WSPP Operating Committee Meeting. October 25, Bob Hayes Vice President Physical Trading & Operations

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1 WSPP Operating Committee Meeting October 25, 2012 Bob Hayes Vice President Physical Trading & Operations

2 Safe Harbor Statement Forward-Looking Statements The information contained in this presentation includes certain estimates, projections and other forward-looking information that reflect Calpine s current views with respect to future events and financial performance. These estimates, projections and other forward-looking information are based on assumptions that Calpine believes, as of the date hereof, are reasonable. Inevitably, there will be differences between such estimates and actual results, and those differences may be material. There can be no assurance that any estimates, projections or forward-looking information will be realized. All such estimates, projections and forward-looking information speak only as of the date hereof. Calpine undertakes no duty to update or revise the information contained herein other than as required by law. You are cautioned not to place undue reliance on the estimates, projections and other forward-looking information in this presentation as they are based on current expectations and general assumptions and are subject to various risks, uncertainties and other factors, including those set forth in Calpine s Annual Report on Form 10-K for the year ended December 31, 2011, and in other documents that Calpine files with the SEC. Many of these risks, uncertainties and other factors are beyond Calpine s control and may cause actual results to differ materially from the views, beliefs and estimates expressed herein. Calpine s reports and other information filed with the SEC, including the risk factors identified in its Annual Report on Form 10-K for the year ended December 31, 2011, can be found on the SEC s website at and on Calpine s website at Reconciliation to U.S. GAAP Financial Information The following presentation includes certain non-gaap financial measures as defined in Regulation G under the Securities Exchange Act of 1934, as amended. Schedules are included herein that reconcile the non-gaap financial measures included in the following presentation to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP. 2

3 Calpine Overview Strategically positioned within U.S. power industry value chain Fuel Supply Retail Transportation Transmission & Distribution Calpine (NYSE: CPN) 2,000+ employees 28,000+ MW generation capacity 93 power plants Power Generation 3

4 National Portfolio of More Than 28,000 MW Geographic Diversity North 7,914 MW 28% West 6,919 MW 25% Southeast 6,083 MW 21% Texas 7,239 MW 26% Dispatch Flexibility Peaking 6,476 MW 23% Baseload 5,286 MW 19% Intermediate 16,393 MW 58% As of December 2011 Fleet Facts: Among largest consumers of natural gas for power generation in U.S. Among largest owners and operators of industrial gas turbines in the world Among largest generators of renewable energy 1 in U.S. Among largest owners and operators of cogeneration power plants in the world 1 Excludes hydro. 4

5 Unique Independent Power Producer Calpine is the nation s largest baseload renewable, natural gas and cogeneration power provider 50 Modern 10 Clean Wtd. - Avg. Age (Years) SO2 lbs./mwh CPN DYN NRG GEN Source: Energy Velocity (2010). - CPN DYN NRG GEN Source: Energy Velocity (2010). 14,000 Efficient 100,000 Scale Heat Rate (btu/kwh) 12,000 10,000 8,000 Our steam-adjusted heat rate is 7, Generation (MWh) (000) 80,000 60,000 40,000 20,000 6,000 CPN DYN GEN NRG - CPN NRG GEN DYN Source: Energy Velocity (2010). Not adjusted for steam, and excluding nonfossil fuel generation. Steam-adjusted heat rate does not include peakers. Source: 2010 SEC filings. 5

6 Lower Gas Prices Present Opportunities As Gas Prices Decline and Coal Generation is Displaced Existing Gas-Fired Generation is the Economic Solution $45 100% $40 80% Delivered ($/MWh) $35 $30 $25 1 Capacity Factor 60% 40% $20 20% $15 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 CAPP Coal Gas PRB Coal 0% Southeast CCGTs Mid-Atlantic CCGTs Technical Capacity Source: NYMEX, Calpine data (3/15/12). Gas prices represent SONAT-basis gas. Assumes production heat rates of 10,000 btu/kwh (coal) and 7,000 btu/kwh (gas) and $22/ton CAPP and PRB coal transport cost. 1 Capacity factors in all periods reflect currently owned combined-cycle plants in respective markets. Low natural gas prices drive volume expansion for existing, efficient gas-fired generation 6

7 Calpine Southwest Portfolio 7

8 Calpine s Gas Procurement Philosophy The gas industry has proven to be reliable Gas procurement is handled on a plant by plant basis not a regional decision Firm Transportation Secondary Firm or Interruptible transportation Firm delivered services Market should be allowed to develop solutions no federal/regional mandates Firm Transportation is not always the answer Loses firmness after the primary gas nomination cycle which is prior to day ahead awards Cost prohibitive for lower load factor plants 8

9 Calpine s Perspective on Gas issues in Other Regions New England PJM Supply issue in northern New England Capacity issue in southern New England Sizable coal switching earlier this year Marcellus shale has incentivized producer driven transportation expansions Gas liquidity extremely high Favorable gas price opportunities exist based on location Southeast Has benefitted from large coal unit switching and retirements Also has benefitted from influx of Marcellus supply seeking Carolina, Southeast and Gulf Coast markets Pipeline constraints due to influx of Marcellus gas and lack of LNG receipts ERCOT Increasing gas supply via Eagle Ford shale Increasing gas demand from power gen, petrochem/industrial growth and Mexico demand MISO/SPP Sizable coal switching earlier this year Market rules evolving will likely push gas procurement timing forward in MISO 9

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