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Calpine Receives Court Approval of First Day Motions

Permission to Continue to Perform Under Power Trading Contracts Interim Approval to Use $500 Million of Its $2 Billion DIP Financing Facility Authorization to Continue Paying Employee Compensation and Benefits

SAN JOSE, Calif., Dec. 22 /PRNewswire-FirstCall/ -- Calpine Corporation (OTC: CPNLQ) announced today that it has received approval of first day motions from the U.S. Bankruptcy Court for the Southern District of New York. During a hearing held yesterday before the Honorable Burton R. Lifland, Calpine submitted a number of motions requesting approvals and received, among other things, interim authorization to continue to perform under power trading contracts and the immediate use of $500 million of its $2 billion debtor-in-possession (DIP) financing facility. The company also received authorization to continue paying employee wages and salaries and providing benefits.

Robert P. May, Calpine's Chief Executive Officer, stated, "We are very pleased with the Court's prompt approval of these first day motions, which will help Calpine continue its normal business operations without interruption. In particular, the Court's authorization to continue to perform under existing and new power and gas trading contracts and pledge collateral in support of transactions should provide additional assurance that Calpine power plants will continue to provide reliable supplies of electric power to the markets that depend on us."

Calpine received interim Court approval for the immediate use of up to $500 million of its $2 billion DIP financing facility. The company has received commitments for the DIP facility from Deutsche Bank and Credit Suisse First Boston. The Court has scheduled a hearing for January 25, 2006 to consider final approval of the entire $2 billion DIP financing facility.

"The DIP financing provides us with the much needed liquidity and flexibility to run our business, and should give assurance to our natural gas suppliers, gas transportation companies, and other vendors and suppliers that they will be paid going forward on a current basis," said Mr. May. "In turn, our customers can continue to rely on our power plants for the electricity and other energy services they depend on Calpine to provide."

Calpine also received authorization from the Court to pay pre-petition and post-petition employee wages and salaries, and provide benefits, including healthcare, disability, life insurance and certain vacation benefits, during its restructuring under Chapter 11.

On December 20, 2005, Calpine and many of its subsidiaries, including Calpine Generating Company, LLC, filed voluntary petitions to restructure under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York in Manhattan. The case was assigned to the Honorable Burton R. Lifland and the lead case number is 05-60200 (BRL).

The company has established a toll-free restructuring information line for employees, suppliers, customers, investors and other interested parties, 1-866-504-6370. More information on Calpine's restructuring is also available on the company's web site, www.calpine.com. For access to Court documents and other general information about the Chapter 11 cases, please visit www.kccllc.net/calpine.

A major power company, Calpine Corporation supplies customers and communities with electricity from clean, efficient, natural gas-fired and geothermal power plants. Calpine owns, leases and operates integrated systems of plants in 21 U.S. states and in three Canadian provinces. Its customized products and services include wholesale and retail electricity, gas turbine components and services, energy management and a wide range of power plant engineering, construction and maintenance, and operational services. Calpine was founded in 1984.

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 and its subsidiaries ("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) the Company's ability to continue as a going concern; (ii) the ability of the Company to operate pursuant to the terms of the debtor-in-possession facility; (iii) the Company's ability to obtain court approval with respect to motions in the Chapter 11 proceeding prosecuted by it from time to time; (iv) the ability of the Company to develop, prosecute, confirm and consummate one or more plans of reorganization with respect to the Chapter 11 cases; (v) risks associated with third parties seeking and obtaining court approval to terminate or shorten the exclusivity period for the Company to propose and confirm one or more plans of reorganization, for the appointment of a Chapter 11 trustee or to convert the cases to Chapter 7 cases; (vi) the ability of the Company to obtain and maintain normal terms with vendors and service providers; (vii) the Company's ability to maintain contracts that are critical to its operations; (viii) the potential adverse impact of the Chapter 11 cases on the Company's liquidity or results of operations; (ix) the ability of the Company to fund and execute its business plan;(x) the ability of the Company to attract, motivate and/or retain key executives and associates; (xi) the ability of the Company to attract and retain customers and (xii) other risks identified from time-to-time in the Company's reports and registration statements filed with the SEC, including the risk factors identified in its Annual Report on Form 10-K for the year ended December 31, 2004, and its Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, which can also be found on the Company's website at www.calpine.com. All information set forth in this news release is as of today's date, and the Company undertakes no duty to update this information.

SOURCE Calpine Corporation

CONTACT: Katherine Potter, +1-408-792-1168, kpotter@calpine.com, or Kent Robertson, +1-408-794-2416, kentr@calpine.com, both of Calpine Corporation
Web site: http://www.calpine.com
http://www.kccllc.net/calpine

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Calpine Corporation's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.