916457--2/27/2009--CALPINE

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{loss, insurance, financial}

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{operation, natural, condition}

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{competitive, industry, competition}

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{financial, litigation, operation}

{customer, product, revenue}

{gas, price, oil}

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Economic and Financial Capital Market Conditions A general economic downturn could result in a reduction in our revenue, or result in our customers, counterparties, vendors or other service providers failing to perform under their contracts with us. The soundness of financial institutions could adversely affect us. Inability to access the credit and capital markets could adversely affect us. Our ability to manage our counterparty credit risk could adversely affect us. The U.S. government s proposed plan to address the financial crisis may not be effective to stabilize the financial markets or to increase the availability of credit. We have substantial liquidity needs and could face liquidity pressure. Our substantial indebtedness could adversely impact our financial health and limit our operations. Substantially all of our indebtedness contains floating rate interest provisions, which could adversely affect our financial health if interest rates were to rise significantly. We may be unable to obtain additional financing in the future. We must either repay or refinance our debt maturing in the near term. Our Exit Credit Facility imposes significant restrictions on us; any failure to comply with these restrictions could have a material adverse effect on our liquidity and our operations. Our credit status is below investment grade, which may restrict our operations, increase our liquidity requirements and restrict financing opportunities. Certain of our obligations are required to be secured by letters of credit or cash, which increase our costs; if we are unable to provide such security it may restrict our ability to conduct our business. We may not have sufficient liquidity to hedge market risks effectively. Our ability to receive future cash flows generated from the operation of our subsidiaries may be limited. We may utilize project financing, preferred equity and other types of subsidiary financing transactions when appropriate in the future. Our Exit Credit Facility and other parent-company debt is effectively subordinated to certain project indebtedness. Our financial results may be volatile and may not reflect historical trends. Our results are subject to quarterly and seasonal fluctuations. Accounting for our hedging activities may increase the volatility in our quarterly and annual financial results. The use of hedging agreements could result in financial losses. We may be subject to claims that were not discharged in the Chapter 11 cases, which could have a material adverse effect on our results of operations and profitability. Revenue may be reduced significantly upon expiration or termination of our PPAs. In certain situations, our PPAs and other contractual arrangements, including construction agreements, commodity contracts, maintenance agreements and other arrangements, may be terminated by the counterparty and/or may allow the counterparty to seek liquidated damages. We may be unable to obtain an adequate supply of natural gas in the future at prices acceptable to us. We rely on power transmission and natural gas distribution facilities owned and operated by other companies. Our revenues and results of operations depend on market rules, regulation and other forces beyond our control. Our power generating operations performance may be below expected levels of output or efficiency. Our power project development activities may not be successful. Our geothermal power reserves may be inadequate for our operations. Natural disasters could damage our projects or our corporate offices. We depend on our management and employees. We depend on computer and telecommunications systems we do not own or control. Competition could adversely affect our performance. Our financial performance may be impacted by price fluctuations in the wholesale power markets and other market factors that are beyond our control. Existing and future anticipated GHG/Carbon legislation could adversely affect our operations. Existing and proposed federal and state RPS and energy efficiency, as well as economic support for renewable sources of power under the U.S economic stimulus legislation could adversely impact our operations. We are subject to complex governmental regulation which could adversely affect our operations. If we were deemed to have market power in certain markets as a result of the ownership of our stock by certain significant shareholders, we could lose FERC authorization to sell power at wholesale at market-based rates in such markets or be required to engage in mitigation in those markets. Risks Relating to Our Common Stock The market pricing of our common stock has been volatile. Our principal shareholders own a significant amount of our common stock, giving them influence over corporate transactions and other matters. Transfers of our equity, or issuances of equity in connection with our reorganization, may impair our ability to utilize our federal income tax NOL carryforwards in the future.

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916457--2/27/2009--CALPINE_CORP