Nov. 5, 2002 — Calpine Corp. recently announced financial and operating results for the quarter and nine months ended September 30, 2002.

For the third quarter 2002, Calpine reported $0.36 diluted earnings per share, or $161.3 million in net income, compared with $0.88 diluted earnings per share, or $320.8 million of net income, in the third quarter of 2001.

Before certain non-recurring items, Calpine reported $0.38 diluted earnings per share, or $170.9 million in net income.

The reduced earnings represent a 50 percent drop from the same quarter in 2001, but analysts’ expectations were met for net income before non-recurring items with $0.38 diluted earnings per share, or $170.9 million. As a result, immediately following the Calpine report, its stock price rose by 3.5 percent to $2.69 on volume of 12 million shares, CBS MarketWatch.com reported Tuesday.

For the nine months ended September 30, 2002, Calpine earned $0.45 diluted earnings per share, or $159.6 million in net income, compared with $1.57 diluted earnings per share, or $548.1 million of net income, for the same period of 2001. Before certain non-recurring items (as detailed in the attached Supplemental Data), Calpine reported $0.74 diluted earnings per share, or $293.9 million in net income.

“I am pleased to report that Calpine earned $170.9 million of recurring net income for the third quarter of 2002,” stated Calpine Chairman and CEO Peter Cartwright. “Our consistent and disciplined strategy and seasoned management team have proven successful under difficult market conditions. In the beginning of the year, Calpine set in motion a revised business plan to meet the challenges and uncertainties of the power industry and capital markets. We implemented this program to achieve critical near-term goals in an incremental and decisive manner, while continuing to execute upon a proven business model to sustain the long-term value of our core power generating business.

“We continue to execute and refine this program with measurable and effective results. We have reduced our 2002/2003 capital spending by more than $4 billion, continued to strengthen liquidity through non-strategic asset sales, and we have improved our balance sheet through the retirement of debt. Equally important, Calpine has completed more than $3 billion of financings this year, and we are in active discussions with our lenders as we prepare to launch our 2003 refinancing program.

“Over the past twelve months, Calpine has developed and is now implementing a new organizational structure designed to transition Calpine from a development and construction-focused company to one of North America’s premier power producers, focused on operating our generating assets to maximize efficiencies, lower costs and further leverage economies of scale. We will continue to focus on marketing our products and services to enhance value for our customers and Calpine. This new organizational structure benefits Calpine and our customers and will contribute significantly to our goal of becoming the lowest cost producer in the markets we serve.

“By the end of 2002, Calpine will own and operate one of the industry’s cleanest, largest and most fuel-efficient fleet of natural gas-fired generating facilities. Calpine has the core earnings power, strong operating assets, predictable cash flow and the demonstrated business model that meets the challenges and opportunities in recently’s dynamic power industry.”

2002 Third Quarter Financial Results

Financial results for the three and nine months ended September 30, 2002, were affected by a significant decrease in electricity prices and spark spreads compared with the same periods in 2001, primarily reflecting an increase in supply. The company has experienced a significant drop in margin from trading activities, which reflects the company’s decision to limit this activity due to costs associated with credit support for trading.

Total electrical generating production for the three and nine months ended September 30, 2002, increased by 71% and 87%, respectively, as the company brought additional facilities into operation. However, the combination of lower spark spreads on electrical generation, lower revenue on sales of oil and gas, and lower trading gains resulted in decreases of 30% and 26%, respectively, in gross profit for the three and nine months ended September 30, 2002, compared with the same periods in 2001. Calpine’s low-cost of production, economies of scale and portfolio of long-term contracts helped to mitigate the effects of the depressed power market on Calpine’s financial results.

Financial results for the third quarter of 2002 reflect higher project development costs, as the company expensed costs related to the indefinite suspension of certain development projects; increased other income, primarily as a result of a $38.6 million pre-tax gain from the termination of a power sales agreement; and a lower effective tax rate.

In accordance with the requirements of Emerging Issues Task Force (EITF) Issue No. 02-03: Recognition and Reporting of Gains and Losses on Energy Trading Contracts, Calpine has shown trading activity on a net rather than gross basis in its financial results for the current period and has restated prior period results accordingly.

Also, in compliance with Statement of Financial Accounting Standards (SFAS) No. 144: Accounting for the Impairment or Disposal of Long-Lived Assets, the company has reclassified results for certain assets sold or held for sale as discontinued operations and has restated prior period results accordingly.

Additionally, effective July 1, 2002, the company has early-adopted SFAS No. 145, which rescinds Financial Accounting Standards Board Statement No. 4, Reporting Gains and Losses from Extinguishment of Debt. As a result of the early adoption of SFAS No. 145, Calpine has reclassified debt extinguishment gains and losses from extraordinary gain or loss to other income or expense for both current and prior periods. The accounting changes noted above do not change reported net income in either the current or prior periods.

As a result of the foregoing accounting changes, Deloitte & Touche, Calpine’s independent auditor, will re-audit the company’s results for the years ended December 31, 2000 and 2001.

Operations-Focused Industry Leader

Calpine is one of North America’s largest power producers, with 75 energy centers in operation recently. Its fleet of modern energy centers, representing more than 18,600 megawatts of capacity, is considered one of the most modern, efficient and environmentally sound natural gas-fired portfolios of its kind in the power industry.

The company continues to maintain a very high level of availability for its generating assets, and it has lowered its cost of production through improved efficiencies and economies of scale. These facilities are strategically located in significant energy markets across North America, with a large natural gas-fired unit in the United Kingdom.

Operations highlights:

* Achieved a 93% average availability for the past 12 months;
* Commissioned 20 plants in 2002, adding more than 7,600 megawatts;
* Increased power production by 87% over 2001 levels, to 53.8 million megawatt-hours for the first nine months of 2002;
* Achieved an average merchant baseload heat rate of under 7,000 British thermal units per kilowatt-hour; and
* Continued construction for 24 natural gas-fired facilities, representing an additional 9,800 megawatts of capacity.

Customer-Focused Marketing Program

Consistent with its proven business model, Calpine continues to enter into long-term contracts directly with load-serving customers throughout North America. In addition, Calpine Energy Services acquires low-cost natural gas to fuel the company’s generating facilities, sells electricity from Calpine’s generating plants, as well as a variety of ancillary services, and continues to maximize the value of Calpine’s portfolio. This proven and consistent marketing model has significantly contributed to Calpine’s continued ability to generate earnings and cash flow during extremely volatile market conditions.

“Despite the turmoil in the energy trading markets, Calpine Energy Services continues to perform in an efficient and highly ethical manner, reliably and cost-effectively moving gas to our plants and power to our customers,” stated Cartwright.

Over the past 12 months, Calpine has entered into long-term contracts with load-serving and industrial customers, totaling nearly 4,000 megawatts of power sales. The company is currently in negotiations with other load-serving entities for up to 3,000 megawatts of additional long-term power sales.

Liquidity-Enhancing Initiatives

Calpine continues to make significant progress in 2002 toward completing its previously identified liquidity-enhancing initiatives:

— Through completed or pending transactions of asset sales, will generate approximately $300 million of cash; in the aggregate, assets sales exceeded book value; company continues to evaluate additional asset sales, including certain contracted power facilities, oil and gas properties and contract monetizations;

— Received approximately $160 million in cash from the initial public offering of its Calpine Power Income Fund in Canada; a follow-on offering of the fund during the next several months is under review;

— Reduced outstanding debt by approximately $300 million through the sale of oil and gas properties;

— Completed a $106-million, non-recourse project financing for its Blue Spruce Energy Center in Colorado;

— Continued to finalize funding for lease financing for an 11-unit California peaking program, representing approxima