FYI - Calpine Announces New Texas Power Sales Contracts;

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-----Original Message-----
From: Stein, Neil [mailto:neil.stein@csfb.com]
Sent: Wednesday, July 18, 2001 12:31 PM
To: undisclosed-recipients
Subject: CPN: Announces New Texas Power Sales Contracts;
EarningsVisibili ty Enhanced

Good Afternoon:

Attached, please find our recent FC note on Calpine.

<<cpn071801.pdf<<
Summary
1) We reiterate our Strong Buy rating on Calpine. Over the last 2 days, the
company has announced a number of significant power sales agreements
associated with its Texas capacity.
2) On July 17, CPN announced that it had entered into 2 agreements with
Reliant Energy services to provide 1,000 MW of power over a 5 year period.
On July 18, CPN announced an agreement with Shell Oil to provide up to 3,000
MW of power, also over a 5 year period. All the contracts commence on
January 1, 2002, which coincides with the beginning of retail competition in
Texas.
3) Other details relating to pricing and contract structure were not
disclosed.
4) In Texas, CPN currently owns 2,337 MW capacity in operation, 3,786 MW
under construction and 1,007 MW under development.
5) Importantly, as a result of these announcements and other recent
agreements, Calpine's Texas capacity is now 85% sold forward for the next 2
years. Overall, this hedged position gives us additional comfort in CPN's
ability to meet or exceed our 2001-2003 EPS estimates of $1.94, $2.35 and
$3.08, respectively.
6) Some investors have expressed concern about Calpine's exposure to
potential overbuilding in the Texas market. CPN's recent contract
announcements should reassure investors that the company is actively taking
steps to manage and minimize its market price risk in this region.

Regards,

Neil Stein 212/325-4217
Bryan Sifert 212/325-3906

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