Third Quarter 2008 Highlights vs. same period 2007:

• $3.2 billion of Operating Revenues, a 37% increase
• $842 million of Commodity Margin, a 15% increase
• $593 million of Adjusted EBITDA, a 17% increase
• $941 million of Net Cash Provided by Operating Activities, a 268% increase
• $1.6 billion of Total Liquidity, an increase of 135% from June 30, 2008

Nine Months 2008 Highlights vs. same period 2007:

• $8.0 billion of Operating Revenues, a 32% increase
• $2.1 billion of Commodity Margin, a 25% increase
• $1.4 billion of Adjusted EBITDA, a 26% increase
• $355 million of Net Cash Provided by Operating Activities, a 393% increase

Third Quarter 2008 Operational Highlights:

• 25.9 million MWh of electric generation
• 96.6% availability, an increase of 3% over the same period in 2007
• Record low forced outage factor of 0.01% at The Geysers geothermal facilities
• Refined hedging program and risk management in light of financial markets turmoil

Providing 2008 Adjusted EBITDA Guidance:

• 2008 Adjusted EBITDA guidance of $1.650 – 1.675 billion

Calpine Corporation (NYSE:CPN) today reported operating revenues of $3.2 billion for third quarter 2008, an increase of 37% over operating revenues in the third quarter 2007. Net income, excluding reorganization items, rose to $134 million for the quarter ended September 30, 2008. This result includes a pre-tax net mark-to-market (MtM) non-cash gain of $38 million, as shown in Table 1 below. Third quarter net income also includes a one-time impairment loss of $179 million related to our interest in Auburndale and a $13 million one-time loss related to the settlement of certain disputes.

Commodity Margin for the third quarter was $842 million, an increase of $110 million over the third quarter 2007, as seen in Table 3 below, primarily due to the Company’s performance in the Texas region where Commodity Margin increased by $104 million, or 62% over the same period last year. Higher market spark spreads and plant availability, together with prudent risk management following Hurricane Ike, drove the year-over-year improvements.

Adjusted EBITDA was $593 million for the quarter, up 17%, or $88 million from $505 million reported for the third quarter 2007, as seen in Table 2 below. This increase is mainly attributed to the increase in Commodity Margin, as discussed above, decreased plant operating expenses not related to scheduled major maintenance activity of $10 million and an increase in other revenue of $6 million, partially offset by a $32 million decrease in pre-tax realized MtM (cash portion) revenue and a $12 million increase in sales, general and other administrative expenses (without depreciation and non-cash employee stock-based compensation) primarily related to increased legal and consulting expenses associated with Calpine’s emergence from bankruptcy in January of this year.

Net cash provided by operating activities for the third quarter 2008 increased $685 million, or 268%, to $941 million over the same period in 2007. This increase is mainly attributed to a $324 million return of net cash collateral deposits, a $24 million reduction in gas and power prepayments and a $66 million change in additional working capital.

“Calpine has delivered record financial results for the third quarter despite cooler weather and major hurricanes in our primary markets, as well as a slowdown in the economy,” said Jack Fusco, Calpine’s President and Chief Executive Officer. “Importantly, despite considerable turbulence in the financial markets, we have been able to substantially improve liquidity which will enable us to continue to execute on our business plan. Other achievements included completion of the jointly owned Greenfield Energy Centre, which commenced commercial operations in October, and power plant operating availability of 97%. These exceptional results are due to our careful focus on operating our business, our hedging program, utilizing a first-lien structure to preserve liquidity, managing counterparty risk, fiscal discipline and excellence in plant operations.”

For the first nine months of 2008, operating revenues increased by 32% from the same period last year to $8.0 billion. Net income (loss), excluding reorganization items, was improved by $387 million to ($144) million, when compared against the same period in 2007. Commodity Margin for the first nine months of 2008 was $2.1 billion compared to Commodity Margin of $1.7 billion in the first nine months of 2007. Adjusted EBITDA for the first nine months of 2008 was $1.4 billion versus $1.1 billion for the same period in 2007. This increase is largely attributed to the $424 million increase in Commodity Margin due to strong performance of our Texas region where Commodity Margin increased by $268 million, or 68%, over the same period last year, favorable market conditions during the off-peak period in the West during the second quarter and higher natural gas prices in the second quarter and the first half of the third quarter of 2008 which benefited our plants as they operated more efficiently than market heat rates.

Net cash provided by operating activities for the nine-month period ending September 30, 2008, increased $283 million, or 393%, to $355 million over the same period in 2007. This increase is mainly attributed to a $61 million return of net cash collateral deposits.

REGIONAL SEGMENT REVIEW OF RESULTS

West: Commodity Margin in our West segment decreased by $40 million, or 10%, for the three months ended September 30, 2008, compared to the same period in the prior year resulting from lower realized margins on hedged positions as well as the negative impact on our natural gas held in storage resulting from the decrease in market natural gas prices in September 2008. Partially offsetting the decrease were the favorable impacts of new and renegotiated power contracts and, to a lesser extent, a 3% increase in generation during the three months ended September 30, 2008, compared to 2007. The increase in generation was attributed to a 2% increase in our average capacity factor, excluding peakers, driven by a 2% increase in our average availability for the three months ended September 30, 2008, compared to the three months ended September 30, 2007.

West segment Commodity Margin for the nine-month period ending September 30, 2008, increased $74 million or 8% over the same period in 2007. This increase primarily resulted from higher off-peak spark spreads in April 2008 due to lower hydroelectric generation and the favorable impact of new power contracts and a 5% increase in generation during the nine months ended September 30, 2008, compared to 2007.

Texas: Commodity Margin in our Texas segment increased by $104 million, or 62%, due primarily to higher market spark spreads in July and August of 2008 compared to the same period in 2007. Market spark spreads decreased in September 2008 compared to the same period in 2007 due to the impact of Hurricane Ike; however, we were able to purchase replacement power at prices below our generation cost and hedged prices during the same period, which had a favorable impact in September 2008. Generation increased in July and August 2008 as a result of the favorable market conditions and higher average availability, but the negative impact of Hurricane Ike in September 2008 left generation relatively unchanged for the third quarter of 2008 compared to 2007. We experienced a 3% increase in our steam adjusted heat rate for the three months ended September 30, 2008, compared to 2007 resulting from the loss of steam load due to the impact of Hurricane Ike and lower steam demand from two of our customers.

For the nine-month period ending September 30, 2008, Commodity Margin in our Texas segment increased by $268 million, or 68%, due primarily to higher market spark spreads from higher natural gas prices and transmission congestion in the South and Houston zones in the second quarter and the first half of the third quarter of 2008.

Southeast: Commodity Margin in our Southeast segment decreased $6 million, or 5%, during the three months ended September 30, 2008, compared to 2007 resulting from lower market spark spreads on open positions. However, the decrease was substantially offset by higher hedged levels on existing generation and the favorable impact of new power contracts which effectively negated a 15%, or 1,122 MW, decrease in our average total MW in operation and lower market spark spreads in the third quarter of 2008 compared to 2007. Generation decreased 28% during the three months ended September 30, 2008, compared to 2007 due primarily to a 15% or 1,122 MW decrease in our average total MW in operation following the sale of our interest in Acadia Power Partners in 2007 and the deconsolidation of Auburndale during the third quarter of 2008. Also contributing to the decrease in generation was a 13% decrease in our average capacity factor, excluding peakers, which resulted from lower market heat rates as well as an unplanned outage at our Carville Energy Center due to Hurricane Gustav during the third quarter of 2008.

For the nine-month period ending September 30, 2008, Commodity Margin in our Southeast segment increased by $20 million, or 9%, compared to 2007 resulting from the impact of higher hedged levels on existing generation, the favorable impact of new power contracts and $21 million of Commodity Margin recognized during the second quarter of 2008 related to a transmission capacity contract for which we received approval from the Federal Energy Regulatory Commission during the second quarter of 2008.

North: Commodity Margin in our North segment increased by $17 million, or 22%, resulting from higher realized spark spreads as well as an increase in our hedged position during the three months ended September 30, 2008, compared to 2007. The increase was partially offset by a decrease in generation of 15% during the third quarter of 2008, compared to the same period in 2007 due primarily to lower generation at power plants whose generation is contracted and controlled by third parties. Steam adjusted heat rate increased by 3% due to lower steam demand at two of our power plants.

For the nine-month period ending September 30, 2008, Commodity Margin in our North segment increased by $13 million, or 6%, resulting from higher realized spark spreads and an increase in our hedged position compared to 2007. This was partially offset by outages at our Westbrook Energy Center during the second quarter of 2008.

Other: Commodity Margin in our Other segment increased by $35 million during the third quarter and by $49 million for the nine-month period ending September 30, 2008, primarily resulting from the roll-off from OCI into earnings of the realized portion of non-region specific natural gas hedges and elimination of inter-segment transactions.

LIQUIDITY AND CAPITAL RESOURCES

Despite the turmoil in the financial markets during the third quarter, Calpine’s liquidity position increased by $914 million to $1.6 billion due to a $481 million increase in cash balances and a $506 million increase in Exit Credit Facility revolver availability. The increase in cash and revolver availability was primarily driven by $324 million in return of cash collateral, $43 million in reductions in gas and power prepayments and $89 million in reclassification of restricted cash to unrestricted cash.

Subsequent to the end of the third quarter, Calpine elected to draw $725 million under its Exit Credit Facility revolver as a proactive financial decision to reduce the risk of non-performance from the institutions that hold a revolving commitment in its corporate first-lien facility, thereby enhancing the quality of the Company’s liquidity during a period of great uncertainty in the capital markets.

PLANT DEVELOPMENT AND CONSTRUCTION

Greenfield Energy Centre: This 1,005 MW combined-cycle, natural gas-fired plant in Ontario, Canada, 50% owned through a joint venture with Mitsui & Co., achieved commercial operation on October 17, 2008. Greenfield has a 20-year clean power supply contract with the Ontario Power Authority for the full output with guaranteed revenue equivalent to a fixed monthly payment, plus payment for variable operating and maintenance costs based on actual power generation.

Otay Mesa Energy Center: The 596 MW combined-cycle, natural gas-fired Otay Mesa plant near San Diego is under construction and scheduled to begin commercial operations in September 2009. Calpine has sold 596 MW of production under a ten-year power purchase agreement (PPA) with San Diego Gas & Electric.

Russell City Energy Center: This is a joint development project in which Calpine holds a 65% interest, in partnership with GE Energy Financial Services, for a 600 MW combined-cycle, natural gas-fired plant to be constructed in the San Francisco Bay area. In the third quarter, the 2006 PPA between Pacific Gas & Electric Company (PG&E) and Russell City Energy Company, LLC, under which PG&E would take 100% of the generation for ten years, was amended to provide for continued development with an expected commercial operation date in June 2012. Completion of the Russell City development project is dependent upon obtaining the necessary permits and regulatory approvals.

OPERATIONS UPDATE

Plant Operations Achievements: Our plants had an exceptional quarter with achievements in several important categories:

• Safety: We had top quartile safety performance with a lost-time rate of 0.17. In addition, our Magic Valley Generating Station earned OSHA’s VPP Recognition for outstanding efforts by an employer and its employees to achieve a level of excellence in occupational safety and health at their worksites.
• Geothermal: The Geysers geothermal facilities had a forced outage factor of only 0.01%. In addition, our facilities were recognized by the State of California with a seventh consecutive Outstanding Lease Maintenance Award for environmental stewardship, safety, infrastructure maintenance and resource conservation.
• Fossil Generation: Fleetwide, our natural gas-fired units had a forced outage factor of 2.8% before adjustments for storms and less than 2% after adjustment for forced outages due to Hurricane Ike and Hurricane Gustav.

Commercial Operations Achievements: Our commercial operations group has continued to reduce natural gas and power price exposure and lock in commodity margin, despite a difficult commercial environment in a more collateral efficient manner.

• Filled out a substantial portion of the unhedged balance of 2008 price risk enabling us to provide the full year 2008 guidance discussed below.
• Substantially increased our hedges for 2009 at target prices to lock in commodity margin. This places Calpine in a strong position to perform – notwithstanding the current economic slowdown.
• Executed a new 500 MW PPA with TVA in the Southeast Region.
• Increased usage of the First-Lien or so-called “right-way-risk” program by almost 140% since September 1, 2008.
• The Texas team delivered strong September results despite the impacts of Hurricane Ike.

OUTLOOK FOR 2008

Delivering on management’s commitment to increase the level of transparency to assist the investment community in evaluating the Company, Calpine is providing 2008 Adjusted EBITDA guidance for the first time since emerging from bankruptcy. Our Adjusted EBITDA guidance for 2008 is $1.650 - $1.675 billion. The Company’s 2008 guidance reflects the substantial hedging progress that our commercial operations team has been able to achieve this year, with 92% hedged on expected energy deliveries at an average spark spread price of $26 per MWh.

INVESTOR CONFERENCE CALL AND WEBCAST

Calpine will host a conference call to discuss its financial and operating results for the three and nine months ended September 30, 2008, on Friday, November 7, 2008, at 10:00 a.m. ET/9:00 a.m. CT. A listen-only webcast of the call may be accessed through the Company’s web site at www.calpine.com, or by dialing 877-591-4954 (or 719-325-4900 for international listeners) at least ten minutes prior to the beginning of the call. An archived recording of the call will be made available on the web site and can also be accessed by dialing 888-203-1112 or 719-457-0820 (International) and providing Confirmation Code 4259943. In addition, the accompanying presentation will be available on the Company web site on November 7, 2008.

ABOUT CALPINE

Calpine Corporation is helping meet the needs of an economy that demands more and cleaner sources of electricity. Founded in 1984, Calpine is a major U.S. power company, currently capable of delivering over 24,000 MWs of clean, cost-effective, reliable and fuel-efficient electricity to customers and communities in 16 states in the United States and in Canada. The Company operates low-carbon emissions, natural gas-fired power plants and renewable geothermal power plants. Using advanced technologies, Calpine generates electricity in a reliable and environmentally responsible manner for the customers and communities it serves. Please visit www.calpine.com for more information.

Calpine’s Quarterly Report on form 10-Q, including its unaudited financial statements, for the quarter ended September 30, 2008, has been filed with the Securities and Exchange Commission (SEC) and may be found on the SEC’s web site at www.sec.gov.

FORWARD LOOKING INFORMATION

In addition to historical information, this release contains forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. Words such as “believe,” “intend,” “expect,” “anticipate,” “plan,” “may,” “will” and similar expressions identify forward-looking statements. Such statements include, among others, those concerning expected financial performance and strategic and operational plans, as well as assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and that a number of risks and uncertainties could cause actual results to differ materially from those anticipated in the forward-looking statements. Such risks and uncertainties include, but are not limited to:

• the Company’s ability to implement its business plan;
• financial results that may be volatile and may not reflect historical trends;
• seasonal fluctuations of our results and exposure to variations in weather patterns;
• potential volatility in earnings associated with fluctuations in prices for commodities such as natural gas and power;
• the Company’s ability to manage liquidity needs and comply with covenants related to its Exit Credit Facility and other existing financing obligations;
• general financial and economic conditions including the cost and availability of capital and credit;
• the impact of the current financial crisis and the economic downturn on liquidity in the energy markets on which the Company relies to hedge risk and on the ability of suppliers and service providers to perform under their contracts with us;
• the Company’s ability to complete the implementation of its Plan of Reorganization;
• disruptions in or limitations on the transportation of natural gas and transmission of electricity;
• the expiration or termination of PPAs and the related results on revenues;
• risks associated with the operation of power plants including unscheduled outages;
• factors that impact the output of the Company’s geothermal resources and generation facilities, including unusual or unexpected steam field well and pipeline maintenance and variables associated with the wastewater injection projects that supply added water to the steam reservoir;
• natural disasters such as hurricanes, earthquakes and floods that may impact the Company’s plants or the markets such plants serve;
• risks associated with power project development and construction activities as well as upgrades and expansions of existing plants;
• the ability to attract, retain and motivate key employees including filling certain significant positions within our management team;
• the ability to attract and retain customers and counterparties;
• the ability to manage our customer and counterparty exposure and credit risk;
• competition and regulation in the markets in which the Company participates;
• risks associated with marketing and selling power from plants in the evolving energy markets, including changing market rules;
• present and possible future claims, litigation and enforcement actions;
• effects of the application of laws or regulations, including changes in laws or regulations or the interpretation thereof; and
• other risks identified in this release or in Calpine’s reports and registration statements filed with the SEC, including, without limitation, the risk factors identified in its Annual Report on Form 10-K for the year ended December 31, 2007.

Actual results or developments may differ materially from the expectations expressed or implied in the forward-looking statements, and Calpine undertakes no obligation to update any such statements. Unless specified otherwise, all information set forth in this release is as of today’s date, and Calpine undertakes no duty to update this information. For additional information about Calpine’s Chapter 11 reorganization or general business operations, please refer to Calpine’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007, and any other recent Calpine report to the Securities and Exchange Commission. These filings are available by visiting the Securities and Exchange Commission’s web site at www.sec.gov or Calpine’s web site at www.calpine.com.