Calpine Corporation And Bechtel Enterprises Announce Joint Venture To Develop California Power Plants

San Jose, CA - July 27, 1998 San Jose, CA-based Calpine Corporation [NYSE:CPN], one of the nation's fastest growing independent power companies, and San Francisco-based Bechtel Enterprises, an affiliate of Bechtel Group, Inc., a premier global engineer-constructor, today announced a joint venture to develop, own, and operate approximately 2,000 megawatts of new natural gas-fired power plants in northern California, to primarily serve the San Francisco Bay Area. The proposed plants will provide low-cost, clean, efficient power, eventually replacing less efficient Bay Area power plants, ranging in age from 26 to more than 40 years.
The modern, natural gas-fired plants, to be constructed by Bechtel and operated by Calpine, will provide significant environmental and cost saving benefits. These state-of-the-art plants will use up to 40 percent less fuel compared to the average gas-fired plant in operation today and will utilize advanced emissions control technology. The emissions of smog and acid rain producing nitrogen oxides will be reduced by approximately 93 percent on a kilowatt hour basis as compared to existing Bay Area utility fossil-fired plants. Carbon dioxide emissions, a contributor to global warming, will be reduced by almost 40 percent.

The proposed 2,000 megawatts of new capacity will meet the electricity needs of millions of Bay Area businesses and homes. The first plant of this program will begin commercial operation as early as 2001. Prior to construction, Calpine and Bechtel will work closely with local, state, and federal agencies and will solicit community input during the comprehensive environmental review process.

"Deregulation of the U.S. power industry has created immense opportunities to replace old, inefficient power plants with clean, modern facilities," said Calpine President and Chief Executive Officer Peter Cartwright. "California can lead the nation in modernizing its power industry--providing communities with new sources of clean, low-cost power."

Paul Unruh, President and Chief Operating Officer of Bechtel Enterprises, commented, "The economic benefits of these facilities will be tremendous--with over a billion dollars of capital investment injected into the Bay Area economy. In addition, Calpine and Bechtel will be providing affordable and reliable power to ensure the continued growth of the industrial and commercial sectors in our region, including Silicon Valley."

The first plant to be developed by the joint venture will be a 535 to 800 megawatt unit to be located at the Dow Chemical facility in Pittsburg, CA. Over the next several months, Calpine and Bechtel will be working with local governments, environmental, and community groups to finalize the selection of additional sites for other new units.

"The new plant in Pittsburg will mark the beginning of a new era of power production in the Bay Area," added Cartwright. "Our power program can be the solution that community leaders are looking for. Calpine and Bechtel will demonstrate that low-cost, reliable power and a clean environment go hand in hand."

Bechtel Enterprises is the development, financing, and ownership affiliate of Bechtel Group, Inc., a premier global engineer-constructor. It has developed more than 35 projects in the power generation, water and wastewater, transportation, pipeline, and telecommunications sectors and is a partner in nine world-class infrastructure development companies, including two global independent power producers. Since 1990 alone, Bechtel Enterprises has arranged or participated in more than $12 billion in project financings. The Bechtel organization has been at the center of power development since the 1940s, having built more than 450 power plants with an aggregate generating capacity of over 250,000 megawatts. In the Bay Area, Bechtel has constructed numerous power facilities, the most recent being the 240 megawatt Crockett Cogeneration Plant adjacent to the C&H Sugar Refinery. Visit Bechtel's web site at for more information.

Calpine Corporation is a leading independent power company dedicated to providing customers with low-cost electricity and thermal energy. Calpine brings in-depth expertise to the development, ownership and operation of power generation facilities. Calpine's operating projects include clean-burning natural gas-fired, combined-cycle power plants and geothermal facilities. Calpine currently has 5,100 megawatts of capacity in operation, under construction, or in development in 10 states--enough energy to power five million households. The company was founded in 1984 and is publicly traded on the New York Stock Exchange under the symbol CPN. Please visit Calpine's Web site at for more information.

This news release discusses certain matters that may be considered "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding the intent, belief, or current expectations of Calpine Corporation ("the Company") and its management. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties that could materially affect actual results such as, but not limited to;(i) changes in government regulations and anticipated deregulation of the electric energy industry; (ii) commercial operations of new plants that may be delayed because of various development and construction risks, such as a failure to obtain financing and the necessary permits to operate or the failure of third-party contractors to perform their contractual obligations; (iii) the assurance that the Company will develop additional plants; (iv) a competitor's development of a lower-cost generating gas-fired power plant; or (v) the risks associated with marketing and selling power from power plants in the newly competitive energy market. Prospective investors are also referred to the other risks identified from time to time in the Company's reports and registration statements filed with the Securities and Exchange Commission.