Wyoming Pipeline Authority Calpine Corporation KEY ISSUES FOR NATURAL GAS AND POWER

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Wyoming Pipeline AuthorityCalpine
CorporationKEY ISSUES FOR NATURAL GAS AND POWER

• COLIN COE
• DIRECTOR, FUELS

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CALPINE OVERVIEW
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FORWARD LOOKING STATEMENT

• Certain of the information discussed in this
  presentation may contain forward-looking
  statements regarding future events or the future
  financial performance of Calpine Corporation. We
  wish to caution you that these statements are
  only estimates and that actual events or results
  may differ materially. We refer you to the
  documents the Company files from time to time
  with the Securities and Exchange Commission,
  specifically the Companys most recent Annual
  Report on Form 10-K and Quarterly Report on Form
  10-Q. These documents contain and identify
  important factors that could cause the Companys
  actual future results to differ materially from
  those contained in such forward-looking
  statements.

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FOCUSED STRATEGY

• North America Power Markets
• Modern, Gas-Fired Plants
• Wholesale Markets
• Balanced Gas / Power Portfolio

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To Paraphrase Mark Twain.rumors of our death

• 2001 provides a challenging year
• Weak Economy poor spark spreads
• The Enron shock affects confidence
• Equity Financing option vanishes
• Debt Financing Challenges
• But we have survived what doesnt kill you
  makes you stronger

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Spark Spreads an overview

• Efficiency Factor Heat Rate
• 7000 HRt vs 10,000 HRt per hour
• Gas price x my HRt my cost
• 7000 HRt x 5.00 35 MW
• If market is a 10,000 HRt 50 MW
• My spark spread is 50 35 15
• 15/MW/hr x 24 x 500 MW 180k
• 84,000 MMBtu/d vs 120,000/day

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FINANCIAL GROWTH
19,046
7,458
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LONG-TERM OUTLOOKREMAINS ATTRACTIVE

• Electricity is a Vital Component of Our Society
• Consumption is Up (1)
• 4.11 - 2002 Over 2001
• 3.48 - YTD 2003 Over Same Period in 2002
• Significant New Project Cancellations
• Continued Pressure on Aging, Polluting Fleet
• Prices Trending Upward

(1) Source Edison Electric Institute
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CALPINES GROWING PORTFOLIO
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CALPINES POWER PORTFOLIO
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CALPINE CORPORATION A PREMIER POWER COMPANY
Largest U.S. Independent Power Companies (1)
27,600
20,686
17,831
15,006
14,441
(1) Source Platts 202 Independent Power
Companies
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CALPINES GROWINGGAS CONSUMPTION

2004 Consumption Approximately Equal to 22 mmtpy
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CALPINES GAS PORTFOLIO

• 1 tcf of Proved Reserves
• Provides Hedge to Fixed-Price Revenue Contracts
• Exploit Proved Reserves
• Value in Excess of 1.3 Billion
• Active Producer Services Group

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CURRENT CALPINE GAS RESERVES PRODUCTION LEVELS
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ECONOMIC AND REGULATORY BARRIERS IN MEETING
DEMANDS FOR NATURAL GAS

• Capital Markets Credit
• Commodity Markets Indexes
• Supply/Demand Perspectives

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CAPITAL MARKETS CREDIT

• Tightened Capital Markets
• Credit Downgrades
• Increased Credit Requirements
• FERC Actions
• NAESB Efforts
• Pipeline Expansions

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COMMODITY MARKETS INDEXES

• Fewer Participants
• Reduced Transparency and Confidence
• Price Indexes

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GAS PRODUCTION -THAT 70S SHOW
Gas Enough for Present Customers,but How About
the New Ones?
Nations Business, July 1971
Natural Gas Users Howl Over Shortages
Business Week November 17, 1973
Were Running Out of Gas
The New York Times Magazine March 19, 1972
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U.S. 2002 TOTAL GAS CONSUMPTION
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U.S. POWER MARKET GAS FOCUS

• Huge Market
• Growing Demand
• Inefficient Plants
• Environmental Concerns

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EMISSIONS
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CONCLUSIONS

• Gas Fired Electric Generation Will Grow
• Natural Gas Production Must Increase
• Pipeline Infrastructure Must be Proactive
• Creative Gas Contracting Needed

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