
    (4)&nbsp;the trustee fails to act for a period of 60&nbsp;days
    after receipt of notice, request and offer of security or
    indemnity; and</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;&nbsp;
    (5)&nbsp;during that 60-day period, the holders of a majority in
    principal amount of the notes do not give the trustee a
    direction inconsistent with the request.</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;&nbsp;
This provision does not, however, affect the right of a holder
of notes to sue for enforcement of payment of the principal and
interest on the holder&#146;s notes on or after the respective
due dates expressed or provided for in its notes or the
holder&#146;s right to convert its notes in accordance with the
indenture.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The trustee will be entitled under the indenture, subject to the
duty of the trustee during a default to act with the required
standard of care, to be indemnified before proceeding to
exercise any right or power under the indenture at the direction
of the registered holders of the notes or which requires the
trustee to expend or risk its own funds or otherwise incur any
financial liability. The indenture will also provide that the
registered holders of a majority in principal amount of the
outstanding notes may direct the time, method and place of
conducting any proceeding for any remedy available to the
trustee or exercising any trust or power conferred on the
trustee with respect to the notes. The trustee, however, may
refuse to follow any such direction that the trustee determines
is unduly prejudicial to the rights of other registered holders
of the notes, or would involve the trustee in personal
liability; <I>provided </I>that the trustee may take any other
action deemed proper by it that is not inconsistent with such
direction.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The indenture will provide that while the trustee generally must
mail notice of a default or Event of Default to the registered
holders of the notes within 90&nbsp;days of the trustee&#146;s
actual knowledge of the occurrence, the trustee may withhold
notice of any default or Event of Default (except in payment on
the notes) if the trustee in good faith determines that the
withholding of such notice is in the interest of the holders of
the notes.
</DIV>

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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>Modification and Waiver</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;&nbsp;
We may amend or supplement the indenture if the holders of a
majority in principal amount of the notes consent to it. Without
the consent of each noteholder affected, however, no
modification may:
</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="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;reduce the amount of notes whose holders must consent
    to an amendment, supplement or waiver;</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;&nbsp;
    (2)&nbsp;reduce the rate of interest or change the time for
    payment of interest on the notes;</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;&nbsp;
    (3)&nbsp;reduce the principal amount or change the stated
    maturity of the notes;</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;&nbsp;
    (4)&nbsp;make any change in any repurchase right to the
    detriment of such holder;</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;&nbsp;
    (5)&nbsp;make any change in any conversion right to the
    detriment of such holder;</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;&nbsp;
    (6)&nbsp;make payments on the notes payable in currency or
    consideration other than as originally stated in the notes;</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;&nbsp;
    (7)&nbsp;impair the holder&#146;s right to receive payment of
    principal and interest on the notes or to institute suit for the
    enforcement of any payment on the notes;</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;&nbsp;
    (8)&nbsp;make any change in the percentage of principal amount
    of notes necessary to waive compliance with some provisions of
    the indenture or to make any change in this provision for
    modification; or</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;&nbsp;
    (9)&nbsp;waive a continuing default or Event of Default
    regarding any payment on the notes.</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;&nbsp;
We may amend or supplement the indenture or waive any provision
of it without the consent of any holders of notes in certain
circumstances, 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="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;to cure any ambiguity, omission, defect or
    inconsistency;</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;&nbsp;
    (2)&nbsp;to provide for the assumption of our obligations under
    the indenture by a successor upon any merger, consolidation or
    asset transfer permitted under the indenture;</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;&nbsp;
    (3)&nbsp;to provide for uncertificated notes in addition to or
    in place of certificated notes or to provide for bearer notes;</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;&nbsp;
    (4)&nbsp;to provide any security for or guarantees of the notes;</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;&nbsp;
    (5)&nbsp;to comply with any requirement to effect or maintain
    the qualification of the indenture under the
    Trust&nbsp;Indenture Act of 1939, as amended;</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;&nbsp;
    (6)&nbsp;to add covenants that would benefit the holders of
    notes or to surrender any rights we have under the indenture; or</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;&nbsp;
    (7)&nbsp;to make any change that does not adversely affect the
    rights of any holder of the notes, including, without
    limitation, changing any payment record dates as necessary to
    conform to the then current market practice.</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;&nbsp;
The holders of a majority in principal amount of the outstanding
notes may waive any existing or past default or Event of
Default. Those holders may not, however, waive any default or
Event of Default in any payment of principal or interest on any
note or compliance with a provision that cannot be amended or
supplemented without the consent of each holder affected.
</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>Calculations in Respect of Notes</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;&nbsp;
We will be responsible for making all calculations called for
under the notes. These calculations include, but are not limited
to, determinations of the market prices of the notes and
</DIV>

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<DIV align="left" style="font-size: 10pt;">
shares of our common stock and accrued interest payable on the
notes. We will make all these calculations in good faith, and,
absent manifest error, our calculations will be final and
binding on holders of notes. We will provide a schedule of our
calculations to the trustee and conversion agent, and each of
the trustee and conversion agent is entitled to rely upon the
accuracy of our calculations without independent verification.
The trustee and/or the conversion agent will forward our
calculations to any holder of notes upon the request of that
holder.
</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>Governing Law</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;&nbsp;
The indenture and the notes will be governed by, and construed
in accordance with, the laws of the State of New York.
</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>Trustee, Paying Agent and Conversion Agent</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;&nbsp;
Wilmington Trust&nbsp;Company will initially act as trustee,
paying agent and conversion agent for the 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;&nbsp;
If an Event of Default occurs and is continuing, the trustee
will be required to use the degree of care and skill of a
prudent man under the circumstances in the conduct of his own
affairs. The trustee will become obligated to exercise any of
its powers under the indenture at the request of any of the
holders of any notes only after those holders have offered the
trustee indemnity reasonably satisfactory to it.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
If the trustee becomes one of our creditors, it will be subject
to limitations in the indenture on its rights to obtain payment
of claims or to realize on some property received for any such
claim, as security or otherwise. The trustee is permitted to
engage in other transactions with us. If, however, it acquires
any conflicting interest, it must eliminate that conflict or
resign.
</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>Form, Exchange, Registration and Transfer</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;&nbsp;
We will issue the notes in registered form, without interest
coupons. There will be no service charge for any registration of
transfer or exchange of the notes. We may, however, require the
payment of any tax or other governmental charge payable for that
registration.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Notes will be exchangeable for other notes, for the same total
principal amount and for the same terms but in different
authorized denominations in accordance with the indenture.
Holders may present notes for registration of transfer at the
office of the security registrar or any transfer agent we
designate. The security registrar or transfer agent will effect
the transfer or exchange when it is satisfied with the documents
of title and identity of the person making the 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;&nbsp;
We have appointed the trustee as security registrar for the
notes. We may at any time rescind that designation or approve a
change in the location through which any registrar acts. We are
required to maintain an office or agency for transfers and
exchanges in each place of payment. We may at any time designate
additional registrars for the notes.
</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>Payment and Paying Agents</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;&nbsp;
Payments on the notes will be made in U.S. dollars at the office
of the trustee. At our option, however, we may make payments by
check mailed to the holder&#146;s registered address or, with
respect to global notes, by wire transfer. We will make interest
payments to the person in whose name the notes is registered at
the close of business on the regular record date for the
interest payment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The trustee will be designated as our paying agent for payments
on notes. We may at any time designate additional paying agents
or rescind the designation of any paying agent or approve a
change in the office through which any paying agent acts.
</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;&nbsp;
Subject to the requirements of any applicable abandoned property
laws, the trustee and paying agent shall pay to us upon written
request any money held by them for payments on the notes that
remain unclaimed for two years after the date upon which that
payment has become due. After payment to us, holders entitled to
the money must look to us for payment. In that case, all
liability of the trustee or paying agent with respect to that
money will cease.
</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>Notices</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;&nbsp;
Except as otherwise described in this prospectus supplement,
notice to registered holders of the notes will be given by mail
to the holders at the addresses as they appear in the security
register. Notices will be deemed to have been given on the date
of such mailing.
</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>Replacement of Notes</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;&nbsp;
We will replace any notes that become mutilated, destroyed,
stolen or lost at the expense of the holder upon delivery to the
trustee of the mutilated notes or evidence of the loss, theft or
destruction satisfactory to us and the trustee. In the case of
lost, stolen or destroyed notes, indemnity satisfactory to the
trustee and us may be required at the expense of the holder of
the notes before a replacement note will be issued.
</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>Payment of Stamp and Other Taxes</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;&nbsp;
We will pay all stamp and other duties, if any, which may be
imposed by the United States or any political subdivision
thereof or taxing authority thereof or therein with respect to
the issuance of the notes. We will not be required to make any
payment with respect to any other tax, assessment or
governmental charge imposed by any government or any political
subdivision thereof or taxing authority thereof or therein.
</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>Additional 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;&nbsp;
Anyone who receives this prospectus supplement may obtain a copy
of the indenture without charge by writing to Calpine
Corporation, 50&nbsp;West San Fernando Street, San Jose,
California 95113, Attention: Investor Relations.
</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>Book-Entry, Delivery and Form</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;&nbsp;
The notes will be represented by one or more global notes in
registered, global form without interest coupons (collectively,
the &#147;global note&#148;). The global note will initially be
deposited upon issuance with the trustee as custodian for The
Depository Trust&nbsp;Company (the &#147;Depositary&#148;) in
New York, New York, and registered in the name of the Depositary
or its nominee, in each case, for credit to an account of a
direct or indirect participant 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;&nbsp;
Except as set forth below, the global notes may be transferred,
in whole and not in part, only to another nominee of the
Depositary or to a successor of the Depositary or its nominee.
Beneficial interests in the global notes may not be exchanged
for notes in certificated form except in the limited
circumstances described below. See &#147;&#151;&nbsp;Exchange of
Book-Entry Notes for Certificated Notes.&#148; In addition,
transfer of beneficial interests in the global notes are subject
to the applicable rules and procedures of the Depositary and its
direct or indirect participants, which may change from time to
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>Depositary 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;&nbsp;
The Depositary has advised Calpine that the Depositary is a
limited-purpose trust company created to hold securities for its
participating organizations (collectively, the
&#147;Participants&#148;) and to facilitate the clearance and
settlement of transactions in those securities between
Participants through electronic book-entry changes in accounts
of Participants. The Participants include
</DIV>

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<DIV align="left" style="font-size: 10pt;">
securities brokers and dealers (including the underwriter),
banks, trust companies, clearing corporations and certain other
organizations. Access to the Depositary&#146;s system is also
available to other entities such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly
(collectively, &#147;Indirect Participants&#148;). Persons who
are not Participants may beneficially own securities held by or
on behalf of the Depositary only through the Participants or
Indirect Participants. The ownership interest and transfer of
ownership interest of each actual purchaser of each security
held by or on behalf of the Depositary are recorded on the
records of the Participants and Indirect Participants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The laws of some states require that certain persons take
physical delivery in definitive form of securities that they
own. Consequently, the ability to transfer beneficial interests
in a global note to such persons may be limited to that extent.
Because the Depositary can act only on behalf of the
Participants, which in turn act on behalf of the Indirect
Participants and certain banks, the ability of a person having
beneficial interests in a global note to pledge such interests
to persons or entities that do not participate in the Depositary
system, or otherwise take actions in respect of such interests,
may be affected by the lack of a physical certificate evidencing
such interests. For certain other restrictions on the
transferability of the notes, see &#147;&#151;&nbsp;Exchange of
Book-Entry Notes for Certificated Notes&#148; and
&#147;&#151;&nbsp;Certificated Notes.&#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;&nbsp;
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL
NOTES WILL NOT HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT
RECEIVE PHYSICAL DELIVERY OF NOTES IN CERTIFICATED FORM AND WILL
NOT BE CONSIDERED THE REGISTERED OWNERS, OR HOLDERS THEREOF
UNDER THE INDENTURE FOR ANY PURPOSE.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Payments in respect of the principal and premium, if any, and
interest, if any, on a global note registered in the name of the
Depositary or its nominee will be payable by the trustee to the
Depositary or its nominee in its capacity as the registered
holder under the indenture. Under the terms of the indenture,
Calpine and the trustee will treat the persons in whose names
the notes, including the global notes, are registered as the
owners thereof for the purpose of receiving such payments and
for any and all other purposes whatsoever. Consequently, neither
Calpine, the trustee nor any agent of Calpine or the trustee has
or will have any responsibility or liability for:
</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="4%"></TD>
    <TD width="96%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    (1)&nbsp;any aspect of the Depositary&#146;s records or any
    Participant&#146;s or Indirect Participant&#146;s records
    relating to or payments made on account of beneficial ownership
    interests in the global notes, or for maintaining, supervising
    or reviewing any of the Depositary&#146;s records or any
    Participant&#146;s or Indirect Participant&#146;s records
    relating to the beneficial ownership interests in the global
    notes; or</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;&nbsp;
    (2)&nbsp;any other matter relating to the actions and practices
    of the Depositary or any of its Participants or Indirect
    Participants.</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;&nbsp;
The Depositary has advised Calpine that its current practices,
upon receipt of any payment in respect of securities such as the
notes (including principal and interest, if any), is to credit
the accounts of the relevant Participants with the payment on
the payment date, in amounts proportionate to their respective
holdings in principal amount of beneficial interests in the
relevant security such as the global notes as shown on the
records of the Depositary. Payments by Participants and the
Indirect Participants to the beneficial owners of notes will be
governed by standing instructions and customary practices and
will not be the responsibility of the Depositary, the trustee or
Calpine. Neither Calpine nor the trustee will be liable for any
delay by the Depositary or its Participants in identifying the
beneficial owners of the notes, and Calpine and the trustee may
conclusively rely on and will be protected in relying on
instructions from the Depositary or its nominee as the
registered owner of the notes for all purposes.
</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;&nbsp;
Interests in the global notes will trade in the
Depositary&#146;s Same-Day Funds Settlement System and secondary
market trading activity in such interests will, therefore,
settle in immediately available funds, subject in all cases to
the rules and procedures of the Depositary and its Participants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Transfers between Participants in the Depositary will be
effective in accordance with the Depositary&#146;s procedures,
and will be settled in same-day funds.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The Depositary has advised Calpine that it will take any action
permitted to be taken by a holder of notes only at the direction
of one or more Participants to whose account the Depositary
interests in the global notes are credited and only in respect
of such portion of the aggregate principal amount of the notes
as to which such Participant or Participants has or have given
direction. However, if there is an Event of Default under the
notes, the Depositary reserves the right to exchange global
notes for legended notes in certificated form, and to distribute
such notes to its Participants.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The information in this section concerning the Depositary and
its book-entry systems has been obtained from sources that
Calpine believes to be reliable, but Calpine takes no
responsibility for the accuracy of that 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;&nbsp;
Although the Depositary has agreed to the foregoing procedures
to facilitate transfers of interests in the global note among
Participants in the Depositary, it is under no obligation to
perform or to continue to perform such procedures, and such
procedures may be discontinued at any time. None of Calpine, the
placement agent or the trustee will have any responsibility for
the performance by the Depositary or its respective Participants
or Indirect Participants of their respective obligations under
the rules and procedures governing their operations.
</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>Exchange of Book-Entry Notes for Certificated Notes</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;&nbsp;
A global note is exchangeable for definitive notes in registered
certificated form if (1)&nbsp;the Depositary (A)&nbsp;notifies
Calpine that it is unwilling or unable to continue as depository
for the global note and Calpine thereupon fails to appoint a
successor depository or (B)&nbsp;has ceased to be a clearing
agency registered under the Securities Exchange Act,
(2)&nbsp;Calpine, at its option, notifies the trustee in writing
that it elects to cause issuance of the notes in certificated
form or (3)&nbsp;if an Event of Default with respect to the
notes has occurred and is continuing. In addition, beneficial
interests in a global note may be exchanged for certificated
notes upon request but only upon at least 20&nbsp;days prior
written notice given to the trustee by or on behalf of the
Depositary in accordance with customary procedures. In all
cases, certificated notes delivered in exchange for any global
note or beneficial interest therein will be registered in names,
and issued in any approved denominations, requested by or on
behalf of the Depositary (in accordance with its customary
procedures).
</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>Certificated Notes</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;&nbsp;
Subject to certain conditions, any person having a beneficial
interest in the global note may, upon request to the trustee,
exchange such beneficial interest for notes in the form of
certificated notes. Upon any such issuance, the trustee is
required to register such certificated notes in the name of, and
cause the same to be delivered to, such person or persons (or
the nominee of any thereof). In addition, if (1)&nbsp;Calpine
notifies the trustee in writing that the Depositary is no longer
willing or able to act as a depository and Calpine is unable to
locate a qualified successor within 90&nbsp;days,
(2)&nbsp;Calpine, at its option, notifies the trustee in writing
that it elects to cause the issuance of notes in the form of
certificated notes under the indenture or (3)&nbsp;if an Event
of Default with respect to the notes has occurred and is
continuing, then, upon surrender by the global note holder of
its global note, notes in such form will be issued to each
person that the global note holder and the Depositary identify
as being the beneficial owner of the related notes. Neither
Calpine nor the trustee will be liable for any delay by the
global note holder or the
</DIV>

<P align="center" style="font-size: 10pt;">S-73

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<DIV align="left" style="font-size: 10pt;">
Depositary in identifying the beneficial owners of notes and
Calpine and the trustee may conclusively rely on, and will be
protected in relying on, instructions from the global note
holder or the Depositary for all purposes.
</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>Same Day Settlement and Payment</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;&nbsp;
The indenture will require that payments in respect of the notes
represented by the global note (including principal, premium, if
any, and interest, if any) be made by wire transfer of
immediately available funds to the accounts specified by the
global note holder. With respect to certificated notes, Calpine
will make all payments of principal, premium, if any, interest,
if any, by wire transfer of immediately available funds to the
accounts specified by the holders thereof or, if no such account
is specified, by mailing a check to each such holder&#146;s
registered address. Calpine expects that secondary trading in
the certificated notes will also be settled in immediately
available funds.
</DIV>

<P align="center" style="font-size: 10pt;">S-74

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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
<A name='109'></A>
</DIV>

<!-- link1 "PRICE RANGE OF COMMON STOCK" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>PRICE RANGE OF COMMON STOCK</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;&nbsp;
Our common stock is traded on the New York Stock Exchange under
the symbol &#147;CPN.&#148; The following table sets forth, for
the periods indicated, the range of high and low sale prices for
our common stock:
</DIV>
<FONT face="times new roman,times">

<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="78%">&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>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap><B><FONT face="helvetica,arial">Common</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap><B><FONT face="helvetica,arial">Stock</FONT></B></TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap><B><FONT face="helvetica,arial">Price ($)</FONT></B></TD>
</TR>

<TR valign="bottom" style="font-size: 1px">
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="7" align="center" nowrap style="border-top: 1pt solid #000000;">&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">High</FONT></B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><B><FONT face="helvetica,arial">Low</FONT></B></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="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><FONT face="helvetica,arial">Year ended December&nbsp;31,
    2003</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">First Quarter
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.42</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2.51</FONT></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">
    <FONT face="helvetica,arial">Second Quarter
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7.25</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3.33</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Third Quarter
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8.03</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.76</FONT></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">
    <FONT face="helvetica,arial">Fourth Quarter
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">5.25</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3.28</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="2" align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <B><FONT face="helvetica,arial">Year ended December&nbsp;31,
    2004</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">First Quarter
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6.42</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.35</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Second Quarter
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.98</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3.04</FONT></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">
    <FONT face="helvetica,arial">Third Quarter
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.46</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2.87</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">Fourth Quarter
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.08</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2.24</FONT></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><FONT face="helvetica,arial">Year ended December&nbsp;31,
    2005</FONT></B></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" 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">
    <FONT face="helvetica,arial">First Quarter
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">4.00</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">2.52</FONT></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">
    <FONT face="helvetica,arial">Second Quarter (through June 17,
    2005)
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3.65</FONT></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1.32</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As of June&nbsp;17, 2005, there were 2,361 holders of record of
our common stock. On June&nbsp;17, 2005, the last sale price for
our common stock reported on the New York Stock Exchange was
$3.10&nbsp;per share.
</DIV>

<P align="center" style="font-size: 10pt;">S-75

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<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt;">
<A name='110'></A>
</DIV>

<!-- link1 "DESCRIPTION OF CAPITAL STOCK" -->

<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 CAPITAL STOCK</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;&nbsp;
Our authorized capital stock consists of 2,000,000,000 shares of
common stock, $.001 par value, and 10,000,000 shares of
preferred stock, $.001 par value. The following summary is
qualified in its entirety by the provisions of our amended and
restated certificate of incorporation and by-laws, which have
been incorporated by reference as exhibits to our Annual Report
on Form&nbsp;10-K for the year ended December&nbsp;31, 2004,
which is incorporated by reference in this prospectus supplement.
</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>Common Stock</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;&nbsp;
As of March&nbsp;31, 2005, there were 538,017,458 shares of our
common stock outstanding. In addition, as of March&nbsp;31,
2005, there were 2,043,030 shares of our common stock underlying
vested stock options eligible for sale and shares to be issued
under our ESPP and there were an additional 9,338,193 shares of
our common stock issuable upon conversion of our outstanding
convertible securities (which includes the HIGH TIDES III and
our remaining outstanding 4% convertible notes due 2006; it also
includes our two outstanding series of contingent convertible
notes, each of which, if converted at March&nbsp;31, 2005 prices
for our common stock, would result in no shares being issued
but, to the extent the price of our common stock rises above the
applicable conversion price for each series, could result in a
substantial number of additional shares of common stock being
issuable upon conversion). As of March&nbsp;31, 2005, on an as
adjusted basis that assumes that all of the HIGH TIDES III will
be repurchased or redeemed following the issuance of the notes
offered hereby, there would have been 72,643&nbsp;shares of our
common stock issuable upon conversion of our outstanding
convertible securities (including our remaining outstanding 4%
convertible notes due 2006; it also includes our two series of
contingent convertible notes, which as described above, would
not have resulted in any shares being issued if converted at the
March&nbsp;31, 2005 prices for our 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;&nbsp;
The holders of all outstanding shares of common stock are
entitled to one vote per share on all matters to be voted upon
by the stockholders. Subject to preferences that may be
applicable to any outstanding preferred stock, the holders of
common stock are entitled to receive ratably such dividends, if
any, as may be declared from time to time by the board of
directors out of legally available funds. See
&#147;&#151;&nbsp;Dividend Policy,&#148; below. In the event of
our liquidation, dissolution or winding up, the holders of
common stock are entitled to share ratably in all assets
remaining after payment of liabilities, subject to prior
liquidation rights of preferred stock, if any, then outstanding.
The common stock has no preemptive or conversion rights or other
subscription rights. There are no redemption or sinking fund
provisions applicable to the common stock.
</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>Dividend Policy</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;&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 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>Preferred Stock</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;&nbsp;
As of March&nbsp;31, 2005, there were no shares of our preferred
stock outstanding. Our board of directors has the authority,
without further vote or action by the stockholders, to issue
from time to time up to 10,000,000 shares of preferred stock in
one or more series, and to fix the
</DIV>

<P align="center" style="font-size: 10pt;">S-76

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<DIV align="left" style="font-size: 10pt;">
rights, preferences, privileges, qualifications, limitations and
restrictions granted to or imposed upon any wholly unissued
shares of undesignated preferred stock, including without
limitation dividend rights, if any, voting rights, if any, and
liquidation and conversion rights, if any. Our board of
directors has the authority to fix the number of shares
constituting any series and the designations of such series
without any further vote or action by the stockholders. Our
board of directors, without stockholder approval, can issue
preferred stock with voting and conversion rights which could
adversely affect the voting power of the holders of common
stock. The issuance of preferred stock may have the effect of
delaying, deferring or preventing a change in control of
Calpine, or could delay or prevent a transaction that might
otherwise give our stockholders an opportunity to realize a
premium over the then-prevailing market price of the 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;&nbsp;
On June&nbsp;5, 1997, our board of directors adopted a
shareholder rights plan and in connection therewith authorized
the issuance of up to 1,000,000 shares of Series&nbsp;A
Participating Preferred Stock, par value $.001 per share (the
&#147;Series&nbsp;A Preferred&#148;), upon the exercise of the
rights issued under the rights plan. Pursuant to an amendment to
the plan adopted by our board of directors on March&nbsp;18,
2005, the rights expired unexercised on May&nbsp;1, 2005, with
no shares of Series&nbsp;A Preferred having been issued.
</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>Anti-Takeover Effects of Provisions of the Certificate of
Incorporation, Bylaws and Delaware&nbsp;Law</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;">
<B><I>Certificate of Incorporation and Bylaws</I></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;&nbsp;
Our certificate of incorporation and by-laws provide that
directors may be removed only by the affirmative vote of the
holders of two-thirds of the shares of our capital stock
entitled to vote. Any vacancy on the board of directors may be
filled only by vote of the majority of directors then in office.
Further, the certificate of incorporation provides that any
business combination (as therein defined) requires the
affirmative vote of the holders of two-thirds of the shares of
our capital stock entitled to vote, voting together as a single
class. The certificate of incorporation also provides that all
stockholder actions must be effected at a duly called meeting
and not by a written consent. Our certificate of incorporation
provides that a special meeting of stockholders may be called
only by the chairman of our board of directors, or by the
chairman or secretary upon the written request of a majority of
the total number of directors we would have if there were no
vacancies on our board of directors. The provisions of the
certificate of incorporation and bylaws, could discourage
potential acquisition proposals and could delay or prevent a
change in control of Calpine. These provisions are intended to
enhance the likelihood of continuity and stability in the
composition of the board of directors and in the policies
formulated by the board of directors and to discourage certain
types of transactions that may involve an actual or threatened
change of control of Calpine. These provisions are designed to
reduce our vulnerability to an unsolicited acquisition proposal.
The provisions also are intended to discourage certain tactics
that may be used in proxy fights. However, such provisions could
have the effect of discouraging others from making tender offers
for our shares and, as a consequence, they also may inhibit
fluctuations in the market price of our shares that could result
from actual or rumored takeover attempts. Such provisions also
may have the effect of preventing changes in our management.
</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><I>Rights Plan</I></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;&nbsp;
As discussed in our Annual Report on Form&nbsp;10-K for the year
ended December&nbsp;31, 2004, on June&nbsp;5, 1997, we adopted a
stockholders&#146; rights plan, which was amended on
September&nbsp;19, 2001, September&nbsp;28, 2004, and
March&nbsp;18, 2005. To implement the rights plan, we declared a
dividend of one preferred share purchase right for each
outstanding share of our common stock held of record as of
June&nbsp;18, 1997, and directed the issuance of one preferred
share purchase right with respect to each share of our common
stock that shall become outstanding thereafter
</DIV>

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<DIV align="left" style="font-size: 10pt;">
until the rights became exercisable or they expired. The rights
expired on May&nbsp;1, 2005, and, accordingly, the rights plan
is of no further effect.
</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><I>Delaware Anti-Takeover Statute</I></B>
</DIV>

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We are subject to Section&nbsp;203 of the General Corporation
Law of the State of Delaware (&#147;Section&nbsp;203&#148;),
which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any business combination with any
interested stockholder for a period of three years following the
time that such stockholder became an interested stockholder,
unless: (1)&nbsp;prior to such time, the board of directors of
the corporation approved either the business combination or the
transaction that resulted in the stockholder becoming an
interested stockholder; (2)&nbsp;upon consummation of the
transaction that resulted in the stockholder becoming an
interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at
the time the transaction commenced, excluding for purposes of
determining the voting stock outstanding (but not the
outstanding voting stock owned by the interested stockholder)
those shares owned (x)&nbsp;by persons who are directors and
also officers and (y)&nbsp;by employee stock plans in which
employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be
tendered in a tender or exchange offer; or (3)&nbsp;on or
subsequent to such time, the business combination is approved by
the board of directors and authorized at an annual or special
meeting of stockholders, and not by written consent, by the
affirmative vote of at least
66<FONT style="font-size: 70%"><SUP>2</SUP></FONT>/<FONT style="font-size: 60%">3</FONT>%
of the outstanding voting stock that is not owned by the
interested stockholder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Section&nbsp;203 defines the term business combination to
include: (1)&nbsp;any merger or consolidation involving the
corporation or any of its direct or indirect majority-owned
subsidiaries and the interested stockholder; (2)&nbsp;any sale,
transfer, pledge or other disposition of 10% or more of the
assets of the corporation or any of its direct or indirect
majority-owned subsidiaries involving the interested
stockholder; (3)&nbsp;subject to certain exceptions, any
transaction that results in the issuance or transfer by the
corporation of any stock of the corporation or any of its direct
or indirect majority-owned subsidiaries of any stock of the
corporation or that subsidiary to the interested stockholder;
(4)&nbsp;any transaction involving the corporation or any of its
direct or indirect majority-owned subsidiaries that has the
effect of increasing the proportionate share of the stock of any
class or series of the corporation or that subsidiary
beneficially owned by the interested stockholder; or
(5)&nbsp;the receipt by the interested stockholder of the
benefit of any loans, advances, guarantees, pledges or other
financial benefit provided by or through the corporation or any
of its direct or indirect majority-owned subsidiaries. In
general, Section&nbsp;203 defines an interested stockholder as
any entity or person beneficially owning 15% or more of the
outstanding voting stock of the corporation and any entity or
person affiliated with or controlling or controlled by such
entity or person.
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<A name='111'></A>
</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>MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES</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;&nbsp;
The following is a summary of the material United States federal
income tax consequences of the ownership and disposition of the
notes and the shares of common stock into which the notes are
convertible (the &#147;securities&#148;). Unless otherwise
specified, this summary deals only with U.S. holders that
purchase the notes from the underwriter for cash at the price
set forth on the cover page of this prospectus supplement and
who hold the securities as capital assets. The discussion
regarding United States federal income tax laws assumes that the
notes will be issued, and transfers thereof and payments thereon
will be made, in accordance with the applicable indenture.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
As used herein, &#147;U.S. holders&#148; are any beneficial
owners of the securities, that are, for United States federal
income tax purposes, (1)&nbsp;citizens or residents of the
United States, (2)&nbsp;corporations (or other entities taxable
as corporations for United States federal income tax purposes)
created or organized in, or under the laws of, the United
States, any state thereof or the District of Columbia,
(3)&nbsp;estates, the income of which is subject to United
States federal income taxation regardless of its source, or
(4)&nbsp;trusts if (A)&nbsp;a court within the United States is
able to exercise primary supervision over the administration of
the trust and (B)&nbsp;one or more United States persons have
the authority to control all substantial decisions of the trust.
In addition, certain trusts in existence on August&nbsp;20, 1996
and treated as U.S. holders prior to such date may also be
treated as U.S. holders. As used herein, &#147;non-U.S.
holders&#148; are beneficial owners of the securities, other
than partnerships, that are not U.S. holders as defined above.
If a partnership (including for this purpose any entity or
arrangement treated as a partnership for United States federal
income tax purposes) is a beneficial owner of the securities,
the treatment of a partner in the partnership will generally
depend upon the status of the partner and upon the activities of
the partnership. Partnerships and partners in such partnerships
should consult their tax advisors about the United States
federal income tax consequences of owning and disposing of the
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;&nbsp;
This summary does not describe all of the tax consequences that
may be relevant to a holder in light of its particular
circumstances. For example, it does not deal with special
classes of holders such as banks, thrifts, real estate
investment trusts, regulated investment companies, insurance
companies, dealers and traders in securities or currencies, or
tax-exempt investors. It also does not discuss securities held
as part of a hedge, straddle, &#147;synthetic security&#148; or
other integrated transaction. This summary also does not address
the tax consequences to (i)&nbsp;U.S. holders that have a
functional currency other than the U.S. dollar,
(ii)&nbsp;certain U.S. expatriates or (iii)&nbsp;shareholders,
partners or beneficiaries of a holder of the securities.
Further, it does not include any description of any estate, gift
or alternative minimum tax consequences or the tax laws of any
state or local government or of any foreign government that may
be applicable to the securities. This summary is based on the
Internal Revenue Code of 1986, as amended (the
&#147;Code&#148;), the Treasury regulations promulgated
thereunder and administrative and judicial interpretations
thereof, all as of the date hereof, and all of which are subject
to change or differing interpretations, possibly on a
retroactive 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;&nbsp;
You should consult with your own tax advisor regarding the
federal, state, local and foreign income, franchise, personal
property and any other tax consequences of the ownership and
disposition of the securities.
</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>Taxation of U.S. Holders</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;">
<B><I>Interest Income</I></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;&nbsp;
In certain circumstances, we may be required to pay a premium
(in the form of additional shares) upon conversion of a note.
See &#147;Description of the Notes&nbsp;&#151;&nbsp;Adjustment
for Certain Changes of Control.&#148; Because we are obligated
to make such payments under certain circumstances, the notes may
be subject to special rules under Treasury regulations that are
</DIV>

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<DIV align="left" style="font-size: 10pt;">
applicable to debt instruments that provide for one or more
contingent payments. Under the Treasury regulations, however,
the special rules applicable to contingent payment debt
instruments will not apply if, as of the issue date, the
contingencies are either &#147;remote&#148; or
&#147;incidental.&#148; Calpine believes that (and this
discussion assumes) such payments are remote or incidental
contingencies. Based on the foregoing, payments of interest will
be taxable to a U.S. holder as ordinary interest income at the
time such payments are accrued or received (in accordance with
the holder&#146;s regular method of tax accounting).
Calpine&#146;s determination that the potential premium payments
are remote or incidental contingencies for these purposes is
binding on each holder, unless such holder discloses in the
proper manner to the Internal Revenue Service that it is taking
a different position. The Internal Revenue Service, however,
will not be bound by this determination and may assert that the
notes are subject to the rules applicable to contingent payment
debt instruments, including the mandatory accrual of interest in
accordance with those rules and the possible characterization of
any gain realized on the taxable disposition of a note as
ordinary income rather than capital gain.
</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><I>Conversion of Notes</I></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;&nbsp;
If a U.S. holder converts a note, the tax treatment to the
holder is uncertain. A holder may be required to recognize gain
(but not loss) in an amount equal to the excess of the sum of
the fair market value of the common shares and cash received
(other than cash received in lieu of a fractional share and
other than common stock and cash attributable to accrued but
unpaid interest which will be taxed as interest) over such
holder&#146;s adjusted tax basis in the note (excluding the
portion of the tax basis attributable to a fractional share),
but only to the extent such gain does not exceed the amount of
cash received (other than cash received in lieu of a fractional
share or attributable to accrued but unpaid interest). In such
case, a holder&#146;s tax basis in the common stock received in
the conversion (including any basis allocable to a fractional
share but excluding common stock received that is attributable
to accrued but unpaid interest) would be equal to such
holder&#146;s adjusted tax basis in the note, reduced by any
cash received in the conversion (other than cash received in
lieu of a fractional share or attributable to accrued but unpaid
interest) and increased by the amount of any gain recognized on
the conversion (other than gain with respect to a fractional
share). A holder&#146;s tax basis in any common stock received
that is attributable to accrued but unpaid interest would equal
the fair market value of such stock at the time received.
Alternatively, the cash payment may be treated as proceeds from
a sale of a portion of the note, as described below under
&#147;&#151;&nbsp;Sale, Exchange or Redemption of Notes.&#148;
In such case, a holder&#146;s tax basis in the note would be
allocated between the portion of the note that is treated as
exchanged for common stock and the portion of the note that is
treated as sold for cash (including any fractional share treated
as received but excluding common stock received that is
attributable to accrued but unpaid 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;&nbsp;
If cash is received in lieu of a fractional share, the holder
will be treated as having received the fractional share and as
having immediately sold it for an amount equal to such cash.
Accordingly, the receipt of cash in lieu of a fractional share
will generally result in a holder&#146;s recognizing capital
gain or loss, if any, measured by the difference between the
cash received for the fractional share and the U.S.
holder&#146;s adjusted tax basis in the fractional share. A
holder&#146;s tax basis in a fractional share will be determined
by allocating the holder&#146;s tax basis in the common shares
received (including the fractional share deemed received)
between the common shares actually received on conversion and
the fractional share deemed received, in accordance with their
respective fair market values. The holding period for any common
stock received in a conversion (including any fractional share
treated as received) will include the holding period for the
note. Holders should consult their tax advisors regarding the
proper treatment to them of the receipt of a combination of cash
and common stock upon a conversion of the notes.
</DIV>

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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><I>Adjustment of Conversion Rate</I></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;&nbsp;
If at any time we make a distribution of property to
shareholders that would be taxable as a dividend for United
States federal income tax purposes (for example, cash
distributions or distributions of evidences of indebtedness or
assets, but generally not stock dividends or rights to subscribe
for common stock) and the conversion rate of the notes is
increased, such increase may be deemed to be the payment of a
taxable dividend to a U.S. holder of the notes to the extent of
our current or accumulated earnings and profits. If the
conversion rate is increased at our discretion or in certain
other circumstances, including upon a change of control, such
increase also may be deemed to be the payment of a taxable
dividend to the U.S. holder. In certain circumstances, failure
to make an adjustment to the conversion rate will be deemed to
be a payment of a taxable dividend to a holder of common stock.
</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><I>Repurchase of Notes at the Option of Holder</I></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;&nbsp;
If a U.S. holder requires us to repurchase a note as described
under &#147;Description of the Notes&nbsp;&#151; Change of
Control,&#148; such holder will generally recognize gain or loss
as described below under &#147;&#151; Sale, Exchange or
Redemption of Notes.&#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><I>Sale, Exchange or Redemption of Notes</I></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;&nbsp;
If we elect to redeem notes tendered for conversion for a
combination of shares of common stock and cash, a U.S. holder
will generally be taxed as set forth under
&#147;&#151;&nbsp;Conversion of Notes&#148; above. Otherwise,
except as set forth under &#147;&#151;&nbsp;Conversion of
Notes&#148; above, a U.S. holder will generally recognize
capital gain or loss equal to the difference between the amount
realized on the sale, exchange, redemption or other disposition
of a note (except to the extent the amount realized is
attributable to accrued but unpaid interest not previously
included in income, which will be taxable as ordinary interest
income) and the holder&#146;s adjusted tax basis in such note. A
holder&#146;s adjusted tax basis in the note generally will be
the holder&#146;s purchase price for such note. In the case of a
holder other than a corporation, preferential tax rates may
apply to gain recognized on the sale of a note if such
holder&#146;s holding period for such note exceeds one year.
Subject to certain limited exceptions, capital losses cannot be
applied to offset ordinary income for United States federal
income tax purposes.
</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><I>Distributions on Common Stock</I></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;&nbsp;
The amount of any distribution we make in respect of the common
stock (other than pro rata distributions of common stock on
common stock) will be equal to the amount of cash and the fair
market value, on the date of distribution, of any property
distributed. Generally, distributions will be treated as a
dividend to the extent of our current or accumulated earnings
and profits, then as a tax-free return of capital to the extent
of a holder&#146;s tax basis in the common stock and thereafter
as gain from the sale or exchange of such common stock as
described below in &#147;&#151;&nbsp;Sale or Exchange of Common
Stock&#148;. In general, a dividend distribution to a corporate
holder will qualify for the dividends-received deduction. The
dividends-received deduction is subject to certain holding
period, taxable income, and other limitations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Dividends received by an individual taxpayer during taxable
years before 2009 will be taxed at rates applicable to long-term
capital gains, provided the taxpayer held the stock for more
than 60&nbsp;days during a specified period of time and certain
other requirements are met. Under current law, dividends
received by an individual taxpayer for taxable years after 2008
will be subject to tax at ordinary income rates.
</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><I>Sale or Exchange of Common Stock</I></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;&nbsp;
Upon the sale or exchange of common stock, a holder generally
will recognize capital gain or loss equal to the difference
between the amount realized on the sale or exchange and the
</DIV>

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<DIV align="left" style="font-size: 10pt;">
holder&#146;s adjusted tax basis in the common stock. In the
case of a holder other than a corporation, preferential tax
rates may apply to such gain if the holder&#146;s holding period
for the common stock exceeds one year. Subject to certain
limited exceptions, capital losses cannot be applied to offset
ordinary income for United States federal income tax purposes.
</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><I>Information Reporting and Backup Withholding Tax</I></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;&nbsp;
In general, information reporting requirements will apply to the
interest payments on the notes, payments of dividends on the
common stock and payments of the proceeds of the sale of the
notes or common stock. A backup withholding tax may apply to
such payments if the holder fails to comply with certain
identification requirements. Backup withholding is currently
imposed at a rate of 28%. Any amounts withheld under the backup
withholding rules from a payment to a holder will be allowed as
a credit against such holder&#146;s United States federal income
tax and may entitle the holder to a refund, provided that the
required information is furnished to the Internal Revenue
Service. Certain holders, including all corporations, are exempt
from the information reporting and backup withholding
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>Taxation of Non-U.S. Holders</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;&nbsp;
The rules governing United States federal income taxation of a
non-U.S.&nbsp;holder of notes or common stock are complex and no
attempt will be made herein to provide more than a summary of
such rules. Non-U.S.&nbsp;holders should consult with their own
tax advisors to determine the effect of United States federal,
state and local and foreign tax laws, as well as treaties, with
regard to an investment in the securities, including any
reporting 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>Interest Income</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;&nbsp;
Interest income earned on a note by a non-U.S.&nbsp;holder will
not be subject to United States federal income tax or a 30%
withholding tax, provided that such interest income is not
effectively connected with a United States trade or business of
the non-U.S.&nbsp;holder and provided that (1)&nbsp;the
non-U.S.&nbsp;holder does not actually or constructively own 10%
of more of the total combined voting power of all classes of our
stock entitled to vote; (2)&nbsp;the non-U.S.&nbsp;holder is not
a controlled foreign corporation that is related to us through
stock ownership; (3)&nbsp;the non-U.S.&nbsp;holder is not a bank
which acquired the note in consideration for an extension of
credit made pursuant to a loan agreement entered into in the
ordinary course of business; and (4)&nbsp;either (A)&nbsp;the
non-U.S.&nbsp;holder certifies to the payor or the payor&#146;s
agent, under penalties of perjury, that it is not a United
States person and provides its name, address, and certain other
information on a properly executed Internal Revenue Service
Form&nbsp;W-8BEN or a suitable substitute form or (B)&nbsp;a
securities clearing organization, bank or other financial
institution that holds customer securities in the ordinary
course of its trade or business and holds the notes in such
capacity, certifies to the payor or the payor&#146;s agent,
under penalties of perjury, that such a statement has been
received from the beneficial owner by it or by a financial
institution between it and the beneficial owner, and furnishes
the payor or the payor&#146;s agent with a copy thereof. The
applicable United States Treasury regulations also provide
alternative methods for satisfying the certification
requirements of clause&nbsp;(4), above. If a
non-U.S.&nbsp;holder holds the note through certain foreign
intermediaries or partnerships, such holder and the foreign
intermediary or partnership may be required to satisfy
certification requirements under applicable United States
Treasury regulations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Except to the extent that an applicable income tax treaty
otherwise provides, a non-U.S.&nbsp;holder generally will be
taxed with respect to interest in the same manner as a
U.S.&nbsp;holder if the interest is effectively connected with a
United States trade or business of the non-U.S.&nbsp;holder.
Effectively connected interest income received or accrued by a
corporate non-U.S.&nbsp;holder may also, under certain
circumstances, be subject to an additional &#147;branch
profits&#148; tax at a 30% rate (or, if applicable, at a lower
tax rate specified by a treaty). Even though such
</DIV>

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<DIV align="left" style="font-size: 10pt;">
effectively connected income is subject to income tax, and may
be subject to the branch profits tax, it is not subject to
withholding tax if the non-U.S.&nbsp;holder delivers a properly
executed Internal Revenue Service Form&nbsp;W-8ECI (or successor
form) to the payor or the payor&#146;s agent.
</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><I>Conversion of Notes</I></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;&nbsp;
In general, a non-U.S.&nbsp;holder will not recognize gain upon
conversion of a note to the extent such holder receives common
stock. To the extent a non-U.S.&nbsp;holder receives cash upon
conversion of a note, such cash may give rise to gain that would
be subject to the rules described under &#147;&#151;&nbsp;Sale,
Exchange or Redemption of Notes; Sale or Exchange of Common
Stock&#148; and &#147;&#151;&nbsp;Information Reporting and
Backup Withholding&#148; 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><I>Adjustment of Conversion Rate</I></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;&nbsp;
Certain adjustments in the conversion rate of the notes may be
treated as a taxable dividend to a non-U.S. holder. See
&#147;Taxation of U.S.&nbsp;Holders&nbsp;&#151; Adjustment of
Conversion Rate&#148; above and &#147;&#151;Distributions on
Common Stock&#148; below. Any resulting withholding tax may be
withheld from payments of interest or principal on the notes.
</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><I>Repurchase of Notes at the Option of Holder</I></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;&nbsp;
If a non-U.S. holder requires us to repurchase a note as
described under &#147;Description of the Notes&nbsp;&#151;
Change of Control&#148;, such repurchase may give rise to gain
that would be subject to the rules described under
&#147;&#151;&nbsp;Sale, Exchange or Redemption of Notes; Sale or
Exchange of Common Stock&#148; 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><I>Distributions on Common Stock</I></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;&nbsp;
Distributions we make with respect to the common stock that are
treated as dividends paid, as described above under
&#147;Taxation of U.S.&nbsp;Holders&nbsp;&#151; Distributions on
Common Stock,&#148; to a non-U.S.&nbsp;holder (excluding
dividends that are effectively connected with the conduct of a
United States trade or business by such holder and are taxable
as described below) will be subject to United States federal
withholding tax at a 30% rate (or a lower rate provided under an
applicable income tax treaty). Except to the extent that an
applicable income tax treaty otherwise provides, a
non-U.S.&nbsp;holder will be taxed in the same manner as a
U.S.&nbsp;holder on dividends paid (or deemed paid) that are
effectively connected with the conduct of a United States trade
or business by the non-U.S.&nbsp;holder. If such
non-U.S.&nbsp;holder is a foreign corporation, it may also be
subject to a United States branch profits tax on such
effectively connected income at a 30% rate (or such lower rate
as may be specified by an applicable income tax treaty). Even
though such effectively connected dividends are subject to
income tax and may be subject to the branch profits tax, they
will not be subject to United States federal withholding tax if
the holder delivers a properly executed Internal Revenue Service
Form&nbsp;W-8ECI (or successor form) to the payor or the
payor&#146;s agent. A non-U.S.&nbsp;holder who wishes to claim
the benefit of an applicable income tax treaty is required to
satisfy certain certification and other requirements. If a
non-U.S.&nbsp;holder is eligible for a reduced rate of United
States withholding tax pursuant to an income tax treaty, such
non-U.S.&nbsp;holder may obtain a refund of any excess amounts
withheld by filing an appropriate claim for refund with the
Internal Revenue Service.
</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><I>Sale, Exchange or Redemption of Notes; Sale or Exchange of
Common Stock</I></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;&nbsp;
If we elect to redeem notes tendered for conversion for a
combination of shares of common stock and cash, a
non-U.S.&nbsp;holder will generally be taxed as set forth under
&#147;&#151;&nbsp;Conversion of Notes&#148; above. Otherwise, a
non-U.S.&nbsp;holder generally will not be subject to United
States federal income tax on any gain realized on the sale,
exchange, redemption or other disposition of a note or the sale
or exchange of common stock unless (1)&nbsp;the gain is
effectively connected with a
</DIV>

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<DIV align="left" style="font-size: 10pt;">
United States trade or business of the non-U.S.&nbsp;holder,
(2)&nbsp;in the case of a non-U.S.&nbsp;holder who is an
individual, such holder is present in the United States for a
period or periods aggregating 183&nbsp;days or more during the
taxable year of the disposition, and either (A)&nbsp;such holder
has a &#147;tax home&#148; in the United States or (B)&nbsp;the
disposition is attributable to an office or other fixed place of
business maintained by such holder in the United States, or
(3)&nbsp;we are characterized as a United States real property
holding corporation and the non-U.S.&nbsp;holder does not
qualify for certain exemptions (see discussion below under
&#147;Foreign Investment in Real Property Tax Act&#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;&nbsp;
Except to the extent that an applicable income tax treaty
otherwise provides, (A)&nbsp;if an individual non-U.S. holder
falls under clause (1)&nbsp;above, such individual generally
will be taxed on the net gain derived from a sale in the same
manner as a U.S.&nbsp;holder and (B)&nbsp;if an individual
non-U.S.&nbsp;holder falls under clause (2)&nbsp;above, such
individual generally will be subject to a 30% tax on the gain
derived from a sale, which may be offset by certain United
States capital losses (notwithstanding the fact that such
individual is not considered a resident of the United States).
Individual non-U.S.&nbsp;holders who have spent (or expect to
spend) 183&nbsp;days or more in the United States in the taxable
year in which they contemplate a disposition of notes or common
stock are urged to consult their tax advisors as to the tax
consequences of such sale. If a non-U.S.&nbsp;holder that is a
foreign corporation falls under clause&nbsp;(1), it generally
will be taxed on the net gain derived from a sale in the same
manner as a U.S.&nbsp;holder and, in addition, may be subject to
the branch profits tax on such effectively connected income at a
30% rate (or such lower rate as may be specified by an
applicable income tax treaty).
</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><I>Information Reporting and Backup Withholding Tax</I></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;&nbsp;
Generally, we must report annually to the Internal Revenue
Service and to each non-U.S.&nbsp;holder the amount of interest
and dividends paid to such holder and the tax withheld with
respect to those payments (if any). Copies of the information
returns reporting such interest and dividend payments and any
withholding may also be made available to the tax authorities in
the country in which the non-U.S.&nbsp;holder resides under the
provisions of an applicable income tax treaty. United States
backup withholding tax will not apply to payments to a
non-U.S.&nbsp;holder if the requirements described in clause
(4)&nbsp;under &#147;&#151;&nbsp;Interest Income&#148; above are
satisfied with respect to the holder unless the payor has actual
knowledge or reason to know that the holder is a United States
person.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Information reporting requirements and backup withholding tax
will not apply to any payment of the proceeds of the sale of
notes or common stock effected outside the United States by a
foreign office of a &#147;broker&#148; as defined in applicable
Treasury regulations, unless such broker (1)&nbsp;is a United
States person as defined in the Internal Revenue Code,
(2)&nbsp;is a foreign person that derives 50% or more of its
gross income for certain periods from the conduct of a trade or
business in the United States, (3)&nbsp;is a controlled foreign
corporation for United States federal income tax purposes or
(4)&nbsp;is a foreign partnership with certain
U.S.&nbsp;connections. Payment of the proceeds of any such sale
effected outside the United States by a foreign office of any
broker that is described in the preceding sentence may be
subject to information reporting (but not backup withholding),
unless such broker has documentary evidence in its records that
the beneficial owner is a non-U.S.&nbsp;holder and certain other
conditions are met, or the beneficial owner otherwise
establishes an exemption. Payment of the proceeds of any such
sale to or through the United States office of a broker is
subject to information reporting and backup withholding
requirements unless the beneficial owner provides the statement
described in clause (4)&nbsp;of &#147;&#151;&nbsp;Interest
Income&#148; above and certain other conditions are met, or the
beneficial owner otherwise establishes an exemption.
</DIV>

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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><I>Foreign Investment in Real Property Tax Act</I></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;&nbsp;
A non-U.S.&nbsp;holder who disposes of a United States real
property interest generally is required to recognize gain or
loss that is subject to United States federal income tax. A
&#147;United States real property interest&#148; generally
includes any interest (other than an interest solely as a
creditor) in a United States corporation unless it is
established under specified procedures that the corporation is
not (and was not for the shorter of the period during which the
holder held such interest and the prior five-year period) a
&#147;United States real property holding corporation.&#148; We
believe it is likely that we are a United States real property
holding corporation and we can give no assurance that we will
not continue to be a United States real property holding
corporation in the future. However, so long as our common stock
is regularly traded on an established securities market, an
exemption should apply to the notes and the common stock except
(i)&nbsp;in the case of notes, if the notes are or become
regularly traded, with respect to a non-U.S.&nbsp;holder that
owns more than 5% of the notes, and (ii)&nbsp;otherwise, and in
the case of the common stock, with respect to a
non-U.S.&nbsp;holder whose beneficial and/or constructive
ownership of the notes or the common stock, as the case may be,
exceeds 5% of the total fair market value of the 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;&nbsp;
Any investor that may approach or exceed the 5% ownership
threshold discussed above, either alone or in conjunction with
related persons, should consult its own tax advisor concerning
the United States tax consequences that may result. A
non-U.S.&nbsp;holder who sells or otherwise disposes of a note
or common stock may be required to inform its transferee whether
such note or common stock constitutes a United States real
property 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;&nbsp;
<B>The United States federal income tax discussion set forth
above is included for general information only and may not be
applicable depending upon a holder&#146;s particular situation.
Holders should consult their tax advisors with respect to the
tax consequences to them of the ownership and disposition of the
securities, including the tax consequences under state, local,
foreign and other tax laws and the possible effects of changes
in United States federal or other tax laws.</B>
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<A name='112'></A>
</DIV>

<!-- link1 "UNDERWRITING" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>UNDERWRITING</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;&nbsp;
We will enter into an underwriting agreement with Goldman, Sachs
&#38; Co., as underwriter, with respect to the notes. Subject to
certain conditions, the underwriter has agreed to purchase the
entire principal amount of the notes. The underwriter is
committed to take and pay for all notes being offered, if any
are taken.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
Notes sold by the underwriter to the public will initially be
offered at the initial public offering price set forth on the
cover of this prospectus supplement. Any notes sold by the
underwriter to securities dealers may be sold at a discount from
the initial public offering price of up to 1.35% of the
principal amount of notes. Any such securities dealers may
resell any notes purchased from the underwriters to certain
other brokers or dealers at a discount from the initial public
offering price of up to 0.90% of the principal amount of notes.
If all the notes are not sold at the initial offering price, the
underwriters may change the offering price and the other selling
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;&nbsp;
The notes are a new issue of securities with no established
trading market. We do not intend to apply for the notes to be
listed on any securities exchange or to arrange for the notes to
be quoted on any quotations system. We have been advised by the
underwriter that the underwriter intends to make a market in the
notes but is not obligated to do so and may discontinue market
making at any time without notice. No assurance can be given as
to the liquidity of the trading market for the 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;&nbsp;
In connection with the offering, the underwriter may purchase
and sell notes in the open market. These transactions may
include short sales, stabilizing transactions and purchases to
cover positions created by short sales. Short sales involve the
sale by the underwriter of a greater number of notes than it is
required to purchase in the offering. Stabilizing transactions
consist of certain bids or purchases made for the purpose of
preventing or retarding a decline in the market price of the
notes while the offering is 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;&nbsp;
These activities by the underwriter may stabilize, maintain or
otherwise affect the market price of the notes. As a result, the
price of the notes may be higher than the price that otherwise
might exist in the open market. If these activities are
commenced, they may be discontinued by the underwriter at any
time. These transactions may be effected in the over-the-counter
market or otherwise.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We have agreed that for a period from the date of the
underwriting agreement to 90&nbsp;days after the issuance of the
notes, we will not sell or cause to be offered, sold or
contracted to sell, or otherwise dispose of any shares of our
common stock or securities that are convertible into shares of
our stock without the prior written consent of the underwriter,
except for (i)&nbsp;grants of employee stock options or other
stock awards pursuant to the terms of our option plans existing
on the date of the underwriting agreement and issuances of
shares of stock pursuant to the exercise of such options;
(ii)&nbsp;issuances of shares of stock pursuant to the terms of
our employee stock purchase plan; (iii)&nbsp;issuances of shares
of stock pursuant to the exercise of any other employee stock
options outstanding as of the date of the underwriting
agreement; (iv)&nbsp;issuances of shares of stock upon the
conversion or exchange of convertible or exchangeable securities
outstanding on the date of the underwriting agreement;
(v)&nbsp;issuances of shares of stock upon the conversion of the
notes; and (vi)&nbsp;issuances of additional shares of our
common stock pursuant to Section&nbsp;3(a)(9) of the Securities
Act in connection with the exchange of shares of our common
stock for a portion of our outstanding Contingent Convertible
Notes due 2014 (except that such issuances are limited to an
aggregate of 29,000,000&nbsp;shares 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;&nbsp;
In addition, our directors and certain of our officers have
agreed not to sell or cause to be offered, sold or contracted
for sale, or to otherwise dispose of any shares of our common
stock, for a period of 90&nbsp;days from the date of the
underwriting agreement, without the prior written
</DIV>

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<DIV align="left" style="font-size: 10pt;">
consent of the underwriter, subject to certain exceptions,
including pursuant to plans under Rule&nbsp;10b5-1 of the
Securities Exchange Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The company estimates that its share of the total expenses of
the offering, excluding underwriting discounts and commissions,
will be approximately $600,000.
</DIV>

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We have agreed to indemnify the underwriter against certain
liabilities, including liabilities under the Securities Act.
</DIV>

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The underwriter and its affiliates have, from time to time,
performed, and may in the future perform, various financial
advisory and investment banking services for the company, for
which they received or will receive customary fees and expenses.
In addition, the underwriter and its affiliates may actively
trade the debt and equity securities (or related derivative
securities) of the Company for their own account and for the
accounts of their customers and may at any time hold long and
short positions of such securities.
</DIV>

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<DIV align="left" style="font-size: 10pt;">
<A name='113'></A>
</DIV>

<!-- link1 "LEGAL MATTERS" -->

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<B>LEGAL MATTERS</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;&nbsp;
Certain legal matters in connection with the offering of the
notes will be passed upon for us by Covington &#38; Burling, New
York, New York. Certain legal matters with respect to the notes
will be passed upon for the underwriter by Skadden, Arps, Slate,
Meagher &#38; Flom LLP, New York, New York. Skadden, Arps,
Slate, Meagher &#38; Flom LLP has in the past performed, and may
from time to time in the future perform, work for Calpine and
related entities. In particular, Skadden, Arps, Slate, Meagher
&#38; Flom LLP is acting as counsel to Calpine and its
affiliates in connection with the sale of Calpine&#146;s Saltend
Energy Centre.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='114'></A>
</DIV>

<!-- link1 "EXPERTS" -->

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<B>EXPERTS</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;&nbsp;
The consolidated financial statements as of December&nbsp;31,
2004 and 2003 and for the years ended December&nbsp;31, 2004 and
2003, and management&#146;s assessment of the effectiveness of
internal control over financial reporting (which is included in
Management&#146;s Report on Internal Control over Financial
Reporting) incorporated in this prospectus by reference to the
Annual Report on Form&nbsp;10-K for the year ended
December&nbsp;31, 2004 have been so incorporated in reliance on
the report (which contains an adverse opinion on the
effectiveness of internal control over financial reporting) of
PricewaterhouseCoopers LLP, an independent registered public
accounting firm, given on the authority of said firm as experts
in auditing and 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;&nbsp;
The 2002 consolidated financial statements and related financial
statement schedules of Calpine Corporation incorporated by
reference in this prospectus supplement and the prospectus to
which it relates from Calpine Corporation&#146;s Annual Report
on Form&nbsp;10-K for the year ended December&nbsp;31, 2004,
have been audited by Deloitte &#38; Touche LLP, an independent
registered public accounting firm, as stated in their report,
which is incorporated herein by reference (which report
expresses an unqualified opinion and includes emphasis relating
to the adoption of a new accounting standard in 2002 and
divestitures), and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in
accounting and auditing.
</DIV>

<DIV align="left" style="font-size: 10pt;">
<A name='115'></A>
</DIV>

<!-- link1 "WHERE YOU CAN FIND MORE INFORMATION ABOUT US AND THIS OFFERING" -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>WHERE YOU CAN FIND MORE INFORMATION ABOUT US AND THIS
OFFERING</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;&nbsp;
We file annual, quarterly and special reports, proxy statements
and other information with the SEC. You may read and copy any
document we file at the SEC&#146;s public reference room in
Washington, D.C. Please call the SEC at 1-888-SEC-0330 for
further information on the public reference room. Our SEC
filings are also available to the public through the SEC&#146;s
website at www.sec.gov or through our website at
www.calpine.com. However, the information on these web sites
does not constitute a part of this prospectus supplement or the
prospectus to which it relates.
</DIV>

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You should rely only upon the information provided in this
prospectus supplement and the prospectus to which it relates. We
have not authorized anyone to provide you with different
information. You should not assume that the information in this
prospectus supplement or the prospectus to which it relates is
accurate as of any date other than the dates specified herein
and therein, as applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We will provide without charge, upon written or oral request, a
copy of the indenture and form of the note, as well as copies of
any document incorporated by reference, other than exhibits to
such documents, unless such exhibits are specifically
incorporated by reference in such documents. Requests should be
directed to our Investor Relations Department at 50 West San
Fernando Street, San Jose, California, 95113, telephone number
(408)&nbsp;995-5115.
</DIV>

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

<FONT face="helvetica,arial">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Incorporation 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;&nbsp;
We are &#147;incorporating by reference&#148; into this
prospectus supplement information in documents we file with the
SEC, which means that we may disclose important information to
you by referring you to those documents. The information we are
incorporating by reference will be considered a part of this
prospectus supplement when filed with the SEC and will update
and supersede the information contained or incorporated by
reference herein.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
We hereby incorporate by reference into this prospectus
supplement the documents listed below as well as any future
filings made with the SEC under Sections&nbsp;13(a), 13(c), 14
or 15(d) of the Securities Exchange Act until we have sold all
the securities offered hereunder or until this offering is
otherwise terminated:
</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="4%"></TD>
    <TD width="1%"></TD>
    <TD width="95%"></TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD>&#149;&nbsp;</TD>
    <TD align="left">
    our Annual Report on Form&nbsp;10-K for the year ended
    December&nbsp;31, 2004;</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 Quarterly Report on Form&nbsp;10-Q for the quarter ended
    March&nbsp;31, 2005;</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 Current Reports on Form&nbsp;8-K filed with the SEC on
    January&nbsp;18, 2005, February&nbsp;3, 2005, March&nbsp;10,
    2005, March&nbsp;17, 2005, March&nbsp;23, 2005, May&nbsp;16,
    2005, May&nbsp;18, 2005, May&nbsp;26, 2005, June&nbsp;3, 2005,
    June&nbsp;9, 2005, June&nbsp;10, 2005, June&nbsp;16, 2005 and
    June&nbsp;16, 2005;</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 information contained in Item&nbsp;4.02 of our Current
    Report on Form 8-K filed with the SEC on March&nbsp;1, 2005;</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 information contained in Item&nbsp;8.01 of our Current
    Reports on Form 8-K filed with the SEC on January&nbsp;24, 2005,
    April&nbsp;14, 2005, and April 29, 2005;</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 description of our common stock contained in our
    Registration Statement on Form&nbsp;8-A (File
    No.&nbsp;001-12079), filed with the SEC on August 20, 1996; 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 description of rights relating to our common stock contained
    in our Registration Statement on Form&nbsp;8-A (File
    No.&nbsp;001-12079), filed with the SEC on June&nbsp;17, 1997,
    and the amendments to that Registration Statement filed on
    June&nbsp;18, 1997, June&nbsp;24, 1997 and September&nbsp;28,
    2001.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt;">S-89

</FONT>

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

<P align="left">
<B><FONT size="2">PROSPECTUS</FONT></B>

<DIV align="center">
<IMG src="f09939b2f0163304.gif" alt="Calpine Coporation">
</DIV>

<DIV align="left">
<IMG src="f09939b2f0163303.gif" alt="(Calpine Corporation Logo)">
</DIV>

<DIV align="center">
<B><FONT size="2">Common Stock</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Preferred Stock</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Depositary Shares</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Debt Securities</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Purchase Contracts</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Units</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Warrants</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="4">Calpine Canada Energy Finance ULC</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="4">Calpine Canada Energy Finance II ULC</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">Debt Securities Fully and
Unconditionally</FONT></B>

<DIV align="center">
<B><FONT size="2">Guaranteed by Calpine Corporation</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">Warrants</FONT></B>
</DIV>

<P align="center">
<B><FONT size="4">Calpine Capital Trust IV</FONT></B>

<DIV align="center">
<B><FONT size="4">Calpine Capital Trust V</FONT></B>
</DIV>

<P align="center">
<B><FONT size="2">Trust Preferred Securities</FONT></B>

<DIV align="center">
<B><FONT size="2">Fully and Unconditionally
Guaranteed,</FONT></B>
</DIV>

<DIV align="center">
<B><FONT size="2">as Described Herein, by Calpine
Corporation</FONT></B>
</DIV>

<P align="center">
<HR size="1" width="30%" align="center" noshade>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may offer any combination of the securities
described in this prospectus in different series from time to
time in amounts, at prices and on terms to be determined at or
prior to the time of the offering. We will provide you with
specific terms of the applicable offered securities in one or
more supplements to this prospectus. The aggregate initial
offering price of the securities that we may issue under this
prospectus will not exceed $2,500,000,000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We urge you to read this prospectus and any
accompanying prospectus supplement carefully before you make
your investment decision. This prospectus may not be used to
make sales of the offered securities unless it is accompanied by
a prospectus supplement describing the method and terms of the
offering of those offered securities. We may sell the securities
or we may distribute them through underwriters or dealers. In
addition, the underwriters may overallot a portion of the
securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine Corporation&#146;s common stock is traded
on The New York Stock Exchange under the symbol &#147;CPN.&#148;
Unless we state otherwise in a prospectus supplement, we will
not list any other of these securities on any securities
exchange or on the Nasdaq Stock Market.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Investing in these securities involves certain
risks. See &#147;Risk Factors&#148; on page&nbsp;8.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Neither the Securities and Exchange Commission
nor any state securities commission has approved or disapproved
of these securities or determined if this prospectus is truthful
or complete. Any representation to the contrary is a criminal
offense.</FONT></B>

<P align="center">
<FONT size="2">Prospectus dated September&nbsp;23, 2004
</FONT>
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<DIV align="left">

</DIV>

<DIV align="left">
<!-- TOC -->
</DIV>

<DIV align="left">
<A name="tocpage"></A>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No person is authorized to give any information
or to make any representations other than those contained or
incorporated by reference in this prospectus or the accompanying
prospectus supplement and, if given or made, such information or
representations must not be relied upon as having been
authorized. This prospectus and accompanying prospectus
supplement do not constitute an offer to sell or the
solicitation of an offer to buy any securities other than the
securities described in this prospectus and the accompanying
prospectus supplement or an offer to sell or the solicitation of
an offer to buy such securities in any circumstance in which
such offer or solicitation is unlawful. Neither the delivery of
this prospectus or the accompanying prospectus supplement, nor
any sale made under this prospectus or accompanying prospectus
supplement shall, under any circumstances, create any
implication that there has been no change in our affairs since
the date of the prospectus supplement accompanying this
prospectus or that the information contained or incorporated by
reference in this prospectus or accompanying prospectus
supplement is correct as of any time subsequent to the date of
such information.
</FONT>

<P align="center">
<B><FONT size="2">TABLE OF CONTENTS</FONT></B>

<CENTER>
<TABLE width="60%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="90%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="2%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Page</FONT></B></TD>
</TR>

<TR>
    <TD></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#101'>About This Prospectus</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#102'>Calpine Corporation</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">3</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#103'>Calpine Canada Energy
    Finance ULC and Calpine Canada Energy Finance II ULC</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">6</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#104'>Calpine Capital Trust IV and
    Calpine Capital Trust V</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">7</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#105'>Risk Factors</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#106'>Where You Can Find More
    Information; Documents Incorporated by Reference</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">8</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#107'>Forward-Looking
    Statements</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">10</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#108'>Calpine Consolidated Ratio
    of Earnings to Fixed Charges</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#109'>Use of Proceeds</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">11</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#110'>Plan of Distribution</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">12</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#111'>Description of Capital
    Stock</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">14</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#112'>Description of Depositary
    Shares</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">17</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#113'>Description of Debt
    Securities</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">20</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#114'>Description of Purchase
    Contracts</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">35</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#115'>Description of Units</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">36</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#116'>Description of Warrants</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">37</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#117'>Description of Trust
    Preferred Securities</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">38</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#118'>Material United States
    Federal Income Tax Consequences</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">43</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#119'>Certain Canadian Federal
    Income Tax Considerations</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">58</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#120'>Legal Matters</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">59</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left:10px; text-indent:-10px">
    <FONT size="2">&nbsp;<A HREF='#121'>Independent Registered
    Public Accounting Firm</A>
    </FONT></DIV>
    </TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">59</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>

</TABLE>
</CENTER>

<DIV align="left">
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</DIV>

<P align="center"><FONT size="2">i
</FONT>
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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV align="left">
<FONT size="2"> <A name='101'></A>
</FONT>
</DIV>

<!-- link1 "ABOUT THIS PROSPECTUS" -->

<P align="center">
<B><FONT size="2">ABOUT THIS PROSPECTUS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This prospectus is part of a joint registration
statement that Calpine Corporation, Calpine Canada Energy
Finance ULC, Calpine Canada Energy Finance II ULC, Calpine
Capital Trust IV and Calpine Capital Trust V filed with the
Securities and Exchange Commission (the &#147;SEC&#148;) using a
&#147;shelf&#148; registration, or continuous offering, process.
Under this shelf process, we may sell, from time to time, any
combination of the securities described in this prospectus in
one or more offerings up to a total dollar amount of
$2,500,000,000, which amount includes over-allotment options
with regard to certain securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to Rule&nbsp;3-10 of Regulation&nbsp;S-X
promulgated by the SEC, we are not required to include in this
prospectus separate financial statements of Calpine Canada
Energy Finance ULC, which we refer to as &#147;Energy
Finance,&#148; Calpine Canada Energy Finance&nbsp;II ULC, which
we refer to as &#147;Energy Finance&nbsp;II,&#148; Calpine
Capital Trust&nbsp;IV, which we refer to as
&#147;Trust&nbsp;IV,&#148; or Calpine Capital Trust&nbsp;V,
which we refer to as &#147;Trust&nbsp;V,&#148; because:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">in the case of Energy Finance and Energy
    Finance&nbsp;II, all of each of their respective voting rights
    are owned by Calpine Corporation (which we refer to as
    &#147;Calpine&#148;), either directly or indirectly;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">in the case of Trust IV and Trust V, the sum of
    all of each of their respective interests are owned by Calpine,
    either directly or through wholly-owned subsidiaries of Calpine,
    other than (i)&nbsp;securities that are guaranteed by Calpine
    and, if applicable, other 100%-owned subsidiaries of Calpine and
    (ii)&nbsp;securities that guarantee securities issued by Calpine
    and, if applicable, other 100% owned subsidiaries of Calpine;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Calpine files periodic and other reports with the
    SEC pursuant to the Securities Exchange Act of 1934, as amended
    (the &#147;Securities Exchange Act&#148;);
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">none of Energy Finance, Energy Finance&nbsp;II,
    Trust&nbsp;IV or Trust&nbsp;V has operations other than the
    investment of funds in Calpine or its subsidiaries; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Calpine will fully and unconditionally guarantee
    the obligations of Energy Finance, Energy Finance&nbsp;II,
    Trust&nbsp;IV and Trust&nbsp;V, and the rights of holders of
    their securities, and no subsidiary of Calpine will guarantee
    those obligations.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Because Energy Finance, Energy Finance&nbsp;II,
Trust&nbsp;IV and Trust&nbsp;V are permitted to omit financial
statements, pursuant to Rule&nbsp;12h-5 under the Securities
Exchange Act, they are not subject to the information reporting
requirements of that Act.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This prospectus provides you with a general
description of the securities we may offer. Each time we sell
such securities, we will provide a prospectus supplement
containing specific information about the terms of the
securities being offered, including any guarantees, and if we
sell securities through agents, underwriters or dealers, the
names of such agents, underwriters or dealers and any fees,
discounts and commissions to be paid to them. That prospectus
supplement may include a discussion of any risk factors or other
special considerations applicable to those securities. The
prospectus supplement may also add, update or change information
in this prospectus. If there is any inconsistency between the
information in this prospectus and any prospectus supplement,
you should rely on the information in that prospectus
supplement. You should read both this prospectus and any
prospectus supplement together with the additional information
described under the heading &#147;Where You Can Find More
Information; Documents Incorporated by Reference.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The registration statement containing this
prospectus, including the exhibits to the registration
statement, provides additional information about us and the
securities offered under this prospectus. The registration
statement, including the exhibits, can be read at the SEC
website or at the SEC offices mentioned under the heading
&#147;Where You Can Find More Information; Documents
Incorporated by Reference.&#148; Additional documents that
contain the specific terms of certain securities we may offer
may subsequently be filed as exhibits to this registration
statement or incorporated into the prospectus or prospectus
supplement by reference to documents we file with the SEC.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The prospectus also incorporates business and
financial information about us that is not included or delivered
with this document. <B>You may request and obtain this
information free of charge by writing to us at Calpine
Corporation, 50&nbsp;West San Fernando Street, San Jose,
California 95113, attention: Lisa M. Bodensteiner, Assistant
Secretary, or by telephoning us at (408)&nbsp;995-5115.</B>
</FONT>

<P align="center"><FONT size="2">1
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">You should rely only on the information provided
or incorporated by reference in this prospectus and the
accompanying prospectus supplement. We have not authorized
anyone to provide you with different information. We are not
making an offer or soliciting a purchase of these securities in
any jurisdiction in which the offer or solicitation is not
authorized or in which the person making the offer or
solicitation is not qualified to do so or to anyone to whom it
is unlawful to make the offer or solicitation. You should assume
that the information in this prospectus or the accompanying
prospectus supplement is accurate only as of the date on the
front of the document and that any information incorporated by
reference is accurate only as of the date of the document
incorporated by reference.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless we have indicated otherwise, in this
prospectus references to &#147;Calpine&#148; are to Calpine
Corporation, references to &#147;Energy Finance&#148; are to
Calpine Canada Energy Finance ULC, references to &#147;Energy
Finance&nbsp;II&#148; are to Calpine Canada Energy Finance II
ULC, references to &#147;Trust&nbsp;IV&#148; are to Calpine
Capital Trust&nbsp;IV, references to &#147;Trust&nbsp;V&#148;
are to Calpine Capital Trust V, references to &#147;the
trusts&#148; are, collectively, to Trust&nbsp;IV and
Trust&nbsp;V, and references to &#147;we,&#148; &#147;us&#148;
and &#147;our&#148; or similar terms are, collectively, to
Calpine Corporation and its consolidated subsidiaries. Unless
otherwise indicated, references in this prospectus to
&#147;$&#148; or &#147;dollar&#148; are to the lawful currency
of the United States.
</FONT>

<P align="center"><FONT size="2">2
</FONT>

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<DIV align="left">
<A name='102'></A>
</DIV>

<!-- link1 "CALPINE CORPORATION" -->

<P align="center">
<B><FONT size="2">CALPINE CORPORATION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are a San Jose, California based power company
engaged in the development, construction, ownership and
operation of power generation facilities and the sale of
electricity, predominantly in the United States, but also in
Canada and the United Kingdom. We were established as a
corporation in 1984. We focus on two efficient and clean types
of power generation technologies:&nbsp;natural gas-fired
combustion turbine and geothermal. We currently lease and
operate a significant fleet of geothermal power plants at The
Geysers, and have increased our operating portfolio of clean
burning natural gas power plants by 17,502&nbsp;megawatts, or
MW, over the past three years.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Power Plants.
</FONT></I></B><FONT size="2">Currently, we own interests in
91&nbsp;power plants having a net capacity of 26,206&nbsp;MW. We
also have 12&nbsp;gas-fired projects currently under
construction having a net capacity of 5,751&nbsp;MW. The
completion of these new projects would give us interests in 103
power plants located in 23&nbsp;states, three Canadian
provinces, Mexico and the United Kingdom, having a net capacity
of 31,957&nbsp;MW. Of this total generating capacity, 98% will
be attributable to gas-fired facilities and 2% will be
attributable to geothermal facilities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Natural Gas Assets.
</FONT></I></B><FONT size="2">We have in place an experienced
gas production management team that manages nearly
472&nbsp;billion cubic feet equivalent, or Bcfe, of proved gas
reserves, after giving effect to our recent sales of certain of
our gas reserves. These reserves are located in California,
South Texas and Gulf Coast regions, all of which are major oil
and gas producing regions in North America. Approximately 96% of
our North American proved reserves are natural gas. In addition
to our ability to produce over 120&nbsp;million cubic feet
equivalent, or MMcfe, of natural gas per day, we own or control
approximately 257,000 net undeveloped acres that are available
for future exploration or drilling activity. For more
information about our recent sales of certain of our gas
reserves see &#147;&#151;&nbsp;Recent Developments.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Calpine Energy Services
L.P.</FONT></I></B><FONT size="2"> Our wholly-owned subsidiary,
Calpine Energy Services L.P., or CES, provides the trading and
risk management services needed to schedule our power sales and
to make sure fuel is delivered to our power plants on time to
meet delivery requirements and to optimize the value of our
power and gas assets.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Complementing CES&#146;s activities, we have
recently reorganized our sales and marketing organization to
better meet the needs of our growing list of wholesale and large
retail customers. We focus our sales activities on load serving
entities such as local utilities, municipalities and
cooperatives, as well as on large-scale end users such as
industrial and commercial companies. 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.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Power Contract Portfolio.
</FONT></I></B><FONT size="2">As of June&nbsp;30, 2004, our
contractual portfolio consisted of 152&nbsp;contracts covering
105&nbsp;customers with a weighted average investment grade
credit rating. The weighted average life of the contracts in the
portfolio is approximately seven years. As of June&nbsp;30,
2004, we had approximately 46% of our available capacity sold
for 2005.
</FONT>

<P align="left">
<B><FONT size="2">The Market</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">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 $260&nbsp;billion of electricity sales in 2003 based on
information published by the Energy Information Administration
of the Department of Energy. Historically, the power generation
industry has been largely characterized by electric utility
monopolies producing electricity from old, inefficient,
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, 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.
</FONT>

<P align="center"><FONT size="2">3
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The North American Electric Reliability Council
estimates that in the United States, peak (summer) electric
demand in 2003 totaled approximately 720,000&nbsp;MW, while
summer generating capacity in 2003 totaled approximately
912,000&nbsp;MW, creating a peak summer reserve margin of
192,000&nbsp;MW, or 26.7%. Historically, utility reserve margins
have been targeted to be 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. Some regions have margins well in excess of the 15%
target range, while other regions remain short of ideal reserve
margins. The estimated 192,000&nbsp;MW of reserve margin in 2003
compares to an estimated 120,000&nbsp;MW in 2002. The increase
is due in large part to the start-up of new low-cost,
clean-burning, gas-fired power plants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Even though most new power plants are fueled by
natural gas, the majority of power generated in the U.S. is
still produced by coal and nuclear power plants. The Energy
Information Administration has estimated that approximately 51%
of the electricity currently generated in the U.S. is fueled by
coal, 20% by nuclear sources, 17% 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 installing 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.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Due primarily to the completion of gas-fired
combustion turbine projects, we have seen increased power
supplies and higher reserve margins in the last two years
accompanied by a decrease in liquidity in the energy trading
markets and a general lessening of enthusiasm for investing in
energy companies. In 2003, while electricity prices generally
increased, the cost of natural gas grew at an even greater rate,
further depressing spark spreads (the margin between the value
of the electricity sold and the cost of fuel to generate that
electricity) from the low levels in 2002.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Based on strength in residential and commercial
demand, overall consumption of electricity was estimated to have
grown by approximately 2.9% in 2004 through February compared to
the same period in 2003, according to Edison Electric Institute
published data. The growth rate for calendar year 2003 was 1.8%.
The growth rate in supply is 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 rising to over $6.40 per million British thermal units,
or MMbtu, in the first quarter of 2004, compared to an average
of approximately $5.50 per MMbtu in 2003 and $3.00 per MMbtu in
2002. Overall, we expect the market to continue to work through
the current oversupply of power in several regions within the
next few years. As the supply-demand dynamics improve, we expect
to see spark spreads improve.
</FONT>

<P align="left">
<B><FONT size="2">Recent Developments</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<I><FONT size="2">In addition to the recent developments
described below, please see the recent developments described in
our Quarterly Report on Form&nbsp;10-Q for the quarter ended
June&nbsp;30, 2004, which is incorporated by reference in this
prospectus.</FONT></I>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">$360 Million Preferred Equity
Offering.</FONT></B><FONT size="2"> On September&nbsp;17, 2004,
we announced that Calpine (Jersey) Limited, a new company being
formed as our indirect, wholly owned subsidiary, intends to
commence an offering of $360 million of two-year redeemable
preferred shares in a private placement transaction under
Regulation&nbsp;D and Regulation&nbsp;S of the Securities Act.
The offering is subject to the receipt of certain regulatory
approvals. We intend to initially loan the proceeds of the
offering to our 1,200&nbsp;MW Saltend cogeneration power plant
located in Hull, Yorkshire, England, and the payments of
principal and interest on the loan will fund payments on the
redeemable preferred shares. The net proceeds of the offering
will ultimately be used as permitted by the terms of our
outstanding debt securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">Sale of Certain Natural Gas Reserves and
Petroleum Assets; Repayment and Reduction of Commitments Under
Senior Secured Credit Facility.</FONT></B><FONT size="2"> On
September&nbsp;1, 2004, we completed the sale of all of our
right, title and interest in our oil and gas properties and
associated assets in New Mexico and Colorado (except for the
Kitzmiller property of Calpine Natural Gas L.P. located in the
northwest part of Colorado, which was retained), including our
leases, minerals, overrides, easements, wells, contracts, and
personal property. These New Mexico and Colorado properties were
sold, effective July 1, 2004, to two U.S.&nbsp;gas companies for
</FONT>

<P align="center"><FONT size="2">4
</FONT>

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<DIV align="left">
<FONT size="2">approximately $140&nbsp;million and approximately
$83&nbsp;million, respectively, subject, in each case, to
certain post-closing adjustments, including for certain title
defects claimed by the purchasers. Such properties and assets
represent approximately 120&nbsp;Bcfe of proved reserves,
producing approximately 16.3&nbsp;MMcfe of net gas per day.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On September&nbsp;2, 2004, we completed the sale,
effective as of July&nbsp;1, 2004, of all of our Canadian
natural gas reserves and petroleum assets, together with certain
units of the Calpine Natural Gas Trust, for a total purchase
price of approximately $625&nbsp;million, less adjustments to
reflect the September 2, 2004 closing date. (The purchase price
takes into account a foreign exchange hedge established in
connection with this transaction.) As of September&nbsp;2, 2004,
these assets represented approximately 221 Bcfe of proved
reserves, producing approximately 61&nbsp;MMcfe of net gas per
day. Also included in this sale was our 25% interest in
approximately 80&nbsp;Bcfe of proved reserves (net of royalties)
and 32 net MMcfe per day owned by the Calpine Natural Gas Trust.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">All of the proceeds from the U.S. gas asset sales
and a portion of the proceeds from the Canadian gas sales were
used to repay all amounts outstanding under our existing senior
secured credit facility and to terminate the revolving
commitments thereunder. A portion of the proceeds from the
Canadian gas asset sale was also used to cash collateralize
$144.8&nbsp;million of letters of credit outstanding under that
agreement. Remaining proceeds from the Canadian gas asset sale
will be used in accordance with the asset sale provisions of our
existing bond indentures. Following the repayment of our
existing secured credit facility, we expect to issue new secured
first priority lien debt that will rank senior to our other
outstanding secured debt.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><I><FONT size="2">Letter of Credit Facility of Calpine Energy
Management L.P.</FONT></I></B><FONT size="2"> On August&nbsp;5,
2004, our indirect wholly-owned subsidiary, Calpine Energy
Management L.P., 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 Calpine Energy
Management L.P.&#146;s power and gas obligations by issuing
letters of credit under the facility. Receivables generated
through power sales will serve as collateral to support the
letters of credit. Calpine Energy Management L.P. was created to
facilitate short-term gas and power purchases and sales
transactions ranging from the hourly market up to one month
forward.
</FONT>

<P align="left">
<B><FONT size="2">Principal Executive Offices</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine&#146;s principal executive offices are
located at 50&nbsp;West San&nbsp;Fernando Street, San&nbsp;Jose,
California 95113. Our telephone number is (408)&nbsp;995-5115,
and our home page on the world wide web is at
<I>http://www.calpine.com</I>. The contents of our website are
not part of this prospectus.
</FONT>

<P align="center"><FONT size="2">5
</FONT>
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<DIV align="left">
<A name='103'></A>
</DIV>

<!-- link1 "CALPINE CANADA ENERGY FINANCE ULC AND CALPINE CANADA ENERGY FINANCE II ULC" -->

<P align="center">
<B><FONT size="2">CALPINE CANADA ENERGY FINANCE ULC
AND</FONT></B>

<DIV align="center">
<B><FONT size="2">CALPINE CANADA ENERGY FINANCE II ULC</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Energy Finance is an unlimited liability company
organized in March 2001 under the laws of Nova Scotia, Canada.
Energy Finance II is an unlimited liability company organized in
July 2001 under the laws of Nova Scotia, Canada. Energy
Finance&#146;s direct parent company is Quintana Canada
Holdings, LLC, a Delaware limited liability company. Energy
Finance II&#146;s direct parent company is Calpine Canada
Resources Ltd., an Alberta, Canada corporation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Energy Finance and Energy Finance II are both
indirect, wholly-owned special purpose finance subsidiaries of
Calpine that engage in financing activities to raise funds for
the business operations of Calpine and its subsidiaries. They
will each issue debt securities and warrants to purchase debt
securities. Their debt securities will be fully and
unconditionally guaranteed by Calpine.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For the reasons set forth under the caption
&#147;About this Prospectus,&#148; we are not required to
include separate financial statements of Energy Finance or
Energy Finance II in this prospectus and neither entity is
subject to the information reporting requirements of the
Securities Exchange Act.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The registered office of each of Energy Finance
and Energy Finance II is Suite&nbsp;800, Purdy&#146;s Wharf,
Tower 1, 1959 Upper Water Street, P.O. Box 997, Halifax, Nova
Scotia B3J 3N2, and their telephone number at that address is
(902)&nbsp;420-3335.
</FONT>

<P align="center"><FONT size="2">6
</FONT>

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<DIV align="left">
<A name='104'></A>
</DIV>

<!-- link1 "CALPINE CAPITAL TRUST IV AND CALPINE CAPITAL TRUST V" -->

<P align="center">
<B><FONT size="2">CALPINE CAPITAL TRUST IV AND CALPINE CAPITAL
TRUST V</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each of Trust IV and Trust V is a Delaware
business trust created under the Delaware Business Trust Act.
Each of the trusts will be governed by a declaration of trust
(as it may be amended and restated from time to time) among the
trustees of each trust and Calpine. Each declaration will be
qualified under the Trust Indenture Act of 1939.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For the reasons set forth under the caption
&#147;About this Prospectus,&#148; we are not required to
include separate financial statements of Trust IV or Trust V in
this prospectus and neither entity is subject to the information
reporting requirements of the Securities Exchange Act.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each of the trusts will exist primarily for the
purposes of (i)&nbsp;issuing its trust preferred and trust
common securities; (ii)&nbsp;investing the proceeds from the
sale of its securities in Calpine&#146;s debt securities; and
(iii) engaging in only such other activities as are necessary or
incidental to issuing its securities and purchasing and holding
Calpine&#146;s debt securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">When a trust issues its trust preferred
securities, you and the other holders of the trust preferred
securities will own all of the issued and outstanding trust
preferred securities of the trust. Calpine will acquire all of
the issued and outstanding trust common securities of each
trust, representing an undivided beneficial interest in the
assets of each trust of at least 3%. Wilmington Trust Company,
acting in its capacity as guarantee trustee, will hold for your
benefit a trust preferred securities guarantee issued by
Calpine, which will be separately qualified under the Trust
Indenture Act of 1939.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each of the trusts will initially have three
trustees. One of the trustees will be an individual who is an
officer or employee of Calpine. The second trustee will be
Wilmington Trust Company, which will serve as the property
trustee under the declaration of trust for purposes of the Trust
Indenture Act of 1939. The third trustee will be Wilmington
Trust Company, which will serve as Delaware trustee and has its
principal place of business in the State of Delaware.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless otherwise provided in the applicable
prospectus supplement, because Calpine will own all of the trust
common securities of each trust, Calpine will have the exclusive
right to appoint, remove or replace trustees and to increase or
decrease the number of trustees. In most cases, there will be at
least three trustees. The term of a trust will be described in
the applicable prospectus supplement, but may dissolve earlier
as provided in the applicable declaration of trust.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The rights of the holders of the trust preferred
securities of a trust, including economic rights, rights to
information and voting rights, and the duties and obligations of
the trustees of a trust, will be contained in and governed by
the declaration of trust of that trust (as it may be amended and
restated from time to time), the Delaware Business Trust Act and
the Trust Indenture Act of 1939.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The address of each trust is 50 West San Fernando
Street, San Jose, California 95113, and the telephone number of
each trust at that address is (408)&nbsp;995-5115.
</FONT>

<P align="center"><FONT size="2">7
</FONT>

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<DIV align="left">
<A name='105'></A>
</DIV>

<!-- link1 "RISK FACTORS" -->

<P align="center">
<B><FONT size="2">RISK FACTORS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Investing in our securities involves risk. Please
see the risk factors described in the Second Amendment to our
Annual Report on Form&nbsp;10-K/ A for the year ended
December&nbsp;31, 2003, filed with the SEC on September 22, 2004
(referred to herein as our Annual Report on Form 10-K/A for the
year ended December 31, 2003) which is incorporated by reference
in this prospectus. Any of such risks could materially adversely
affect our business, financial condition or results of
operations. Before making an investment decision, you should
carefully consider these risks as well as other information
contained or incorporated by reference in this prospectus. You
could lose all or part of your investment if any of the risks
and uncertainties described actually occur.
</FONT>

<DIV align="left">
<A name='106'></A>
</DIV>

<!-- link1 "WHERE YOU CAN FIND MORE INFORMATION; DOCUMENTS INCORPORATED BY REFERENCE" -->

<P align="center">
<B><FONT size="2">WHERE YOU CAN FIND MORE INFORMATION;</FONT></B>

<DIV align="center">
<B><FONT size="2">DOCUMENTS INCORPORATED BY REFERENCE</FONT></B>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine files annual, quarterly and special
reports, proxy statements and other information with the SEC.
You may obtain any document we file with the SEC at the
SEC&#146;s public reference room in Washington, D.C., Chicago,
Illinois and New York, New York. 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 Fifth Street, N.W.,
Washington, D.C. 20549-1004. Our SEC filings are also accessible
through the Internet at the SEC&#146;s website at
<I>http://www.sec.gov.</I>
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">None of Energy Finance, Energy Finance II, Trust
IV or Trust V is currently subject to the information reporting
requirements of the Securities Exchange Act, for the reasons set
forth under the caption &#147;About this Prospectus.&#148;
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The SEC permits us to &#147;incorporate by
reference&#148; into this prospectus the information in
documents we file with it, which means that we can disclose
important information to you by referring you to those
documents. The information incorporated by reference is
considered to be a part of this prospectus and later information
that we file with the SEC will automatically update and
supersede this information. This prospectus incorporates by
reference:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the Second Amendment to our Annual Report on
    Form&nbsp;10-K/ A for the year ended December&nbsp;31, 2003;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our Quarterly Report on Form&nbsp;10-Q/ A for the
    quarter ended March&nbsp;31, 2004;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our Quarterly Report on Form&nbsp;10-Q for the
    quarter ended June&nbsp;30, 2004;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our Current Reports on Form&nbsp;8-K filed with
    the SEC on January 6, 2004, January&nbsp;9, 2004,
    January&nbsp;9, 2004, January&nbsp;20, 2004, January 29, 2004,
    February&nbsp;3, 2004, February&nbsp;4, 2004, February&nbsp;9,
    2004, February&nbsp;24, 2004, February&nbsp;24, 2004,
    March&nbsp;10, 2004, March&nbsp;12, 2004, March&nbsp;16, 2004,
    March&nbsp;23, 2004, April&nbsp;19, 2004, April&nbsp;28, 2004,
    May 27, 2004, June&nbsp;9, 2004, June&nbsp;15, 2004,
    June&nbsp;29, 2004, August&nbsp;18, 2004, August&nbsp;20, 2004,
    September&nbsp;8, 2004, September&nbsp;21, 2004 and
    September&nbsp;21, 2004;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our Current Report on Form&nbsp;8-K/A filed with
    the SEC on September&nbsp;14, 2004;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the description of Calpine&#146;s common stock
    contained in Calpine&#146;s Registration Statement on
    Form&nbsp;8-A (File No.&nbsp;001-12079), filed with the SEC on
    August&nbsp;20, 1996; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the description of rights relating to our common
    stock contained in our Registration Statement on Form&nbsp;8-A
    (File No. 001-12079), filed with the SEC on June&nbsp;17, 1997,
    and the amendments to that Registration Statement filed on
    June&nbsp;18, 1997, June&nbsp;24, 1997 and September&nbsp;28,
    2001.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This prospectus also incorporates by reference
any future filings we make with the SEC under
Sections&nbsp;13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act until we sell all of the securities being
registered or until this offering is otherwise terminated.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If you request a copy of any or all of the
documents incorporated by reference, then we will send to you
the copies you requested at no charge. However, we will not send
exhibits to such documents, unless such exhibits are
specifically incorporated by reference in such documents. You
should direct requests for such copies either by writing to
Calpine Corporation, 50 West San Fernando Street, San Jose,
California 95113, attention: Lisa M. Bodensteiner, Assistant
Secretary, or by telephoning (408)&nbsp;995-5115.
</FONT>

<P align="center"><FONT size="2">8
</FONT>

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

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We have filed with the SEC a joint registration
statement on Form&nbsp;S-3 under the Securities Act of 1933, as
amended (the &#147;Securities Act&#148;), covering the
securities described in this prospectus. This prospectus does
not contain all of the information included in the registration
statement. Any statement made in this prospectus concerning the
contents of any contract, agreement or other document is only a
summary of the actual contract, agreement or other document. If
we have filed any contract, agreement or other document as an
exhibit to the registration statement, you should read the
exhibit for a more complete understanding of the document or
matter involved. Each statement regarding a contract, agreement
or other document is qualified in its entirety by reference to
the actual document. Copies of documents described herein are
available free of charge upon request as provided in the
preceding paragraph.
</FONT>

<P align="center"><FONT size="2">9
</FONT>
<!-- 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">
<A name='107'></A>
</DIV>

<!-- link1 "FORWARD-LOOKING STATEMENTS" -->

<P align="center">
<B><FONT size="2">FORWARD-LOOKING STATEMENTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Some of the statements contained or incorporated
by reference in this prospectus are forward-looking statements
within the meaning of Section&nbsp;27A of the Securities Act and
Section&nbsp;21E of the Securities Exchange Act and are subject
to the safe harbor created by the Private Securities Litigation
Reform Act of 1995. These statements include declarations
regarding our or our management&#146;s intents, beliefs or
current expectations. In some cases, you can identify
forward-looking statements by terminology such as
&#147;may,&#148; &#147;will,&#148; &#147;should,&#148;
&#147;expects,&#148; &#147;plans,&#148; &#147;anticipates,&#148;
&#147;believes,&#148; &#147;estimates,&#148;
&#147;predicts,&#148; &#147;potential,&#148; or
&#147;continue&#148; or the negative of these terms or other
comparable terminology. Any forward-looking statements are not
guarantees of future performance and actual results could differ
materially from those indicated by the forward-looking
statements. Forward-looking statements involve known and unknown
risks, uncertainties, and other factors that may cause our or
our industry&#146;s actual results, levels of activity,
performance, or achievements to be materially different from any
future results, levels of activity, performance, or achievements
expressed or implied by such forward-looking statements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Among the important factors that could cause
actual results to differ materially from those indicated by such
forward-looking statements are the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the timing and extent of deregulation of energy
    markets and the rules and regulations adopted on a transitional
    basis with respect thereto;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the timing and extent of changes in commodity
    prices for energy, particularly natural gas and electricity and
    the impact of related derivatives transactions;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">supply of and demand for power in the markets
    served by our power generation facilities, including the
    potential effects of unseasonable weather patterns that result
    in reduced demand for power and unscheduled outages of our power
    generation facilities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">economic slowdowns, which can adversely affect
    consumption of power by businesses and consumers;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the inability to commence commercial operation of
    new facilities, whether as a result of failure to obtain the
    necessary permits to operate, failure of third-party contractors
    to perform their contractual obligations, inability to obtain
    project financing on acceptable terms or otherwise;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our ability to accurately estimate future costs;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">development of lower-cost power plants or of a
    lower-cost means of operating a fleet of power plants by our
    competitors;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our ability to market and sell power from power
    plants in the evolving energy market;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the successful exploitation of an oil or gas
    resource that ultimately depends upon the geology of the
    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;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our ability to accurately estimate oil and gas
    reserves;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reduced liquidity in the trading and power
    industry;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our ability to access the capital markets on
    attractive terms or at all;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">our ability to accurately estimate sources and
    uses of cash, which estimates are based on current expectations;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">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;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">possible future claims, litigation and
    enforcement actions pertaining to the foregoing;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">effects of the application of regulations,
    including changes in regulations or the interpretation thereof;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">other risks identified in this prospectus; and.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">other risks identified from time to time in our
    reports and registration statements filed with the SEC,
    including the risk factors identified in our Annual Report on
    Form&nbsp;10-K/ A for the year ended December&nbsp;31, 2003,
    which is incorporated by reference in this prospectus.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance
or achievements.
</FONT>

<P align="center"><FONT size="2">10
</FONT>

<!-- 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">
<A name='108'></A>
</DIV>

<!-- link1 "CALPINE CONSOLIDATED RATIO OF EARNINGS TO FIXED CHARGES" -->

<P align="center">
<B><FONT size="2">CALPINE CONSOLIDATED RATIO OF EARNINGS TO
FIXED CHARGES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following table sets forth Calpine&#146;s
consolidated ratio of earnings to fixed charges for each of the
last five years and for the six months ended June 30, 2004.
</FONT>

<CENTER>
<TABLE width="40%" align="center" cellspacing="0" cellpadding="0" border="0">

<TR>
    <TD width="7%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="6%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="11%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="11%"><FONT size="2">&nbsp;</FONT></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">(Unaudited)</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Six Months</FONT></B></TD>
</TR>

<TR>
    <TD colspan="19"></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">Ended</FONT></B></TD>
</TR>

<TR>
    <TD colspan="19" align="center" nowrap><B><FONT size="1">Year Ended December 31,</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">June 30,</FONT></B></TD>
</TR>

<TR>
    <TD colspan="19" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">1999</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2000</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2001</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2002</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2003</FONT></B></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><B><FONT size="1">2004</FONT></B></TD>
</TR>

<TR>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
    <TD></TD>
    <TD colspan="3" align="center" nowrap><HR size="1" noshade></TD>
</TR>

<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="top" nowrap><FONT size="2">1.81</FONT></TD>
    <TD align="left" valign="top" nowrap><FONT size="2">x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.89</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">1.40</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">x</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(1)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(2)</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="right" valign="bottom" nowrap><FONT size="2">&#151;</FONT></TD>
    <TD align="left" valign="bottom" nowrap><FONT size="2">(3)</FONT></TD>
</TR>

</TABLE>
</CENTER>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For purposes of computing our consolidated ratio
of earnings to fixed charges, earnings consist of pre-tax income
before adjustment for minority interests in our consolidated
subsidiaries and income or loss from equity investees, plus
fixed charges, amortization of capitalized interest and
distributed income of equity investees, reduced by interest
capitalized, the minority interest in pre-tax income of
subsidiaries that have not incurred fixed charges and
distributions on our company-obligated Remarketable Term Income
Deferrable Equity Securities (&#147;HIGH TIDES&#148;). Fixed
charges consist of interest expensed and capitalized (including
amortized premiums, discounts and capitalized expenses related
to indebtedness), an estimate of the interest within rental
expense and the distributions on the HIGH TIDES.
</FONT>

<P align="left">
<HR size="1" width="18%" align="left" noshade>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD><FONT size="2">(1)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">For the year ended December&nbsp;31, 2002,
    Calpine had an earnings-to-fixed-charges coverage deficiency of
    approximately $587.1 million, primarily as a result of
    (a)&nbsp;a pre-tax charge to earnings of $404.7&nbsp;million for
    equipment cancellation and asset impairment, (b) increased
    interest costs due to recent debt financings to support our
    growth, and (c)&nbsp;a significant decrease in electricity
    prices, gas prices and spark spreads, primarily as a result of
    weak market fundamentals as compared to the year ended
    December&nbsp;31, 2001.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(2)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">For the year ended December&nbsp;31, 2003, we had
    an earnings-to-fixed-charges coverage deficiency of
    approximately $269.8&nbsp;million, primarily as a result of
    (a)&nbsp;a pre-tax charge to earnings of $64.4&nbsp;million for
    equipment cancellation and asset impairment and
    $16.4&nbsp;million for long-term service agreement cancellation
    charges, (b)&nbsp;increased interest costs due to recent debt
    financings to support our growth, and (c)&nbsp;a decrease in
    average spark spreads per megawatt-hour and higher fuel expense
    in 2003 as compared with the same period in 2002.
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD><FONT size="2">(3)&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">For the six months ended June&nbsp;30, 2004, we
    had an earnings-to-fixed charges coverage deficiency of
    approximately $442.2&nbsp;million, primarily as a result of
    (a)&nbsp;a decrease in gross profit of $152.5&nbsp;million from
    the same period in the previous year, which is a result of lower
    per megawatt-hour spark spreads realized during the six months
    ended June&nbsp;30, 2004, and additional costs associated with
    new power plants coming on line, and (b)&nbsp;a pre-tax charge
    to earnings of $534.4&nbsp;million for increased interest costs
    due to recent debt financings to support our growth.
    </FONT></TD>
</TR>

</TABLE>

<DIV align="left">
<A name='109'></A>
</DIV>

<!-- link1 "USE OF PROCEEDS" -->

<P align="center">
<B><FONT size="2">USE OF PROCEEDS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless otherwise specified in a prospectus
supplement accompanying this prospectus, we will add the net
proceeds from the sale of the securities to which this
prospectus and the prospectus supplement relate to our general
funds, which we will use, directly or indirectly, for financing
power projects under development or construction, working
capital, general corporate purposes and any other purpose
specified in a prospectus supplement. We may conduct concurrent
or additional financings at any time. The net proceeds from the
sale of debt securities by Energy Finance or Energy Finance II
to which this prospectus relates will be lent to us or our
affiliates by Energy Finance or Energy Finance II, as
applicable, pursuant to one or more intercompany loans. The net
proceeds from the sale of trust preferred securities and trust
common securities by Trust IV and Trust V to which this
prospectus relates will be used to purchase our debt securities,
and, unless otherwise specified in a prospectus supplement
accompanying this prospectus, we will add the net proceeds from
the sale of such debt securities to our general funds, which we
will use, directly or indirectly, for financing power projects
under development or construction, working capital, general
corporate purposes and any other purpose specified in a
prospectus supplement.
</FONT>

<P align="center"><FONT size="2">11
</FONT>
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<DIV align="left">
<A name='110'></A>
</DIV>

<!-- link1 "PLAN OF DISTRIBUTION" -->

<P align="center">
<B><FONT size="2">PLAN OF DISTRIBUTION</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may sell the securities offered through this
prospectus in and outside the United States (i)&nbsp;to or
through underwriters or dealers, (ii)&nbsp;directly to
purchasers, including our affiliates, (iii)&nbsp;through agents,
or (iv)&nbsp;through a combination of any these methods. The
securities may be distributed at a fixed price or prices, which
may be changed, market prices prevailing at the time of sale,
prices related to the prevailing market prices, or negotiated
prices. The prospectus supplement will include the following
information:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the terms of the offering;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the names of any underwriters or agents;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the name or names of any managing underwriter or
    underwriters;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the purchase price of the securities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the net proceeds from the sale of the securities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any delayed delivery arrangements;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any underwriting discounts, commissions and other
    items constituting underwriters&#146; compensation;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any initial public offering price;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any discounts or concessions allowed or reallowed
    or paid to dealers; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any commissions paid to agents.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Sale Through Underwriters or Dealers</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If underwriters are used in the sale, the
underwriters will acquire the securities for their own account,
including through underwriting, purchase, security lending or
repurchase agreements with us. The underwriters may resell the
securities from time to time in one or more transactions,
including negotiated transactions. Underwriters may sell the
securities in order to facilitate transactions in any of our
other securities (described in this prospectus or otherwise),
including other public or private transactions and short sales.
Underwriters may offer securities to the public either through
underwriting syndicates represented by one or more managing
underwriters or directly by one or more firms acting as
underwriters. Unless otherwise indicated in the prospectus
supplement, the obligations of the underwriters to purchase the
securities will be subject to certain conditions, and the
underwriters will be obligated to purchase all the offered
securities if they purchase any of them. The underwriters may
change from time to time any initial public offering price and
any discounts or concessions allowed or reallowed or paid to
dealers.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If dealers are used in the sale of securities
offered through this prospectus, we will sell the securities to
them as principals. They may then resell those securities to the
public at varying prices determined by the dealers at the time
of resale. The prospectus supplement will include the names of
the dealers and the terms of the transaction.
</FONT>

<P align="left">
<B><FONT size="2">Direct Sales and Sales Through
Agents</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may sell the securities offered through this
prospectus directly. In this case, no underwriters or agents
would be involved. Such securities may also be sold through
agents designated from time to time. The prospectus supplement
will name any agent involved in the offer or sale of the offered
securities and will describe any commissions payable to the
agent. Unless otherwise indicated in the prospectus supplement,
any agent will agree to use its reasonable best efforts to
solicit purchases for the period of its appointment.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may sell the securities directly to
institutional investors or others who may be deemed to be
underwriters within the meaning of the Securities Act with
respect to any sale of those securities. The terms of any such
sales will be described in the prospectus supplement.
</FONT>

<P align="left">
<B><FONT size="2">Delayed Delivery Contracts</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the prospectus supplement indicates, we may
authorize agents, underwriters or dealers to solicit offers from
certain types of institutions to purchase securities at the
public offering price under delayed delivery contracts. These
contracts would provide for payment and delivery on a specified
date in the future. The contracts would be subject only to those
conditions described in the prospectus supplement. The
applicable prospectus supplement will describe the commission
payable for solicitation of those contracts.
</FONT>

<P align="center"><FONT size="2">12
</FONT>

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<P align="left">
<B><FONT size="2">Market Making, Stabilization and Other
Transactions</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless the applicable prospectus supplement
states otherwise, each series of offered securities will be a
new issue and will have no established trading market. We may
elect to list any series of offered securities on an exchange.
Any underwriters that we use in the sale of offered securities
may make a market in such securities, but may discontinue such
market making at any time without notice. Therefore, we cannot
assure you that the securities will have a liquid trading market.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Any underwriter may also engage in stabilizing
transactions, syndicate covering transactions and penalty bids
in accordance with Rule&nbsp;104 under the Securities Exchange
Act. Stabilizing transactions involve bids to purchase the
underlying security in the open market for the purpose of
pegging, fixing or maintaining the price of the securities.
Syndicate covering transactions involve purchases of the
securities in the open market after the distribution has been
completed in order to cover syndicate short positions.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Penalty bids permit the underwriters to reclaim a
selling concession from a syndicate member when the securities
originally sold by the syndicate member are purchased in a
syndicate covering transaction to cover syndicate short
positions. Stabilizing transactions, syndicate covering
transactions and penalty bids may cause the price of the
securities to be higher than it would be in the absence of the
transactions. The underwriters may, if they commence these
transactions, discontinue them at any time.
</FONT>

<P align="left">
<B><FONT size="2">Derivative Transactions and Hedging</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We and the underwriters may engage in derivative
transactions involving the securities. These derivatives may
consist of short sale transactions and other hedging activities.
The underwriters may acquire a long or short position in the
securities, hold or resell securities acquired and purchase
options or futures on the securities and other derivative
instruments with returns linked to or related to changes in the
price of the securities. In order to facilitate these derivative
transactions, we may enter into security lending or repurchase
agreements with the underwriters. The underwriters may effect
the derivative transactions through sales of the securities to
the public, including short sales, or by lending the securities
in order to facilitate short sale transactions by others. The
underwriters may also use the securities purchased or borrowed
from us or others (or, in the case of derivatives, securities
received from us in settlement of those derivatives) to directly
or indirectly settle sales of the securities or close out any
related open borrowings of the securities.
</FONT>

<P align="left">
<B><FONT size="2">At-the-Market Offerings</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to the limitations under
Rule&nbsp;415(a)(4)(ii) under the Securities Act, we may offer
our securities into an existing trading market on the terms
described in the applicable prospectus supplement. Underwriters
and dealers who may participate in any at-the-market offerings
include Deutsche Bank Securities Inc.
</FONT>

<P align="left">
<B><FONT size="2">General Information</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Agents, underwriters, and dealers may be
entitled, under agreements entered into with us, to
indemnification by Calpine and, if applicable, Energy Finance,
Energy Finance&nbsp;II, Trust&nbsp;IV or Trust&nbsp;V, against
certain liabilities, including liabilities under the Securities
Act. Our agents, underwriters, and dealers, or their affiliates,
may be customers of, engage in transactions with or perform
services for us, in the ordinary course of business.
</FONT>

<P align="center"><FONT size="2">13
</FONT>

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<DIV align="left">
<A name='111'></A>
</DIV>

<!-- link1 "DESCRIPTION OF CAPITAL STOCK" -->

<P align="center">
<B><FONT size="2">DESCRIPTION OF CAPITAL STOCK</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our authorized capital stock consists of
2,000,000,000 shares of common stock, $.001 par value, and
10,000,000 shares of preferred stock, $.001 par value. The
following summary is qualified in its entirety by the provisions
of our amended and restated certificate of incorporation and
by-laws, which have been included or incorporated by reference
as exhibits to our Quarterly Report on Form&nbsp;10-Q for the
quarter ended June&nbsp;30, 2004, which is incorporated by
reference to this prospectus.
</FONT>

<P align="left">
<B><FONT size="2">Common Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of June&nbsp;30, 2004, there were 439,326,249
shares of our common stock outstanding. In addition, as of
June&nbsp;30, 2004, there were 24,020,742 shares of our common
stock underlying vested stock options eligible for sale and
there were an additional 35,997,981 shares of our common stock
issuable upon conversion of our outstanding convertible
securities (including the HIGH TIDES). The holders of common
stock are entitled to one vote per share on all matters to be
voted upon by the stockholders. Subject to preferences that may
be applicable to any outstanding preferred stock, the holders of
common stock are entitled to receive ratably such dividends, if
any, as may be declared from time to time by the board of
directors out of legally available funds. See
&#147;&#151;&nbsp;Dividend Policy,&#148; below. In the event of
our liquidation, dissolution or winding up, the holders of
common stock are entitled to share ratably in all assets
remaining after payment of liabilities, subject to prior
liquidation rights of preferred stock, if any, then outstanding.
The common stock has no preemptive or conversion rights or other
subscription rights. There are no redemption or sinking fund
provisions applicable to the common stock. Pursuant to a rights
agreement entered into in June 1997, as amended, our shares of
common stock outstanding prior to the occurrence of events
specified in the rights agreement have certain preferred share
purchase rights, which are set forth in more detail in the
rights agreement incorporated by reference as an exhibit to
Calpine&#146;s Annual Report on Form&nbsp;10-K/ A for the year
ended December&nbsp;31, 2003, which is incorporated by reference
in this prospectus. See &#147;&#151;&nbsp;Anti-Takeover Effects
of Provisions of the Certificate of Incorporation, Bylaws and
Delaware Law&nbsp;&#151; Rights Plan,&#148; below.
</FONT>

<P align="left">
<B><FONT size="2">Dividend Policy</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">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 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.
</FONT>

<P align="left">
<B><FONT size="2">Preferred Stock</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As of September&nbsp;10, 2004, there were no
shares of our preferred stock outstanding. Our board of
directors has the authority, without further vote or action by
the stockholders, to issue from time to time up to 10,000,000
shares of preferred stock in one or more series, and to fix the
rights, preferences, privileges, qualifications, limitations and
restrictions granted to or imposed upon any wholly unissued
shares of undesignated preferred stock, including without
limitation dividend rights, if any, voting rights, if any, and
liquidation and conversion rights, if any. Our board of
directors has the authority to fix the number of shares
constituting any series and the designations of such series
without any further vote or action by the stockholders. Our
board of directors, without stockholder approval, can issue
preferred stock with voting and conversion rights which could
adversely affect the voting power of the holders of common
stock. The issuance of preferred stock may have the effect of
delaying, deferring or preventing a change in control of
Calpine, or could delay or prevent a transaction that might
otherwise give our stockholders an opportunity to realize a
premium over the then prevailing market price of the common
stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our board of directors has authorized the
issuance of up to 1,000,000 shares of Series&nbsp;A
Participating Preferred Stock, par value $.001 per share,
pursuant to a rights plan adopted by our board of directors on
June&nbsp;5, 1997, which was amended on September&nbsp;19, 2001.
As of September&nbsp;10, 2004, no shares of our participating
preferred stock were outstanding. A description of the rights
plan and the participating preferred stock is set forth under
&#147;&#151;&nbsp;Anti-Takeover Effects of Provisions of
Certificate of Incorporation, Bylaws and Delaware
Law&nbsp;&#151; Rights Plan,&#148; below.
</FONT>

<P align="center"><FONT size="2">14
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In connection with the business combination with
Encal, a series of our preferred stock, consisting of one share,
was designated as special voting preferred stock, having a par
value of $.001 and a liquidation preference of $.001. The one
share of special voting preferred stock has been redeemed and
cancelled.
</FONT>

<P align="left">
<B><FONT size="2">Anti-Takeover Effects of Provisions of the
Certificate of Incorporation, Bylaws and Delaware Law</FONT></B>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certificate
of Incorporation and Bylaws</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Our amended and restated certificate of
incorporation and bylaws provide that our board of directors is
classified into three classes of directors serving staggered,
three-year terms. The certificate of incorporation also provides
that directors may be removed only by the affirmative vote of
the holders of two-thirds of the shares of our capital stock
entitled to vote. Any vacancy on the board of directors may be
filled only by vote of the majority of directors then in office.
Further, the certificate of incorporation provides that any
business combination (as therein defined) requires the
affirmative vote of the holders of two-thirds of the shares of
our capital stock entitled to vote, voting together as a single
class. The certificate of incorporation also provides that all
stockholder actions must be effected at a duly called meeting
and not by a written consent. Our certificate of incorporation
provides that a special meeting of stockholders may be called
only by the chairman of our board of directors, or by the
chairman or secretary upon the written request of a majority of
the total number of directors we would have if there were no
vacancies on our board of directors. The provisions of the
certificate of incorporation and bylaws could discourage
potential acquisition proposals and could delay or prevent a
change in control of Calpine. These provisions are intended to
enhance the likelihood of continuity and stability in the
composition of the board of directors and in the policies
formulated by the board of directors and to discourage certain
types of transactions that may involve an actual or threatened
change of control of Calpine. These provisions are designed to
reduce our vulnerability to an unsolicited acquisition proposal.
The provisions also are intended to discourage certain tactics
that may be used in proxy fights. However, such provisions could
have the effect of discouraging others from making tender offers
for our shares and, as a consequence, they also may inhibit
fluctuations in the market price of our shares that could result
from actual or rumored takeover attempts. Such provisions also
may have the effect of preventing changes in our management.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Rights
Plan</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">On June&nbsp;5, 1997, we adopted a
stockholders&#146; rights plan to strengthen our ability to
protect our stockholders. The rights plan was amended on
September 19, 2001. The rights plan is designed to protect
against abusive or coercive takeover tactics that are not in the
best interests of Calpine or its stockholders. To implement the
rights plan, we declared a dividend of one preferred share
purchase right for each outstanding share of our common stock
held on record as of June&nbsp;18, 1997, and directed the
issuance of one preferred share purchase right with respect to
each share of our common stock that shall become outstanding
thereafter until the rights become exercisable or they expire as
described below. Each right initially represents a contingent
right to purchase, under certain circumstances, one
one-thousandth of a share, called a &#147;unit,&#148; of our
Series&nbsp;A Participating Preferred Stock, par value $.001 per
share, at a price of $140.00 per unit, subject to adjustment.
The rights will become exercisable and trade independently from
our common stock upon the public announcement of the acquisition
by a person or group of 15% or more of our common stock, or ten
days after commencement of a tender or exchange offer that would
result in the acquisition of 15% or more of our common stock.
Each unit purchased upon exercise of the rights will be entitled
to a dividend equal to any dividend declared per share of common
stock and will have one vote, voting together with the common
stock. In the event of our liquidation, each unit purchased upon
exercise of the rights will be entitled to any payment made per
share of common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If we are acquired in a merger or other business
combination transaction after a person or group has acquired 15%
or more of our common stock, each right will entitle its holder
to purchase at the right&#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 our 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 our participating preferred stock
or shares of our common stock having a market value of twice the
right&#146;s exercise price.
</FONT>

<P align="center"><FONT size="2">15
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The rights remain exercisable for up to
90&nbsp;days following a triggering event (such as a person
acquiring 15% or more of our common stock). The rights expire on
June&nbsp;18, 2007, unless redeemed earlier by us. We can redeem
the rights at a price of $.01 per right at any time before the
rights become exercisable, and thereafter only in limited
circumstances.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Delaware
Anti-Takeover Statute</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We are subject to Section&nbsp;203 of the General
Corporation Law of the State of Delaware
(&#147;Section&nbsp;203&#148;), which, subject to certain
exceptions, prohibits a Delaware corporation from engaging in
any business combination with any interested stockholder for a
period of three years following the time that such stockholder
became an interested stockholder, unless: (1)&nbsp;prior to such
time, the board of directors of the corporation approved either
the business combination or the transaction that resulted in the
stockholder becoming an interested stockholder; (2)&nbsp;upon
consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced, excluding for
purposes of determining the voting stock outstanding (but not
the outstanding voting stock owned by the interested
stockholder) those shares owned (x)&nbsp;by persons who are
directors and also officers and (y)&nbsp;by employee stock plans
in which employee participants do not have the right to
determine confidentially whether shares held subject to the plan
will be tendered in a tender or exchange offer; or (3)&nbsp;on
or subsequent to such time, the business combination is approved
by the board of directors and authorized at an annual or special
meeting of stockholders, and not by written consent, by the
affirmative vote of at least 66&nbsp;2/3% of the outstanding
voting stock that is not owned by the interested stockholder.
</FONT>

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

<P align="center"><FONT size="2">16
</FONT>

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<DIV align="left">
<A name='112'></A>
</DIV>

<!-- link1 "DESCRIPTION OF DEPOSITARY SHARES" -->

<P align="center">
<B><FONT size="2">DESCRIPTION OF DEPOSITARY SHARES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a general description of the
depositary shares to which this prospectus and any prospectus
supplement may relate. The applicable prospectus supplement will
describe the specific terms of the depositary shares offered
through that prospectus supplement, as well as any general terms
described in this section that will not apply to those
depositary shares.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following description of the depositary
shares is subject to the detailed provisions of the depositary
receipts and the deposit agreement relating to the applicable
series of preferred stock, the form of each of which has been
filed as an exhibit to the registration statement of which this
prospectus is a part. Whenever particular provisions of the
depositary receipts or deposit agreement, or terms defined
therein, are referred to, those provisions or definitions are
incorporated by reference herein and such descriptions are
qualified in their entirety by such reference. We urge you to
read the depositary receipts and the depositary agreement
because they, and not this description, describe every detail of
the terms of the depositary shares. The summary below of the
general terms of the depositary shares will be supplemented by
the more specific terms in a prospectus supplement.
</FONT>

<P align="left">
<B><FONT size="2">General</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine may, at its option, elect to have shares
of its preferred stock represented by depositary shares. The
shares of any series of preferred stock underlying the
depositary shares will be deposited under a separate deposit
agreement that we will enter into with a bank or trust company
of our choosing. The prospectus supplement relating to a series
of depositary shares will give the name and address of the
depositary. Subject to the terms of the deposit agreement, each
owner of a depositary share will be entitled to all the rights
and preferences of the preferred stock underlying the depositary
share in proportion to the applicable interest in the preferred
stock underlying the depositary share.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The depositary shares will be evidenced by
depositary receipts issued pursuant to the deposit agreement.
Each depositary share will represent the applicable interest in
a number of shares of a particular series of the preferred stock
described in the applicable prospectus supplement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless otherwise provided in the applicable
prospectus supplement, upon surrender of depositary shares at
the office of the depositary and upon payment of the charges
provided in the deposit agreement, a holder of depositary shares
will be entitled to the number of whole shares of the related
series of preferred stock evidenced by the surrendered
depositary shares.
</FONT>

<P align="left">
<B><FONT size="2">Dividends and Other Distributions</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The depositary will distribute all cash dividends
or other cash distributions received in respect of the preferred
stock to the record holders of depositary shares representing
the preferred stock in proportion to the number of the
depositary shares owned by the holders on the relevant record
date. The depositary will distribute only that amount which can
be distributed without attributing to any depositary
shareholders a fraction of one cent, and any balance not so
distributed will be added to and treated as part of the next sum
received by the depositary for distribution to record depositary
shareholders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If there is a distribution other than in cash,
the depositary will distribute property to the entitled record
depositary shareholders, unless the depositary determines that
it is not feasible to make that distribution. In that case the
depositary may, with our approval, adopt the method it deems
equitable and practicable for making that distribution,
including any sale of property and the distribution of the net
proceeds from this sale to the concerned holders.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The deposit agreement will also contain
provisions relating to the manner in which any subscription or
similar rights we offer to holders of preferred stock will be
made available to holders of depositary shares.
</FONT>

<P align="left">
<B><FONT size="2">Conversion and Exchange</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If any preferred stock underlying depositary
shares is convertible or exchangeable, each record holder of
depositary shares will have the right or obligation to convert
or exchange the depositary shares in the manner provided in the
deposit agreement and described in the applicable prospectus
supplement.
</FONT>

<P align="left">
<B><FONT size="2">Redemption by Calpine</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the preferred stock underlying depositary
shares is subject to redemption at our option, the depositary
shares will be redeemed from the redemption proceeds received by
the depositary. The redemption price per
</FONT>

<P align="center"><FONT size="2">17
</FONT>

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<DIV align="left">
<FONT size="2">depositary share will be equal to the aggregate
redemption price payable with respect to the number of shares of
preferred stock underlying the depositary shares. Whenever we
redeem preferred stock from the depositary, the depositary will
redeem as of the same redemption date a proportionate number of
depositary shares representing the shares of preferred stock
that we redeemed. If less than all the depositary shares are to
be redeemed, the depositary shares to be redeemed will be
selected by lot or pro rata as we may determine.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">After the date fixed for redemption of the
underlying preferred stock, the depositary shares called for
redemption will no longer be deemed to be outstanding and all
rights of the holders of the depositary shares will cease,
except the right to receive the redemption price. Any funds
Calpine deposits with the depositary for any depositary shares
that the holders fail to redeem will be returned to us after two
years from the date the funds are deposited.
</FONT>

<P align="left">
<B><FONT size="2">Voting</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon receipt of notice of any meeting or action
in lieu of any meeting at which the holders of any shares of
preferred stock underlying the depositary shares are entitled to
vote, the depositary will mail the information contained in the
notice to the record holders of the depositary shares relating
to the preferred stock. Each record holder of the depositary
shares on the record date, which will be the same date as the
record date for the preferred stock, will be entitled to
instruct the depositary as to the exercise of the voting rights
pertaining to the number of shares of preferred stock underlying
the holder&#146;s depositary shares. The depositary will
endeavor, insofar as practicable, to vote the number of shares
of preferred stock underlying the depositary shares in
accordance with these instructions, and we will agree to take
all action that the depositary deems necessary to enable the
depositary to do so.
</FONT>

<P align="left">
<B><FONT size="2">Amendment</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The depositary receipt evidencing the depositary
shares and any provision of the deposit agreement may at any
time be amended by agreement between Calpine and the depositary.
However, any amendment that materially and adversely alters the
rights of the existing holders of depositary shares will not be
effective unless the amendment has been approved by the record
holders of at least a majority of the depositary shares then
outstanding.
</FONT>

<P align="left">
<B><FONT size="2">Charges of Depositary</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We will pay all transfer and other taxes and
governmental charges that arise solely from the existence of the
depositary arrangements. We will also pay charges of the
depositary in connection with the initial deposit of the
preferred stock and any exchange or redemption of the preferred
stock. Holders of depositary shares will pay all other transfer
and other taxes and governmental charges, and, in addition, any
other charges that are expressly provided in the deposit
agreement to be for their accounts.
</FONT>

<P align="left">
<B><FONT size="2">Resignation and Removal of
Depositary</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The depositary may resign at any time by
delivering to us notice of its election to do so, and we may at
any time remove the depositary. Any resignation or removal will
take effect upon the appointment of a successor depositary and
its acceptance of the appointment. We will appoint the successor
depositary within 60&nbsp;days after delivery of the notice of
resignation or removal.
</FONT>

<P align="left">
<B><FONT size="2">Termination of Deposit Agreement</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The depositary may terminate, or we may direct
the depositary to terminate, the deposit agreement if:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">we have redeemed or reacquired all outstanding
    depositary shares relating to the deposit agreement;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">there has been a final distribution in respect of
    the preferred stock of any series in connection with our
    liquidation, dissolution or winding up and such distribution has
    been made to the related depositary shareholders.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon termination of the deposit agreement, the
depositary will discontinue the transfer of depositary receipts,
will suspend the distribution of dividends, and will not give
any further notices (other than notice of the termination) or
perform any further acts under the deposit agreement. However,
the depositary will continue to deliver preferred stock
certificates, together with dividends and distributions and the
net proceeds of any sales of property, in exchange for
depositary receipts surrendered. At our request, the depositary
will
</FONT>

<P align="center"><FONT size="2">18
</FONT>

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<DIV align="left">
<FONT size="2">deliver to us all books, records, certificates
evidencing preferred stock, depositary receipts and other
documents relating to the deposit agreement.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Miscellaneous</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We, or at our option, the depositary, will make
available to the holders of depositary shares all reports and
communications that we are required to furnish to the holders of
preferred stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Neither Calpine nor the depositary will be liable
if the depositary is prevented or delayed by law or any
circumstance beyond its control in performing its obligations
under the deposit agreement. Our obligations and those of the
depositary under the deposit agreement will be limited to
performance in good faith of their respective duties under the
deposit agreement. Neither Calpine nor the depositary will be
obligated to prosecute or defend any legal proceeding regarding
any depositary share or preferred stock unless satisfactory
indemnity has been furnished. Calpine and the depositary may
rely upon written advice of counsel or accountants. Calpine and
the depositary may also rely upon information provided to them
by persons presenting preferred stock for deposit, holders of
depositary shares or other persons Calpine or the depositary
believe to be competent. Calpine and the depositary may also
rely upon documents they believe to be genuine.
</FONT>

<P align="center"><FONT size="2">19
</FONT>

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<DIV align="left">
<A name='113'></A>
</DIV>

<!-- link1 "DESCRIPTION OF DEBT SECURITIES" -->

<P align="center">
<B><FONT size="2">DESCRIPTION OF DEBT SECURITIES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a general description of the
debt securities to which this prospectus and any prospectus
supplement may relate. The applicable prospectus supplement will
describe the specific terms of the debt securities offered
through that prospectus supplement, as well as any general terms
described in this section that will not apply to those debt
securities. Unless otherwise stated, the senior debt securities
and the subordinated debt securities are together referred to as
the &#147;debt securities.&#148;
</FONT>

<P align="left">
<B><FONT size="2">General</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine may issue from time to time one or more
series of debt securities under one or more separate indentures
between Calpine and Wilmington Trust Company, as trustee; Energy
Finance may issue from time to time one or more series of debt
securities under one or more indentures between Energy Finance
and Wilmington Trust Company, as trustee; and Energy
Finance&nbsp;II may issue from time to time one or more series
of debt securities under one or more indentures between Energy
Finance&nbsp;II and Wilmington Trust Company, as trustee.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">For purposes of this section, references to the
&#147;issuer&#148; are to Calpine, in the case of debt
securities issued by Calpine, to Energy Finance, in the case of
debt securities issued by Energy Finance, and to Energy
Finance&nbsp;II, in the case of debt securities issued by Energy
Finance&nbsp;II, and references to the &#147;guarantor&#148; are
to Calpine with respect to debt securities issued by Energy
Finance or Energy Finance&nbsp;II. Additionally, in the case of
debt securities issued by Energy Finance or Energy
Finance&nbsp;II, the term &#147;indenture&#148; includes the
guarantee agreement pursuant to which Calpine guarantees the
debt securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The debt securities will be direct, unsecured
obligations of the issuer. The senior debt securities will rank
equally with all other senior debt of the issuer. The indentures
will not limit the amount of debt securities that the issuer may
issue. The subordination provisions of any subordinated debt
securities will be described in an applicable prospectus
supplement.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Almost all of Calpine&#146;s operations are
conducted through Calpine&#146;s subsidiaries and other
affiliates. As a result, Calpine depends almost entirely upon
their earnings and cash flow to service Calpine&#146;s
indebtedness, including Calpine&#146;s ability to pay the
interest on and principal of Calpine&#146;s debt securities, and
on the debt securities of Energy Finance and Energy
Finance&nbsp;II under the guarantees, if the guarantees are
enforced. The non-recourse project financing agreements of
certain of Calpine&#146;s subsidiaries and other affiliates
generally restrict their ability to pay dividends, make
distributions or otherwise transfer funds to Calpine prior to
the payment of other obligations, including operating expenses,
debt service and reserves. Each of Energy Finance and Energy
Finance&nbsp;II is a special purpose financing subsidiary formed
solely as a financing vehicle for Calpine and its subsidiaries.
Therefore, the ability of Energy Finance and Energy
Finance&nbsp;II to pay their obligations under the debt
securities is dependent upon the receipt by them of payments
from Calpine and its subsidiaries to which they have made loans
or otherwise under agreements with them in connection with their
respective financing activities. In addition, under Canadian
law, the respective direct parent companies of Energy Finance
and Energy Finance&nbsp;II will be liable for their
subsidiary&#146;s indebtedness, including any debt securities
issued by such subsidiary, upon a winding-up of that subsidiary.
While each of Energy Finance and Energy Finance&nbsp;II believes
that payments made to it in connection with its financing
activities will be sufficient to pay the principal of, and
interest on, any debt securities it issues, if the responsible
parties were not able to make such payments for any reason, the
holders of such debt securities would have to rely on the
enforcement of Calpine&#146;s guarantee described below.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine&#146;s subsidiaries and other affiliates
are separate and distinct legal entities and will have no
obligation to pay any amounts due on the debt securities issued
by Calpine hereunder, and will not guarantee the payment of
interest on or principal of the debt securities issued by
Calpine hereunder. Calpine&#146;s subsidiaries and other
affiliates (other than Energy Finance (in the case of debt
securities issued by Energy Finance) and Energy Finance&nbsp;II
(in the case of debt securities issued by Energy
Finance&nbsp;II) and their direct parent companies,
respectively, in the case of the winding-up of its subsidiary)
will not have any obligation to pay any amounts due on the debt
securities issued by Energy Finance or Energy Finance&nbsp;II
hereunder and none of Calpine&#146;s subsidiaries or other
affiliates will guarantee the payment of interest on or
principal of the debt securities issued by Energy Finance or
Energy Finance&nbsp;II hereunder. The right of Calpine&#146;s
debt security holders to receive any assets of any of
Calpine&#146;s subsidiaries or other affiliates upon
Calpine&#146;s liquidation or
</FONT>

<P align="center"><FONT size="2">20
</FONT>

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<DIV align="left">
<FONT size="2">reorganization will be subordinated to the claims
of any subsidiaries&#146; or other affiliates&#146; creditors
(including trade creditors and holders of debt issued by
Calpine&#146;s subsidiaries or affiliates, including Energy
Finance and Energy Finance&nbsp;II). Similarly, the right of
holders of Energy Finance&#146;s or Energy
Finance&nbsp;II&#146;s debt securities to receive any assets of
any of Calpine&#146;s subsidiaries or other affiliates upon
Calpine&#146;s liquidation or reorganization will be
subordinated to the claims of any subsidiaries&#146; or other
affiliates&#146; creditors (including trade creditors and
holders of debt issued by Calpine&#146;s subsidiaries or
affiliates). As of June&nbsp;30, 2004, Calpine&#146;s
subsidiaries had approximately $13.0&nbsp;billion of
indebtedness and other liabilities, including trade payables and
excluding deferred tax liabilities, which will be effectively
senior to the debt securities and the guarantees.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following description of the debt securities
is subject to the detailed provisions of each indenture, a copy
of each of which has been incorporated by reference as an
exhibit to the registration statement of which this prospectus
is a part. Whenever particular provisions of any indenture or
terms defined therein are referred to, those provisions or
definitions are incorporated by reference herein and such
descriptions are qualified in their entirety by such reference.
We urge you to read the forms of indentures because they, and
not this description, describe every detail of the terms of the
debt securities. The summary below of the general terms of the
debt securities will be supplemented by the more specific terms
in a prospectus supplement. Unless otherwise stated herein or in
an applicable prospectus supplement, the following indenture
description will apply to both senior and subordinated debt
securities.
</FONT>

<P align="left">
<B><FONT size="2">Terms Applicable to Debt Securities</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The prospectus supplement for a particular series
of debt securities will specify the terms of the series of debt
securities, including:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the classification of the offered debt securities
    as senior or subordinated debt securities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the specific designation, the aggregate principal
    amount, the purchase price and the authorized denominations, if
    other than $1,000 and integral multiples of $1,000 of the
    offered debt securities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the percentage of the principal amount at which
    the debt securities will be issued;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the date or date on which the debt securities
    will mature;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the currency, currencies or currency units in
    which payments on the debt securities will be payable;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the rate or rates at which the debt securities
    will bear interest, if any, or the method of determination of
    such rate or rates;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the date or dates from which the interest, if
    any, shall accrue, the dates on which the interest, if any, will
    be payable and the method of determining holders to whom any of
    the interest shall be payable;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the prices, if any, at which, and the dates at or
    after which, the issuer may or must repay, repurchase or redeem
    the debt securities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any right to convert the debt securities into, or
    exchange the debt securities for, shares of Calpine common stock
    or other securities or property;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any sinking fund obligation with respect to the
    debt securities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">if applicable, any additional material United
    States, and, in the case of debt securities issued by Energy
    Finance or Energy Finance&nbsp;II, Canadian, federal income tax
    consequences;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the exchanges, if any, on which the debt
    securities may be listed;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any other material terms of the debt securities
    consistent with the provisions of the indenture.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless otherwise specified in the prospectus
supplement, the issuer will compute interest payments on the
basis of a 360-day year consisting of twelve 30-day months.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Some of the debt securities may be issued as
discounted debt securities to be sold at a substantial discount
below their stated principal amount. The prospectus supplement
relating to any discounted series of debt securities will
describe any special consequences applicable to discounted debt
securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indentures governing the senior debt do not
contain any provisions that:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">limit the issuer&#146;s ability to incur
    indebtedness;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">provide protection in the event the issuer
    chooses to engage in a highly leveraged transaction,
    reorganization, restructuring, merger or similar transaction.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">21
</FONT>

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<P align="left">
<B><FONT size="2">Issuance of Debt Securities in Connection with
Trust Preferred Securities</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As described under &#147;Description of Trust
Preferred Securities,&#148; below, Calpine may issue debt
securities to Trust&nbsp;IV or Trust V in connection with the
issuance of trust preferred or trust common securities by a
trust. If Calpine issues debt securities to either of the
trusts, it will issue only one series of debt securities to that
trust and those debt securities subsequently may be distributed
to the holders of trust preferred and trust common securities
either upon dissolution of the trust or upon the occurrence of
events that will be described in the applicable prospectus
supplement. An event of default under the applicable indenture
for a series of debt securities issued to a trust will
constitute a trust enforcement event under the declaration of
trust for the applicable trust preferred securities. A holder of
trust preferred securities may directly institute a proceeding
against us for enforcement of payment to that holder of its pro
rata share of principal, premium, interest or any additional
amounts if:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an event of default under the applicable
    declaration of trust has occurred and is continuing;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">that event of default is attributable to our
    failure to pay principal, any premium, interest or additional
    amounts on the applicable series of debt securities when due.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except as described in the preceding sentences or
in the prospectus supplement, the holders of trust preferred
securities will not be able to exercise directly any other
remedy available to the holders of the applicable series of debt
securities.
</FONT>

<P align="left">
<B><FONT size="2">Conversion and Exchange</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine may issue debt securities that are
convertible into or exchangeable for, and Energy Finance and
Energy Finance&nbsp;II may issue debt securities that are
exchangeable for, common stock or preferred stock, property or
cash, or a combination of any of the foregoing. The terms, if
any, on which debt securities of any series will be convertible
or exchangeable will be summarized in the prospectus supplement
relating thereto. Such terms may include provisions, as
applicable, for conversion or exchange, either on a mandatory
basis, at the option of the holder, or at the issuer&#146;s
option, in which case the number of shares of common stock or
preferred stock to be received by the holders of the debt
securities would be calculated according to the factors and at
such time as summarized in the related prospectus supplement.
The prospectus supplement will also summarize certain of the
material United States federal income tax consequences
applicable to any such convertible or exchangeable debt
securities.
</FONT>

<P align="left">
<B><FONT size="2">Reopening of Issue</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The issuer may, from time to time, reopen an
issue of debt securities and issue additional debt securities
with the same terms (including maturity date and interest rate)
as debt securities issued on an earlier date. After such
additional debt securities are issued, they will be fungible
with the debt securities issued on the earlier date to the
extent specified in the applicable prospectus supplement.
</FONT>

<P align="left">
<B><FONT size="2">Ranking</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Any senior debt securities issued by Calpine will
be unsecured and will be effectively subordinated to all of
Calpine&#146;s existing and future secured indebtedness to the
extent of the value of the assets securing that indebtedness,
including indebtedness under Calpine&#146;s secured term loans,
senior secured credit facility and various series of secured
senior notes. As of June&nbsp;30, 2004, Calpine had
$10.4&nbsp;billion of secured indebtedness that would be
effectively senior to the senior debt securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine currently conducts substantially all its
operations through its subsidiaries, and its subsidiaries
generate substantially all of Calpine&#146;s operating income
and cash flow. As a result, distributions or advances from its
subsidiaries are the principal source of funds necessary to meet
Calpine&#146;s debt service obligations. Contractual provisions
or laws, as well as its subsidiaries&#146; financial condition
and operating requirements, may limit Calpine&#146;s ability to
obtain cash from its subsidiaries that Calpine requires to pay
its debt service obligations, including payments on any senior
debt securities issued by Calpine. In addition, holders of any
senior debt securities issued by Calpine will have a junior
position to the claims of creditors of Calpine&#146;s
subsidiaries on the assets and earnings of such subsidiaries. As
of June&nbsp;30, 2004, Calpine&#146;s subsidiaries had
approximately $13.0&nbsp;billion of indebtedness and other
liabilities, including trade payables and excluding deferred tax
liabilities, to which any senior debt securities issued by
Calpine would be structurally subordinated.
</FONT>

<P align="center"><FONT size="2">22
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless otherwise provided in the prospectus
supplement relating to such securities, any senior debt
securities issued by Calpine will rank equal in right of payment
with (a)&nbsp;all of Calpine&#146;s existing and future
unsecured and unsubordinated indebtedness, including, without
limitation, Calpine&#146;s obligations under its outstanding
senior debt securities, including Calpine&#146;s
7&nbsp;5/8%&nbsp;Senior Notes Due 2006, Calpine&#146;s
7&nbsp;3/4%&nbsp;Senior Notes Due 2009, Calpine&#146;s
7&nbsp;7/8%&nbsp;Senior Notes Due 2008, Calpine&#146;s
8&nbsp;3/4%&nbsp;Senior Notes Due 2007, Calpine&#146;s
10&nbsp;1/2%&nbsp;Senior Notes Due 2006, Calpine&#146;s
8&nbsp;1/4%&nbsp;Senior Notes Due 2005, Calpine&#146;s
8&nbsp;5/8%&nbsp;Senior Notes Due 2010, Calpine&#146;s
8&nbsp;1/2%&nbsp;Senior Notes Due 2011, Calpine&#146;s
4%&nbsp;Convertible Senior Notes Due 2006 and Calpine&#146;s
4&nbsp;3/4% Contingent Convertible Senior Notes Due 2023 and
(b)&nbsp;indebtedness of its subsidiaries guaranteed by Calpine,
including the 8&nbsp;1/2%&nbsp;Senior Notes Due 2008 and the
8&nbsp;3/4%&nbsp;Senior Notes Due 2007 issued by Energy Finance,
and the 8&nbsp;7/8%&nbsp;Senior Notes Due 2011 and
8&nbsp;3/8%&nbsp;Senior Notes Due 2008 issued by Energy
Finance&nbsp;II. As of June&nbsp;30, 2004, Calpine had
approximately $14.5&nbsp;billion of indebtedness outstanding, of
which $10.4&nbsp;billion was secured.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless otherwise provided in the prospectus
supplement relating to such securities, debt securities issued
by Energy Finance or Energy Finance&nbsp;II will be:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">senior unsecured obligations of Energy Finance or
    Energy Finance&nbsp;II, as applicable, and will rank equally and
    ratably with all of its other unsecured and unsubordinated
    indebtedness;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">guaranteed on a senior unsecured basis by
    Calpine, which guarantee will rank equally and ratably with all
    other unsecured and unsubordinated indebtedness of Calpine,
    including Calpine&#146;s indebtedness described above including
    the other indebtedness of its subsidiaries guaranteed by Calpine.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The subordinated debt securities issued by
Calpine will be subordinate and junior in right of payment to
all of Calpine&#146;s senior indebtedness, including any
guarantee by Calpine of senior debt securities of Energy Finance
and Energy Finance&nbsp;II. The subordinated debt securities of
Energy Finance and Energy Finance&nbsp;II will be subordinate
and junior in right of payment to all of their respective senior
indebtedness.
</FONT>

<P align="left">
<B><FONT size="2">Guarantees</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine will fully and unconditionally guarantee
to each holder of a debt security issued by Energy Finance or
Energy Finance&nbsp;II and authenticated and delivered by the
trustee the due and punctual payment of the principal of, and
any premium and interest on, the debt security, when and as it
becomes due and payable, whether at maturity, upon acceleration,
by call for redemption, repayment or otherwise in accordance
with the terms of the debt securities and of the related
indenture. The claims of holders under the guarantee by Calpine
will be effectively subordinated to the claims of creditors of
Calpine&#146;s subsidiaries other than Energy Finance or Energy
Finance&nbsp;II, as applicable.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under its guarantee agreement, Calpine will:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">agree that, if an event of default occurs under
    the debt securities, its obligations under the guarantees will
    be absolute and unconditional and will be enforceable
    irrespective of any invalidity, irregularity or unenforceability
    of any series of the debt securities or the related indenture or
    any supplement thereto,&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">waive its right to require the trustee or the
    holders to pursue or exhaust their legal or equitable remedies
    against Energy Finance or Energy Finance&nbsp;II before
    exercising their rights under the guarantees.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Covenants</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indentures and the guarantee shall provide
that, except as otherwise set forth under
&#147;&#151;&nbsp;Defeasance,&#148; below, for so long as any
debt securities remain outstanding or any amount remains unpaid
on any of the debt securities, the issuer and the guarantor, if
any, will comply with the applicable terms of the covenants
contained in the indentures or the guarantee, as applicable,
including the following:
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment of
Securities</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The issuer will duly and punctually pay the
principal of and interest on the debt securities in accordance
with the terms of the debt securities and the indenture.
</FONT>

<P align="center"><FONT size="2">23
</FONT>

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<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maintenance
of Office or Agency</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The issuer will maintain in the Borough of
Manhattan, the City of New York, and such other locations as may
be required or specified in any supplement, an office or agency
where the debt securities may be paid and notices and demands to
or upon the issuer in respect of the debt securities and the
indentures may be served and an office or agency where debt
securities may be surrendered for registration of transfer or
exchange. The issuer will give prompt written notice to the
trustee of the location, and any change in the location, of any
such office or agency. If at any time the issuer shall fail to
maintain any required office or agency or shall fail to furnish
the trustee with the address of any required office or agency,
all presentations, surrenders, notices and demands may be served
at the office of the trustee.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Further
Assurances</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The issuer, the guarantor, if any, and the
trustee will execute and deliver all documents, instruments and
agreements, and do all other acts and things as may be
reasonably required, to enable the trustee to exercise and
enforce its rights under the indentures and under the documents,
instruments and agreements required under the indentures and to
carry out the intent of the indentures.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Limitation on
Sale/ Leaseback Transactions</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the terms of the indentures, the issuer and
the guarantor, if any, shall not, and shall not permit any of
their respective Restricted Subsidiaries to, enter into any
Sale/ Leaseback Transaction unless:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;the issuer or the guarantor, as the case
    may be, or the Restricted Subsidiary would be entitled to create
    a Lien on the property or asset subject to the Sale/ Leaseback
    Transaction securing Indebtedness in an amount equal to the
    Attributable Debt with respect to that transaction without
    equally and ratably securing the debt securities pursuant to the
    covenant entitled &#147;Limitation on Liens&#148;;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;the net proceeds of the sale are at
    least equal to the fair value (as determined by board of
    directors of the issuer or the guarantor, as the case may be) of
    the property or asset subject to the Sale/ Leaseback Transaction
    and the issuer or the guarantor, as the case may be, or the
    Restricted Subsidiary applies or causes to be applied, within
    180&nbsp;days of the effective date of the Sale/ Leaseback
    Transaction, an amount in cash equal to the net proceeds of the
    sale to the retirement of Indebtedness of the issuer or the
    guarantor, as the case may be, or of the Restricted Subsidiary.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition to the transactions permitted
pursuant to the above clauses&nbsp;(a) and (b), the issuer and
the guarantor, if any, or any of their respective Restricted
Subsidiaries may enter into a Sale/ Leaseback Transaction as
long as the sum of:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the Attributable Debt with respect to that Sale/
    Leaseback Transaction and all other Sale/ Leaseback Transactions
    entered into pursuant to this provision; plus
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the amount of outstanding Indebtedness secured by
    Liens incurred pursuant to the final provision to the covenant
    described under &#147;&#151;&nbsp;Limitation on Liens,&#148;
    below;
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<FONT size="2">does not exceed 15% of Consolidated Net Tangible
Assets as determined based on Calpine&#146;s consolidated
balance sheet as of the end of the most recent fiscal quarter
for which financial statements are available. In addition, any
Restricted Subsidiary of the issuer or the guarantor, if any,
may enter into a Sale/ Leaseback Transaction with respect to
property or assets owned by that Restricted Subsidiary, so long
as the proceeds of that Sale/ Leaseback Transaction are used to
explore, drill, develop, construct, purchase, repair, improve or
add to property and assets of any Restricted Subsidiary or to
repay (within 365&nbsp;days of the commencement of full
commercial operation of any such property or assets)
Indebtedness incurred to explore, drill, develop, construct,
purchase, repair, improve or add to property or assets of any
Restricted Subsidiary.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As used in the indentures, the following terms
are defined as follows:
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">&#147;Attributable Debt,&#148; in respect of a
Sale/ Leaseback Transaction, means, as at the time of
determination, the present value (discounted at the rate of
interest set forth or implicit in terms of the lease (or, if not
practicable to determine that rate, the weighted average rate of
interest borne by the debt securities outstanding hereunder
(calculated, in the event of the issuance of any original issue
discount debt securities, based on the computed interest rate
with respect thereto)), compounded annually) of the total
obligations of the lessee for rental payments during the
remaining term of the lease included in such Sale/ Leaseback
Transaction (including any period for which such lease has been
extended).
</FONT>

<P align="center"><FONT size="2">24
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">&#147;Capitalized Lease Obligations&#148; of a
person means the rental obligations under any lease of any
property (whether real, personal or mixed) of which the
discounted present value of the rental obligations of that
person as lessee, in conformity with generally accepted
accounting principals, is required to be capitalized on the
balance sheet of that person; the stated maturity of any such
lease shall be the date of the last payment of rent or any other
amount due under such lease prior to the first date upon which
such lease may be terminated by the lessee without payment of a
penalty.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">&#147;Consolidated Current Liabilities&#148;
means, as of any date of determination, the aggregate amount of
consolidated liabilities of Calpine and Calpine&#146;s
consolidated Restricted Subsidiaries which may properly be
classified as current liabilities (including taxes accrued as
estimated), after eliminating (i)&nbsp;all inter-company items
between Calpine and its subsidiaries and (ii)&nbsp;all current
maturities of long-term Indebtedness, all as determined in
accordance with generally accepted accounting principles.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">&#147;Consolidated Net Tangible Assets&#148;
means, as of any date of determination, the total amount of
Calpine&#146;s consolidated assets (less accumulated
depreciation or amortization, allowances for doubtful
receivables, other applicable reserves and other properly
deductible items) under generally accepted accounting principles
which would appear on Calpine&#146;s consolidated balance sheet,
determined in accordance with generally accepted accounting
principles, and after giving effect to purchase accounting and
after deducting therefrom, to the extent otherwise included, the
amounts of:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;Consolidated Current Liabilities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;minority interests in Calpine&#146;s
    consolidated subsidiaries held by persons other than Calpine or
    any of its Restricted Subsidiaries;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;excess of cost over fair value of assets
    of businesses acquired, as determined in good faith by
    Calpine&#146;s board of directors;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;any revaluation or other write-up in
    value of assets subsequent to December&nbsp;31, 1993 as a result
    of a change in the method of valuation in accordance with
    generally accepted accounting principles;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(e)&nbsp;unamortized debt discount and expenses
    and other unamortized deferred charges, goodwill, patents,
    trademarks, service marks, trade names, copyrights, licenses,
    organization or developmental expenses and other intangible
    items;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(f)&nbsp;treasury stock;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(g)&nbsp;any cash set apart and held in a sinking
    or other analogous fund established for the purpose of
    redemption or other retirement of capital stock to the extent
    such obligation is not reflected in Consolidated Current
    Liabilities.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">&#147;Indebtedness&#148; of any person means,
without duplication:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;the principal of and premium (if any
    premium is then due and owing) in respect of indebtedness of
    that person for money borrowed;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;all Capitalized Lease Obligations of
    that person;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;all obligations of that person for the
    reimbursement of any obligor on any letter of credit,
    banker&#146;s acceptance or similar credit transaction, other
    than obligations with respect to letters of credit securing
    obligations (other than obligations described in
    clauses&nbsp;(a) and (b) above) entered into in the ordinary
    course of business of that person to the extent such letters of
    credit are not drawn upon or, if and to the extent drawn upon,
    that drawing is reimbursed no later than the tenth business day
    following receipt by that person of a demand for reimbursement
    following payment on the letter of credit;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;all obligations of the type referred to
    in clauses&nbsp;(a) through (c) above of other persons and all
    dividends of other persons for the payment of which, in either
    case, that person is responsible or liable, directly or
    indirectly, as obligor, guarantor or otherwise;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(e)&nbsp;all obligations of the type referred to
    in clauses&nbsp;(a) through (d) above of other persons secured
    by any Lien on any property or asset of that person (whether or
    not such obligation is assumed by that person), the amount of
    the obligation on any date of determination being deemed to be
    the lesser of the value of the property or assets or the amount
    of the obligation so secured.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The amount of Indebtedness of any person at any
date shall be, with respect to unconditional obligations, the
outstanding balance at such date of all such obligations as
described above and, with respect to any
</FONT>

<P align="center"><FONT size="2">25
</FONT>

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<DIV align="left">
<FONT size="2">contingent obligations at such date, the maximum
liability determined by that person&#146;s board of directors,
in good faith, as in light of the facts and circumstances
existing at the time, reasonably likely to be incurred upon the
occurrence of the contingency giving rise to such obligation.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">&#147;Lien&#148; means any mortgage, lien,
pledge, charge, or other security interest or encumbrance of any
kind (including any conditional sale or other title retention
agreement and any lease in the nature thereof).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">&#147;Preferred Stock,&#148; as applied to the
capital stock of any corporation, means capital stock of any
class or classes (however designated) which is preferred as to
the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of
such corporation, over shares of capital stock of any other
class of such corporation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">&#147;Restricted Subsidiary&#148; means any
subsidiary of a person that is not designated an Unrestricted
Subsidiary by that person&#146;s board of directors.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">&#147;Sale/ Leaseback Transaction&#148; means an
arrangement relating to property now owned or later acquired
whereby a person or one of such person&#146;s subsidiaries
transfers that property to another person and then leases it
back from that person, other than leases for a term of not more
than 36&nbsp;months or leases between such person and a wholly
owned subsidiary of such person or between such person&#146;s
wholly owned subsidiaries.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">&#147;Senior Indebtedness&#148; means all
indebtedness incurred, assumed or guaranteed by a person,
whether or not represented by bonds, debentures, notes or other
securities, for money borrowed, and any deferrals, renewals or
extensions or refunding of any such indebtedness, unless in the
instrument creating or evidencing any such indebtedness or
pursuant to which the same is outstanding it is specifically
stated, at or prior to the time such person becomes liable in
respect thereof, that any such indebtedness or such deferral,
renewal, extension or refunding thereof is not Senior
Indebtedness.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">&#147;Subordinated Security&#148; means any
security issued under an Indenture which is designated as a
Subordinated Debt Security.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">&#147;Unrestricted Subsidiary&#148; means
(i)&nbsp;any subsidiary that at the time of determination shall
be designated an Unrestricted Subsidiary by a person&#146;s
board of directors in the manner provided below and
(ii)&nbsp;any subsidiary of an Unrestricted Subsidiary. A
person&#146;s board of directors may designate any subsidiary
(including any newly acquired or newly formed subsidiary) to be
an Unrestricted Subsidiary unless such subsidiary owns any
capital stock of, or owns or holds any Lien on any property of,
that person or any other subsidiary of that person that is not a
subsidiary of the subsidiary to be so designated, so long as the
subsidiary to be designated an Unrestricted Subsidiary and all
other subsidiaries previously so designated at the time of any
determination hereunder shall, in the aggregate, have total
assets not greater than 5% of Consolidated Net Tangible Assets
as determined based on Calpine&#146;s consolidated balance sheet
as of the end of the most recent financial quarter for which
financial statements are available. A person&#146;s board of
directors may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided, however, that immediately after
giving effect to that designation no Default or Event of Default
under the indentures shall have occurred and be continuing. Any
such designation by a person&#146;s board of directors shall be
evidenced to the trustee by promptly filing with the trustee a
copy of the board resolution giving effect to the designation
and a certificate signed by two of that person&#146;s officers
certifying that the designation complied with these provisions.
However, the failure to file the resolution and/or certificate
with the trustee shall not impair or affect the validity of the
designation.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Limitation on
Liens</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the terms of the indentures, the issuer and
the guarantor, if any, shall not, and shall not permit any of
their respective Restricted Subsidiaries to, directly or
indirectly, incur any Lien upon any properties or assets
(including capital stock) whether owned at the date of issuance
of the debt securities or thereafter acquired, in each case to
secure Indebtedness of Calpine or any Restricted Subsidiary,
without effectively providing that the outstanding debt
securities shall be secured equally and ratably with (or prior
to) that Indebtedness, so long as that Indebtedness shall be so
secured. The above restriction on Liens will not, however, apply
to:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)(1) Liens securing Indebtedness incurred by
    Calpine or any Restricted Subsidiary to finance the exploration,
    drilling, development, construction or purchase of or by, or
    repairs, improvements or additions to, property or assets, which
    Liens may include Liens on the capital stock of a Restricted
    Subsidiary or (2)&nbsp;Liens incurred by any Restricted
    Subsidiary that does not own, directly or indirectly, at
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">26
</FONT>

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<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">
    <FONT size="2">the time of such original incurrence of such Lien
    under this clause&nbsp;(2) any operating properties or assets
    securing Indebtedness incurred to finance the exploration,
    drilling, development, construction or purchase of or by or
    repairs, improvements or additions to, property or assets of any
    Restricted Subsidiary that does not, directly or indirectly, own
    any operating properties or assets at the time of such original
    incurrence of such Lien, which Liens may include Liens on the
    capital stock of one or more Restricted Subsidiaries that do
    not, directly or indirectly, own any operating properties or
    assets at the time of such original incurrence of such Lien,
    <I>provided, however</I>, that the Indebtedness secured by any
    such Lien may not be issued more than 365&nbsp;days after the
    later of the exploration, drilling, development, completion of
    construction, purchase, repair, improvement, addition or
    commencement of full commercial operation of the property or
    assets being so financed;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;Liens existing on the date of issuance
    of a series of debt securities, other than Liens relating to
    Indebtedness or other obligations being repaid or Liens that are
    otherwise extinguished with the proceeds of any offering of debt
    securities pursuant to the indenture;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;Liens on property, assets or shares of
    stock of a person at the time that person becomes a subsidiary
    of the issuer or the guarantor, as applicable; provided,
    however, that any such Lien may not extend to any other property
    or assets owned by such issuer or guarantor or any of its
    Restricted Subsidiaries;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;Liens on property or assets existing at
    the time that the issuer or the guarantor, as the case may be,
    or one of its subsidiaries, acquires the property or asset,
    including any acquisition by means of a merger or consolidation
    with or into the issuer or the guarantor, as applicable, or one
    of its subsidiaries; provided, however, that such Liens are not
    incurred in connection with, or in contemplation of, that merger
    or consolidation and provided, further, that the Lien may not
    extend to any other property or asset owned by the issuer or the
    guarantor, as applicable, or any of its Restricted Subsidiaries;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(e)&nbsp;Liens securing Indebtedness or other
    obligations of one of the subsidiaries of the issuer or the
    guarantor, as the case may be, that is owing to such issuer or
    guarantor or any of its Restricted Subsidiaries, or Liens
    securing Indebtedness of the issuer or the guarantor, as the
    case may be, or other obligations that are owing to one of the
    subsidiaries of such issuer or guarantor;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(f)&nbsp;Liens incurred on assets that are the
    subject of a Capitalized Lease Obligation to which the issuer or
    the guarantor, as the case may be, or any of its subsidiaries is
    a party, which shall include Liens on the stock or other
    ownership interest in one or more Restricted Subsidiaries of
    such issuer or guarantor, leasing such assets;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(g)&nbsp;Liens to secure any refinancing,
    refunding, extension, renewal or replacement (or successive
    refinancings, refundings, extensions, renewals or replacements)
    as a whole, or in part, of any Indebtedness secured by any Lien
    referred to in clauses&nbsp;(a), (b), (c), (d)&nbsp;and
    (f)&nbsp;above, provided, however, that (1)&nbsp;such new Lien
    shall be limited to all or part of the same property or assets
    that secured the original Lien (plus repairs, improvements or
    additions to that property or assets and Liens on the stock or
    other ownership interest in one or more Restricted Subsidiaries
    beneficially owning that property or assets) and (2)&nbsp;the
    amount of Indebtedness secured by such Lien at such time (or, if
    the amount that may be realized in respect of such Lien is
    limited, by contract or otherwise, such limited lesser amount)
    is not increased, other than by an amount necessary to pay fees
    and expenses, including premiums, related to the refinancing,
    refunding, extension, renewal or replacement of the
    Indebtedness;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(h)&nbsp;Liens by which the debt securities are
    secured equally and ratably with other Indebtedness pursuant to
    this covenant.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">However, the issuer and the guarantor, if any,
and any one or more of their respective Restricted Subsidiaries
may incur other Liens to secure Indebtedness as long as the sum
of:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the lesser of (1)&nbsp;the amount of outstanding
    Indebtedness secured by Liens incurred pursuant to this
    provision (or, if the amount that may be realized in respect of
    such Lien is limited, by contract or otherwise, such limited
    lesser amount) and (2)&nbsp;the fair market value of the
    property securing that item of Indebtedness; plus
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the Attributable Debt with respect to all Sale/
    Leaseback Transactions entered into pursuant to clause&nbsp;(a)
    described under the covenant &#147;Limitation on Sale/ Leaseback
    Transactions&#148;;
    </FONT></TD>
</TR>

</TABLE>

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</FONT>

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<P align="left">
<FONT size="2">does not exceed 15% of Consolidated Net Tangible
Assets as determined based on Calpine&#146;s consolidated
balance sheet as of the end of the most recent fiscal quarter
for which financial statements are available.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Merger,
Consolidation, Sale or Lease</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Nothing in the indentures shall prevent the
issuer and the guarantor, if any, from consolidating with or
merging into another corporation or conveying, transferring or
leasing their respective properties and assets substantially as
an entirety to any person, provided that (a)&nbsp;the successor
entity assumes the obligations of the issuer or the guarantor,
as the case may be, on each series of debt securities
outstanding and (b)&nbsp;immediately after giving effect to the
transaction, no Event of Default, and no event which, after
notice or lapse of time or both, would become an Event of
Default, shall have occurred and be continuing.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">SEC Reports</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine is subject to the informational reporting
requirements of Sections&nbsp;13 and 15(d) under the Securities
Exchange Act and, in accordance with those requirements, files
certain reports and other information with the SEC. See
&#147;Where You Can Find More Information; Documents
Incorporated by Reference,&#148; above. In addition, if
Sections&nbsp;13 and 15(d) cease to apply to Calpine, Calpine
will covenant in the indentures to file those reports and
information with the trustee, and to mail such reports and
information to holders of the debt securities at their
registered addresses, for so long as any debt securities remain
outstanding.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Compliance Certificates</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indentures will require that the issuer and
the guarantor, if any, file annually with the trustee a
certificate describing any &#147;Default,&#148; which is defined
in the indentures as any event which is, or after notice or
passage of time or both would be, an Event of Default, by the
issuer or the guarantor, as the case may be, in the performance
of any conditions or covenants under the indentures and the
status of any such Default. The issuer and the guarantor, if
any, also must give the trustee written notice within
30&nbsp;days of the occurrence of certain Defaults under the
indentures that could mature into Events of Default, as
described under the caption &#147;&#151;&nbsp;Events of
Default,&#148; below.
</FONT>

<P align="left">
<B><FONT size="2">Events of Default</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">&#147;Events of Default&#148; are defined in the
indentures with respect to any series of debt securities as any
of the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;default for 30&nbsp;days in payment of
    any interest installment due and payable on any debt securities
    of such series;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;default in payment of principal or
    premium, if any, when due on the debt securities of such series;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(c)&nbsp;default in the making of any sinking
    fund payment or analogous obligation on the debt securities of
    such series;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(d)&nbsp;material default in performance by the
    issuer or the guarantor, if any, of any other covenants or
    agreements in respect of the debt securities of such series
    contained in the applicable indenture or the debt securities for
    60&nbsp;days after written notice to the issuer and the
    guarantor, if any, or to the issuer, the guarantor, if any, and
    the trustee by the holders of at least 25% in aggregate
    principal amount of the debt securities of such series then
    outstanding;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(e)&nbsp;there shall have occurred a default in
    the payment of the principal or premium, if any, of any bond,
    debenture, note or other evidence of indebtedness of the issuer
    or the guarantor, if any, in each case for money borrowed, or in
    the payment of principal or premium, if any, under any mortgage,
    indenture, agreement or instrument under which there may be
    issued or by which there may be secured or evidenced any
    indebtedness of the issuer or the guarantor, if any, for money
    borrowed (including any other series of debt securities issued
    under the indenture), which default for payment of principal or
    premium, if any, is in an aggregate principal amount exceeding
    $50,000,000 (or its equivalent in any other currency or
    currencies) when such indebtedness becomes due and payable
    (whether at maturity, upon redemption or acceleration or
    otherwise), if such default shall continue unremedied or
    unwaived for more than 30 business days after the expiration of
    any grace period or extension of the time for payment applicable
    thereto;
    </FONT></TD>
</TR>

</TABLE>

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(f)&nbsp;certain events of bankruptcy, insolvency
    and reorganization with respect to the issuer or guarantor, if
    any; and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(g)&nbsp;the guarantee, if any, ceases to be in
    full force and effect (other than in accordance with terms of
    the guarantee agreement) or the guarantor denies or disaffirms
    its obligations under the guarantee.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">An Event of Default under one series of debt
securities does not necessarily constitute an Event of Default
under any other series of debt securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indentures provide that if an Event of
Default occurs and is continuing with respect to any series of
debt securities, either the trustee or the registered holders of
at least 25% in aggregate principal amount of that series of
debt securities, may declare the principal amount of those debt
securities and any accrued and unpaid interest on those debt
securities to be due and payable immediately. At any time after
a declaration of acceleration, but before a judgment or decree
for payment of money has been obtained, if all Events of Default
with respect to those debt securities have been cured (other
than the nonpayment of principal of such debt securities which
has become due solely by reason of the declaration of
acceleration) then the declaration of acceleration shall be
automatically annulled and rescinded.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indentures will require that the issuer and
the guarantor, if any, file annually with the trustee a
certificate describing any Default by the issuer or the
guarantor, as the case may be, in the performance of any
conditions or covenants that has occurred under the indentures
and its status. See &#147;&#151;&nbsp;Covenants&nbsp;&#151;
Compliance Certificates,&#148; above. The issuer and the
guarantor, if any, must give the trustee written notice within
30&nbsp;days of any Default under the indentures that could
mature into an Event of Default described in clause&nbsp;(d),
(e)&nbsp;or (f).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The trustee will be entitled under the
indentures, subject to the duty of the trustee during a Default
to act with the required standard of care, to be indemnified
before proceeding to exercise any right or power under the
indentures at the direction of the registered holders of the
debt securities or which requires the trustee to expend or risk
its own funds or otherwise incur any financial liability. The
indentures will also provide that the registered holders of a
majority in principal amount of the outstanding debt securities
of any series issued under any indenture may direct the time,
method and place of conducting any proceeding for any remedy
available to the trustee or exercising any trust or power
conferred on the trustee with respect to that series of debt
securities. The trustee, however, may refuse to follow any such
direction that conflicts with law or such indenture, is unduly
prejudicial to the rights of other registered holders of that
series of debt securities, or would involve the trustee in
personal liability.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The indentures will provide that while the
trustee generally must mail notice of a Default or Event of
Default to the registered holders of the debt securities of any
series issued under any indenture within 90&nbsp;days of
occurrence, the trustee may withhold notice of any Default or
Event of Default (except in payment on the debt securities) if
the trustee in good faith determines that the withholding of
such notice is in the interest of the registered holders of that
series of debt securities.
</FONT>

<P align="left">
<B><FONT size="2">Modification of the Indentures</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The issuer, the guarantor, if any, and the
trustee may amend or supplement the indentures, including any
guarantee agreement, if the holders of a majority in principal
amount of the outstanding debt securities of each series of debt
securities affected by the amendment or supplement consent to
it, except that no amendment or supplement may, without the
consent of each affected registered holder of that series:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reduce the amount of principal the issuer has to
    repay or change the date of maturity;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reduce the rate or change the time of payment of
    interest;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">change the currency of payment;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">modify any redemption or repurchase right to the
    detriment of the holder;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">reduce the percentage of the aggregate principal
    amount of debt securities needed to consent to an amendment or
    supplement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">change the provisions of the indentures relating
    to waiver of past defaults, rights of registered holders of the
    debt securities to receive payments or the provisions relating
    to amendments of the indentures that require the consent of
    registered holders of each affected series;&nbsp;or
    </FONT></TD>
</TR>

</TABLE>

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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><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">release the guarantee, if any, except in
    compliance with the terms of the guarantee agreement and related
    indenture.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Actions by Holders</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A holder of any series of debt securities may not
pursue any remedy with respect to the indentures or the debt
securities of such series (except a registered holder of a
series of debt securities may bring an action for payment of
overdue principal, premium, if any, or interest on that series),
unless:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the registered holder has given notice to the
    trustee of such series of a continuing Event of Default;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">registered holders of at least 25% in principal
    amount of that series of debt securities have made a written
    request to the trustee of such series to pursue such remedy;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">such registered holder or holders have offered
    the trustee of such series security or indemnity reasonably
    satisfactory to the trustee against any loss, liability or
    expense;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the trustee of such series has not complied with
    such request within 60&nbsp;days of such request and
    offer;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the registered holders of a majority in principal
    amount of that series of debt securities have not given the
    trustee of such series an inconsistent direction during that
    60-day period.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><FONT size="2">Defeasance, Discharge and
Termination</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Defeasance and Discharge</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless otherwise provided in the applicable
indenture and described in the applicable prospectus supplement,
the issuer may discharge the issuer and the guarantor, if any,
from any and all obligations in respect of a series of debt
securities, and the provisions of the related indenture will no
longer be in effect with respect to that series of debt
securities (except for, among other matters, certain obligations
to register the transfer or exchange of those debt securities,
to replace stolen, lost or mutilated debt securities, to
maintain paying agencies and to hold monies for payment in
trust, and the rights of holders of that series to receive
payments of principal, premium, if any, and interest), on the
123rd&nbsp;day after the date of the deposit with the trustee,
in trust, of money or U.S.&nbsp;Government Obligations that,
through the payment of interest, principal and premium, if any,
in respect thereof in accordance with their terms, will provide
money, or a combination thereof, in an amount sufficient to pay
the principal, premium, if any, and interest on that series of
debt securities, when due in accordance with the terms of that
indenture and those debt securities. Such a trust may only be
established if, among other things,
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(a)&nbsp;the issuer has delivered to the trustee
    either:
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an opinion of counsel (who may not be an employee
    of ours) to the effect that registered holders of that series
    will not recognize income, gain or loss for federal income tax
    purposes as a result of such deposit, defeasance and discharge
    and will be subject to federal income tax on the same amount and
    in the same manner and at the same times as would have been the
    case if such deposit, defeasance and discharge had not occurred,
    which opinion of counsel must refer to and be based upon a
    ruling of the Internal Revenue Service or a change in applicable
    federal income tax law occurring after the date of that
    indenture;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a ruling of the Internal Revenue Service to such
    effect; and
    </FONT></TD>
</TR>

</TABLE>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
    <FONT size="2">(b)&nbsp;no Default under the indenture with
    respect to that series shall have occurred and be continuing on
    the date of such deposit or during the period ending on the
    123rd&nbsp;day after such date of deposit and such deposit shall
    not result in or constitute a Default or result in a breach or
    violation of, or constitute a default under, any other agreement
    or instrument to which the issuer or the guarantor, if any, is a
    party or by which the issuer or the guarantor, if any, is bound.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">&#147;U.S.&nbsp;Government Obligations&#148; are
defined under the indentures as securities that are
(x)&nbsp;direct obligations of the United States for the payment
of which its full faith and credit is pledged or
(y)&nbsp;obligations of a person controlled or supervised by and
acting as an agency or instrumentality of the United States the
payment of which is unconditionally guaranteed as a full faith
and credit obligation by the United States and which, in either
case, are not callable or redeemable before their maturity.
</FONT>

<P align="center"><FONT size="2">30
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Defeasance of Covenants and Certain Events
    of Default</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In addition, unless otherwise provided in the
applicable indenture and described in the applicable prospectus
supplement, with respect to a series of debt securities issued
under an indenture, the provisions of that indenture described
under &#147;&#151;&nbsp;Covenants&nbsp;&#151; Limitation on
Liens,&#148; above, and &#147;&#151;&nbsp;Covenants&nbsp;&#151;
Limitation on Sale/ Leaseback Transactions,&#148; above, will no
longer be in effect, clauses&nbsp;(c) (with respect to such
covenants) and (d)&nbsp;under &#147;&#151;&nbsp;Events of
Default,&#148; above, shall be deemed not to be Events of
Default under that indenture, and the provisions described
herein under &#147;&#151;&nbsp;Ranking,&#148; above, shall not
apply, upon the deposit with the trustee, in trust, of money or
U.S.&nbsp;Government Obligations that through the payment of
interest and principal in respect thereof in accordance with
their terms will provide money in an amount sufficient to pay
the principal, premium, if any, and interest on that series of
debt securities when due in accordance with the terms of that
indenture. Such a trust may only be established if, among other
things, the provisions described in clause&nbsp;(b) of the
immediately preceding paragraph have been satisfied and the
issuer has delivered to the trustee an opinion of counsel (who
may not be an employee of ours) to the effect that the
registered holders of that series will not recognize income,
gain or loss for federal income tax purposes as a result of such
deposit and defeasance, and will be subject to federal income
tax on the same amount and in the same manner and at the same
times as would have been the case if such deposit and defeasance
had not occurred.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the event the issuer exercises its option not
to comply, or to discharge the guarantor, if any, from
compliance, with the covenants and certain other provisions of
an indenture with respect to a series of debt securities as
described in the immediately preceding paragraph, and that
series of debt securities are declared due and payable because
of the occurrence of an Event of Default that remains
applicable, while the amount of money or U.S.&nbsp;Government
Obligations on deposit with the trustee will be sufficient to
pay principal of and interest on that series on the respective
dates on which such amounts are due, they may not be sufficient
to pay amounts due on that series at the time of the
acceleration resulting from such Event of Default. However, the
issuer and the guarantor, if any, shall remain liable for such
payments.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Termination of Obligations in Certain
    Circumstances</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless otherwise provided in the applicable
indenture and described in the applicable prospectus supplement,
the issuer may discharge the issuer and the guarantor, if any,
from any and all obligations in respect of a series of debt
securities and the provisions of the related indenture will no
longer be in effect with respect to that series of debt
securities (except to the extent provided under
&#147;&#151;&nbsp;Defeasance and Discharge,&#148; above) if that
series of debt securities mature within one&nbsp;year and the
issuer deposits with the trustee, in trust, money or
U.S.&nbsp;Government Obligations that, through the payment of
interest and principal in respect thereof in accordance with
their terms, will provide money in an amount sufficient to pay
the principal of, premium, if any, and accrued interest on that
series of debt securities when due in accordance with the terms
of that indenture and the debt securities. Such a trust may only
be established if, among other things,
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">no Default under the indenture with respect to
    that series shall have occurred and be continuing on the date of
    such deposit;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">such deposit will not result in or constitute a
    Default or result in a breach or violation of, or constitute a
    Default under, any other agreement or instrument to which the
    issuer or the guarantor, if any, is a party or by which the
    issuer or the guarantor, if any, is bound;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the issuer has delivered to the trustee an
    opinion of counsel stating that such conditions have been
    complied with.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Pursuant to this provision, the issuer is not
required to deliver an opinion of counsel to the effect that
registered holders of that series will not recognize income,
gain or loss for U.S.&nbsp;federal income tax purposes as a
result of such deposit and termination, and there is no
assurance that registered holders of that series would not
recognize income, gain or loss for U.S.&nbsp;federal income tax
purposes as a result thereof or that they would be subject to
U.S.&nbsp;federal income tax on the same amount and in the same
manner and at the same times as would have been the case if such
deposit and termination had not occurred.
</FONT>

<P align="left">
<B><FONT size="2">Unclaimed Money</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to any applicable abandoned property law,
the indentures will provide that the trustee will pay to the
issuer upon request any money held by the trustee for the
payment of principal, premium, if any, or
</FONT>

<P align="center"><FONT size="2">31
</FONT>

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<DIV align="left">
<FONT size="2">interest that remains unclaimed for
two&nbsp;years. After payment to the issuer, registered holders
of debt securities entitled to such money must look to the
issuer for payment as general creditors.
</FONT>
</DIV>

<P align="left">
<B><FONT size="2">Concerning the Trustee and Paying
Agent</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Wilmington Trust Company will initially act as
Trustee and paying agent for the debt securities. Wilmington
Trust Company currently acts as trustee under:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an indenture with Calpine and Calpine&#146;s
    subsidiary, Calpine Capital Trust&nbsp;III, dated as of
    August&nbsp;9, 2000;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an indenture with Calpine, dated as of
    August&nbsp;10, 2000, as supplemented by the First Supplemental
    Indenture, dated as of September&nbsp;28, 2000;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an indenture with Calpine, dated as of
    April&nbsp;30, 2001;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">three indentures with Calpine, dated as of
    July&nbsp;16, 2003;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an indenture with Calpine, dated as of
    November&nbsp;18, 2003, as amended and restated on
    March&nbsp;12, 2004;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an indenture with Energy Finance, dated as of
    April&nbsp;25, 2001, as amended and restated on October&nbsp;16,
    2001;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an indenture with Energy Finance&nbsp;II, dated
    as of October&nbsp;18, 2001, as supplemented by the First
    Supplemental Indenture, dated as of October&nbsp;18, 2001;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an indenture with Power Contract Financing
    L.L.C., a Calpine subsidiary, dated as of June&nbsp;13, 2003;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an indenture with Power Contract
    Financing&nbsp;III, LLC, a Calpine subsidiary, dated as of
    June&nbsp;2, 2004;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an indenture with Calpine Construction Finance
    Company, L.P. and CCFC Finance Corp., both Calpine subsidiaries,
    and each of Calpine Hermiston, LLC, CPN Hermiston, LLC and
    Hermiston Power Partnership, each a Calpine subsidiary, as
    guarantors, dated as of August&nbsp;14, 2003, as supplemented by
    the Supplemental Indenture, dated as of September&nbsp;18, 2003,
    the Second Supplemental Indenture, dated as of January&nbsp;14,
    2004, and the Third Supplemental Indenture, dated as of
    March&nbsp;5, 2004;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">an indenture with Gilroy Energy Center, LLC, a
    Calpine subsidiary, and Creed Energy Center, LLC and Goose Haven
    Energy Center, both Calpine subsidiaries, as guarantors, dated
    September&nbsp;30, 2003;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">first priority, second priority and third
    priority indentures, each dated as of March&nbsp;23, 2004, with
    Calpine Generating Company, LLC and CalGen Finance Corp, both
    Calpine subsidiaries.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may have in the future other relationships
with Wilmington Trust Company.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We will describe in the prospectus supplement any
material business and other relationships (including additional
trusteeships), other than the trusteeship under the indentures,
between us and any of our affiliates, on the one hand, and each
trustee and paying agent under the indentures, on the other hand.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The holders of a majority in principal amount of
the outstanding senior notes will have the right to direct the
time, method and place of conducting any proceeding for
exercising any remedy available to the trustee, subject to
certain exceptions. If an event of default occurs (and is not
cured), the trustee will be required, in the exercise of its
power, to use the degree of care of a prudent man in the conduct
of his own affairs. Subject to such provisions, the trustee will
be under no obligation to exercise any of its rights or powers
under the indenture at the request of any holder of senior
notes, unless such holder shall have offered to the trustee
security and indemnity satisfactory to the trustee against any
loss, liability or expense and then only to the extent required
by the terms of the indenture.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The registered office of the trustee is Rodney
Square North, 1100 North Market Street, Wilmington, Delaware.
</FONT>

<P align="center"><FONT size="2">32
</FONT>

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<P align="left">
<B><FONT size="2">Governing Law</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The laws of the State of New York will govern the
indentures and each series of debt securities.
</FONT>

<P align="left">
<B><FONT size="2">Book-Entry System</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless otherwise specified in the prospectus
supplement, each series of debt securities will be represented
by one or more global notes registered in the name of a nominee
of The Depository Trust Company (&#147;DTC&#148;), as
depositary. Upon the issuance of the global notes, DTC or its
custodian will credit, on its internal system, the respective
principal amount of the individual beneficial interests
represented by the global notes to the accounts of persons who
have accounts with DTC. Each account initially will be
designated by or on behalf of the underwriters, dealer or
agents. Ownership of beneficial interests in a global note will
be limited to persons who have accounts with DTC
(&#147;participants&#148;) or persons who hold interests through
participants. Ownership of beneficial interests in the global
notes will be shown on, and transfers of their ownership may be
effected only through, records maintained by DTC or its nominee
(with respect to interests of participants) and the records of
participants (with respect to interests of persons other than
participants). DTC currently limits the maximum denomination of
any single global note to $400,000,000.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">So long as DTC or its nominee is the registered
owner or holder of the global notes, DTC or such nominee, as the
case may be, will be considered the sole owner or holder of the
debt securities represented by such global notes for all
purposes under the applicable indenture and the debt securities.
No beneficial owner of an interest in the global notes will be
able to transfer that interest except in accordance with
DTC&#146;s applicable procedures, in addition to those provided
for under the indenture.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Payments of the principal of, and interest on,
the global notes will be made to DTC or its nominee, as the case
may be, as the registered owner of the global notes. Neither we,
the trustee or any paying agent will have any responsibility or
liability for any aspect of the records relating to or payments
made on account of beneficial ownership interests in the global
notes or for maintaining, supervising or reviewing any records
relating to such beneficial ownership interests.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We expect that DTC or its nominee, upon receipt
of any payment of principal or interest in respect of the global
notes will credit participants&#146; accounts with payments in
amounts proportionate to their respective beneficial interests
in the principal amount of the global notes as shown on the
records of DTC or its nominee. We also expect that payments by
participants to owners of beneficial interests in the global
notes held through such participants will be governed by
standing instructions and customary practices, as is now the
case with securities held for the accounts of customers
registered in the names of nominees for such customers. Such
payments will be the responsibility of such participants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Transfers between participants in DTC will be
effected in the ordinary way in accordance with DTC rules and
will be settled in same-day funds. If a holder requires physical
delivery of a certificated note for any reason, including to
sell debt securities to persons in states which require delivery
of certificated notes or to pledge their debt securities, such
holder must transfer its interest in the global notes in
accordance with the normal procedures of DTC and the procedures
set forth in the indenture.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">DTC has advised us that it will take any action
permitted to be taken by a holder of a series of debt securities
(including the presentation of debt securities for exchange as
described below) only at the direction of one or more
participants to whose account the DTC interests in the global
notes relating to such series is credited and only in respect of
such portion of the aggregate principal amount of debt
securities as to which such participant or participants has or
have given such direction. However, if there is an Event of
Default under a series of debt securities, DTC will exchange the
global notes relating to such series for certificated notes
which it will distribute to its participants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">DTC has advised us as follows: DTC is a limited
purpose trust company organized under the laws of the State of
New York, a &#147;banking organization&#148; within the meaning
of New York Banking Law, a member of the Federal Reserve System,
a &#147;clearing corporation&#148; within the meaning of the
Uniform Commercial Code and a &#147;Clearing Agency&#148;
registered pursuant to the provisions of Section&nbsp;17A of the
Securities Exchange Act. DTC was created to hold securities for
its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic
book-entry changes in accounts of its participants, thereby
eliminating the need for physical movement of certificates.
Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and certain other
organizations. Indirect access to
</FONT>

<P align="center"><FONT size="2">33
</FONT>

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<DIV align="left">
<FONT size="2">the DTC system is available to &#147;indirect
participants&#148; such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Although DTC has agreed to the foregoing
procedures in order to facilitate transfers of interest in the
global notes among participants of DTC, it is under no
obligation to perform or continue to perform such procedures,
and such procedures may be discontinued at any time. Neither we
nor the trustee will have any responsibility for the performance
by DTC or its respective participants or indirect participants
of their respective obligations under the rules and procedures
governing their operations.
</FONT>

<P align="left">
<B><FONT size="2">Certificated Notes</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If DTC is at any time unwilling or unable to
continue as a depositary for the global notes and a successor
depositary is not appointed by us within 90&nbsp;days, or if the
issuer otherwise chooses to issue definitive debt securities,
the issuer will issue certificated notes in exchange for the
global notes. In either instance, an owner of a beneficial
interest in a global note will be entitled to have debt
securities equal in principal amount to such beneficial interest
registered in its name and will be entitled to physical delivery
of debt securities in definitive form. Debt securities in
definitive form will be issued in denominations of $1,000 and
integral multiples of $1,000 and will be issued in registered
form only, without coupons. The issuer will maintain in the
Borough of Manhattan, The City of New York, one or more offices
or agencies where debt securities may be presented for payment
and may be transferred or exchanged. You will not be charged a
fee for any transfer or exchange of your debt securities, but
the issuer may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
</FONT>

<P align="left">
<B><FONT size="2">Same-Day Settlement in Respect of Global
Notes</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Global notes held by DTC will trade in DTC&#146;s
Same-Day Funds Settlement System until maturity and secondary
market trading activity in the debt securities will settle in
immediately available funds. No assurance can be given as to the
effect, if any, of settlement in immediately available funds on
the trading activity in the debt securities.
</FONT>

<P align="center"><FONT size="2">34
</FONT>
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<DIV align="left">
<A name='114'></A>
</DIV>

<!-- link1 "DESCRIPTION OF PURCHASE CONTRACTS" -->

<P align="center">
<B><FONT size="2">DESCRIPTION OF PURCHASE CONTRACTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine may issue purchase contracts for the
purchase or sale of:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">debt or equity securities issued by us or
    securities issued by third parties, a basket of such securities,
    an index or indices of such securities or any combination of the
    above as specified in the applicable prospectus supplement;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">currencies;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">commodities.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each purchase contract will entitle the holder
thereof to purchase or sell, and obligate us to sell or
purchase, on specified dates, such securities, currencies or
commodities at a specified purchase price, which may be based on
a formula. We may, however, satisfy our obligations, if any,
with respect to any purchase contract by delivering the cash
value of such purchase contract or the cash value of the
property otherwise deliverable or, in the case of purchase
contracts on underlying currencies, by delivering the underlying
currencies.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The purchase contracts may require Calpine to
make periodic payments to the holders thereof or vice versa,
which payments may be deferred to the extent set forth in the
applicable prospectus supplement, and may be unsecured or
prefunded on some basis. The purchase contracts may require the
holders thereof to secure their obligations in a manner
specified in the applicable prospectus supplement.
Alternatively, purchase contracts may require holders to satisfy
their obligations thereunder when the purchase contracts are
issued. Our obligation to settle such pre-paid purchase
contracts on the relevant settlement date may constitute
indebtedness. Accordingly, pre-paid purchase contracts will be
issued under an indenture.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The applicable prospectus supplement will
describe the terms of the purchase contracts, including the
methods by which the holders may purchase or sell such
securities, currencies or commodities and any acceleration,
cancellation or termination provisions or other provisions
relating to the settlement of a purchase contract. The
description in the prospectus supplement will not necessarily be
complete, and reference will be made to the purchase contracts,
and any other applicable documents or instruments relating to
the purchase contracts. Any such purchase contract, and any
other document or instrument relevant to a purchase contract,
will be filed as an exhibit to, or incorporated by reference in,
the registration statement of which this prospectus is a part at
the time of the offering thereof. Material United States federal
income tax considerations applicable to the purchase contracts
will also be discussed in the applicable prospectus supplement.
</FONT>

<P align="center"><FONT size="2">35
</FONT>

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<DIV align="left">
<A name='115'></A>
</DIV>

<!-- link1 "DESCRIPTION OF UNITS" -->

<P align="center">
<B><FONT size="2">DESCRIPTION OF UNITS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">We may issue units comprised of one or more
shares of common stock, shares of preferred stock, debt
securities, warrants, trust preferred securities or debt
obligations of third parties, including U.S.&nbsp;treasury
securities, in any combination. The applicable prospectus
supplement will describe:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the terms of the units and of the securities
    comprising the units, including whether and under what
    circumstances the securities comprising the units may be held or
    transferred separately;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any provisions for the issuance, payment,
    settlement, transfer or exchange of the units or of the
    securities comprising the units;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">certain material United States federal income tax
    considerations applicable to the units;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the terms of any unit agreement governing the
    units.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The description in the prospectus supplement will
not necessarily be complete, and reference will be made to any
unit, collateral or depositary agreements relating to the units.
Any such agreements, and any other document or instrument
relevant to the units, will be filed as an exhibit to, or
incorporated by reference in, the registration statement of
which this prospectus is a part at the time of the offering
thereof.
</FONT>

<P align="center"><FONT size="2">36
</FONT>

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<DIV align="left">
<A name='116'></A>
</DIV>

<!-- link1 "DESCRIPTION OF WARRANTS" -->

<P align="center">
<B><FONT size="2">DESCRIPTION OF WARRANTS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a general description of the
warrants to which this prospectus and any prospectus supplement
may relate. The applicable prospectus supplement will describe
the specific terms of the securities warrants offered through
that prospectus supplement, as well as any general terms
described in this section that will not apply to those
securities warrants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine may issue warrants for the purchase of
Calpine&#146;s common stock, preferred stock, debt securities,
purchase contracts, units or any combination thereof, as well as
other types of warrants. Energy Finance and Energy
Finance&nbsp;II may each issue warrants for the purchase of
their respective debt securities. For purposes of this section,
references to the &#147;issuer&#148; are to Calpine, in the case
of warrants issued by Calpine, to Energy Finance, in the case of
warrants issued by Energy Finance, and to Energy
Finance&nbsp;II, in the case of warrants issued by Energy
Finance&nbsp;II.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Warrants may be issued independently or together
with other securities, and they may be attached to or separate
from the other securities. Each series of warrants will be
issued under a separate warrant agreement that the issuer will
enter into with a bank or trust company that the issuer selects
as warrant agent, as detailed in the applicable prospectus
supplement. The warrant agent will act solely as an agent of the
issuer in connection with the warrants and will not assume any
obligation, or agency or trust relationship, with the holders of
the warrants. The warrant agreements, including the forms of
warrant certificates, will be filed as an exhibit to, or
incorporated by reference in, the registration statement of
which this prospectus is a part. You should refer to the
provisions of the warrant agreements for more specific
information. Until you exercise your warrants, you will not have
any rights as a holder of the underlying securities by virtue of
your ownership of those warrants.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The prospectus supplement relating to a
particular issue of warrants will describe the terms of those
warrants, including the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the title of such warrants;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the aggregate number of such warrants;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the price or prices at which such warrants will
    be issued;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the currency or currencies, including composite
    currencies, in which the price of such warrants may be payable;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the designation and terms of the securities
    purchasable upon exercise of such warrants;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the price at which and the currency or
    currencies, including composite currencies, in which the
    securities purchasable upon exercise of such warrants may be
    purchased;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the date on which the right to exercise such
    warrants shall commence and the date on which such right shall
    expire;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">whether such warrants will be issued in
    registered form or bearer form;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">if applicable, the minimum or maximum amount of
    such warrants that may be exercised at any one time;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">if applicable, the designation and terms of the
    securities with which such warrants are issued and the number of
    such warrants issued with each such security;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">if applicable, the date on and after which such
    warrants and the related securities will be separately
    transferable;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">information with respect to book-entry
    procedures, if any;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">a discussion of certain material United States
    federal income tax considerations;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any other terms of such warrants, including
    terms, procedures and limitations relating to the exchange and
    exercise of such warrants.
    </FONT></TD>
</TR>

</TABLE>

<P align="center"><FONT size="2">37
</FONT>

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<DIV align="left">
<A name='117'></A>
</DIV>

<!-- link1 "DESCRIPTION OF TRUST PREFERRED SECURITIES" -->

<P align="center">
<B><FONT size="2">DESCRIPTION OF TRUST PREFERRED
SECURITIES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a general description of the
trust preferred securities and related guarantee to which this
prospectus and any prospectus supplement may relate. The
applicable prospectus supplement will describe the specific
terms of the trust preferred securities and guarantee offered
through that prospectus supplement, as well as any general terms
described in this section that will not apply to those trust
preferred securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each of Trust&nbsp;IV and Trust V may issue from
time to time trust preferred securities representing undivided
beneficial interests in the assets of the trust under its
declaration of trust, as it may be amended and restated from
time to time. Such trust preferred securities will be fully and
unconditionally guaranteed by Calpine. Each trust will use the
proceeds from the sale of its trust preferred securities to
purchase debt securities from Calpine, which may be distributed
to holders of the trust preferred and trust common securities
either upon dissolution of the trust or upon the occurrence of
events that will be described in the applicable prospectus
supplement. When a trust issues its trust preferred securities,
you and the other holders of the trust preferred securities will
own all of the issued and outstanding trust preferred securities
of the trust. Calpine will acquire all of the issued and
outstanding trust common securities of each trust, representing
an undivided beneficial interest in the assets of the trust of
at least 3%.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following description of trust preferred
securities and related guarantees is subject to the detailed
provisions of the applicable declaration of trust (as it may be
amended and restated from time to time) and guarantee. A copy of
the applicable declaration of trust will be filed as an exhibit
to, or incorporated by reference in, the registration statement
of which this prospectus is a part at the time of the offering
of securities pursuant thereto. The form of the guarantee has
been filed as an exhibit to the registration statement of which
this prospectus is a part. Whenever particular provisions of a
declaration of trust or guarantee, or terms defined therein, are
referred to, those provisions or definitions are incorporated by
reference herein and such descriptions are qualified in their
entirety by such reference. We urge you to read the declaration
of trust and the guarantee because they, and not this
description, describe every detail of the terms of the trust
preferred securities and related guarantees.
</FONT>

<P align="left">
<B><FONT size="2">The Trust Preferred Securities</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The prospectus supplement relating to the
issuance of trust preferred securities by a trust will include
specific terms relating to the offering. These terms will
include some or all of the following:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the designation of the trust preferred securities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the number of trust preferred securities issued
    by the trust;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the annual distribution rate and any conditions
    upon which distributions are payable, the distribution payment
    dates, the record dates for distribution payments and the
    additional amounts, if any, that may be payable with respect to
    the trust preferred securities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">whether distributions will be cumulative and
    compounding and, if so, the dates from which distributions will
    be cumulative or compounded;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the amounts that will be paid out of the assets
    of the trust, after the satisfaction of liabilities to creditors
    of the trust, to the holders of trust preferred securities upon
    dissolution;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any repurchase, redemption or exchange provisions;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any preference or subordination rights upon a
    default or liquidation of the trust;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any voting rights of the trust preferred
    securities in addition to those required by law;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">terms for any conversion or exchange of the debt
    securities or the trust preferred securities into other
    securities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any rights to defer distributions on the trust
    preferred securities by extending the interest payment period on
    the debt securities;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any other relevant terms, rights, preferences,
    privileges, limitations or restrictions of the trust preferred
    securities.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The administrative trustees, on behalf of the
trust and pursuant to the declaration of trust, will issue one
class of trust preferred securities and one class of trust
common securities. The trust securities will represent undivided
beneficial ownership interests in the assets of the trust.
</FONT>

<P align="center"><FONT size="2">38
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except as described in the applicable prospectus
supplement, the trust preferred securities will rank equally,
and payments will be made thereon proportionately, with the
trust common securities. The property trustee of the trust will
hold legal title to the debt securities in trust for the benefit
of the holders of the trust securities. Calpine will execute a
guarantee agreement for the benefit of the holders of the trust
preferred securities. The guarantee will not guarantee the
payment of distributions (as defined below) or any amounts
payable on redemption or liquidation of the trust preferred
securities when the trust does not have funds on hand available
to make such payments.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The applicable prospectus supplement will also
describe certain material United States federal income tax
consequences and special considerations applicable to the trust
preferred securities.
</FONT>

<P align="left">
<B><FONT size="2">The Trust Preferred Securities
Guarantee</FONT></B>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">General</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine will fully and unconditionally guarantee
payments on the trust preferred securities of each of the
trusts, as described in this section. The guarantee covers the
following payments:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">periodic cash distributions on the trust
    preferred securities out of funds held by the property trustee
    of the trust;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">payments on dissolution of the trust;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">payments on redemption of trust preferred
    securities of the trust.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Wilmington Trust Company, as guarantee trustee,
will hold the guarantee for the benefit of the holders of trust
preferred securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Selected provisions of the guarantee are
summarized below. This summary is not complete. For a complete
description, we encourage you to read the guarantee, the form of
which has been filed as an exhibit to the registration statement
of which this prospectus is a part.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine will irrevocably and unconditionally
agree to pay you in full the following amounts to the extent not
paid by a trust:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">any accumulated and unpaid distributions and any
    additional amounts with respect to the trust preferred
    securities and any redemption price for trust preferred
    securities called for redemption by the trust, if and to the
    extent that Calpine has made corresponding payments on the debt
    securities to the property trustee of the trust;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">payments upon the dissolution of the trust equal
    to the lesser of: (a)&nbsp;the liquidation amount plus all
    accumulated and unpaid distributions and additional amounts on
    the trust preferred securities to the extent the trust has funds
    legally available for those payments; and (b)&nbsp;the amount of
    assets of the trust remaining legally available for distribution
    to the holders of trust preferred securities in liquidation of
    the trust.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine will not be required to make these
liquidation payments if:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the trust distributes the debt securities to the
    holders of trust preferred securities in exchange for their
    trust preferred securities; or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the trust redeems the trust preferred securities
    in full upon the maturity or redemption of the debt securities.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine may satisfy its obligation to make a
guarantee payment either by making payment directly to the
holders of trust preferred securities or to the guarantee
trustee for remittance to the holders or by causing applicable
trust to make the payment to them.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each guarantee is a guarantee from the time of
issuance of the applicable series of trust preferred securities.
THE GUARANTEE ONLY COVERS, HOWEVER, DISTRIBUTIONS AND OTHER
PAYMENTS ON TRUST PREFERRED SECURITIES IF AND TO THE EXTENT THAT
CALPINE HAS MADE CORRESPONDING PAYMENTS ON THE DEBT SECURITIES
TO THE APPLICABLE PROPERTY TRUSTEE. IF CALPINE DOES NOT MAKE
THOSE CORRESPONDING PAYMENTS ON THE DEBT SECURITIES, THE
APPLICABLE TRUST WILL NOT HAVE FUNDS AVAILABLE FOR PAYMENTS AND
CALPINE WILL HAVE NO OBLIGATION TO MAKE A GUARANTEE PAYMENT.
</FONT>

<P align="center"><FONT size="2">39
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine&#146;s obligations under the declaration
of trust for each trust, the guarantee, the debt securities and
the associated indenture taken together will provide a full and
unconditional guarantee of payments due on the trust preferred
securities. We will describe the specific terms of the guarantee
in a prospectus supplement.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Covenants of
Calpine</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In each guarantee, Calpine will agree that, as
long as trust preferred securities issued by any trust are
outstanding, it will:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">remain the sole direct or indirect owner of all
    the outstanding common securities of that trust, except as
    permitted by the applicable declaration of trust;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">permit the trust common securities of that trust
    to be transferred only as permitted by the declaration of
    trust;&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">use reasonable efforts to cause that trust to
    continue to be treated as a grantor trust for United States
    federal income tax purposes, except in connection with a
    distribution of debt securities to the holders of trust
    preferred securities as provided in the declaration of trust, in
    which case the trust would be dissolved.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amendments
and Assignments</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine and the guarantee trustee may amend each
guarantee without the consent of any holder of trust preferred
securities if the amendment does not adversely affect the rights
of the holders in any material respect. In all other cases,
Calpine and the guarantee trustee may amend each guarantee only
with the prior approval of the holders of at least a majority of
outstanding trust preferred securities issued by the applicable
trust.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine may assign its obligations under the
guarantees only in connection with a consolidation, merger or
asset sale involving Calpine that is permitted under the
indenture governing the debt securities.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Termination
of the Guarantee</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A guarantee will terminate upon:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">full payment of the redemption price of all trust
    preferred securities of the applicable trust;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">distribution of the related debt securities, or
    any securities into which those debt securities are convertible,
    to the holders of the trust preferred securities and trust
    common securities of that trust in exchange for all the
    securities issued by that trust;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">full payment of the amounts payable upon
    liquidation of that trust.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each guarantee will, however, continue to be
effective or will be reinstated if any holder of trust preferred
securities must repay any amounts paid on those trust preferred
securities or under the guarantee.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Status of the
Guarantee</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine&#146;s obligations under each guarantee
will be unsecured and effectively junior to all debt and
preferred stock of its subsidiaries. BY YOUR ACCEPTANCE OF THE
TRUST PREFERRED SECURITIES, YOU AGREE TO ANY SUBORDINATION
PROVISIONS AND OTHER TERMS OF THE RELATED GUARANTEE. We will
specify in a prospectus supplement the ranking of each guarantee
with respect to Calpine&#146;s capital stock and other
liabilities, including other guarantees.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each guarantee will be deposited with the
guarantee trustee to be held for your benefit. The guarantee
trustee will have the right to enforce the guarantee on your
behalf. In most cases, the holders of a majority of outstanding
trust preferred securities issued by the applicable trust will
have the right to direct the time, method and place of:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">conducting any proceeding for any remedy
    available to the applicable guarantee trustee;&nbsp;or
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">exercising any trust or other power conferred
    upon that guarantee trustee under the applicable guarantee.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Each guarantee will constitute a guarantee of
payment and not merely of collection. This means that the
guarantee trustee may institute a legal proceeding directly
against Calpine to enforce the payment rights under the
guarantee without first instituting a legal proceeding against
any other person or entity.
</FONT>

<P align="center"><FONT size="2">40
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the guarantee trustee fails to enforce the
guarantee or Calpine fails to make a guarantee payment, you may
institute a legal proceeding directly against Calpine to enforce
your rights under that guarantee without first instituting a
legal proceeding against the applicable trust, the guarantee
trustee or any other person or entity.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Periodic
Reports Under the Guarantee</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Calpine will be required to provide annually to
the guarantee trustee a statement as to its performance of its
obligations and its compliance with all conditions under the
guarantees.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Duties of
Guarantee Trustee</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The guarantee trustee normally will perform only
those duties specifically set forth in the applicable guarantee.
The guarantees do not contain any implied covenants. If a
default occurs on a guarantee, the guarantee trustee will be
required to use the same degree of care and skill in the
exercise of its powers under the guarantee as a prudent person
would exercise or use under the circumstances in the conduct of
his own affairs. The guarantee trustee will exercise any of its
rights or powers under the guarantee at the request or direction
of holders of the applicable series of trust preferred
securities only if it is offered security and indemnity
satisfactory to it.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Governing
Law</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">New York law will govern the guarantees.
</FONT>

<P align="left">
<B><FONT size="2">Relationship Among the Trust Preferred
Securities, the Debt Securities and the Trust Preferred
Securities Guarantee</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">To the extent set forth in the guarantee and to
the extent funds are available, Calpine will irrevocably
guarantee the payment of distributions and other amounts due on
the trust securities. If and to the extent we do not make
payments on the debt securities, the trust will not have
sufficient funds to pay distributions or other amounts due on
the trust securities. The guarantee does not cover any payment
of distributions or other amounts due on the trust securities
unless the trust has sufficient funds for the payment of such
distributions or other amounts. In such event, a holder of trust
securities may institute a legal proceeding directly against us
to enforce payment of such distributions or other amounts to
such holder after the respective due dates. Taken together, our
obligations under the declaration of trust for each trust, the
debt securities, the indenture and the guarantee provide a full
and unconditional guarantee of payments of distributions and
other amounts due on the trust securities. No single document
standing alone or operating in conjunction with fewer than all
of the other documents constitutes such guarantee. It is only
the combined operation of these documents that provides a full
and unconditional guarantee of the trust&#146;s obligations
under the trust securities.
</FONT>

<P align="left">
<B><I><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sufficiency
of Payments</FONT></I></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">As long as payments of interest and other amounts
are made when due on the debt securities, such payments will be
sufficient to cover distributions and payments due on the trust
securities of a trust because of the following factors:
</FONT>
<P>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the aggregate principal amount of the debt
    securities will be equal to the sum of the aggregate stated
    liquidation amount of the trust securities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the interest rate and the interest and other
    payment dates on the debt securities will match the distribution
    rate and distribution and other payment dates for the trust
    securities;
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">Calpine, as issuer of the debt securities, will
    pay, and the trust will not be obligated to pay, directly or
    indirectly, any costs, expenses, debts and obligations of the
    trust (other than with respect to the trust securities);&nbsp;and
    </FONT></TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
</TR>

<TR valign="top">
    <TD>&nbsp;</TD>
    <TD><FONT size="2">&#149;&nbsp;</FONT></TD>
    <TD align="left">
    <FONT size="2">the declaration of trust further provides that
    the trust will not engage in any activity that is not consistent
    with the limited purposes of the trust.
    </FONT></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Notwithstanding anything to the contrary in the
indenture, we have the right to set-off any payment we are
otherwise required to make thereunder against and to the extent
we have already made, or are concurrently on the date of such
payment making, a related payment under the guarantee.
</FONT>

<P align="center"><FONT size="2">41
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Enforcement Rights of Holders of Preferred
    Securities</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The declaration of trust provides that if we fail
to make interest or other payments on the debt securities when
due (taking account of any extension period), the holders of the
trust preferred securities may direct the property trustee to
enforce its rights under the applicable indenture. If the
property trustee fails to enforce its rights under the indenture
in respect of an event of default under the indenture, any
holder of record of trust preferred securities may, to the
fullest extent permitted by applicable law, institute a legal
proceeding against us to enforce the property trustee&#146;s
rights under the indenture without first instituting any legal
proceeding against the property trustee or any other person or
entity. Notwithstanding the foregoing, if a trust enforcement
event has occurred and is continuing and such event is
attributable to our failure to pay interest, premium or
principal on the debt securities on the date such interest,
premium or principal is otherwise payable, then a holder of
trust preferred securities may institute a direct action against
us for payment of such holder&#146;s pro rata share. If a holder
brings such a direct action, we will be entitled to that
holder&#146;s rights under the applicable declaration of trust
to the extent of any payment made by us to that holder.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If we fail to make payments under the guarantee,
a holder of trust preferred securities may institute a
proceeding directly against us for enforcement of the guarantee
for such payments.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Limited Purpose of Trust</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The trust preferred securities evidence undivided
beneficial ownership interests in the assets of the trust, and
the trust exists for the sole purpose of issuing and selling the
trust securities and using the proceeds to purchase our debt
securities. A principal difference between the rights of a
holder of trust preferred securities and a holder of debt
securities is that a holder of debt securities is entitled to
receive from us the principal amount of and interest accrued on
the debt securities held, while a holder of trust preferred
securities is entitled to receive distributions and other
payments from the trust (or from us under the guarantee) only if
and to the extent the trust has funds available for the payment
of such distributions and other payments.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Rights Upon Dissolution</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon any voluntary or involuntary dissolution of
the trust involving the redemption or repayment of the debt
securities, the holders of the trust securities will be entitled
to receive, out of assets held by the trust, subject to the
rights of creditors of the trust, if any, the liquidation
distribution in cash. Because Calpine is the guarantor under the
guarantee and, as issuer of the debt securities, Calpine has
agreed to pay for all costs, expenses and liabilities of the
trust (other than the trust&#146;s obligations to the holders of
the trust securities), the positions of a holder of trust
securities and a holder of debt securities relative to other
creditors and to our stockholders in the event of liquidation or
bankruptcy of Calpine would be substantially the same.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

<TR>
    <TD width="1%"></TD>
    <TD width="99%"></TD>
</TR>

<TR valign="top">
    <TD></TD>
    <TD>
    <B><FONT size="2">Accounting Treatment Relating to Trust
    Securities</FONT></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The financial statements of any trust issuing
securities will be consolidated with our financial statements,
with the trust preferred securities shown on our consolidated
financial statements as Calpine-obligated mandatorily redeemable
preferred capital trust securities of a subsidiary trust holding
solely Calpine debt securities. Our financial statements will
include a footnote that discloses, among other things, that the
assets of the trust consist of our debt securities and will
specify the designation, principal amount, interest rate and
maturity date of the debt securities.
</FONT>

<P align="center"><FONT size="2">42
</FONT>

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<DIV align="left">
<A name='118'></A>
</DIV>

<!-- link1 "MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES" -->

<P align="center">
<B><FONT size="2">MATERIAL UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The following is a summary of the material United
States federal income tax consequences of the ownership and
disposition of our common stock, preferred stock and debt
securities and of the debt securities of Energy Finance and
Energy Finance&nbsp;II offered hereunder. A summary of the
material United States federal income tax consequences of the
ownership and disposition of the other securities offered
hereunder will be provided in the applicable prospectus
supplement, as will any information that updates or changes the
information provided below.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Unless otherwise stated, this summary deals only
with common stock, preferred stock or debt securities purchased
for cash and held as capital assets by U.S. holders. As used
herein, &#147;U.S.&nbsp;holders&#148; are any beneficial owners
of the common stock, preferred stock or debt securities, that
are, for United States federal income tax purposes,
(i)&nbsp;citizens or residents of the United States,
(ii)&nbsp;corporations created or organized in, or under the
laws of, the United States, any state thereof or the District of
Columbia, (iii)&nbsp;estates, the income of which is subject to
United States federal income taxation regardless of its source,
or (iv)&nbsp;trusts if (a)&nbsp;a court within the United States
is able to exercise primary supervision over the administration
of the trust and (b)&nbsp;one or more United States persons have
the authority to control all substantial decisions of the trust.
In addition, certain trusts in existence on August&nbsp;20, 1996
and treated as a U.S.&nbsp;holder prior to such date may also be
treated as U.S.&nbsp;holders. As used herein,
&#147;non-U.S.&nbsp;holders&#148; are beneficial owners of the
common stock, preferred stock or debt securities, other than
partnerships, that are not U.S.&nbsp;holders. If a partnership
(including for this purpose any entity treated as a partnership
for United States federal tax purposes) is a beneficial owner of
the common stock, preferred stock or debt securities, the
treatment of a partner in the partnership will generally depend
upon the status of the partner and upon the activities of the
partnership. Partnerships and partners in such partnerships
should consult their tax advisors about the United States
federal income tax consequences of owning and disposing of the
common stock, preferred stock or debt securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This summary does not describe all of the tax
consequences that may be relevant to a holder in light of its
particular circumstances. For example, it does not deal with
special classes of holders such as banks, thrifts, real estate
investment trusts, regulated investment companies, insurance
companies, dealers and traders in securities or currencies, or
tax-exempt investors. It also does not discuss stock or debt
securities held as part of a hedge, straddle, &#147;synthetic
security&#148; or other integrated transaction. This summary
does not address the tax consequences to (i)&nbsp;persons that
have a functional currency other than the U.S.&nbsp;dollar,
(ii)&nbsp;U.S.&nbsp;holders who are resident or who carry on a
trade or business in Canada, (iii)&nbsp;certain
U.S.&nbsp;expatriates or (iv)&nbsp;stockholders, partners or
beneficiaries of a holder of the common stock, preferred stock
or debt securities. Further, it does not include any description
of any alternative minimum tax consequences or the tax laws of
any state or local government or of any foreign government that
may be applicable to the common stock, preferred stock and debt
securities.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This summary is based on the Internal Revenue
Code of 1986, as amended, the Treasury regulations promulgated
thereunder and administrative and judicial interpretations
thereof, all as of the date hereof, and all of which are subject
to change or differing interpretations, possibly on a
retroactive basis.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">You should consult with your own tax advisor
regarding the federal, state, local and foreign income,
franchise, personal property, and any other tax consequences of
the ownership and disposition of the common stock, preferred
stock or debt securities.</FONT></B>

<P align="left">
<B><FONT size="2">Taxation of Common Stock of Calpine</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This subsection describes certain of the material
United States federal income tax consequences of owning and
disposing of the common stock that Calpine may offer.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">U.S.&nbsp;Holders of Common
    Stock</FONT></I></B></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Distributions</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The amount of any distribution Calpine makes in
respect of its common stock will be equal to the amount of cash
and the fair market value, on the date of distribution, of any
property distributed. Generally, distributions will be treated
as a dividend to the extent of Calpine&#146;s current or
accumulated earnings and profits, then as a tax-free return of
capital to the extent of a holder&#146;s tax basis in the common
stock and thereafter as gain from the sale or exchange of such
stock as described below.
</FONT>

<P align="center"><FONT size="2">43
</FONT>
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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In general, a dividend distribution to a
corporate holder will qualify for the dividends-received
deduction. The dividends-received deduction is subject to
certain holding period, taxable income, and other limitations
(see &#147;&#151;&nbsp;Taxation of Preferred Stock&nbsp;&#151;
U.S.&nbsp;Holders of Preferred Stock&nbsp;&#151; Dividends to
Corporate Holders,&#148; below).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Dividends received by an individual taxpayer
during taxable years before 2009 will be taxed at a maximum rate
of 15%, provided the taxpayer held the stock for more than
60&nbsp;days during a specified period of time and certain other
requirements are met. Dividends received by an individual
taxpayer for taxable years after 2008 will be subject to tax at
ordinary income rates.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Sale or Exchange of Common Stock</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon the sale or exchange of common stock, a
holder generally will recognize capital gain or loss equal to
the difference between (i)&nbsp;the amount of cash and the fair
market value of any property received upon the sale or exchange
and (ii)&nbsp;such holder&#146;s adjusted tax basis in the
common stock. A holder&#146;s basis in the common stock is
generally equal to its initial purchase price. In the case of a
holder other than a corporation, preferential tax rates may
apply to such gain if the holder&#146;s holding period for the
common stock exceeds one year. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary
income for United States federal income tax purposes.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Information Reporting and Backup Withholding
    Tax</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In general, information reporting requirements
will apply to payments of dividends on common stock and payments
of the proceeds of the sale of common stock, and a backup
withholding tax may apply to such payments if the holder fails
to comply with certain identification requirements. Back-up
withholding is currently imposed at a rate of 28%. Any amounts
withheld under the backup withholding rules from a payment to a
holder will be allowed as a credit against such holder&#146;s
United States federal income tax and may entitle the holder to a
refund, provided that the required information is furnished to
the Internal Revenue Service.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Non-U.S.&nbsp;Holders of Common
    Stock</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The rules governing United States federal income
taxation of a non-U.S.&nbsp;holder of common stock are complex
and no attempt will be made herein to provide more than a
summary of such rules. Non-U.S.&nbsp;holders should consult with
their own tax advisors to determine the effect of federal,
state, local and foreign tax laws, as well as treaties, with
regard to an investment in the common stock, including any
reporting requirements.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Distributions</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Distributions by Calpine with respect to common
stock that are treated as dividends paid, as described above
under <I>&#147;Distributions,&#148; </I>to a
non-U.S.&nbsp;holder (excluding dividends that are effectively
connected with the conduct of a United States trade or business
by such holder and are taxable as described below) will be
subject to United States federal withholding tax at a 30% rate
(or a lower rate provided under an applicable income tax
treaty). Except to the extent that an applicable income tax
treaty otherwise provides, a non-U.S.&nbsp;holder will be taxed
in the same manner as a U.S.&nbsp;holder on dividends paid (or
deemed paid) that are effectively connected with the conduct of
a United States trade or business by the non-U.S.&nbsp;holder.
If such non-U.S.&nbsp;holder is a foreign corporation, it may
also be subject to a United States branch profits tax on such
effectively connected income at a 30% rate (or such lower rate
as may be specified by an applicable income tax treaty). Even
though such effectively connected dividends are subject to
income tax and may be subject to the branch profits tax, they
will not be subject to United States federal withholding tax if
the holder delivers a properly executed Internal Revenue Service
Form&nbsp;W-8ECI (or successor form) to the payor or the
payor&#146;s agent.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A non-U.S.&nbsp;holder who wishes to claim the
benefit of an applicable income tax treaty is required to
satisfy certain certification and other requirements. If you are
eligible for a reduced rate of United States withholding tax
pursuant to an income tax treaty, you may obtain a refund of any
excess amounts withheld by filing an appropriate claim for
refund with the Internal Revenue Service.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Sale or Exchange of Common Stock</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A non-U.S.&nbsp;holder generally will not be
subject to United States federal income tax or withholding tax
on the sale or exchange of common stock unless (i)&nbsp;the gain
is effectively connected with a United States trade or
</FONT>

<P align="center"><FONT size="2">44
</FONT>

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<DIV align="left">
<FONT size="2">business of the non-U.S.&nbsp;holder,
(ii)&nbsp;in the case of a non-U.S.&nbsp;holder who is an
individual, such holder is present in the United States for a
period or periods aggregating 183&nbsp;days or more during the
taxable year of the disposition, and either (a)&nbsp;such holder
has a &#147;tax home&#148; in the United States or (b)&nbsp;the
disposition is attributable to an office or other fixed place of
business maintained by such holder in the United States, or
(iii)&nbsp;in the event that Calpine is characterized as a
United States real property holding corporation and the
non-U.S.&nbsp;holder does not qualify for certain exemptions
(see discussion below under &#147;Foreign Investment in Real
Property Tax Act&#148;).
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except to the extent that an applicable income
tax treaty otherwise provides, (1)&nbsp;if an individual
non-U.S.&nbsp;holder falls under clause&nbsp;(i) above, such
individual generally will be taxed on the net gain derived from
a sale in the same manner as a U.S.&nbsp;holder and (2)&nbsp;if
an individual non-U.S.&nbsp;holder falls under clause&nbsp;(ii)
above, such individual generally will be subject to a flat 30%
tax on the gain derived from a sale, which may be offset by
certain United States capital losses (notwithstanding the fact
that such individual is not considered a resident of the United
States). Individual non-U.S.&nbsp;holders who have spent (or
expect to spend) 183&nbsp;days or more in the United States in
the taxable year in which they contemplate a disposition of
common stock are urged to consult their tax advisors as to the
tax consequences of such disposition. If a non-U.S.&nbsp;holder
that is a foreign corporation falls under clause&nbsp;(i), it
generally will be taxed on the net gain derived from a sale in
the same manner as a U.S.&nbsp;holder and, in addition, may be
subject to the branch profits tax on such effectively connected
income at a 30% rate (or such lower rate as may be specified by
an applicable income tax treaty).
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Information Reporting and Backup Withholding
    Tax</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Generally, we must report annually to the
Internal Revenue Service and to each non-U.S.&nbsp;holder the
amount of dividends paid to such holder and the tax withheld
with respect to those payments, if any. Copies of the
information returns reporting such payments and any withholding
may also be made available to the tax authorities in the country
in which the non-U.S.&nbsp;holder resides under the provisions
of an applicable income tax treaty. United States backup
withholding tax will not apply to such payments if certain
certification requirements are satisfied.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">United States information reporting requirements
and backup withholding tax will not apply to any payment of the
proceeds of the sale of common stock effected outside the United
States by a foreign office of a &#147;broker&#148; as defined in
applicable Treasury regulations (absent actual knowledge or
reason to know that the payee is a United States person), unless
such broker (1)&nbsp;is a United States person as defined in the
Internal Revenue Code, (2)&nbsp;is a foreign person that derives
50% or more of its gross income for certain periods from the
conduct of a trade or business in the United States, (3)&nbsp;is
a controlled foreign corporation for United States federal
income tax purposes or (4)&nbsp;is a foreign partnership with
certain U.S.&nbsp;connections. Payment of the proceeds of any
such sale effected outside the United States by a foreign office
of any broker that is described in the preceding sentence may be
subject to backup withholding tax and information reporting
requirements, unless such broker has documentary evidence in its
records that the beneficial owner is a non-U.S.&nbsp;holder and
certain other conditions are met, or the beneficial owner
otherwise establishes an exemption. Payment of the proceeds of
any such sale to or through the United States office of a broker
is subject to information reporting and backup withholding
requirements unless the beneficial owner of the common stock
satisfies certain certification requirements.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Foreign Investment in Real Property Tax
    Act</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the Foreign Investment in Real Property Tax
Act, any person who acquires a &#147;United States real property
interest&#148; (as described below) from a foreign person must
deduct and withhold a tax equal to 10% of the amount realized by
the foreign transferor. In addition, a foreign person who
disposes of a United States real property interest generally is
required to recognize gain or loss that is subject to United
States federal income tax. A &#147;United States real property
interest&#148; generally includes any interest (other than an
interest solely as a creditor) in a United States corporation
unless it is established under specified procedures that the
corporation is not (and was not for the prior five-year period)
a &#147;United States real property holding corporation.&#148;
We believe it is likely that we are a United States real
property holding corporation and we can give no assurance that
we will not continue to be a United States real property holding
corporation in the future. However, so long as our common stock
is regularly traded on an established securities market, an
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">exemption should apply with respect to any
non-U.S.&nbsp;holder whose beneficial and/or constructive
ownership of common stock is 5% or less of the total fair market
value of the common stock.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Any investor that may approach or exceed the 5%
ownership threshold discussed above, either alone or in
conjunction with related persons, should consult its own tax
advisor concerning the United States tax consequences that may
result. A non-U.S.&nbsp;holder who sells or otherwise disposes
of common stock may be required to inform its transferee whether
such common stock constitutes a United States real property
interest.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">The United States federal income tax
discussion set forth above is included for general information
only and may not be applicable depending upon a holder&#146;s
particular situation. Holders should consult their tax advisors
with respect to the tax consequences to them of the ownership
and disposition of common stock, including the tax consequences
under state, local, foreign and other tax laws and the possible
effects of changes in United States federal or other tax
laws.</FONT></B>

<P align="left">
<B><FONT size="2">Taxation of Preferred Stock of
Calpine</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This subsection describes certain of the material
United States federal income tax consequences of owning and
disposing of the preferred stock that Calpine may offer.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">U.S. Holders of Preferred
    Stock</FONT></I></B></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Distributions</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The amount of any distribution Calpine makes in
respect of its preferred stock will be equal to the amount of
cash and the fair market value, on the date of distribution, of
any property (including common stock) distributed. Generally,
distributions will be treated as a dividend, to the extent of
Calpine&#146;s current or accumulated earnings and profits, then
as a tax-free return of capital to the extent of a holder&#146;s
tax basis in the preferred stock and thereafter as gain from the
sale or exchange of such stock as described below.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Dividends to Individual Holders</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Dividends received by an individual taxpayer
during taxable years before 2009 will be taxed at a maximum rate
of 15%, provided the taxpayer satisfies certain holding period
and other requirements. Dividends received by an individual
taxpayer for taxable years after 2008 will be subject to tax at
ordinary income rates.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Dividends to Corporate Holders</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A dividend distribution to a corporate holder
will generally qualify for the dividends-received deduction. In
determining entitlement to the dividends-received deduction,
corporate holders should also consider the provisions of
Sections&nbsp;246(c), 246A and 1059 of the Internal Revenue
Code, as well as Treasury regulations and Internal Revenue
Service rulings and administrative pronouncements relating to
such provisions. Under current law, Section&nbsp;246(c) of the
Internal Revenue Code disallows the dividends-received deduction
in its entirety if the holder does not satisfy the applicable
holding period requirement for the dividend-paying stock for a
period beginning before and ending after such holder becomes
entitled to receive each dividend on the stock.
Section&nbsp;246(c)(4) of the Internal Revenue Code provides
that a holder may not count toward this minimum holding period
any period in which the holder (1)&nbsp;has an option to sell,
is under a contractual obligation to sell, or has made (and not
closed) a short sale of, substantially identical stock or
securities, or (2)&nbsp;has diminished its risk of loss by
holding one or more positions with respect to substantially
similar or related property. Under certain circumstances,
Section&nbsp;1059 of the Internal Revenue Code (A)&nbsp;reduces
the tax basis of stock by a portion of any &#147;extraordinary
dividends&#148; that are eligible for the dividends-received
deduction and (B)&nbsp;to the extent that the basis reduction
would otherwise reduce the tax basis of the stock below zero,
requires immediate recognition of gain, which is treated as gain
from the sale or exchange of the stock. An &#147;extraordinary
dividend&#148; includes any amount treated as a dividend with
respect to a redemption that is not pro rata to all stockholders
(or meets certain other requirements), without regard to either
the relative amount of the dividend or the holder&#146;s holding
period for the stock. Section&nbsp;246A of the Internal Revenue
Code contains the &#147;debt-financed&#148; portfolio stock
rules, under which the dividends-received deduction could be
reduced to the extent that a holder incurs indebtedness directly
attributable to its investment in the stock.
</FONT>

<P align="center"><FONT size="2">46
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Receipt of Common Stock Upon Conversion of the
    Preferred Stock</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the preferred stock is convertible into common
stock of Calpine, gain or loss will not be recognized by a
holder upon the conversion of such preferred stock into common
stock if no cash is received. A holder who receives cash in lieu
of a fractional share of common stock will in general be treated
as having received such fractional share and having exchanged it
for cash in a redemption, which would be treated in the manner
described under &#147;Sale, Exchange or Redemption of Preferred
Stock,&#148; below. As discussed therein, a holder who cannot
qualify for sale or exchange treatment under the rules
applicable to redemptions will generally be taxable on the cash
received in lieu of a fractional share as a distribution
described in &#147;&#151;&nbsp;Distributions,&#148; above.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A holder&#146;s tax basis in the common stock
received upon conversion will generally be equal to the
holder&#146;s tax basis in the preferred stock less the tax
basis allocated to any fractional share for which cash is
received, and a holder&#146;s holding period in the common stock
received upon conversion generally will include the period
during which the preferred stock was held by such holder.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Adjustments of Conversion Price in Respect of
    Preferred Stock</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the preferred stock is convertible into common
stock of Calpine, adjustments to the conversion price ratio to
take into account a stock dividend or stock split generally will
not be taxable. However, an adjustment to the conversion price
ratio to reflect the issuance of certain rights, warrants,
evidences of indebtedness, securities or other assets to holders
of common stock (an <I>&#147;Adjustment&#148;</I>) may result in
constructive distributions to the holders of the preferred
stock. The amount of any such constructive distribution would be
the fair market value on the date of the Adjustment of the
number of shares of common stock which, if actually distributed
to holders of preferred stock, would produce the same increase
in the proportionate interests of such holders in the assets or
earnings and profits of Calpine as that produced by the
Adjustment. The distribution would be treated in the manner
described above under &#147;Distributions.&#148;
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Excessive Redemption Price of Preferred
    Stock</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under Section&nbsp;305 of the Internal Revenue
Code and the applicable Treasury regulations, if preferred stock
with a mandatory redemption date or preferred stock subject to
certain redemption rights on the part of either Calpine or the
holder of such stock has a redemption price that exceeds its
issue price (i.e., its fair market value at its date of original
issuance) by more than a <I>de minimis </I>amount, such excess
may be treated as a constructive distribution that will be
treated in the same manner as distribution described above under
&#147;Distributions.&#148; A holder of such preferred stock
would be required to treat such excess as a constructive
distribution received by the holder over the life of such stock
under a constant interest (economic yield) method that takes
into account the compounding of yield.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Accrued Dividends on the Preferred
    Stock</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The tax treatment of accrued dividends that are
payable upon a redemption of the preferred stock will be
addressed in the applicable prospectus supplement.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Sale, Exchange or Redemption of Preferred
    Stock</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Upon the sale or exchange of preferred stock, a
holder generally will recognize capital gain or loss equal to
the difference between (1)&nbsp;the amount of cash and the fair
market value of any property received upon the sale or exchange
and (2)&nbsp;such holder&#146;s adjusted tax basis in the stock.
A holder&#146;s basis in the preferred stock is generally equal
to its initial purchase price. In the case of a holder other
than a corporation, preferential tax rates may apply to such
gain if the holder&#146;s holding period for the preferred stock
exceeds one year. Subject to certain limited exceptions, capital
losses cannot be applied to offset ordinary income for United
States federal income tax purposes.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Gain or loss recognized by a holder on a
redemption of the preferred stock will be treated as a sale or
exchange and therefore qualify for the treatment described above
if certain requirements are satisfied. Generally, these
requirements are satisfied if either (1)&nbsp;the holder&#146;s
interest in the stock of Calpine is completely terminated as a
result of such redemption, (2)&nbsp;such holder&#146;s
percentage ownership of Calpine&#146;s voting stock immediately
after the redemption is less than 80% of such holder&#146;s
percentage ownership immediately before the redemption or
(3)&nbsp;the redemption is &#147;not essentially equivalent to a
dividend.&#148; The attribution rules of Section&nbsp;318 of the
Internal Revenue Code treat a person as owning stock owned by
certain
</FONT>

<P align="center"><FONT size="2">47
</FONT>

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<DIV align="left">
<FONT size="2">related parties or certain entities in which the
person owns an interest and stock that a person could acquire
through exercise of an option. For this purpose, an option would
include any conversion right under the preferred stock. Whether
a redemption is &#147;not essentially equivalent to a
dividend&#148; depends on each holder&#146;s facts and
circumstances, but in any event requires a &#147;meaningful
reduction&#148; in such holder&#146;s equity interest in
Calpine. A holder of the preferred stock who sells some or all
of the stock of Calpine owned by it may be able to take such
sales into account to satisfy one of the foregoing conditions.
Conversely, a holder who purchases additional shares of stock of
Calpine may be required to take such shares into account in
determining whether any of the foregoing conditions are
satisfied.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If none of the above requirements for sale or
exchange treatment is satisfied, the entire amount of the cash
(or property) received on a redemption will be treated as a
distribution (without offset by the holder&#146;s tax basis in
the redeemed shares), which will be treated in the same manner
as distributions described above under
&#147;Distributions.&#148; In such case, the holder&#146;s basis
in the redeemed preferred stock would be transferred to the
holder&#146;s remaining shares of Calpine stock (if any). If the
holder does not retain any shares of Calpine&#146;s stock but
dividend treatment arises because of the constructive ownership
rules, such basis may be entirely lost to the holder. The
Internal Revenue Service has issued proposed regulations that
would change the treatment of the basis of redeemed stock when a
distribution in redemption of such stock is characterized as a
dividend. The regulations are proposed to be effective for
transactions occurring after the date on which the proposed
regulations are made final and are subject to change prior to
their adoption in final form. Holders should consult their tax
advisors regarding the potential effects of the regulations.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Other Preferred Stock</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Special tax rules may apply to certain types of
preferred stock. The applicable prospectus supplement will
discuss any such special United States federal income tax rules
with respect to such preferred stock.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Information Reporting and Backup Withholding
    Tax</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In general, information reporting requirements
will apply to payments of dividends on the preferred stock and
payments of the proceeds of the sale of the preferred stock, and
a backup withholding tax may apply to such payments if the
holder fails to comply with certain identification requirements.
Back-up withholding is currently imposed at a rate of 28%. Any
amounts withheld under the backup withholding rules from a
payment to a holder will be allowed as a credit against such
holder&#146;s United States federal income tax and may entitle
the holder to a refund, provided that the required information
is furnished to the Internal Revenue Service.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Non-U.S.&nbsp;Holders of Preferred
    Stock</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The rules governing United States federal income
taxation of a non-U.S.&nbsp;holder of preferred stock are
complex and no attempt will be made herein to provide more than
a summary of such rules. Non-U.S.&nbsp;holders should consult
with their own tax advisors to determine the effect of federal,
state, local and foreign tax laws, as well as treaties, with
regard to an investment in the preferred stock, including any
reporting requirements.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Distributions</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Distributions by Calpine with respect to the
preferred stock that are treated as dividends paid (or deemed
paid), as described above under &#147;Distributions&#148; and
&#147;Sale, Exchange or Redemption of Preferred Stock,&#148; to
a non-U.S.&nbsp;holder (excluding dividends that are effectively
connected with the conduct of a United States trade or business
by such holder and are taxable as described below) will be
subject to United States federal withholding tax at a 30% rate
(or a lower rate provided under an applicable income tax
treaty). Except to the extent that an applicable income tax
treaty otherwise provides, a non-U.S. holder will be taxed in
the same manner as a U.S.&nbsp;holder on dividends paid (or
deemed paid) that are effectively connected with the conduct of
a United States trade or business by the non-U.S.&nbsp;holder.
If such non-U.S.&nbsp;holder is a foreign corporation, it may
also be subject to a United States branch profits tax on such
effectively connected income at a 30% rate (or such lower rate
as may be specified by an applicable income tax treaty). Even
though such effectively connected dividends are subject to
income tax, and may be subject to the branch profits tax, they
will not be subject to United States withholding tax if the
holder delivers a properly executed Internal Revenue Service
Form&nbsp;W-8ECI (or successor form) to the payor or the
payor&#146;s agent.
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A non-U.S.&nbsp;holder who wishes to claim the
benefit of an applicable income tax treaty is required to
satisfy certain certification and other requirements. If you are
eligible for a reduced rate of United States withholding tax
pursuant to an income tax treaty, you may obtain a refund of any
excess amounts withheld by filing an appropriate claim for
refund with the Internal Revenue Service.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Receipt of Common Stock Upon Conversion of the
    Preferred Stock</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In general, no United States federal income tax
or withholding tax will be imposed upon the conversion of
preferred stock into common stock by a non-U.S. holder (except
with respect to the non-U.S. holder&#146;s receipt of cash in
lieu of fractional shares where one of the conditions described
below under &#147;Sale, Exchange or Redemption of Preferred
Stock&#148; is satisfied).
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Sale, Exchange or Redemption of Preferred
    Stock</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A non-U.S.&nbsp;holder generally will not be
subject to United States federal income tax or withholding tax
on the sale or exchange of preferred stock unless (i)&nbsp;the
gain is effectively connected with a United States trade or
business of the non-U.S.&nbsp;holder, (ii)&nbsp;in the case of a
non-U.S. holder who is an individual, such holder is present in
the United States for a period or periods aggregating
183&nbsp;days or more during the taxable year of the
disposition, and either (a)&nbsp;such holder has a &#147;tax
home&#148; in the United States or (b)&nbsp;the disposition is
attributable to an office or other fixed place of business
maintained by such holder in the United States or (iii)&nbsp;in
the event that Calpine is characterized as a United States real
property holding corporation and the non-U.S.&nbsp;holder does
not qualify for certain exemptions (see discussion below under
&#147;Foreign Investment in Real Property Tax Act&#148;).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except to the extent that an applicable income
tax treaty otherwise provides, (1)&nbsp;if an individual
non-U.S.&nbsp;holder falls under clause&nbsp;(i) above, such
individual generally will be taxed on the net gain derived from
a sale in the same manner as a U.S.&nbsp;holder and (2)&nbsp;if
an individual non-U.S.&nbsp;holder falls under clause&nbsp;(ii)
above, such individual generally will be subject to a flat 30%
tax on the gain derived from a sale, which may be offset by
certain United States capital losses (notwithstanding the fact
that such individual is not considered a resident of the United
States). Individual non-U.S.&nbsp;holders who have spent (or
expect to spend) 183&nbsp;days or more in the United States in
the taxable year in which they contemplate a disposition of
preferred stock are urged to consult their tax advisors as to
the tax consequences of such disposition. If a
non-U.S.&nbsp;holder that is a foreign corporation falls under
clause (i)&nbsp;above, it generally will be taxed on the net
gain derived from a sale in the same manner as a
U.S.&nbsp;holder and, in addition, may be subject to the branch
profits tax on such effectively connected income at a 30% rate
(or such lower rate as may be specified by an applicable income
tax treaty).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Gain or loss realized by a non-U.S. holder on a
redemption of the preferred stock will be treated as a sale or
exchange and qualify for the treatment described in this section
if certain requirements are satisfied. For a description of
these requirements, see
&#147;&#151;&nbsp;U.S.&nbsp;Holders&nbsp;&#151; Sale, Exchange
or Redemption of Preferred Stock,&#148; above. If such
requirements are not satisfied, then the entire amount of the
cash (or property) received on a redemption (without offset by
the holder&#146;s tax basis in the redeemed shares) will
generally be treated in the same manner as distributions
described above under <I>&#147;Distributions&#148;</I> and the
holder&#146;s basis in the redeemed preferred stock will be
transferred to the holder&#146;s remaining shares of our stock
(if any). If the holder does not retain any shares of our stock
but dividend treatment arises because of the constructive
ownership rules described in &#147;&#151;&nbsp;U.S.
Holders&nbsp;&#151; Sale, Exchange or Redemption of Preferred
Stock,&#148; such basis may be entirely lost to the holder. The
Internal Revenue Service has issued proposed regulations that
would change the treatment of the basis of redeemed stock when a
distribution in redemption of such stock is characterized as a
dividend. The regulations are proposed to be effective for
transactions occurring after the date on which the proposed
regulations are made final and are subject to change prior to
their adoption in final form. Holders should consult their tax
advisors regarding the potential effects of the regulations.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Information Reporting and Backup Withholding
    Tax</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Generally, we must report annually to the
Internal Revenue Service and to each non-U.S.&nbsp;holder the
amount of dividends paid to such holder and the tax withheld
with respect to those payments, if any. Copies of the
information returns reporting such payments and any withholding
may also be made available to the tax authorities in the country
in which the non-U.S.&nbsp;holder resides under the provisions
of an applicable income
</FONT>

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<DIV align="left">
<FONT size="2">tax treaty. United States backup withholding tax
will not apply to such payments if certain certification
requirements are satisfied.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">United States information reporting requirements
and backup withholding tax will not apply to any payment of the
proceeds of the sale of preferred stock effected outside the
United States by a foreign office of a &#147;broker&#148; as
defined in applicable Treasury regulations (absent actual
knowledge or reason to know that the payee is a United States
person), unless such broker (1)&nbsp;is a United States person
as defined in the Internal Revenue Code, (2)&nbsp;is a foreign
person that derives 50% or more of its gross income for certain
periods from the conduct of a trade or business in the United
States, (3)&nbsp;is a controlled foreign corporation for United
States federal income tax purposes or (4)&nbsp;is a foreign
partnership with certain U.S. connections. Payment of the
proceeds of any such sale effected outside the United States by
a foreign office of any broker that is described in the
preceding sentence may be subject to backup withholding tax and
information reporting requirements, unless such broker has
documentary evidence in its records that the beneficial owner is
a non-U.S.&nbsp;holder and certain other conditions are met, or
the beneficial owner otherwise establishes an exemption. Payment
of the proceeds of any such sale to or through the United States
office of a broker is subject to information reporting and
backup withholding requirements unless the beneficial owner of
the preferred stock satisfies certain certification requirements.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Foreign Investment in Real Property Tax
    Act</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Under the Foreign Investment in Real Property Tax
Act, any person who acquires a &#147;United States real property
interest&#148; (as described below) from a foreign person must
deduct and withhold a tax equal to 10% of the amount realized by
the foreign transferor. In addition, a foreign person who
disposes of a United States real property interest generally is
required to recognize gain or loss that is subject to United
States federal income tax. A &#147;United States real property
interest&#148; generally includes any interest (other than an
interest solely as a creditor) in a United States corporation
unless it is established under specified procedures that the
corporation is not (and was not for the prior five-year period)
a &#147;United States real property holding corporation.&#148;
We believe it is likely that we are a United States real
property holding corporation and we can give no assurance that
we will not continue to be a United States real property holding
corporation in the future. However, so long as the preferred
stock is regularly traded on an established securities market,
an exemption should apply with respect to any non-U.S. holder
whose beneficial and/or constructive ownership of preferred
stock is 5% or less of the total fair market value of the
preferred stock. In addition, if the preferred stock is not
regularly traded on an established securities market, but our
common stock continues to be so regularly traded, an exemption
should apply if the fair market value of the
non-U.S.&nbsp;holder&#146;s interest in the preferred stock is
5% or less of the total fair market value of the common stock.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Any investor that may approach or exceed the 5%
ownership threshold discussed above, either alone or in
conjunction with related persons, should consult its own tax
advisor concerning the United States tax consequences that may
result. A non-U.S.&nbsp;holder who sells or otherwise disposes
of preferred stock may be required to inform its transferee
whether such preferred stock constitutes a United States real
property interest.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">The United States federal income tax
discussion set forth above is included for general information
only and may not be applicable depending upon a holder&#146;s
particular situation. Holders should consult their tax advisors
with respect to the tax consequences to them of the ownership
and disposition of the preferred stock, including the tax
consequences under state, local, foreign and other tax laws and
the possible effects of changes in United States federal or
other tax laws.</FONT></B>

<P align="left">
<B><FONT size="2">Taxation of Debt Securities of Calpine and
Energy Finance</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This subsection describes certain of the material
United States federal income tax consequences of owning and
disposing of the debt securities offered by Calpine or Energy
Finance, as the case may be. It deals only with debt securities
that are due to mature 30&nbsp;years or less from the date on
which they are issued. The United States federal income tax
consequences of owning and disposing of debt securities that are
due to mature more than 30&nbsp;years from the date of issue
will be discussed in an applicable prospectus supplement. The
discussion regarding United States federal income tax laws
assumes that any debt securities will be issued, and transfers
thereof and payments thereon will be made, in accordance with
the applicable indenture.
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">U.S.&nbsp;Holders of Debt
    Securities</FONT></I></B></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Interest Income</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to the original issue discount rules
described below, payments of interest on the debt securities
(including, in the case of debt securities issued by Energy
Finance, the amount of Canadian tax withheld, if any) generally
will be taxable to a U.S. holder as ordinary interest income at
the time such payments are accrued or received (in accordance
with the holder&#146;s regular method of tax accounting).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A debt security will be treated as issued with
original issue discount (&#147;OID&#148;) if its stated
redemption price at maturity exceeds its issue price by more
than a de minimis amount. Generally, the issue price will be the
first price at which a substantial amount of the debt securities
is sold to persons other than bond houses, brokers or similar
persons or organizations acting in the capacity of underwriters,
placement agents or wholesalers. A debt security&#146;s stated
redemption price at maturity is the total of all payments on the
debt security that are not payments of qualified stated
interest. An interest payment is qualified stated interest if it
is one of a series of stated interest payments that are
unconditionally payable at least annually at a single fixed rate.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A debt security is not treated as issued with OID
if the OID (<I>i.e., </I>the excess of the stated redemption
price at maturity over the issue price) is de minimis. For this
purpose the amount of OID is de minimis if it is less than the
product of 0.25 percent of the stated redemption price at
maturity multiplied by the number of complete years to maturity.
If the debt security has de minimis OID, a holder must generally
include the de minimis amount in income (as capital gain) as
stated principal payments are made.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the debt security is treated as issued with
OID, a U.S.&nbsp;holder will be required to include the amount
of the OID in income periodically over the term of the debt
security before receipt of the cash or other payment
attributable to such income and irrespective of such
holder&#146;s general method of tax accounting. In particular, a
U.S.&nbsp;holder of a debt security must include in gross
income, as interest for United States federal income tax
purposes, the sum of the daily portions of OID with respect to
the debt security for each day during the taxable year or
portion of a taxable year in which such holder holds the debt
security (&#147;accrued OID&#148;). The daily portion is
determined by allocating to each day of an accrual period a pro
rata portion of an amount equal to the adjusted issue price of
the debt security at the beginning of the accrual period
multiplied by the yield to maturity of the debt security and
subtracting from this product the amount of qualified stated
interest allocable to the accrual period. The adjusted issue
price of the debt security at the start of any accrual period is
the issue price of the debt security increased by the accrued
OID for each prior accrual period and decreased by the amount of
any payments previously made with respect to the debt security
(other than qualified stated interest).
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Source of Income and Foreign Tax Credits With
    Respect to Debt Securities of Energy Finance</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If Canadian withholding taxes are imposed on
payments on the debt securities issued by Energy Finance, the
eligibility of a U.S. holder for a United States foreign tax
credit with respect to such taxes may be limited because, for
United States foreign tax credit purposes, such payments would
constitute income from sources within the United States.
Interest on the debt securities will generally constitute
&#147;passive income&#148; for United States foreign tax credit
purposes. Moreover, if such Canadian withholding taxes are
imposed on interest payments at a rate that equals or exceeds
5%, such interest income would constitute &#147;high withholding
tax interest&#148; for United States foreign tax credit
purposes. A U.S. holder that does not claim a foreign tax credit
may be entitled to a deduction for United States federal income
tax purposes with respect to any such Canadian withholding
taxes. The calculation of foreign tax credits or deductions
involves the application of complex rules that depend on a
holder&#146;s particular circumstances. Accordingly, U.S.
holders are urged to consult their tax advisors regarding the
creditability or deductibility of such taxes. For a discussion
of the Canadian income tax considerations, see &#147;Certain
Canadian Federal Income Tax Considerations,&#148; below.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Debt Securities Purchased at a Market
    Discount</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A holder will be considered to have purchased a
debt security at a &#147;market discount&#148; if the
holder&#146;s adjusted basis in the debt security immediately
after purchase is less than the debt security&#146;s stated
redemption price at maturity, or in the case of a debt security
issued at a discount, its revised issue price (which has the
same meaning as &#147;adjusted issue price&#148; as defined
above). A debt security is not treated as having market discount
if the amount of market discount is de minimis. For this
purpose, the amount of
</FONT>

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<DIV align="left">
<FONT size="2">market discount is de minimis if it is less than
the product of 0.25&nbsp;percent of the stated redemption price
at maturity or revised issue price, as the case may be, on the
purchase date multiplied by the number of complete years to
maturity remaining as of such date. If the debt security has de
minims market discount, a holder must generally include such de
minimis amount in income (as capital gain) as stated principal
payments are made.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If a debt security is treated as having market
discount, any gain recognized upon the receipt of any principal
payment on, or upon the disposition of, the debt security will
generally be treated as ordinary income to the extent that such
gain does not exceed the accrued market discount on the debt
security that has not been previously included in income.
Alternatively, a holder of a debt security may elect to include
market discount in income currently over the life of the debt
security. Such an election applies to all debt instruments with
market discount acquired by the electing holder on or after the
first day of the first taxable year to which the election
applies and may not be revoked without the consent of the
Internal Revenue Service. Market discount accrues on a
straight-line basis unless the holder elects to accrue such
discount on a constant yield to maturity basis. This latter
election is applicable only to the debt security with respect to
which it is made and is irrevocable. A holder of a debt security
that does not elect to include market discount in income
currently generally will be required to defer deductions for
interest on borrowings allocable to such debt security in an
amount not exceeding the accrued market discount on such debt
security until the maturity or disposition of such debt security.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Debt Securities Purchased at a
    Premium</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A holder will be considered to have purchased a
debt security at a premium if the holder&#146;s adjusted basis
in the debt security immediately after the purchase (which does
not include any amount paid in respect of accrued interest on
the debt security) is greater than the amount payable on
maturity. A holder may elect to treat such premium as
&#147;amortizable bond premium,&#148; in which case the amount
of interest required to be included in the holder&#146;s income
each year with respect to the interest on the debt security will
be reduced by the amount of the amortizable bond premium
allocable (generally under a constant yield method based on the
holder&#146;s yield to maturity) to such year with a
corresponding decrease in the holder&#146;s tax basis in the
debt security. Any election to amortize bond premium is
applicable to all debt securities (other than tax-exempt debt
securities) held by the holder at the beginning of the first
taxable year to which the election applies or thereafter
acquired by the holder, and may not be revoked without the
consent of the Internal Revenue Service.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Sale or Exchange of Debt Securities</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A holder will generally recognize capital gain or
loss equal to the difference between the amount realized on the
sale, exchange or other disposition of the debt security and the
holder&#146;s adjusted tax basis in such debt security, except
that ordinary income will be recognized to the extent that a
portion of the amount realized is attributable to market
discount or accrued interest not previously included in income.
A holder&#146;s adjusted tax basis in the debt security
generally will be the initial purchase price paid therefor,
increased by any OID or market discount previously included in
income with respect to the debt security and reduced by any
amortizable bond premium and any payments previously received
with respect to the debt security other than qualified stated
interest. In the case of a holder other than a corporation,
preferential tax rates may apply to gain recognized on the sale
of a debt security if such holder&#146;s holding period for such
debt security exceeds one year. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary
income for United States federal income tax purposes.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Other Debt Securities</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Special tax rules may apply to certain types of
debt securities including, but not limited to, debt securities
subject to contingencies, variable rate debt securities and debt
securities convertible into equity of Calpine. The applicable
prospectus supplement will discuss any such special United
States federal income tax rules with respect to such debt
securities.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Information Reporting and Backup Withholding
    Tax</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In general, information reporting requirements
will apply to payments of principal, premium, if any, and
interest on the debt securities and payments of the proceeds of
the sale of the debt securities, and a backup withholding tax
may apply to such payments if the holder fails to comply with
certain identification
</FONT>

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</FONT>

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<DIV align="left">
<FONT size="2">requirements. Back-up withholding is currently
imposed at a rate of 28%. Any amounts withheld under the backup
withholding rules from a payment to a holder will be allowed as
a credit against such holder&#146;s United States federal income
tax and may entitle the holder to a refund, provided that the
required information is furnished to the Internal Revenue
Service.
</FONT>
</DIV>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">Non-U.S. Holders of Debt
    Securities</FONT></I></B></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The rules governing United States federal income
taxation of a non-U.S. holder of debt securities are complex and
no attempt will be made herein to provide more than a summary of
such rules. Non-U.S. holders should consult with their own tax
advisors to determine the effect of federal, state, local and
foreign tax laws, as well as treaties, with regard to an
investment in the debt securities, including any reporting
requirements.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This discussion assumes that the debt security or
coupon is not subject to the rules of Section&nbsp;871(h)(4)(A)
of the Internal Revenue Code, relating to interest payments that
are determined by reference to income, profits, changes in value
of property or other attributes of the issuer or a related party.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Interest Income</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Generally, interest income of a non-U.S. holder
that is not effectively connected with a United States trade or
business will be subject to a withholding tax at a 30% rate (or,
if applicable, a lower tax rate specified by a treaty). However,
interest income earned on a debt security by a non-U.S. holder
will qualify for the &#147;portfolio interest&#148; exemption
and therefore will not be subject to United States federal
income tax or withholding tax, provided that such interest
income is not effectively connected with a United States trade
or business of the non-U.S. holder and provided that
(1)&nbsp;the non-U.S. holder does not actually or constructively
own 10% of more of the total combined voting power of all
classes of the issuer&#146;s stock entitled to vote;
(2)&nbsp;the non-U.S. holder is not a controlled foreign
corporation that is related to the issuer or Calpine through
stock ownership; (3)&nbsp;the non-U.S. holder is not a bank
which acquired the debt security in consideration for an
extension of credit made pursuant to a loan agreement entered
into in the ordinary course of business; and (4)&nbsp;either
(A)&nbsp;the non-U.S. holder certifies to the payor or the
payor&#146;s agent, under penalties of perjury, that it is not a
United States person and provides its name, address, and certain
other information on a properly executed Internal Revenue
Service Form&nbsp;W-8BEN or a suitable substitute form or
(B)&nbsp;a securities clearing organization, bank or other
financial institution that holds customer securities in the
ordinary course of its trade or business and holds the debt
securities in such capacity, certifies to the payor or the
payor&#146;s agent, under penalties of perjury, that such a
statement has been received from the beneficial owner by it or
by a financial institution between it and the beneficial owner,
and furnishes the payor or the payor&#146;s agent with a copy
thereof. The applicable United States Treasury regulations also
provide alternative methods for satisfying the certification
requirements of clause&nbsp;(4), above. If a non-U.S. holder
holds the debt security through certain foreign intermediaries
or partnerships, such holder and the foreign intermediary or
partnership may be required to satisfy certification
requirements under applicable United States Treasury regulations.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except to the extent that an applicable income
tax treaty otherwise provides, a non-U.S. holder generally will
be taxed with respect to interest in the same manner as a U.S.
holder if the interest is effectively connected with a United
States trade or business of the non-U.S. holder. Effectively
connected interest income received or accrued by a corporate
non-U.S. holder may also, under certain circumstances, be
subject to an additional &#147;branch profits&#148; tax at a 30%
rate (or, if applicable, at a lower tax rate specified by an
applicable income tax treaty). Even though such effectively
connected income is subject to income tax, and may be subject to
the branch profits tax, it is not subject to withholding tax if
the non-U.S. holder delivers a properly executed Internal
Revenue Service Form&nbsp;W-8ECI (or successor form) to the
payor or the payor&#146;s agent.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Sale or Exchange of Debt Securities</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A non-U.S. holder generally will not be subject
to United States federal income tax or withholding tax on any
gain realized on the sale, exchange or other disposition of a
debt security unless (i)&nbsp;the gain is effectively connected
with a United States trade or business of the non-U.S. holder or
(ii)&nbsp;in the case of a non-U.S.&nbsp;holder who is an
individual, such holder is present in the United States for a
period or periods aggregating 183&nbsp;days or more during the
taxable year of the disposition, and either (a)&nbsp;such holder
has a &#147;tax home&#148; in the United States or (b)&nbsp;the
disposition is attributable to an office or other fixed place of
business maintained by such holder in the United States.
</FONT>

<P align="center"><FONT size="2">53
</FONT>

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<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Except to the extent that an applicable income
tax treaty otherwise provides, (1)&nbsp;if an individual
non-U.S. holder falls under clause&nbsp;(i) above, such
individual generally will be taxed on the net gain derived from
a sale in the same manner as a U.S. holder and (2)&nbsp;if an
individual non-U.S. holder falls under clause&nbsp;(ii) above,
such individual generally will be subject to a flat 30% tax on
the gain derived from a sale, which may be offset by certain
United States capital losses (notwithstanding the fact that such
individual is not considered a resident of the United States).
Individual non-U.S. holders who have spent (or expect to spend)
183&nbsp;days or more in the United States in the taxable year
in which they contemplate a sale or other disposition of a debt
security are urged to consult their tax advisors as to the tax
consequences of such sale. If a non-U.S. holder that is a
foreign corporation falls under clause&nbsp;(i), it generally
will be taxed on the net gain derived from a sale in the same
manner as a U.S. holder and, in addition, may be subject to the
branch profits tax on such effectively connected income at a 30%
rate (or such lower rate as may be specified by an applicable
income tax treaty).
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Information Reporting and Backup Withholding
    Tax</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Generally, we must report annually to the
Internal Revenue Service and to each non-U.S. holder the amount
of interest paid to such holder and the tax withheld with
respect to those payments, if any. Copies of the information
returns reporting such payments and any withholding may also be
made available to the tax authorities in the country in which
the non-U.S. holder resides under the provisions of an
applicable income tax treaty. United States backup withholding
tax will not apply to such payments if the statement described
in clause&nbsp;(4) under &#147;Interest Income&#148; above is
duly provided by such holder, provided that the payor does not
have actual knowledge or reason to know that the holder is a
United States person.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Information reporting requirements and backup
withholding tax will not apply to any payment of the proceeds of
the sale of debt securities effected outside the United States
by a foreign office of a &#147;broker&#148; as defined in
applicable Treasury regulations (absent actual knowledge that
the payee is a United States person), unless such broker
(1)&nbsp;is a United States person as defined in the Internal
Revenue Code, (2)&nbsp;is a foreign person that derives 50% or
more of its gross income for certain periods from the conduct of
a trade or business in the United States, (3)&nbsp;is a
controlled foreign corporation for United States federal income
tax purposes or (4)&nbsp;is a foreign partnership with certain
U.S. connections. Payment of the proceeds of any such sale
effected outside the United States by a foreign office of any
broker that is described in the preceding sentence may be
subject to backup withholding tax and information reporting
requirements unless such broker has documentary evidence in its
records that the beneficial owner is a non-U.S. holder and
certain other conditions are met, or the beneficial owner
otherwise establishes an exemption. Payment of the proceeds of
any such sale to or through the United States office of a broker
is subject to information reporting and backup withholding
requirements unless the beneficial owner of the debt securities
provides the statement described in clause&nbsp;(4) of
&#147;Interest Income&#148; or otherwise establishes an
exemption.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">The United States federal income tax
discussion set forth above is included for general information
only and may not be applicable depending upon a holder&#146;s
particular situation. Holders should consult their tax advisors
with respect to the tax consequences to them of the ownership
and disposition of the debt securities, including the tax
consequences under state, local, foreign and other tax laws and
the possible effects of changes in United States federal or
other tax laws.</FONT></B>

<P align="left">
<B><FONT size="2">Taxation of Debt Securities of Energy
Finance&nbsp;II</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This subsection describes certain of the material
United States federal income tax consequences of owning and
disposing of the debt securities offered by Energy
Finance&nbsp;II. It deals only with debt securities that are due
to mature 30&nbsp;years or less from the date on which they are
issued. The United States federal income tax consequences of
owning and disposing of debt securities that are due to mature
more than 30&nbsp;years from the date of issue will be discussed
in an applicable prospectus supplement. The discussion regarding
United States federal income tax laws, including the statements
regarding the U.S.-Canada double taxation convention relating to
income and capital gains (the &#147;Tax Treaty&#148;), assumes
that any debt securities will be issued, and transfers thereof
and payments thereon will be made, in accordance with the
applicable indenture.
</FONT>

<P align="center"><FONT size="2">54
</FONT>

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<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <B><I><FONT size="2">U.S. Holders of Debt
    Securities</FONT></I></B></TD>
</TR>

</TABLE>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Interest Income</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Subject to the original issue discount rules
described below, payments of interest on the debt securities
(including the amount of Canadian tax withheld, if any)
generally will be taxable to a U.S. holder as ordinary interest
income at the time such payments are accrued or received (in
accordance with the holder&#146;s regular method of tax
accounting).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A debt security will be treated as issued with
original issue discount (&#147;OID&#148;) if its stated
redemption price at maturity exceeds its issue price by more
than a de minimis amount. Generally, the issue price will be the
first price at which a substantial amount of the debt securities
is sold to persons other than bond houses, brokers or similar
persons or organizations acting in the capacity of underwriters,
placement agents or wholesalers. A debt security&#146;s stated
redemption price at maturity is the total of all payments on the
debt security that are not payments of qualified stated
interest. An interest payment is qualified stated interest if it
is one of a series of stated interest payments that are
unconditionally payable at least annually at a single fixed rate.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A debt security is not treated as issued with OID
if the OID (<I>i.e.</I>, the excess of the stated redemption
price at maturity over the issue price) is de minimis. For this
purpose the amount of OID is de minimis if it is less than the
product of 0.25&nbsp;percent of the stated redemption price at
maturity multiplied by the number of complete years to maturity.
If the debt security has de minimis OID, a holder must generally
include the de minimis amount in income (as capital gain) as
stated principal payments are made.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If the debt security is treated as issued with
OID, a U.S. holder will be required to include the amount of the
OID in income periodically over the term of the debt security
before receipt of the cash or other payment attributable to such
income and irrespective of such holder&#146;s general method of
tax accounting. In particular, a U.S. holder of a debt security
must include in gross income, as interest for United States
federal income tax purposes, the sum of the daily portions of
OID with respect to the debt security for each day during the
taxable year or portion of a taxable year in which such holder
holds the debt security (&#147;accrued OID&#148;). The daily
portion is determined by allocating to each day of an accrual
period a pro rata portion of an amount equal to the adjusted
issue price of the debt security at the beginning of the accrual
period multiplied by the yield to maturity of the debt security
and subtracting from this product the amount of qualified stated
interest allocable to the accrual period. The adjusted issue
price of the debt security at the start of any accrual period is
the issue price of the debt security increased by the accrued
OID for each prior accrual period and decreased by the amount of
any payments previously made with respect to the debt security
(other than qualified stated interest).
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Source of Income and Foreign Tax Credits With
    Respect to Debt Securities of Energy Finance&nbsp;II</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If Canadian withholding taxes are imposed on
payments on the debt securities issued by Energy
Finance&nbsp;II, a U.S. holder may be eligible for a United
States foreign tax credit with respect to such taxes. The
interest payments will be foreign source income and will
generally constitute &#147;passive income&#148; for foreign tax
credit purposes. Moreover, if Canadian withholding taxes are
imposed on the interest payments at a rate that equals or
exceeds 5%, such interest income would constitute &#147;high
withholding tax interest&#148; for United States foreign tax
credit purposes. A U.S. holder who is entitled under the Tax
Treaty to a refund of Canadian tax, if any, withheld on interest
on the debt securities will not be entitled to claim a foreign
tax credit with respect to such withheld tax. A U.S. holder that
does not claim a foreign tax credit may be entitled to a
deduction for United States federal income tax purposes with
respect to any such Canadian withholding taxes. The calculation
of foreign tax credits or deductions involves the application of
complex rules that depend on a holder&#146;s particular
circumstances. Accordingly, U.S. holders are urged to consult
their tax advisors regarding the creditability or deductibility
of such taxes. For a discussion of the Canadian income tax
considerations, see &#147;Certain Canadian Federal Income Tax
Considerations,&#148; below.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Debt Securities Purchased at a Market
    Discount</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A holder will be considered to have purchased a
debt security at a &#147;market discount&#148; if the
holder&#146;s adjusted basis in the debt security immediately
after purchase is less than the debt security&#146;s stated
redemption price at maturity, or in the case of a debt security
issued at a discount, its revised issue price (which has the
same meaning as &#147;adjusted issue price&#148; as defined
above). A debt security is not treated as
</FONT>

<P align="center"><FONT size="2">55
</FONT>

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<DIV align="left">
<FONT size="2">having market discount if the amount of market
discount is de minimis. For this purpose, the amount of market
discount is de minimis if it is less than the product of
0.25&nbsp;percent of the stated redemption price at maturity or
revised issue price, as the case may be, on the purchase date
multiplied by the number of complete years to maturity remaining
as of such date. If the debt security has de minims market
discount, a holder must generally include such de minimis amount
in income (as capital gain) as stated principal payments are
made.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">If a debt security is treated as having market
discount, any gain recognized upon the receipt of any principal
payment on, or upon the disposition of, the debt security will
generally be treated as ordinary income to the extent that such
gain does not exceed the accrued market discount on the debt
security that has not been previously included in income.
Alternatively, a holder of a debt security may elect to include
market discount in income currently over the life of the debt
security. Such an election applies to all debt instruments with
market discount acquired by the electing holder on or after the
first day of the first taxable year to which the election
applies and may not be revoked without the consent of the
Internal Revenue Service. Market discount accrues on a
straight-line basis unless the holder elects to accrue such
discount on a constant yield to maturity basis. This latter
election is applicable only to the debt security with respect to
which it is made and is irrevocable. A holder of a debt security
that does not elect to include market discount in income
currently generally will be required to defer deductions for
interest on borrowings allocable to such debt security in an
amount not exceeding the accrued market discount on such debt
security until the maturity or disposition of such debt security.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Debt Securities Purchased at a
    Premium</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A holder will be considered to have purchased the
debt security at a premium if the holder&#146;s adjusted basis
in the debt security immediately after the purchase (which does
not include any amount paid in respect of accrued interest on
the debt security) is greater than the amount payable on
maturity. A holder may elect to treat such premium as
&#147;amortizable bond premium,&#148; in which case the amount
of interest required to be included in the holder&#146;s income
each year with respect to the interest on the debt security will
be reduced by the amount of the amortizable bond premium
allocable (generally under a constant yield method based on the
holder&#146;s yield to maturity) to such year with a
corresponding decrease in the holder&#146;s tax basis in the
debt security. Any election to amortize bond premium is
applicable to all debt securities (other than tax-exempt debt
securities) held by the holder at the beginning of the first
taxable year to which the election applies or thereafter
acquired by the holder, and may not be revoked without the
consent of the Internal Revenue Service.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Sale or Exchange of Debt Securities</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">A holder will generally recognize capital gain or
loss equal to the difference between the amount realized on the
sale, exchange or other disposition of the debt security and the
holder&#146;s adjusted tax basis in such debt security, except
that ordinary income will be recognized to the extent that a
portion of the amount realized is attributable to market
discount or accrued interest not previously included in income.
A holder&#146;s adjusted tax basis in the debt security
generally will be the initial purchase price paid therefor,
increased by any OID or market discount previously included in
income with respect to the debt security and reduced by any
amortizable bond premium and any payments previously received
with respect to the debt security other than qualified stated
interest. In the case of a holder other than a corporation,
preferential tax rates may apply to gain recognized on the sale
of a debt security if such holder&#146;s holding period for such
debt security exceeds one year. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary
income for United States federal income tax purposes.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Other Debt Securities</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">Special tax rules may apply to certain types of
debt securities including, but not limited to, debt securities
subject to contingencies, variable rate debt securities and debt
securities convertible into equity of Calpine. The applicable
prospectus supplement will discuss any such special United
States federal income tax rules with respect to such debt
securities.
</FONT>

<DIV>&nbsp;</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">

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

<TR valign="top">
    <TD></TD>
    <TD>
    <I><FONT size="2">Information Reporting and Backup Withholding
    Tax</FONT></I></TD>
</TR>

</TABLE>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In general, information reporting requirements
and backup withholding will not apply to payments of principal,
premium, if any, and interest on the debt securities and
payments of the proceeds of the sale of the
</FONT>

<P align="center"><FONT size="2">56
</FONT>

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<DIV align="left">
<FONT size="2">debt securities if all actions necessary to
effect such payments are completed outside the United States. If
any such actions are effected within the United States or if
payments are made by transfer to an account maintained by the
payee in the United States or by mail to a United States
address, information reporting and a backup withholding tax may
apply to such payments if the holder fails to comply with
certain identification requirements. Backup withholding is
currently imposed at a rate of 28%. Any amounts withheld under
the backup withholding rules from a payment to a holder will be
allowed as a credit against such holder&#146;s United States
federal income tax and may entitle the holder to a refund,
provided that the required information is furnished to the
Internal Revenue Service.
</FONT>
</DIV>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">The United States federal income tax
discussion set forth above is included for general information
only and may not be applicable depending upon a holder&#146;s
particular situation. Holders should consult their tax advisors
with respect to the tax consequences to them of the ownership
and disposition of the debt securities, including the tax
consequences under state, local, foreign and other tax laws and
the possible effects of changes in United States federal or
other tax laws.</FONT></B>

<P align="center"><FONT size="2">57
</FONT>

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

<DIV align="left">
<A name='119'></A>
</DIV>

<!-- link1 "CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS" -->

<P align="center">
<B><FONT size="2">CERTAIN CANADIAN FEDERAL INCOME TAX
CONSIDERATIONS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<B><FONT size="2">The discussion below is intended to be a
general description only of certain Canadian federal income tax
considerations applicable to the ownership and disposition of
debt securities of Energy Finance or Energy Finance&nbsp;II
acquired pursuant to this offering, and is not intended to be,
nor should it be construed to be, legal or tax advice to any
particular Purchaser (as defined below). Accordingly,
prospective Purchasers (as defined below) are urged to consult
their own tax advisors with respect to the Canadian federal and
provincial tax consequences of an investment in the debt
securities.</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">In the opinion of McCarthy T&#233;trault LLP,
Canadian tax counsel to Energy Finance and Energy
Finance&nbsp;II, the following is a summary of the principal
Canadian federal income tax considerations generally applicable
under the <I>Income Tax Act </I>(Canada) (the &#147;Tax
Act&#148;) to a person (a &#147;Purchaser&#148;) who acquires
beneficial ownership of debt securities of Energy Finance or
Energy Finance&nbsp;II pursuant to this offering and who for
purposes of the Tax Act, and at all relevant times, is not
resident or deemed to be resident in Canada, deals at arm&#146;s
length with the issuer of the debt securities, and does not use
or hold, and is not deemed to use or hold, the debt securities
in carrying on business in Canada. For purposes of the Tax Act,
related persons (as defined therein) are deemed not to deal at
arm&#146;s length, and it is a question of fact whether persons
not related to each other deal at arm&#146;s length.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">This summary is based on the current provisions
of the Tax Act and the Regulations thereunder (the
&#147;Regulations&#148;) in force on the date hereof, specific
proposals (the &#147;Tax Proposals&#148;) to amend the Tax Act
or the Regulations publicly announced by the Minister of Finance
prior to the date hereof, and counsel&#146;s understanding of
the current published administrative and assessing practices of
the Canada Customs and Revenue Agency (the &#147;CRA&#148;).
This summary is not exhaustive of all possible Canadian income
tax consequences and, except for the Tax Proposals, does not
take into account or anticipate any changes in law or changes in
the administrative and assessing practices of the CRA, whether
by legislative, governmental or judicial action, nor does it
take into account income tax laws or considerations of any
province or territory of Canada or any jurisdiction other than
Canada. No assurance can be given that the Tax Proposals will
become law in their present form or at all.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The summary assumes that no interest payable on
the debt securities will be contingent or dependent on the use
of or production from property in Canada or computed by
reference to revenue, profit, cash flow, commodity price or any
other similar criteria or by reference to dividends paid or
payable to stockholders of any class of shares of the capital
stock of a corporation.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The payment of interest, premium, if any, and
principal by Energy Finance or Energy Finance&nbsp;II on the
debt securities of a particular series to such a Purchaser will
be exempt from Canadian non-resident withholding tax under the
Tax Act, provided that the terms of the debt securities of that
particular series do not require the issuer thereof to repay
more than 25% of the principal amount payable thereunder before
the fifth anniversary of the date of issue of that particular
series of debt securities. If the terms of the debt securities
of a particular series do require the issuer to repay more than
25% of the principal amount thereof before the fifth anniversary
of the date of issue thereof, or if a Purchaser thereof does not
deal at arm&#146;s length with the issuer, the payment of
interest thereon will be subject to Canadian non-resident
withholding tax under the Tax Act at a rate of 25% thereof (or,
if applicable, such lower rate as is specified by a tax treaty
between Canada and the Purchaser&#146;s country of residence).
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">No other tax on income (including capital gains)
will be payable under the Tax Act in respect of the holding,
repayment, redemption or disposition of the debt securities, or
the receipt of interest, premium, if any, or principal thereon
by a Purchaser, except that in certain circumstances a
non-resident insurer carrying on business in Canada and
elsewhere in respect of which the debt securities are designated
insurance property for purposes of the Tax Act, may be subject
to such taxes.
</FONT>

<P align="center"><FONT size="2">58
</FONT>

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

<DIV align="left">
<A name='120'></A>
</DIV>

<!-- link1 "LEGAL MATTERS" -->

<P align="center">
<B><FONT size="2">LEGAL MATTERS</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The validity of the securities offered hereby by
Calpine, including the guarantees of Calpine issued in
connection with the issuance of debt securities by Energy
Finance and Energy Finance&nbsp;II and in connection with the
issuance of the trust preferred securities by Trust IV and Trust
V, will be passed upon for us by Covington&nbsp;&#38; Burling,
New York, New York. The validity of the debt securities and
warrants of Energy Finance and Energy Finance II offered hereby
will be passed upon for us by Covington&nbsp;&#38; Burling, New
York, New York and by Stewart McKelvey Stirling Scales, Halifax,
Nova Scotia, Canada. The validity of the trust preferred
securities to be issued by Trust IV and Trust V, the
enforceability of the declarations of trust and the creation of
Trust IV and Trust V will be passed upon for us by Richards,
Layton and Finger, P.A., Wilmington, Delaware. Any underwriters
will be represented by Latham&nbsp;&#38; Watkins LLP, New York,
New York.
</FONT>

<DIV align="left">
<A name='121'></A>
</DIV>

<!-- link1 "INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM" -->

<P align="center">
<B><FONT size="2">INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM</FONT></B>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The consolidated financial statements of Calpine
Corporation as of and for the year ended December&nbsp;31, 2003,
incorporated in this prospectus by reference to Calpine
Corporation&#146;s Annual Report on Form&nbsp;10-K/A for the
year ended December&nbsp;31, 2003, have been so incorporated in
reliance on the report of PricewaterhouseCoopers LLP, an
independent registered public accounting firm, given on the
authority of said firm as experts in auditing and accounting.
</FONT>

<P align="left">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
<FONT size="2">The 2002 and 2001 consolidated financial
statements and related financial statement schedules of Calpine
Corporation incorporated by reference from Calpine
Corporation&#146;s Annual Report on Form&nbsp;10-K/A Amendment
No.&nbsp;2 for the year ended December&nbsp;31, 2003 have been
audited by Deloitte&nbsp;&#38; Touche LLP, an independent
registered public accounting firm, as stated in their report,
which is incorporated herein by reference (which report
expresses an unqualified opinion and includes emphasis relating
to the adoption of new accounting standards in 2002 and 2001 and
divestitures), and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in
accounting and auditing.
</FONT>

<P align="center"><FONT size="2">59
</FONT>

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<P><HR noshade><P>

<FONT face="helvetica,arial">

<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: 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="left" style="font-size: 10pt;">
 <B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No dealer, salesperson
or other person is authorized to give any information or to
represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations.
This prospectus is an offer to sell only the Notes offered
hereby, but only under circumstances and in jurisdictions where
it is lawful to do so. The information contained in this
prospectus is current only as of its date.</B>
</DIV>

<DIV align="center" style="font-size: 4pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<DIV style="width: 27%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

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

<DIV align="center" style="font-size: 10pt;">
Prospectus Supplement
</DIV>
<FONT face="times new roman,times">

<CENTER>
<TABLE width="100%" align="center" cellspacing="0" cellpadding="0" border="0" style="font-size: 9pt; ">

<TR style="font-size: 1pt;">
    <TD width="90%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>

<TR>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center" nowrap><FONT face="helvetica,arial">Page</FONT></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>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#101'>About This
    Prospectus Supplement</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">i</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#102'>Forward-Looking
    Statements</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">i</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#103'>Summary</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">S-1</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#104'>Risk
    Factors</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">S-24</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#105'>Calpine
    Consolidated Ratio of Earnings to Fixed Charges</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">S-48</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#106'>Use of
    Proceeds</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">S-49</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#107'>Capitalization</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">S-50</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#108'>Description of
    the Notes</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">S-52</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#109'>Price Range of
    Common Stock</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">S-75</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#110'>Description of
    Capital Stock</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">S-76</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#111'>Material
    United States Federal Income Tax Consequences</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">S-79</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#112'>Underwriting</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">S-86</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#113'>Legal
    Matters</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">S-88</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#114'>Experts</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">S-88</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#115'>Where You Can
    Find More Information About Us and This Offering</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">S-88</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD colspan="5" align="center" valign="top">
    <FONT face="helvetica,arial">Prospectus
    </FONT></TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#116'>About This
    Prospectus</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">1</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#117'>Calpine
    Corporation</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">3</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#118'>Calpine Canada
    Energy Finance ULC and Calpine Canada Energy Finance II ULC</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">6</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#120'>Calpine
    Capital Trust&nbsp;IV and Calpine Capital Trust&nbsp;V</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">7</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#121'>Risk
    Factors</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#122'>Where You Can
    Find More Information; Documents Incorporated by Reference</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">8</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#124'>Forward-Looking
    Statements</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">10</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#125'>Calpine
    Consolidated Ratio of Earnings to Fixed Charges</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#126'>Use of
    Proceeds</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">11</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#127'>Plan of
    Distribution</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">12</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#128'>Description of
    Capital Stock</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">14</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#129'>Description of
    Depository Shares</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">17</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#130'>Description of
    Debt Securities</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">20</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#131'>Description of
    Purchase Contracts</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">35</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#132'>Description of
    Units</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">36</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#133'>Description of
    Warrants</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">37</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#134'>Description of
    Trust&nbsp;Preferred Securities</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">38</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#135'>Material
    United States Federal Income Tax Consequences</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">43</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#136'>Certain
    Canadian Federal Income Tax Considerations</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">58</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#137'>Legal
    Matters</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">59</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

<TR>
    <TD align="left" valign="top">
    <DIV style="margin-left: 10px; text-indent: -10px">
    <FONT face="helvetica,arial">&nbsp;<A HREF='#138'>Independent
    Registered Public Accounting Firm</A>
    </FONT></DIV>
    </TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap><FONT face="helvetica,arial">59</FONT></TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>
</CENTER>
</FONT>

<DIV align="left" style="font-size: 10pt;">
<!-- /TOC -->
</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: 4pt;">
<DIV style="width: 100%; border-top: 2.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 2pt; margin-top: 6pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<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: 48pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
$650,000,000
</DIV>

<DIV align="center" style="font-size: 18pt;">
<B>Calpine Corporation</B>
</DIV>

<DIV align="center" style="font-size: 14pt; margin-top: 36pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
7.75% Contingent Convertible
</DIV>

<DIV align="center" style="font-size: 14pt;">
Notes due 2015
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 3pt; 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: 14pt;">
<B>PROSPECTUS SUPPLEMENT</B>
</DIV>

<DIV align="center" style="font-size: 3pt;">
<DIV style="width: 26%; border-top: 1.0pt solid black; font-size: 1pt">&nbsp;</DIV>
</DIV>

<DIV align="center" style="font-size: 16pt; margin-top: 3pt; margin-left: 0; margin-right: 0; margin-bottom: 0; color: #000000; background: #ffffff;">
<B>Goldman, Sachs &#38; Co.</B>
</DIV>

<DIV align="center" style="font-size: 3pt; margin-top: 3pt; 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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