Variable Interest Entities and Unconsolidated Investments

We consolidate all of our VIEs where we have determined that we are the primary beneficiary. There were no changes to our determination of whether we are the primary beneficiary of our VIEs for the six months ended June 30, 2012. See Note 5 in our 2011 Form 10-K for further information regarding our VIEs.

Riverside Energy Center

Our 603 MW Riverside Energy Center has a PPA that provides WP&L an option to purchase the power plant and plant-related assets for approximately $392 million upon written notice of exercise prior to May 31, 2012. On May 18, 2012, WP&L exercised their option to purchase Riverside Energy Center, LLC, one of our VIEs which owns Riverside Energy Center. The sale is expected to close in December 2012 and is subject to federal regulatory approval. The assets being disposed of did not meet the criteria for classification as held for sale under U.S. GAAP, and we do not expect any gain (loss) on sale. At June 30, 2012, Riverside Energy Center, LLC had total assets of $422 million and total liabilities of $5 million.

VIE Disclosures

Our consolidated VIEs include natural gas-fired power plants with an aggregate capacity of 10,500 MW and 11,391 MW, at June 30, 2012 and December 31, 2011, respectively. For these VIEs, we may provide other operational and administrative support through various affiliate contractual arrangements among the VIEs, Calpine Corporation and its other wholly owned subsidiaries whereby we support the VIE through the reimbursement of costs and/or the purchase and sale of energy. Calpine Corporation provided support to these VIEs in the form of cash and other contributions other than amounts contractually required of nil during both the three months ended June 30, 2012 and 2011, and nil and $72 million during the six months ended June 30, 2012 and 2011, respectively.

U.S. GAAP requires separate disclosure on the face of our Consolidated Condensed Balance Sheets of the significant assets of a consolidated VIE that can be used only to settle obligations of the consolidated VIE and the significant liabilities of a consolidated VIE for which creditors (or beneficial interest holders) do not have recourse to the general credit of the primary beneficiary. In determining which assets of our VIEs meet the separate disclosure criteria, we consider this separate disclosure requirement is met where Calpine Corporation is substantially limited or prohibited from access to assets (primarily cash and cash equivalents, restricted cash and property, plant and equipment), and where our VIEs had project financing that prohibits the VIE from providing guarantees on the debt of others. In determining which liabilities of our VIEs meet the separate disclosure criteria, we consider whether this separate disclosure requirement is met where there are agreements that prohibit the debt holders of the VIEs from recourse to the general credit of Calpine Corporation and where the amounts were material to our financial statements.

Unconsolidated VIEs and Investments

We have a 50% partnership interest in Greenfield LP and in Whitby. Greenfield LP and Whitby are also VIEs; however, we do not have the power to direct the most significant activities of these entities and therefore do not consolidate them. We account for these entities under the equity method of accounting and include our net equity interest in investments on our Consolidated Condensed Balance Sheets. At June 30, 2012 and December 31, 2011, our equity method investments included on our Consolidated Condensed Balance Sheets were comprised of the following (in millions):



	Ownership Interest as of June 30, 2012	June 30, 2012		December 31, 2011
Greenfield LP	50%	$	69	$	72
Whitby	50%	7		8
Total investments		$	76	$	80

Our risk of loss related to our unconsolidated VIEs is limited to our investment balance. Holders of the debt of our unconsolidated investments do not have recourse to Calpine Corporation and its other subsidiaries; therefore, the debt of our unconsolidated investments is not reflected on our Consolidated Condensed Balance Sheets. At June 30, 2012 and December 31, 2011, equity method investee debt was approximately $448 million and $462 million, respectively, and based on our pro rata share of each of the investments, our share of such debt would be approximately $224 million and $231 million at June 30, 2012 and December 31, 2011, respectively.

Our equity interest in the net income (loss) from Greenfield LP and Whitby for the three and six months ended June 30, 2012 and 2011 is recorded in (income) loss from unconsolidated investments in power plants. The following table sets forth details of our (income) loss from unconsolidated investments in power plants for the periods indicated (in millions):



	Three Months Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Greenfield LP	$	(2	)	$	4		$	(8	)	$	(1	)
Whitby	(3		)	(2		)	(6		)	(6		)
Total	$	(5	)	$	2		$	(14	)	$	(7	)

Greenfield LP — Greenfield LP is a limited partnership between certain subsidiaries of ours and of Mitsui & Co., Ltd., which operates the Greenfield Energy Centre, a 1,038 MW natural gas-fired, combined-cycle power plant located in Ontario, Canada. We and Mitsui & Co., Ltd. each hold a 50% interest in Greenfield LP. Greenfield LP holds an 18-year term loan in the amount of CAD $648 million. Borrowings under the project finance facility bear interest at Canadian LIBOR plus 1.125% or Canadian prime rate plus 0.125%. Distributions from Greenfield LP were $9 million during both the three and six months ended June 30, 2012, and $2 million during both the three and six months ended June 30, 2011.

Whitby — Whitby is a limited partnership between certain subsidiaries of ours and Atlantic Packaging Ltd., which operates the Whitby facility, a 50 MW natural gas-fired, simple-cycle cogeneration power plant located in Ontario, Canada. We and Atlantic Packaging Ltd. each hold a 50% partnership interest in Whitby. Distributions from Whitby were $7 million during both the three and six months ended June 30, 2012, and $4 million during both the three and six months ended June 30, 2011.

Inland Empire Energy Center Put and Call Options — We hold a call option to purchase the Inland Empire Energy Center (a 775 MW natural gas-fired power plant located in California which achieved COD on May 3, 2010) from GE that may be exercised between years 2017 and 2024. GE holds a put option whereby they can require us to purchase the power plant, if certain plant performance criteria are met by 2025. We determined that we are not the primary beneficiary of the Inland Empire power plant, and we do not consolidate it due to the fact that GE directs the most significant activities of the power plant including operations and maintenance.