Greg Imbruce, Calpine Corp. (CPN), Jefferies High Yield Analyst, 4Q 2002 Earning Call

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CPN - Q4 2002 Calpine Corporation Earnings Conference Call

Event Date/Time: Feb. 13. 2003 / 8:30AM PT
CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com

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C O R P O R A T E P A R T I C I P A NT S PRESENTATION
Richard Barraza
Calpine Corporation - Senior Vice President of Investor Relations
Peter Cartwright Operator
Calpine Corporation - Chairman Chief Executive Officer and
President
Good morning, my name is Eunike and I will be your conference
Robert Kelly facilitator today. At this time, I would like to welcome everyone to
Calpine Corporation - Executive Vice President Chief Financial Calpin e's 4th quarter earnings conference call. All lines have been
Offivcer President of Calpine Finance Corp. placed on mute to prevent any background noise. After the
Ron Walter speakers' remarks, there will be a question-and-answer period. If
Calpine Corporation - Executive Vice President you would like to ask a question during this time, simply press star,
then the number 1 on your telephone keypad. If you would like to
Paul Posoli
Calpine Corporation - Senior Vice President of Calpine Energy withdraw your question, press star, then the number two on your
Services telephone keypad. Thank you, I will now turn the call over to Rick
Barraza.
Richard Barraza - Calpine Corporation - Senior Vice President

of Investor Relations
Thank you, Eunike, good morning everyone. On behalf of

everyone here at Calpine, I'd like to welcome you, and thank you
for taking the time this morning to join us for today's conference
call to discuss our financial and operating results for the quarter
and year ended December 31, 2002. As always, our call today is
being broadcast live over the phone and on our website at
www.calpine.com. You will find this webcast on the website on
the investor relations page. You will also find something new this
quarter, we will be putting a transcript of today's call on the
website on the same investor relations page. That should be
available first thing tomorrow morning.
Joining me for today's call, Peter Cartwright, our President,

Chairman and CEO, Bob Kelly, Executive Vice President and
Chief Financial Officer, Chuck Clark, Senior Vice President
Corporate Controller, Lisa Bodensteiner, Executive Vice President
and General Counsel and, as always, we do have a number of
mImbruce of Calpine's senior management team in the room
available for the Q&A session.
Our outline for today's call includes a detailed review of the 4th
quarter and year-end financial and operating results along with an
update on additional financial matters by Bob Kelly, followed by a
business update and outlook from Pete. Following Pete's
comments, we will then open it up for a 30-minute Q&A session.
Before we begin the call, I'd like to read a brief announcement, as

always. This conference call does include forward-looking
statements within the meaning of section 27-A of the Securities
Act of 1933, and section 21-E of the Securities and Exchange Act
of 1934. Such statements include declarations regarding the intent,
belief or current expectations of 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 as identified in the company's

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reports and registration statement filed with the Securities and March 2002, we cancelled 35 turbines and delayed delivery on 81
Exchange Commission. At this time, we'll start our call, and to do units. This week, we announced a program which reduced our
that, I will turn it over to Pete. commitments to turbine, gas turbine, steam turbine equipment by
$3.4 million, still giving us the flexibility to add these units when
we need them.
Peter Cartwright - Calpine Corporation - Chairman Chief
Executive Officer and President
We said that we would continue to pursue long-term contracts,
which is a basic part of our business, contracts with load serving
Thank you, Rick. Good morning, everyone, and thank you for entities, utilities, municipal utilities, and some large industrial
joining us this morning.
customers. In 2002, 70% of our available megawatt hours were
sold under these contracts at attractive prices. Our contract
I'd like to begin by reviewing 2002, the challenges we face as a portfolio has a spark spread of $2.1 billion in 2003, and if we look
company and our accomplishments. As Rick said, Bob Kelly will
at just the next 10 years, many of these go beyond 10 years, over
then go into some detail on our financial activities for the year and
the next 10 years, the value of that spark spread is $13.6 billion
the results and where we're going this year and then I'll come back and we can present value that at 9% as over $10 billion.
on and wrap up with a look at where Calpine is today and where
we will be going during 2003. A year ago, as we began 2002, we
I'd like to talk about California, it's been a big part of the power
laid out a program for the year based on really radically changed industry over the last several years. We had 2,500 megawatts of
power plants and capital markets. I want to review with you today
contracts with the state which we entered into at the request of the
what we said we would do at that time and what we have actually
state two years ago. Last year, we spent a long time, about five
done. months, renegotiating these at the request of the state to produce
what I'm very proud of as a win-win contract. The state is happy
In January 2002, we had 27 power plants under construction. I said
with these contracts, they've been signed off by all state agencies
we would continue that program and bring these unit s online in and they're very very good for Calpine.
2002, '03 and '04 and we have done so. In 2002, we brought online
8,200 megawatts. During the year we generated 75 million
Throughout the entire energy crisis and subsequent turmoil in the
megawatt hours, a 71% increase in production over 2001. Today, power industry here in California, Calpine has always been seen by
we have 76 power plants 19,000 megawatts in operation and an
all of the state agencies as a responsible positive part in this
additional 23 plants, 9,800 megawatts in construction.
solution, never been characterized as one of the bad guys. We
delivered all the power to the state that we had when the state
We've achieved a position as a leader in our industry in operational
needed power, we expedited the construction of power plants to
excellence. Our fleet line availability, including all of the new
meet the December crisis in '01, we entered into long-term
power plants, is 92%. Safety, which is always our number one contracts when the state asked us to do so, we renegotiated those
goal, we've had a good and outstanding year. We experienced 75%
contracts when the state asked us to do so, and we are continuing
fewer lost time accidents compared to a typical workforce in our
to build power plants in California when virtually everyone else
industry. has abandoned this market and it will be a good market as we go
forward into the future.
Last January, we put all of our development projects on standby.
We said we would only go ahead with a new project when we had We said we would review a wide range of alternatives for our
a power purchase agreement that was strong enough for the project
Calpine Energy Services Group, which manages our portfolio out
to stand alone to be financeable on its own. Six projects, we
of our Houston office. We looked at joint ventures, we talked to
successfully moved into that category, they are financeable on their virtually all of the trading shops in the industry. Over the course of
own and we have power purchase agreements and we're now into
the year, most of these potential partners have gone out of the
construction. That represents 2,300 megawatts.
trading business, but we persevered with our trading and risk
management operation, a very unique organization, and we've
I'd like to highlight one of those plants because it's significant in
done so without partners. We've learned how to do business in a
what we've been able to do when challenged. Bethpage, on Long
very tough environment and we're pleased and proud of the
Island, is a small power plant that we've had for some time. Long success of that group.
Island Power Authority last year was in desperate need of power
for the Summer. We put on-line in 81 days from when we broke
Just to emphasize how different we are from others, our Energy
ground till we had a plant in commercial operation and an Services Group Charter is to manage our 20,000 megawatt
additional 50 megawatts at Bethpage. We have a very, very happy
portfolio, to get gas to our power plants, to get power from our
customer.
power plants to our customers, to optimize our portfolio, to
schedule power and gas delivery, and then to do the back office
We said a year ago that we would reduce our equipment
billing and management.
commitments to bring them in line with our new program. In

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Turning to the gas side of the business, in 2002, we achieved

We said that we would focus 2002 on liquidity. Bob and his team production of 351 MMCFE per day at an average cost of $2.19.
have raised over $3.1 billion in a very difficult capital market The gas company in 2002 produced about 26% of our power
environment. We reduced capital expenditures for 2002 and 2003 company's gas requirements. We ended the year with the
by more than $4 billion. We sold nonstrategic assets, things like oil geographically diverse reserve base of 1 TCF pproved reserves.
properties, minority interests in power plants, and we did so, in These reserves have a PV 10 valuation around 1.4 to 1.5 billion
total, above our book value. We had a strong program of reducing dollars.
G&A expense.
Turning to the balance sheet, we ended the year with 13.4 billion
In fact, we have today, in Calpine, fewer people with the 19,000 of debt or 72% of capitalization this is down from the 2001 peak of
megawatt portfolio than we had in 2001 with the 10,000 megawatt 76%. On the liquidity side, cash at year-end was $656 million, of
portfolio. Bob and his team are well along in negotiating additional which, because of a new accounting classification, $111 million is
liquidity enhancing events. And now I'd like to turn it over to Bob termed restricted cash related to various financings which can be
Kelly to talk more about our financial results. and is used to pay operating expenses. The cash balance
throughout the year when you looked on a monthly basis, we
averaged around $600 million for the entire year.
Robert Kelly - Calpine Corporation - Executive Vice President
Chief Financial Offivcer President of Calpine Finance Corp.
Under our $1 billion revolving credit facility we had $340 million
of drawings and $570 million of letters of credit usage at year-end.
Thank you, Pete. Good morning, everybody. Let me start talking
The LC usage is broken down into the following categories: There
about a little bit about the 4th quarter and 2002 financial results is $115 million of letters of credit at CES for their activities in
before we get into 2003. During the 4th quarter of 2002, Calpine
buying gas and selling power, $265 million of performance related
earned $35 million, or 9 cents a share, before nonrecurring items
LCs for things like gas, transportation, and electric transmission,
and gains from sales of discontinued operations. Comparable and $190 million of financial guarantees related to various
numbers for the full year 2002 were $330 million, or 84 cents a
financings.
share.
That's a snapshot of Q4 and the full year 2002, let me move to
During Q4, we recorded a pretax charge of $210 million relating to
2003 and what the future looks like. We expect EPS to be in the
equipment cancellation charges and $28 million of previously
range of 40 to 50 cents per share for 2003. This number is based on
capitalized development costs. Recurring EBITDA as adjusted in average on peak spark market spreads of around 8 to $10, effective
2002 was $1.4 billion, and this resulted in an EBITDA to interest
cost controls, and execution of our business plan. The marketplace
coverage ratio of 3.9 times.
today for on peak power is around $8, so we're at the low end of
that number. EBITDA, as adjusted, will range between 1.4 and 1.5
On the production side in Q4, we produced 21 million megawatt
billion and our interest coverage ratio will be around 2 1/2 times.
hours, representing a 59% capacity factor, and we achieved an
average spark spread of $22.56. Total capacity at year-end was We'll have roughly 21,000 average megawatts throughout the year
19,100 and we had an average capacity throughout the year of
capable of producing 160 million megawatt hours. We presold
around 15,275 megawatts. In 2002, we produced a record 75
with our long-term contracts 97 million megawatt hours. This will
million megawatt hours, we ran at 67% capacity factor, and for the generate, as Pete said, $2.1 billion of spark spread coming in for
full year, we realized an average spark spread of $25.39.
the year 2003. We outlined our contractual portfolio on the press
release and also it's available on the website.
When you look at the marketplace in 2002, the market spark
spread for on peak was around $8.99, our $25.39 compares to that
Assuming in the year we generate only during the on peak hours,
number. Obviously you can see we benefit immensely from our
our open megawatt position is around 33 million megawatt hours.
strategy of locking in long-term contracts for a substantial portion On a sensitivity basis, a dollar change in the on peak spark spread
of our portfolio. The strategy of locking in or hedging 2/3 of our
for our company equates to about 5 cents a share.
portfolio on a long-term basis really works.
I want to talk a bit about the sources and uses for 2003. First, I
On the cost side of the business, we really started to benefit from
want to break it down into two categories; the cash from
economies of scale in 2002. Our plant operating expense declined
operations, what we call the operating company and on the other
from $7.52 per megawatt hour in 2001 to $6.83 per megawatt hour side, the construction program is what we term the construction
in 2002. One of our primary goals if in 2003 is to aggressively
company and sources and uses on both sides of the two entities.
challenge this number. We expect to see a number in the $5.25 to
Just from the operations, cash from operations assumin g the
$5.50 range per megawatt hour in the year 2003. metrics I said earlier will be around $650 million, and $650 million
of cash coming in will be used to pay about $300 million of

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maintenance cap ex, and $350 million of cash lease expense. As

you can see, cash from operations is sufficient to cover the Contract securitization/monetization, $800 million. This is a big
maintenance and the lease payments. Therefore, if you're just liquidity number throughout probably the last half of last year, we
looking at the operating side of the business, we should end up did quite an analysis on all our contracts, looking to see where the
with approximately the same $650 million cash we started with in most value was, where we could raise capital against these
the beginning of this year. contracts, and we identified a number of them and started working
on them. We're well along in this process right now, we're almost
Turning to the construction side, construction budget, the cap ex ready to go to the rating agencies on some of them and we targeted
budget is 1.3 billion for 2003 and we have another $300 million in March 31as a closing date which is really the end of the 1st
turbine payments, that is 1.6 million dollars in money going out the quarter. I think it will slip a little bit for a couple of them, but by
door. These expenditures will be funded through the following April 30, we expect to have all $800 million in the shop.
$2.3 billion of activity.
The asset sales also the end of last year, we highlighted internally
First I'll break down the activity and then I'll go back and explain -- some older power plants, what we call the QF qualifying facility
or talk in length about each one of them. Project financings, $400 power plants, which had on average, 8 to 10 years left on contracts
million, lease financing, $400 million, Calpine power income fund, on these facilities. They are a little higher heat rate than the new
$140 million, contracts securitization or monetization, $800 modern 7000 heat rate plants that it's the real driver behind our
million, selected asset sales, $600 million. This totals $2.3 billion. company. With started our process with Salomon Smith Barney,
I'll talk about each one of the categories, where we're at, timing, put out bids for the power plants, we got the bids back, created a
our confidence level in getting to the finish line. Project financing, short list, narrowed the short list down, broke it into a number of
$400 million, these are the financings that Pete talked about, portfolios, and we're confident we'll close aroun d $600 million
projects with long-term contracts, in particular, there are two probably the end of February, the end of March, the end of April,
financings, what we call Riverside and Rocky Mountain, two we've done it in a number of stages, so we feel pretty confident on
combined cycle power plants with long-term contracts with high that.
credit quality off takers.
When you look at the 2.3 billion of activity, as Pete said in the
We're in the final stage on Riverside talking to a lender group and opening, this is stuff we've been working on for a good six to nine
arranging that financing. We expect to close in the next couple of months now and it's almost, but not quite to the finish line and we
months. When we finish Riverside, we roll right into the second just need to push them over. 2.3 and 1.6 billion of cap ex in turbine
financing, which is Rocky Mountain, and we expect to close that payments, we'll have over $700 million of surplus. This surplus
sometime in the 2nd quarter. Our confidence level is pretty good provides a cushion in the event some of the deals don't close, or in
on the $400 million project financing. the event spark spreads are weak around the operating side of the
business than anticipated.
Lease financing, $400 million, this is one single financing which
you've heard me talk about for about a year now. This is the Peaker Also, if you look at the cap ex of 1.3 billion, there's about $400
Lease 11 LM 6000s which we'd be building throughout the year, million of the 1.3 billion related to projects which come on-line in
the power generated is sold under a long-term contract to the DWR 2004, 2005, and 2006. You have the opportunity in the event
under a 10-year contract. Currently we have nine of the plants money is not coming in to reduce those expenditures if the
completed. Two plants will be completed in Q1 of this year and financial activity doesn't materialize, so it's a further cushion for
they will be operational by the contract date. the company.
You'll recall we talked or I updated you last quarter on a number Let me turn to refinancing act ivity outside of the raising capital for
around $400 million, we started at about 500 million about a year the construction program, we spent an enormous amount of time
ago. We're now about a year and a half into the contract, so the on two refinancing activities for the company in 2003. We have a
number is 400. We remain confident in closing this one probably billion dollar revolver maturing in May with a group of 15 banks
by the end of March, but definitely by the end of April with the and a $1 billion construction loan maturing in October.
financing group.
The first revolver, the billion dollar revolver, 600 million can be
The third category is the income fund, $140 million. This one I am extended for one year, and it's important to note that this facility is
real confident because it just closed this morning. We closed 151 secured by gas and power assets. The security under this facility
Canadian I think it was, which is about $100 million U.S. This was has a book value of $12 billion securing a $1 billion revolver and
a sale of our remaining share holdings in that entity and 17 million also it also secured the $1 billion term loan in 2004, so you have
shares and a warrant for 8 million shares. We expect if the price $12 billion of book value over $2 billion of debt. It is a well
stays above $9 to collect the remaining $50 million from proceeds secured asset from the bank's perspective. even if they take a very
from the warrants by the end of this year. draconian view on power assets. Probably the gas assets and the

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geothermal steam value could pay the entire $2 billion of business. They're managing a huge portfolio, larger than anyone
indebtedness. Currently, working with a bank group, we're looking else, and they're optimizing the value of that portfolio for Calpine.
at a two -year extension on the billion dollar revolver moving it out
to 2005. We'll be working hard over the next 6 to 8 weeks on the We went through a complete reorganization of the company that's
negotiations to complete this revolver. under way now and it has changed our company from a very
successful development company to a very successful and very
The second financing is the billion dollar construction loan, what large operations company with a very, very heavy focus on our
we call CCFC 1. CCFC-1 is a closed end power company for the customers.
most part, it consists of nine power plants totaling 5200 megawatts,
six are completed. The six have an ability to generate 3,300 The recession and the addition of new power plants over the last
megawatts, there's a book value to the company o around $3 several years have driven down electricity prices, but we are seeing
billion so you have a billion in debt against 3 billion in book value. that this is turning around. Spark spreads are improving in most
The six power plants running alone, forget finishing off the other markets, and demand for electricity is on the rise.
three, can carry the entire debt service of the company, that is a
33% debt to cap with that company. We follow the Edison Electric Institute data which comes out on a
weekly basis and there is some amazing things happening in the
In Q3, of this year, we plan to approach the bond market with a power industry. In 2002, total electricity consumption by the
first mortgage bond of about 75% of the refinancing with the bank investor owned utilities in the United States was up 4.1%. That's
market extending about 25% of the refinancing. We remain remarkable. Electricity consumption is basically broken into three
optimistic on both deals. We've been working on them for a components, commercial, residential and industrial and
considerable time now and we will meet the deadline of May for traditionally each of those components is about a third. Industrial
the first one and get to the bond market for the second one in the was off as a result of the recession by 8 to 10%, so the commercial
3rd quarter of this year. With that, I'll turn it back to Pete. and residential not only made up for the decline in industrial
consumption, but pushed the total consumption up by 4.1%.

So far this year, and the year is really beginning, but a month's
worth of data, electricity consumption is up 7.6% over the same
period last year, so when the industrial demand starts to build back
Thanks, Bob. Calpine's strategy and our business models have
up, we expect to see very, very strong growth in demand, much
really been tested over the last year and they have proved to be more than anyone has predicted. At the same time, power plants
correct and very successful. We hit some of the major points.
are being cancelled, development projects are being cancelled
across the country. We keep a running total on projects that we
Our fleet of power plants are comprised of only the most modern, know about that have been either permanently shelved or cancelled
least polluting, lowest cost power plants in North America. We
or are simply not going to be built and we can identify 162,000
developed a large portfolio and we're realizing the economies of
megawatts in that category. So demand is coming back, it's
scale that we predicted we would from this large fleet of power building up, and supply is being limited.
plants. We also, in addition to our gas fire powered plants, we
operate 800 megawatts of geothermal which makes Calpine,
We're seeing more and more opportunities for long-term power
arguably the largest producer of alternative energy in the United purchase agreements. We closed 720 megawatts of new contracts
States. There are some opportunities for us to expand geothermal
in the last 30 days, and our salespeople are in discussion with
as the demand for alternative energy increases.
customers on an incredible 10,000 additional megawatts, and there
are more out there that we're bidding on.
We have emphasized during the presentation a number of times the
importance that long-term power sales agreements are in our
So, in summary, Calpine has an experienced management team, we
portfolio. They're very important and we now, with our sales and have a strategy that we have adhered to, our team is in place and is
marketing team, have under way a program to expand to get to
strongly committed, all of us are strongly committed to have
know our customers better and to enter into more of these long-
Calpine emerge from this present chaos in the power industry to be
term power sales agreements. the industry leader. Thank you. Now I'll turn it back to Rick
Barraza, who will act as m.c. for your questions.
Calpine Fuels has played a major role in our strategy. We own and
operate 1 trillion cubic feet of gas and we use that gas as a hedge
when we have opportunities to fix electricity prices, so we fix the Richard Barraza - Calpine Corporation - Senior Vice President
difference between our gas costs and our electricity price, and of Investor Relations
having that gives us an ability to do something which others cannot
do. We talked about CES, they are an important part of our Thanks Pete and thanks Bob for your comments this morning. I'd
now like to open up the call for the next 30 minutes for your

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questions. Again today we do have a large number of folks on the QUESTION AND ANSWER
call, and already have a number of people in the queue for the
Q&A session.
So we can get to as many callers in,we have been very successful Operator
in the past, I'd like to also ask for your cooperation by limiting
yourself to one question and a follow-up if necessary. If we're At this time, I would like to remind everyone, in order to ask a
unable to get to your questions here this morning, feel free to call question, please press star, then 1 on your telephone keypad. Your
myself, Karen or Lisa after the call, we'd be more than happy to first question comes from David Silverstein of Merrill Lynch.
answer your questions. And again, the transcript of the call will be
available tomorrow morning, that would also be a good source to
David Silverstein - Merrill Lynch
take a look at and answer any questions that you may have from
this morning's call. So with that, if you could open it up for Q&A
Hi guys. Bob, just to start off here with this cap ex number, the
please.
cap ex number moved from 1.1 to 1.3 billion, and we were under
the impression that you had flexibility to reduce that by a larger
amount, and also with that in mind, the 400 million mentioned, are
you saying you can reduce the current cap ex budget to 1.3 billion
by 400 million this year?

Yeah, I think just to clarify, David, the cap ex number that we

talked about, the 1.1, has actually being reduced to .9, and then you
add on the .9 the 400 million of projects which we are bringing
into construction because they have long-term contracts and
because of the financing coming on board, so that's how you get
1.3. So the comparable number is 1.1 down to .9.
And so a 400 reduction, though, give us a sense for when you

have to make the decision go or no go to be able to realize the
benefit of that reduction?

I think when we look at the program, it takes about 30 to 45 days

to start ramping it down working with the contractors and things
like that. If you look at the cap ex and the money coming in, you
have flexibility in when you want to do that. It's important to note
that these are projects in '04, '05, and '06.
And because they are not turn key contracts, you have the ability
to just say we're ramping down, without any significant --


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You have to work with the contractors, whether it's EBC or And Kate, let me ask Ron Walter, who heads up our Development
Calpine manage, you still have a contractor that you have to work Acquisition Group, to answer your first question with regards to
with. the Excel project.
David Silverstein - Merrill Lynch Ron Walter - Calpine Corporation - Executive Vice President
Just one other quick one so Rick doesn't get mad at me, the delta Your comment was correct, we were selected out of an RFP
on EBITDA in terms of spark spread, you gave an EPS spread, can process by Excel to perhaps put a power plant called Mankato on-
you give me an EBITDA delta in terms of spark spread? line out there in the future. You probably also know that this is
contingent on the Perry Island Nuclear Power Plant shutting down
permanently or not, so we responded to that and we were
Robert Ke lly - Calpine Corporation - Executive Vice President
successful, we're entering into some discussions with them here in
a very short time period.
Probably just take the open megawatt hours of 33 million times a

buck, 33 million dollars. Kate Jaquet - Seneca Capital
Thank you very much.

Thanks. You'll come pretty close. Ron Walter - Calpine Corporation - Executive Vice President
Okay.
Operator
Thank you.
Your next question comes from Craig Shere, Standard & Poor's.
Operator
Craig Shere - Standard and Poor's
Your next question, Kate Jaquet of Seneca Capital.
Hi. I noticed that the planned megawatt hours for the year is down
to 159 from 179. Is that because of delays in 4th quarter
Kate Jaquet - Seneca Capital
construction and the $200 million reduction from 1.1 billion to 900
million?
Hi, I was hoping that you could comment on your bidding for
building a plant for Excel in Minnesota, and, also, just for clarity,
you guys only have $400 million due with the bank market this Richard Barraza - Calpine Corporation - Senior Vice President
May, is that correct due to your one year term out option? of Investor Relations
That's exactly right. It's when the megawatts come on, the timing,
the average megawatts throughout the year.
No, underneath the deal, it's a billion dollar revolver and in there Craig Shere - Standard and Poor's
there's an option to extend 600 million for letters of credit for one
year. The point I make is that it's a $400 million refinancing issue And you said before on the 1.1 billion, 75% was discretionary. So
right now, but we are refinancing the entire 1 billion anticipated to if you take that 75%, subtract the 200 million you have alluded to,
be for two years. does that tell us that you have 625 million of discretionary cap ex?
Richard Barraza - Calpine Corporation - Senior Vice President Robert Kelly - Calpine Corporation - Executive Vice President
of Investor Relations Chief Financial Offivcer President of Calpine Finance Corp.
When I talked about the 75%, I think I put it in , that is a

draconian scenario that you could stop at all, and the 400 I talk

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about today is, it is not as draconian because you're stopping things

in '04 '05, '06. If you wanted to pull back completely to the 75% The first objective we have is raising the liquidity to complete the
range, you're now stopping cap ex on power plants which would power plants. If you have surplus cash after that, then you
come on-line this year and that just doesn't make economic sense. approach buying back bonds or whatever.
It's economic rationale to make those cap ex. The 75% was, if
there was no money coming in, you could do it so it doesn't create
Elizabeth Parrella - Merrill Lynch
the liquidity event with what I was talking about.
Just one follow-up, on the 600 of asset sales, it sounded like the
Craig Shere - Standard and Poor's way you described it, that that would all come from the QF sales.
Are the QFs out of the security package or is that 600 intended to
Just to finish, could you translate the 20 million megawatt hours be kind of net of sharing?
for the year into the difference in plants that's going to be brought
on-line? Robert Kelly - Calpine Corporation - Executive Vice President
Chief Financial Offivcer President of Calpine Finance Corp. It's out of the security package, there's a carve out in the bank
yields, I think it's 750 or 800 million dollars total which is a
No, I don't think I could. percent of tangible assets so, all of that money is available to
complete the construction program.
Operator
Your next question comes from Elizabeth Parrella from Merrill
Lynch. Thank you.
Elizabeth Parrella - Merrill Lynch Operator
Thank you. On the contract securitization, is that something that Your next question comes from Thomas Boyce of Bear Stearns.
you -- what is kind of the bank group's reaction to securitizing
some of the contracts? I realize they're not part of the security
Thomas Boyce - Bear Stearns
package, but are they comfortable with that?
Yes, hi. You've laid out the timing of the closing of the 6 hundred
Robert Kelly - Calpine Corporation - Executive Vice President million of QF sales in three phases. Can you give us an idea of
Chief Financial Offivcer President of Calpine Finance Corp. how much we'll close with each of the three phases?
The bank group is being very positive because the money coming
in pays for the cap ex, the cap ex generates cash flow which makes
their bank loans better. We have not had any negative feedback at
all and you're right these are not secured or anything like that,
I'd say you do 200, 200, 200, you'll be pretty close.
these are assets which are valuable to the company. You hedge to
power, you monetize it, you reinvest in the business, generate more
cash. Thomas Boyce - Bear Stearns
Okay. And just real quick, the California Peaker lease, you
suggested last quarter 200 million was funded in the 4th quarter
with the other 200 in 1st quarter of '03, now I just want to confirm,
The way you've laid it out it's obviously used for cap ex. Would
you're saying none of it funded in the 4th quarter and it was all
there be some type of bar in terms of doing something like this and
funded in the 1st quarter?
using the proceeds for other purposes such as retiring unsecured
debt?

TRANSCRIPT
No, we didn't fund any in the 4th quarter, we were still long cash Robert Kelly - Calpine Corporation - Executive Vice President
at that time, and we still have 600, but we expect to close that first Chief Financial Offivcer President of Calpine Finance Corp.
100 or 200 or incremental in the middle of March sometime right
now.
575 off the top of my head, Michael. Somebody will nod here in a
second. 575.
Michael Lipsky - Deutsche Banc
And the rest sometime in the 2nd quarter?
Thank you very much.
Operator
Yeah.
Your next question comes from John Raleigh of Goldman Sachs.

John Raleigh - Goldman Sachs
Okay, thank you.

Thank you. Bob, you mentioned in the past what the estimated
value was for the contracts. Now that you're talking about
Operator monetizing an amount, $800 million, can you give us a most recent
assessment of what the contract value is and how you arrive at that
Your next question comes from Michael Lipsky from Deutsche number and reconcile it to the 800 million?
Banc.
Michael Lipsky - Deutsche Banc Chief Financial Offivcer President of Calpine Finance Corp.
Hello. A quick question about the term out of the revolver to Trying to interpret your question here a couple of ways. We've
2005. Wanted to know if the banks had expressed any reservation always said the contracts were worth 6.1 billion above market
about being moved out beyond the 1.2 billion convert and if so, value, which used as a 9% discount rate.
what would your response be to that reservation?
The contracts today are probably in the $5.3 billion range and it
has gone down because the market has gone up, so your above
Robert Kelly - Calpine Corporation - Executive Vice President market is lower because we've seen an increase in spark spreads.
Chief Financial Offivcer President of Calpine Finance Corp. And the $800 million for the most part, John, is higher than the
valuation which would be included in the 6.1 or in the 5.3 because
I think one, it's not a term out, there's -- this is a new bank the discount rate we're using is lower.
revolver for a billio n dollars. When you look at the company, we're
a $7 billion in sales company, we need a billion dollar revolver just
for-- it's not classified as a term out, it's our two-year recover John Raleigh - Goldman Sachs
which we sort of got away from last year.
Okay. Have you gotten any feedback -- that would only represent
There is many discussions with the bank, I don't know if you call it between 10 to 15% of the contract value? Or 10 to 15% of the
reservations, because of the number of maturities, we have a contracts, have you got any feedback as to that being a reasonable
billion dollar maturity in October, a billion in May of next year, number from any of t he possible counter parties?
21/2 in November, and a potential put in December and we've
worked through all those issues through the bank. And we'll go Robert Kelly - Calpine Corporation - Executive Vice President
through the negotiations over the next six to 8 weeks. Chief Financial Offivcer President of Calpine Finance Corp.
Michael Lipsky - Deutsche Banc We're very comfortable on the $800 million. We've given ourself
probably a 25% cushion in there.
One follow up question, total capitalized interest in 2002, what is
that? John Raleigh - Goldman Sachs

TRANSCRIPT

That's a correct way of looking at it in terms of giving up 10 to
15% something like that of the value of the contracts?
Yeah. Thanks.

Paul Posoli - Calpine Corporation - Senior Vice President of
Calpine Energy Services
Right. Essentially you're taking the contracts, taking the capital,
Thanks John.
you're reinvesting in cap ex, then you go out and sell the power
again, and you're seeing power prices rise, so you're cashing in on
your high markets, the market moves up and you go again. Operator
John Raleigh - Goldman Sachs Next question, Terry Hoye, Provident Investments.
Do you have any numbers in terms of the estimated sparks or Terry Hoye - Provident Investment
value that you use to come up with the 5.3 billion?
Could you just recap for me or help me recap the capacity at year-
Robert Kelly - Calpine Corporation - Executive Vice President end, you had 19,000 hundred megawatts on-line, 9,800 megawatts
Chief Financial Offivcer President of Calpine Finance Corp. under construction; is that correct?
That would be the $21 and I forget how many cents on the website Richard Barraza - Calpine Corporation - Senior Vice President
of what the -- of Investor Relations
Richard Barraza - Calpine Corporation - Senior Vice President That is correct.

Terry Hoye - Provident Investment
Let's ask Paul Posoli to step in, maybe just briefly walk through
that analysis. Paul? And then you said that 21,000 average for '03?
Paul Posoli - Calpine Corporation - Senior Vice President of Robert Kelly - Calpine Corporation - Executive Vice President
Calpine Energy Services Chief Financial Offivcer President of Calpine Finance Corp.
Sure, John. We basically value all the contracts against the Yeah, we are going to bring on around 4500 throughout the year
forward curve. So, if we have a fixed-price contract, we're looking so you can come up with an average of how many megawatts you
at the forward curve for fixed price power. If we're looking at a have.
capacity contract, we're looking at forward spark spreads. And
depending on the market -- obviously every market's different, so
if you want me to go through the markets, I can. Terry Hoye - Provident Investment
So those would probably --it looks like they're heavily weighted

towards the end of the year?
No, I just want to clarify that in simpleton methodology would be

taking the difference between, let's say the average was $8 versus Robert Kelly - Calpine Corporation - Executive Vice President
$21 and that's the methodology you are using to come up with the Chief Financial Offivcer President of Calpine Finance Corp.
5.3 billion in a simple fashion?
I'm not sure when exactly each one comes on.

Calpine Energy Services Richard Barraza - Calpine Corporation - Senior Vice President
For capacity contracts.

TRANSCRIPT
You can look at it, really throughout the year, we started with
19,000 and ending with a little over 23,000, gives you Bob's No, I can't. That's across 27 power plants. I don't have it for the
average of 21 for the year. five plants which are in CCFC 1 and 2.
Terry Hoye - Provident Investment Greg Imbruce - Jeffries and Company
Okay. Thank you. Third, do you have a realized spot spark spread for the 4th quarter
and then do you have an available figure for the 1st quarter of this
year?
Operator
Your next question comes from Greg Imbruce of Jeffries & Robert Kelly - Calpine Corporation - Executive Vice President
Company. Chief Financial Offivcer President of Calpine Finance Corp.
We have nothing for the 1st quarter of this year. Your question
Greg Imbruce - Jeffries and Company was what was our spot megawatt on merchant. No, we -- Paul, do
you have that number?
Good morning. Could you tell me what the number of QFs
included in that $600 million estimate are?
Greg Imbruce - Jeffries and Company
Robert Kelly - Calpine Corporation - Executive Vice President As opposed to the on peak, just an average.

Around 600 megawatts. of Investor Relations
Greg Imbruce - Jeffries and Company Greg, why don't we track that down for you and we'll interrupt the
call in a few minutes and put that out there for you.
Representing how many plants?
Greg Imbru ce - Jeffries and Company
Chief Financial Offivcer President of Calpine Finance Corp. Thanks. And last question, have you bought back any bonds
outside the ten growth transaction?
11 plants, 9 to 11 points. It's closer to nine.
Greg Imbruce - Jeffries and Company Chief Financial Offivcer President of Calpine Finance Corp.
Nine plants? We have not.
Just let me elaborate on your question on spark spread. It's

Robert Kelly - Calpine Corporation - Executive Vice President important to know the long-term contracts, when you think of the
Chief Financial Offivcer President of Calpine Finance Corp. company, 2.1 billion coming in under long-term contracts, and
whatever is the spark spread on the open megawatt hours, lets say
Yeah. $10 times 33, you're talking 2.4 billion of spark spread, so your
sensitivity as a company to the market is only 13, 14% of your
total cash flow coming in.
And can you give me a breakout of the 900 million construction Greg Imbruce - Jeffries and Company
costs between CCFC 1 and 2?
I recognize that. Maybe I can ask a follow-up since I am still
online here.

TRANSCRIPT

Your next question comes from Jason West of Deutsche Banc.
Last one. Jason West - Deutsche Banc
Thanks. I was wondering if you had set an estimate for D&A

expense for '03?
On your natural gas reserves, I had estimated a higher figure for

year-end using I think it was $4.50 NIMEX natural gas. What price Robert Kelly - Calpine Corporation - Executive Vice President
did you use and was that a lower price due to contracts between Chief Financial Offivcer President of Calpine Finance Corp.
CES?
I don't have that detail here, Bill, or Jason, sorry.

Chief Financial Offivcer President of Calpine Finance Corp. Jason West - Deutsche Banc
We use -- I don't know why your number would be higher, I am Okay, I guess we can assume it's going to continue to ramp up as
not sure when we used the price deck. That is just the proved new plants come on-line?
reserves only. Obviously if you took proved and probable, the gas
company is worth a lot more money than 1.4 or 1.5 billion.
Yes.
Okay. Thank you.
Jason West - Deutsche Banc

Operator
And one follow-up, I noticed in the press release it mentioned a
Your next question is from Gordon Howald of Credit Lyonnaise reaudit of the '00 and '01 results. Is that something new or is that
something that I missed in the past?
Gordon Howald - Credit Lyonnaise

Actually, my question has been answered already, thank you very Chief Financial Offivcer President of Calpine Finance Corp.
much.
No, 3rd quarter we announced that when we sold some assets, we
had discontinued ops and because of that and a couple other
Operator accounting changes we had to do a reaudit. The new accounting
firm, Deloitte and Touche, are reauditing 2000, 2001, 2002, an
Your next question comes from Bill Techar from Aristeia Capital. incredible amount of transactions over that period of time.
Bill Techar - Aristeia Capital Jason West - Deutsche Banc
Hi guys, just a quick question. What was the 4th quarter cap ex? Thanks a lot.
And I guess my other questions have been answered. Thanks.
Operator
Your next question comes from Mitchell Spiegel of Credit Suisse
First Boston
One second, Bill. 4th quarter was about $350 million, for the full
year, just a shade under 2.5 billion.
Mitchell Spiegel - Credit Suisse First Boston
Operator

TRANSCRIPT
A question relating to the restructuring of the turbine I guess I wanted to ask about -- I guess Mr. Kelly commented
commitments. When you originally made the announcement of the about the collateralization, if I heard him properly, was it 8 billion
delay covering the 89 turbines, what was the breakdown between on that one bank facility of a billion. Is there any way we can
steam and gas and how does that relate to the information you liquefy some of that? Can you talk about that a little bit?
provided earlier in the week in unabridged numbers?

Richard Barraza - Calpine Corporation - Senior Vice President Chief Financial Offivcer President of Calpine Finance Corp.
The number, there's 12 billion of book value against 2 billion of
Let me ask Ron Walter to jump on that question. indebtedness, 1 billion of which is the revolver and 1 billion is a
two-year term loan which matures in May of next year. I'm not
sure I understand the question are you saying sell those assets to
Ron Walter - Calpine Corporation - ExecutiveVice President of
repay the indebtedness?
Planning and Development
I think the number of 89 was gas turbines that we had in our Steve Gidumal - Trilogy Capital
portfolio at that time that we were looking to restructure. There
was no steam turbine deal. I guess maybe I'm asking that. Does that make sense? Could we
maybe borrow another billion dollars against that?
Mitchell Spiegel - Credit Suisse First Boston

Okay. And then just so I'm reading the press release right, it just Chief Financial Offivcer President of Calpine Finance Corp.
looks like the fee that you incurred to restructure, but if you then
go ahead and cancel the remaining balance of the turbines, is there You're limited somewhat under the indenture, the unsecured
an additional cancellation fee? indentures on the amount of indebtedness you can secure and that's
around $2 billion, so your cap on the ability to increase the amount
against those assets with the unsecureds.
Ron Walter - Calpine Corporation - Executive Vice President
There's a couple of points to make, Steve. The billion dollar
All we have left, when you look at the press release, was the revolver as you break down the letters of credit for gas
balance of that 109 or $18 million. After that, there is nothing else.
transportation, electric transmission, things like that, we need a
billion dollar revolver for working capital. It doesn't make a lot of
Mitchell Spiegel - Credit Suisse First Boston sense to sell any of those assets and pay down a billion dollar
revolver. It's a very ineffective use of capital.
Okay. Okay. Thank you.
Steve Gidumal - Trilogy Capital
Operator
I was thinking that sell some of those assets to pay down other
Your next question comes from Steve Gidumal of Trilogy Capital. debt and obviously use a revolver. I mean is that a possibility?

Hi guys. Can you hear me okay?
When you look at the collateral, the main collateral is broken
down into the gas company, which I said is worth 1.4 to1.5 billion,
Richard Barraza - Calpine Corporation - Senior Vice President and then other power assets, and we're not sure why you would sell
of Investor Relations power assets in today's depressed market to pay down 3% money.
That's literally what you would be doing.
Yeah.


TRANSCRIPT
Thank you. Then related to that, does that mean if the unsecured Peter Cartwright - Calpine Corporation - Chairman Chief
indentures are sort of operative now, and you have a $2 billion Executive Officer and President
secured cap, if you roll some of these other bank facilities, none of
them will be secured, is that --
They would be -- those are 8 to 10-year contracts, so essentially
you would have cash coming in over time and you're counting it --
Robert Kelly - Calpine Corporation - Executive Vice President discounting it and getting the cash today.
Jay Madea - Forest Investment Management
No, I think there's the challenge in the bank market is rolling. If
you tried to take the security away from them, that would be next
Thank you. The second question is the 600 million of QF older
to impossible. They will maintain the security they have and --
plant sales, you said they were contracted older plants, can you
give us an idea of the price per megawatt of that sale?
I'm talking about other facilities that may not -- I thought you said Chief Financial Offivcer President of Calpine Finance Corp.
some of the others may not be overcollateralized.
Yeah. When we went out into the marketplace based upon our lot
Robert Kelly - Calpine Corporation - Executive Vice President port sale earlier last year, we had a pretty good feeling that QF
Chief Financial Offivcer President of Calpine Finance Corp. contractual plants were worth about $1,000 per KW. (kilowatt) and
when we looked at the bid list, it was pretty much spot on. So, an
I'm not sure of the question. old plant with a good contract, $1,000 per K.W., that seems to be
where it is coming out .

I'll withdraw the question. Thanks.
So is that going to cause your spark spread, your gross margin
going forward to deteriorate a little bit?
Robert Ke lly - Calpine Corporation - Executive Vice President
Thanks. Before we go to the next question, let me follow up on the Chief Financial Offivcer President of Calpine Finance Corp.
question Greg asked a second ago. The spark spreads for the 4th
quarter, just a quick sampling of what we were seeing on peak for Absolutely. You're selling 100 megawatts and so you have to
our merchant generation in Q4 in the Northwest, roughly $12.40, remember, 600 on a 20,000 portfolio. Not a huge number, but if
spark spread up in New England, $14, and the other about $6 and you do decline.
again these are the on peak spark spreads. Okay, Eunike we are
ready for the next question.
Operator Okay. Thanks very much.
Your next question comes from Jay Madea from Forest

Operator
Investment Management.
Next question, Raymond Niles of Salomon Smith Barney.
Raymond Niles - Salomon Smith Barney
I was just wondering, with the 800 million contract securitization,
what is the tenor of that 800 million, meaning when are those --
Good morning. Thank you. The question I have is, just comparing
what's the timing of those contracts, when can we expect the cash
the forward contractual spread margins from September until now,
flows from those contracts not to come in because you've sold
there's quite a large increase kind of in the 22 to 23 dollar range.
them?
Does that represent having sold some lower priced contracts or
maybe you could just shed some light on that?

TRANSCRIPT
Operator
of Investor Relations Your next question comes from Christopher Sye of J.P. Morgan
Paul, can you take this one?

Christopher Sye - JP Morgan
Paul Posoli - Calpine Corporation - Senior Vice President of Hi. Can you talk a little bit about what the rise in gas prices are,
Calpine Energy Services what it's done for the spark spread for you guys in general?
The way we calculate that, the total spark spread margin locked
over time really hasn't changed.
Richard Barraza - Calpine Corporation - Senior Vice President Paul, would you like to answer that one for us?

Ray, I am sorry, I'm not sure what that feedback is.
Raymond Niles - Salomon Smith Barney Sure. I think the power markets have really reacted very closely to
what our expectations were in the last earnings call. The
Why don't you just go ahead. underlying fixed prices have increased dramatically with gas prices
going up. The question is, what happening with spark spreads, the
west has seen significant spark spread expansion on a forward
Unidentified Speaker basis.
I'll hang this up -- If you look at the balance of 2003, NP 15, which is Northern
California, spark spreads are up $8 a megawatt hour over the last
Paul Posoli - Calpine Corporation - Senior Vice President of three months and I think on our last call we said that we expected
Calpine Energy Services to see some increase in spark spread in the Alaska, we've seen that.
We're trading over $20 a megawatt hour on a spark spread basis
now for 2003 in NP 15. When you look at 2004 through 2010,
Sounds like somebody just hung up on us. So, the total contracted
we're up $8 also on a spark spread basis, trading close to $18 a
spark spread margin over time has remained pretty consistent, but
megawatt hour.
we have fewer contracted megawatt hours because we bought
back, so the way we look at contracted megawatt hours is on a net
So, we've seen incredible spark spread expansion, some of that is
basis. Every time I buy megawatt hours on a forward basis, what
due to the fact that gas is up and we're more efficient than the
happens is my contracted megawatt hours goes down so it just
marginal unit in those markets, but I think more than that, the West
changes the dollars on spark spread per megawatt hour basis.
is -- I think it's fundamentally short supply market. In years like
this one, where you have very low hydro conditions, we're at about
Raymond Niles - Salomon Smith Barney 65% of normal, the shortage is highlighted, so I think the West is a
combination of gas prices and also just the fact that we're going to
So you just basically bought back some of the low price contracts, have a tight supply demand balance for this summer and the next
so the remaining average is higher? few years, it looks like.
The rest of the country has also reacted to the move in gas. In
markets where you have gas in the margin, we've seen a little
increase in spark spreads, a dollar or two, not a significant
increase. Markets like the Southeast and Midwest we've seen them
Yes. decrease a little bit, slightly, maybe a buck here and there. Off-
peak spark spreads remain negative in most markets, and with gas
Raymond Niles - Salomon Smith Barney running the way it has, it makes off peak a little bit worse.
Okay, great. Thank you. Christopher Sye - JP Morgan

TRANSCRIPT

Thank you.
Operator No, that got paid back to 50% to the term loan B and 50% to the
revolver banks.
Your next question comes from Phil Pannell of Q Investments.
Phil Pannell - Q Investments

And was that a permanent reduction in those amounts?
I had a question to kind of follow up on the cap ex for Q4. You
had indicated last call that the terms of construction, it was like
650 million that was expected in Q4, about 50 million in
maintenance and another 150 in turbines, how did each of those
play out?
It was on the term loan B, it's decreased from a billion to 950, and
the billion dollar revolver decreased to 950 and we're going back
Robert Kelly - Calpine Corporation - Executive Vice President up to a billion with the new deal.

The number I gave of 350 was the just straight plant construction
cap ex. Turbines in the 4th quarter, around 135, capitalized
Okay. Thanks.
interest, around 120.
Operator
Ladies and gentlemen, we have reached the end of the allotted

The maintenance was about 50, is that about right?
time for questions and answers. Mr. Barraza, do you have any
closing remarks?
That would be in the ballpark.
Thank you, Eunike. Let me ask Pete to say a few words.


And then the $111 million of restricted cash that you talked about,
does that include the 60 million that would kind of end the number
last quarter from the 10 gross deal that you guys were holding --
I want to thank you all for participating this morning. We have we
had some very good questions. Feel free to take Rick up on his
Robert Kelly - Calpine Corporation - Executive Vice President offer and give him a call if you'd like further information. Thanks
Chief Financial Offivcer President of Calpine Finance Corp. again for being on the line with us and we'll talk to you again soon.
All that is, is a category put in by the accountants as a result of the

water falls in some of the financing. I have argued many times, it is
not restricted, it just flows through. It pays the operating expenses
and we get what's left.
That 60 million, did it get paid back to the revolver or are you
guys still holding that?

TRANSCRIPT
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Greg Imbruce, Calpine Corp. (CPN), Jefferies High Yield Analyst, 4Q 2002 Earning Call

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TRANSCRIPT

CPN - Q4 2002 Calpine Corporation Earnings Conference Call

CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com

Richard Barraza - Calpine Corporation - Senior Vice President

Thank you, Eunike, good morning everyone. On behalf of

Joining me for today's call, Peter Cartwright, our President,

Before we begin the call, I'd like to read a brief announcement, as

CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com

CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com

Turning to the gas side of the business, in 2002, we achieved

CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com

maintenance cap ex, and $350 million of cash lease expense. As

CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com

Peter Cartwright - Calpine Corporation - Chairman Chief

CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com

Robert Kelly - Calpine Corporation - Executive Vice President

Yeah, I think just to clarify, David, the cap ex number that we

David Silverstein - Merrill Lynch

And so a 400 reduction, though, give us a sense for when you

Robert Kelly - Calpine Corporation - Executive Vice President

I think when we look at the program, it takes about 30 to 45 days

David Silverstein - Merrill Lynch

Robert Kelly - Calpine Corporation - Executive Vice President

CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com

Probably just take the open megawatt hours of 33 million times a

Thank you very much.

When I talked about the 75%, I think I put it in , that is a

CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com

about today is, it is not as draconian because you're stopping things

Elizabeth Parrella - Merrill Lynch Operator

CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com

Thomas Boyce - Bear Stearns

Okay, thank you.

CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com

John Raleigh - Goldman Sachs

Robert Kelly - Calpine Corporation - Executive Vice President

Richard Barraza - Calpine Corporation - Senior Vice President That is correct.

So those would probably --it looks like they're heavily weighted

No, I just want to clarify that in simpleton methodology would be

Paul Posoli - Calpine Corporation - Senior Vice President of

CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com

Terry Hoye - Provident Investment Greg Imbruce - Jeffries and Company

Richard Barraza - Calpine Corporation - Senior Vice President

Nine plants? We have not.

Just let me elaborate on your question on spark spread. It's

CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com

Richard Barraza - Calpine Corporation - Senior Vice President

Last one. Jason West - Deutsche Banc

Thanks. I was wondering if you had set an estimate for D&A

On your natural gas reserves, I had estimated a higher figure for

Robert Kelly - Calpine Corporation - Executive Vice President

Jason West - Deutsche Banc

Gordon Howald - Credit Lyonnaise

Bill Techar - Aristeia Capital Jason West - Deutsche Banc

CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com

Robert Kelly - Calpine Corporation - Executive Vice President

Mitchell Spiegel - Credit Suisse First Boston

Robert Kelly - Calpine Corporation - Executive Vice President

Steve Gidumal - Trilogy Capital

CCBN StreetEvents streetevents@ccbn.com 617.603.7900 www.streetevents.com

Steve Gidumal - Trilogy Capital

Operator Okay. Thanks very much.

Your next question comes from Jay Madea from Forest