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

Wyoming Pipeline Authority Calpine Corporation KEY ISSUES FOR NATURAL GAS AND POWER. COLIN COE DIRECTOR, FUELS. CALPINE OVERVIEW. FORWARD LOOKING STATEMENT.

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

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  1. Wyoming Pipeline AuthorityCalpine CorporationKEY ISSUES FOR NATURAL GAS AND POWER COLIN COE DIRECTOR, FUELS

  2. CALPINE OVERVIEW R060308

  3. 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 Company’s 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 Company’s actual future results to differ materially from those contained in such forward-looking statements. R060308

  4. FOCUSED STRATEGY • North America Power Markets • Modern, Gas-Fired Plants • Wholesale Markets • Balanced Gas / Power Portfolio R060308

  5. 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 doesn’t kill you makes you stronger” R060308

  6. 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 R060308

  7. FINANCIAL GROWTH 19,046 $7,458 R060308

  8. 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 R060308

  9. Net Megawatts 29,940 29,940 29,940 28,800 26,330 19,249 7,755 Assumes No New Projects CALPINE’S GROWING PORTFOLIO R060308

  10. 1 1 1 1 3 1 1 1 4 1 1 1 3 39 2 2 1 1 1 1 1 1 3 1 2 1 1 1 2 1 11 3 1 1 2 2 86 In Operation 2 1 18 Under Construction CALPINE’S POWER PORTFOLIO R060308

  11. Coal CCGT Other 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” R060308

  12. CALPINE’S GROWINGGAS CONSUMPTION * * 2004 Consumption Approximately Equal to 22 mmtpy R060308

  13. CALPINE’S 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 R060308

  14. 950 Bcfe 278 Mmcfe/day CURRENT CALPINE GAS RESERVES & PRODUCTION LEVELS R060308

  15. ECONOMIC AND REGULATORY BARRIERS IN MEETING DEMANDS FOR NATURAL GAS • Capital Markets — Credit • Commodity Markets — Indexes • Supply/Demand — Perspectives R060308

  16. CAPITAL MARKETS — CREDIT • Tightened Capital Markets • Credit Downgrades • Increased Credit Requirements • FERC Actions • NAESB Efforts • Pipeline Expansions R060308

  17. COMMODITY MARKETS — INDEXES • Fewer Participants • Reduced Transparency and Confidence • Price Indexes R060308

  18. GAS PRODUCTION -THAT 70’S SHOW Gas: Enough for Present Customers,but How About the New Ones? — Nation’s Business, July 1971 Natural Gas Users Howl Over Shortages — Business Week; November 17, 1973 We’re Running Out of Gas — The New York Times Magazine; March 19, 1972 R060308

  19. Total U.S. Natural Deliveries January-November 2002 (U.S. EIA) U.S. 2002 TOTAL GAS CONSUMPTION R060308

  20. U.S. POWER MARKET – GAS FOCUS • Huge Market • Growing Demand • Inefficient Plants • Environmental Concerns R060308

  21. EMISSIONS R060308

  22. CONCLUSIONS • Gas Fired Electric Generation Will Grow • Natural Gas Production Must Increase • Pipeline Infrastructure Must be Proactive • Creative Gas Contracting Needed R060308

  23. CALPINE

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