Calpine to establish Canadian natural gas trust

SAN JOSE, Calif., Aug. 27, 2003 — Calpine Corp. announced has plans to establish a new Canadian trust — Calpine Natural Gas Trust (CNG Trust). CNG Trust has filed a preliminary prospectus with securities commissions or similar authorities in each of the provinces and territories of Canada to qualify for distribution of trust units of CNG Trust by way of an initial public offering.

CNG Trust intends to acquire select Calpine-owned natural gas and crude oil properties in several major natural gas and oil fields throughout Alberta, Canada, including interests in the Markerville, Sylvan Lake and Innisfail areas. The average daily net production of the initial properties for the six months ending June 30, 2003 was approximately 28 million cubic feet of natural gas equivalent per day, with proven reserves of approximately 83 billion cubic feet of natural gas equivalent.

Calpine intends to hold 25 percent of the outstanding trust units of CNG Trust and will participate, by way of investment, in the business strategy of the CNG Trust. Calpine will have the option to purchase up to 100 percent of the CNG Trust’s ongoing production at market prices for use in its North America power generation assets. An executive team, independent of Calpine, will manage the CNG Trust. The majority of the board of directors of CNG Trust will be independent, with Calpine appointing three of a total of seven directors.

Calpine’s participation in the CNG Trust will allow it to increase its competitiveness in the acquisition and development of additional natural gas reserves in Canada to fuel its power generation portfolio in North America. The proceeds generated by Calpine from the establishment of the CNG Trust will be used for general corporate purposes.

Scotia Capital Inc. is lead underwriter for the offering. Marketing of the offering is expected to take place in late September, with closing anticipated to occur in early October.

The securities offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. A preliminary prospectus relating to these securities has been filed with securities commissions or similar authorities in each of the provinces and territories of Canada but has not yet become final for the purpose of a distribution to the public. This news release shall not constitute an offer to buy these securities in any state of the United States or province or territory of Canada.

Calpine Corporation is a North American power company dedicated to providing electric power to wholesale and industrial customers from clean, efficient, natural gas-fired and geothermal power facilities. The company generates power at plants it owns or leases in 22 states in the United States, three provinces in Canada and in the United Kingdom. Calpine is also the world’s largest producer of renewable geothermal energy, and it owns approximately one trillion cubic feet equivalent of proved natural gas reserves in Canada and the United States. The company was founded in 1984 and is publicly traded on the New York Stock Exchange under the symbol CPN. For more information about Calpine, visit www.calpine.com.