8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 20, 2010

CALPINE CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	1-12079	77-0212977
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

717 Texas Avenue, Suite 1000, Houston, Texas 77002

(Addresses of principal executive offices and zip codes)

Registrant’s telephone number, including area code: (713) 830-8775

Not applicable

(Former name or former address if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

ITEM 1.01 — ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

ITEM 7.01 — REGULATION FD

ITEM 9.01 — FINANCIAL STATEMENTS AND EXHIBITS

SIGNATURES

EXHIBIT INDEX

1

ITEM 1.01 — ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

Calpine Corporation (“Calpine”) announced today that it entered into a Purchase Agreement (the “Purchase Agreement”) through New Development Holdings, LLC (“Purchaser”), a wholly owned indirect subsidiary of Calpine on April 20, 2010, with Pepco Holdings, Inc. (“PHI”), Conectiv, a wholly owned subsidiary of PHI (“Conectiv”), and Conectiv Energy Holding Company (the “Company”), a wholly-owned direct subsidiary of Conectiv.

Pursuant to the Purchase Agreement, Purchaser has agreed, on the terms and subject to the conditions of the Purchase Agreement, to purchase from Conectiv all of the membership interests in the Company, and thereby acquire all of the electricity generation assets of Conectiv, which include 18 operating power plants and one plant under construction, with approximately 4,490 MW of capacity (including completion of the power plant under construction and scheduled upgrades) for a purchase price of $1.65 billion in cash plus the market value of the fuel oil inventory at closing, and subject to other adjustments including (i) the level of working capital and non-fuel oil inventory at closing and (ii) actual capital expenditures relative to budgeted capital expenditures through the closing date. Purchaser will not acquire the Company’s trading book, collateral requirements or load-serving auction obligations. In addition, Purchaser will not assume any of the Company’s off-site environmental liabilities or pre-close pension liabilities. The transaction is targeted to close by June 30, 2010. Effective July 1, 2010, the purchase price will be subject to a per diem reduction for each day closing does not occur of (i) $360,000 in July, (ii) $363,500 in August, (iii) $237,500 in September, (iv) $195,000 in October, (v) $189,500 in November, and (vi) $219,500 in December.

Calpine will finance the transaction through available cash and bank debt provided pursuant to financing commitments from Credit Suisse as lead arranger, along with Citigroup Global Markets Inc. and Deutsche Bank Trust Company Americas. However, the Purchase Agreement is not subject to financing condition.

The obligations of the parties under the Purchase Agreement are subject to customary closing conditions, including, among others: (i) obtaining required governmental and third party consents and approvals and (ii) the absence of legal restraints that would make the transactions contemplated by the Purchase Agreement illegal or otherwise prevent the consummation thereof. In addition, the obligations of Purchaser are subject to certain other conditions, including: (i) possession by the Company and its subsidiaries (the “Companies”) of all permits necessary to conduct their businesses in all material respects in accordance with applicable laws, (ii) absence, since the date of the Purchase Agreement, of any events or circumstances that, individually or in the aggregate, have had or are reasonably likely to have a material adverse effect on the Companies or certain specified assets of the Companies, (iii) the successful consummation of an agreed reorganization of Companies as described in the Purchase Agreement (the “Reorganization”), (iv) the release of certain liens affecting certain real property, (v) the absence of legal or regulatory action with respect to plants, (vi) certain actions to ensure that the Company’s facility construction project in Peach Bottom Township, Pennsylvania (the “Delta Project”) is completed on schedule and in the expected manner and (vii) the receipt by Purchaser of audited financial statements of the Company and its consolidated subsidiaries for the years ended December 31, 2009 and 2008.

Under the terms of the Purchase Agreement, PHI and the Company have agreed to, and the Company has agreed to cause its subsidiaries to, among other things and subject to certain exceptions: (i) conduct its business in the ordinary course, (ii) use reasonable best efforts to preserve intact their respective business organizations and maintain appropriate relationships with governmental or regulatory authorities and others having material business relationships with them, (iii) comply in all material respects with all applicable laws and (iv) refrain from taking certain specified actions. In addition, all parties have agreed to use reasonable best efforts to take, or cause to be taken, all action, and to do, or cause to be done, and to assist and cooperate with each other in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by the Purchase Agreement, including obtaining consents and approvals, and executing any additional instruments reasonably necessary to consummate the transactions contemplated by the Purchase Agreement.

The parties have agreed to customary indemnifications for breaches of representations, warranties or covenants made by the parties under the Purchase Agreement. The indemnifications for breaches of representations and warranties are capped at $320 million (except with respect to specific representations and in the case of fraud, bad faith or willful misconduct) and subject to a $10 million deductible. In addition, PHI and Conectiv have agreed to indemnify Purchaser for specific matters identified in the Purchase Agreement.

The Purchase Agreement contains customary termination rights for the parties. In addition, the Purchase Agreement may be terminated at any time by PHI or Purchaser if the closing fails to occur before December 31, 2010. Purchaser has early termination rights if specified events occur or do not occur, or if specified documents are not delivered by certain dates, including audited financial statements of the Company and its consolidated subsidiaries, PHI lender consents and certain other transaction documents.

The Purchase Agreement provides that liquidated damages be paid to parent or Purchaser, as the case may be, upon termination under certain circumstances, the amount of which liquidated damages depends on the reason for termination. The liquidated damages payable by PHI range from $20 million to $175 million. The liquidated damages payable by Purchaser range from $40 million to $175 million. Calpine has agreed to guarantee Purchaser’s liquidated damages obligations. The parties are not entitled to specific performance under the Purchase Agreement, other than with respect to certain specified covenants.

ITEM 7.01 — REGULATION FD

        Calpine will discuss the transaction during a conference call for investors at 9 a.m. EDT / 8 a.m. CDT on Wednesday, April 21, 2010. Calpine also intends to update its 2010 guidance and issue 2011 guidance for the first time. Presentation materials will be made available on Calpine’s Web site prior to the call and are attached hereto as Exhibit 99.2. A listen-only webcast of the call may be accessed through Calpine’s Web site at www.calpine.com, or by dialing 877-397-0286 (or 713-325-4942 for international listeners) at least ten minutes prior to the beginning of the call. An archived recording of the call will be made available on the Web site and can also be accessed by dialing 888-203-1112 or 719-457-0820 (International) and providing confirmation code 4987312.

The information in this Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the “1934 Act”), nor shall they be deemed “incorporated by reference” into any filing under the Securities Act of 1933, as amended, or the 1934 Act, except as may be expressly set forth by specific reference in such filing.

ITEM 9.01 — FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibits

Exhibit No.	Description
99.1	Calpine Corporation Press Release dated April 21, 2010.
99.2	Calpine Corporation Presentation dated April 21, 2010.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CALPINE CORPORATION
By:	/s/    ZAMIR RAUF
	Zamir Rauf
	Executive Vice President and
	Chief Financial Officer

Date: April 21, 2010

3

EXHIBIT INDEX

Exhibit No.	Description
99.1	Calpine Corporation Press Release dated April 21, 2010.
99.2	Calpine Corporation Presentation dated April 21, 2010.

EX-99.1

Exhibit 99.1

CONTACTS:	NEWS RELEASE
Media Relations:	Investor Relations:
Norma F. Dunn	Andre K. Walker
713-830-8883	713-830-8775
norma.dunn@calpine.com	andrew@calpine.com

Calpine to Purchase Conectiv Energy Fleet for $1.65 Billion,

Adding Scale in Targeted PJM Region

Accretive transaction complements Calpine’s clean energy footprint

(HOUSTON, Texas) April 21, 2010 – Calpine Corporation (NYSE:CPN) announced today that it has agreed to purchase 4,490 MW of power generation assets from Pepco Holdings, Inc. (PHI) for $1.65 billion plus adjustments. The purchase of the Conectiv Energy fleet, which includes 18 operating power plants and one plant under construction, is expected to close by June 30, 2010.

“The Conectiv acquisition represents a unique opportunity to transform our company by expanding our portfolio with scale in one of the most robust competitive markets in the country, giving us even greater geographic diversity that we expect will enhance value for our shareholders,” said Jack A. Fusco, Calpine’s President and Chief Executive Officer. “This adjusted free cash flow and EBITDA accretive transaction meets the criteria we established last year for financially disciplined growth and achieves our stated strategic goal of expanding with scale into an Eastern market.

“Calpine has long been a leader in generating clean energy at our natural gas-fired and geothermal plants. The Conectiv fleet of primarily natural gas-fired plants and renewable generation,” Fusco said, “coupled with our decision to operate the two coal plants in the fleet on natural gas, reaffirms our strong sense of environmental stewardship. This transaction also reaffirms our view that natural gas-fired and renewable generation are the core components of the energy solution for our country’s future and our commitment to that business model.”

Financial and Strategic Benefits

Acquisition of clean fleet (with our decision to switch the two coal plants to natural gas) at an attractive price

• Accretive to Adjusted EBITDA and Adjusted Free Cash Flow per share

Sizeable entry into strategically targeted Mid-Atlantic region

• PJM East market features distinct market advantages, including a robust capacity market and a strong likelihood that increasingly stringent environmental regulation will result in the retirement of aging, inefficient coal units, creating new opportunities for our natural gas-fired fleet

Stable cash flows from contracted capacity revenues and new 565 MW contracted CCGT

• Addition of long-term capacity revenues improves risk profile of overall portfolio

• Conectiv’s capacity-driven cash flows reduce Calpine’s sensitivity to gas prices

Portfolio of growth opportunities

• New, fully contracted 565 MW combined-cycle plant currently under construction, to be completed mid 2011

• Additional expansion capabilities imbedded within portfolio

-more-

Calpine to Purchase Conectiv Energy Fleet

April 21, 2010

Page 2

Transaction Summary

As a result of the transaction, Calpine will significantly increase its operating capacity in the PJM market, adding 4,490 MW.

Table 1: Asset Profile

Late-model combined-cycle	2,260 MW
Simple-cycle	771 MW
Conventional gas	868 MW
Internal combustion	22 MW
Solar	4 MW
New combined-cycle (under construction)	565 MW
PJM-E Capacity	4,490 MW

The capacities shown above include 3,860 MW of capacity expected to be in operation as of the close of the transaction and 65 MW of upgrades to be completed after the close of the transaction.

Although Calpine is purchasing Conectiv’s electrical generation business, it will not acquire Conectiv’s trading book, collateral requirements or load-serving auction obligations. In addition, Calpine will assume no off-site environmental liabilities or pre-close pension liabilities.

Funding

Calpine expects to fund the transaction with a combination of subsidiary-level debt and corporate cash. Though final financing terms are subject to change, Calpine has received a commitment from Credit Suisse as lead arranger, along with Citi and Deutsche Bank, for a $1.3 billion amortizing term loan at attractive rates and terms. This seven-year term loan allows Calpine to take advantage of the lower cost of capital of subsidiary-level financing without sacrificing flexibility.

Approvals and Time to Close

Under the contract, the parties are targeting a transaction close of June 30, 2010. The transaction is subject to customary closing conditions, approval from the Federal Energy Regulatory Commission and antitrust review under the Hart-Scott-Rodino Act. No shareholder approval is required.

Advisors

Calpine’s financial advisors were Citi and Deutsche Bank, and its legal advisor was White and Case LLP.

-more-

Calpine to Purchase Conectiv Energy Fleet

April 21, 2010

Page 3

Investor Conference Call and Webcast

Management will discuss the transaction during a conference call for investors at 9 a.m. EDT / 8 a.m. CDT on Wednesday, April 21. Management also intends to update Calpine’s 2010 guidance and issue 2011 guidance for the first time. Presentation materials will be made available on the Company’s Web site prior to the call. A listen-only webcast of the call may be accessed through the Company’s Web site at www.calpine.com or by dialing 877-397-0286 (or 719-325-4942 for international listeners) at least 10 minutes prior to the beginning of the call. An archived recording of the call will be made available on the Web site and can also be accessed by dialing 888-203-1112 (or 719-457-0820 for international listeners) and providing confirmation code 4987312.

About Calpine Corporation

Founded in 1984, Calpine Corporation is a major U.S. power company, currently capable of delivering nearly 25,000 megawatts of clean, cost-effective, reliable and fuel-efficient power from its 76 operating plants to customers and communities in 16 states in the United States and Canada. Calpine Corporation is committed to helping meet the needs of an economy that demands more and cleaner sources of electricity. Calpine owns, leases and operates low-carbon, natural gas-fired and renewable geothermal power plants. Using advanced technologies, Calpine generates power in a reliable and environmentally responsible manner for the customers and communities it serves. Please visit our Web site at www.calpine.com for more information.

About Pepco Holding, Inc.

Pepco Holdings, Inc., headquartered in Washington, D.C., delivers electricity and natural gas to about 1.9 million customers in Delaware, the District of Columbia, Maryland, and New Jersey, through its subsidiaries Pepco, Delmarva Power and Atlantic City Electric. PHI also provides retail energy products and services through Pepco Energy Services.

Forward-Looking Information

In addition to historical information, this release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as “believe,” “intend,” “expect,” “anticipate,” “plan,” “may,” “will” and similar expressions identify forward-looking statements. Such statements include, among others, those concerning expected financial performance and strategic and operational plans, as well as assumptions, expectations, predictions, intentions or beliefs about future events. You are cautioned that any such forward-looking statements are not guarantees of future performance and that a number of risks and uncertainties could cause actual results to differ materially from those anticipated in the forward-looking statements. Please see the risks identified in this release or in Calpine’s reports and registration statements filed with the Securities and Exchange Commission, including, without limitation, the risk factors identified in its Annual Report on Form 10-K for the year ended Dec. 31, 2009. These filings are available by visiting the Securities and Exchange Commission’s Web site at www.sec.gov or Calpine’s Web site at www.calpine.com. Actual results or developments may differ materially from the expectations expressed or implied in the forward-looking statements, and Calpine undertakes no obligation to update any such statements.

###

EX-99.2

CALPINE CORPORATION

Strategic Transactions Overview:

Acquisition

of

Conectiv

Fleet

&

Sale of Colorado Plants

April 21, 2010

Exhibit 99.2

Agenda

•

Welcome and Safe Harbor

Andre Walker

VP, Finance & Investor Relations

•

Recent Strategic Transactions

Jack Fusco

President, Chief Executive Officer

•

Operations Overview

Thad Hill

EVP, Chief Commercial Officer

•

Financial Considerations

Zamir

Rauf

EVP, Chief Financial Officer

•

Concluding Remarks

Jack Fusco

President, Chief Executive Officer

•

Q & A

1

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.

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, 2009 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,

2009,

can

be

found

on

the

SEC’s

website

at

www.sec.gov

and

on Calpine’s website at www.calpine.com.

Reconciliation to GAAP Financial Information

The

following

presentation

includes

certain

“non-GAAP

financial

measures”

as

defined

in

Regulation

G

under

the

Securities

Exchange Act of 1934.  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

GAAP.

2

LEGEND

CCGT

CT

Conventional

Solar

Internal combustion

•

2 plants

•

931 MW

•

$739 million

•

$794 / KW

•

19

plants

•

4,490 MW

•

$1.65

billion

•

$381 / KW

Achieving Strategic Goals

CPN as Seller:

CPN as Buyer:

Transactions Exceed

Current Calpine

Valuation Metrics

Long-Term Value

Enhancement

Divestiture of

Non-Strategic Assets

+

Scale Expansion in

Strategic Markets

+

Committed Financing

with No New Equity

Includes projects under construction.

Includes 3,860 MW of capacity expected to be in operation as of the close of the transaction, 65 MW of upgrades to be completed after the close of the transaction, and 565 MW of capacity under construction.

  Adjustments to include (but may not be limited to) purchases of liquid fuel inventory, changes in other working capital items versus pro forma assumptions, and other customary adjustments (e.g,

    adjustments for actual versus planned capital expenditures).

3

1

2

3

1

3

2

•

Description

Acquisition

of

Conectiv

Energy

from

Pepco

Holdings

Inc.

(PHI)

•

Price

$1.65

billion

+

Adjustments

•

Operations

Short-Term: Convert coal-fired generation primarily to gas

Long-Term: Modernize sites

•

Key Considerations

CPN

to

acquire

all

of

Conectiv

Energy

except:

-

Load-serving auction positions

-

Legacy trading book

$1.3 billion committed term loan

•

Regulatory Approvals

FERC

HSR

•

Est. Transaction Close

July 1, 2010

Calpine as Buyer: Key Transaction Terms

Asset Profile²:

2,260 MW

Late-model CCGT

771 MW

Peaking (CT)

868 MW

Conventional Gas

22 MW

Internal Combustion

4 MW

Solar

565 MW

New CCGT

(Under Construction)

4,490 MW

PJM-E Capacity

1

1

Acquisition

is

Accretive

to

CPN’s

Adjusted

EBITDA

and

Adjusted

Free

Cash

Flow

4

Adjustments to include (but may not be limited to) purchases of liquid fuel inventory, changes in other working capital items versus pro forma assumptions, and other customary adjustments (e.g,

adjustments for actual versus planned capital expenditures).

2

The capacities shown above include 3,860 MW of capacity expected to be in operation as of the close of the transaction and 65 MW of upgrades to be  completed after the close of the transaction.

Benefits of Transaction

•

Presence in IPP-friendly

PJM market

•

Assets located in

transmission-

constrained PJM-E

region

•

Increasingly diversified

national footprint

through scale

acquisition in third

region

•

PJM capacity revenues

firm through May 2013 

(through 2014 at close)

•

Addition of long-term

capacity contracts

improves risk profile of

CPN overall portfolio

•

Transaction economics

feature low gas price

sensitivity

•

Delta

—

Phase I: 565 MW CCGT

currently under

construction; long-term

tolling agreement with

Constellation

—

Phase II: 565 MW CCGT

permitted at same site

•

Short term: Optimize /

upgrade assets at

existing sites

•

Long term: Modernize

conventional-fired sites;

Expand solar

•

Purchase price of

$381/KW

•

Accretive Transaction

—

Adjusted EBITDA:

Implied 2011 EV/Adj.

EBITDA multiple of 6.9x

vs. CPN of ~

8.8x

—

Adjusted Free Cash

Flow per Share: 35%

accretive in 2011

—

Adjusted Free Cash

Flow accretive for the

long term

1

Based on midpoint of 2011 guidance.  See slide 17 for additional detail.

Acquisition of clean fleet

at attractive valuation

Sizeable entry into

strategically-targeted

Mid-Atlantic region

Stable cash flows from

contracted capacity

revenues

Portfolio of growth

opportunities

Unique opportunity to build scale in third region through acquisition of

quality assets with potential for additional growth

1

5

•

Description

Sale of Colorado plants to Xcel Energy

•

Price

$739 million

•

Regulatory Approvals

FERC

HSR

Colorado PUC

•

Est. Transaction Close

December 1, 2010

•

Use of Proceeds

$412

million

debt

repayment

-

Fully retire 2011 maturities

-

Release ~$90 million restricted cash

$327 million pre-tax proceeds

Calpine as Seller: Key Transaction Terms

Asset Profile:

621 MW

Late-model CCGT

PPA

to

expire

2014

310 MW

Peaking (CT)

PPA to expire 2013

931 MW

WECC Capacity

Rocky Mountain Energy Center

Attractively-priced sale of non-core assets

provides opportunity to redeploy capital into strategic markets

2

1

1

  PPA includes immaterial generation requirement through 2017.

2

  Includes debt associated with Riverside Energy Center, which is not being sold.  Debt and restricted cash balances are projected as of 12/1/10, and reflect impacts of estimated payments   

   made prior to such date.

6

Transaction Comparative

7

What We’re Selling:

Colorado

What We’re Buying:

Conectiv

CPN

(As Is)

Full Value

Post

Contracts

Full Value

Less Delta

(at cost)

Enterprise Value

1

($ millions)

$739

$739

$1,650

$1,230

$14,375

Adj. EBITDA

2

($ millions)

$80

$40

$240

$190

$1,525 -

$1,725

Capacity (MW)

931

931

4,490

3,925

24,738

Adj. EBITDA Multiple

9.2x

18.5x

6.9x

6.5x

8.3x –

9.4x

Value

3

/ KW

$794

$381                 $313

$581

Asset sale

completed at valuation

ABOVE

corporate metrics

Asset purchase

completed at valuation

BELOW

corporate metrics

Successful execution of value-enhancing transactions

Conectiv Less Delta based on $1,650 million purchase, less $420 million estimated construction cost of Delta incurred as of close date.  CPN based on $11.89 share price as of 4/16/10 x 486 million shares +

$8.6 billion of projected net debt at YE2011.

CPN estimates for Colorado and Conectiv full value based upon CPN projection of Commodity Margin, less expenses, as adjusted. Colorado Post Contracts reflects CPN estimates of recontracted value 

    after current PPAs expire.  Conectiv Less Delta reflects estimated removal of fully-contracted Delta plant.  CPN represents 2011 guidance. See reconciliation of CPN Adj. EBITDA on slide 27. 

Value / KW calculation for Conectiv based upon unadjusted Enterprise Value of $1,650 million, plus $62 million of remaining costs construction costs for Delta and scheduled upgrades.

1

2

3

OPERATIONS OVERVIEW

8

PJM: Strategic Market for Future Calpine Growth

“At Risk ”

Coal Plants in PJM, NY & NE:

~12,000 MW Total (~10,000 MW in PJM)

•

Robust capacity market

•

Conectiv

plants located behind transmission constraints

•

High dispatch flexibility

-

Current CCGTs

all with bypass stacks / quick-start capabilities (in a world of

increasing intermittent resources)

CPN remains well-positioned for

tougher environmental standards

1

Source:

Conectiv

Energy,

Energy

Velocity

2008.

Conectiv

emissions

shown for natural gas-fired generation only. Dynegy adjusted for estimated impacts of 2009 plant sale to LS Power.

2

Graph

depicts

uncontrolled

units

with

<250

MW

of

capacity

and

>

30

years

old.

Source:

Energy

Velocity.

Other PJM / Conectiv

Benefits:

Combining two of the

cleanest  merchant fleets…

…and positioning Calpine where

“clean”

capacity will be needed

2

1

0

500

1,000

1,500

2,000

2,500

CPN

Conectiv

DYN

MIR

NRG

RRI

9

Fulfilling Strategic Objective of Mid-Atlantic Presence

NY

PA

VA

NJ

WV

DE

Combined Cycle (CC)

CC -

Under Construction

CT / Other

Steam Turbines

Solar

Plants by fuel type

Calpine North Region (pro forma)

CPN

North Region

(Today)

Conectiv

1

CPN

North Region

(Pro Forma)

CCGT

2,363 MW

2,825 MW

5,188 MW

CT / Other

1,054 MW

1,661 MW

2,715 MW

Renewable

—

4 MW

4 MW

TOTAL

3,417 MW

4,490 MW

7,907 MW

CPN TOTAL

28,297 MW

1

Includes

3,860

MW

of

capacity

expected

to

be

in

operation

as

of

the

close

of

the

transaction,

65

MW

of

upgrades

to

the

completed

after

the

close

of

the

transaction,

and

565

MW

of

capacity

under

construction.

CPN Plant

Conectiv

Plant

Conectiv

Fleet

Delta

Bethlehem

Hay Road

MD

10

Energy

Margin

11%

Reliability &

Other Margin

89%

Understanding

the

Conectiv

Fleet

11

Lower CCGT Capacity Factors,

Given PJM Reliance on Coal…

…but changing coal viability &

capacity markets compensate

0%

2%

4%

6%

2007

2008

2009

Strong Assets / Good Operators

CCGT Equivalent Forced Outage Rate (%)

Source: Conectiv Energy.  Comparable to Forced Outage Factor (FOF), as traditionally reported

by CPN.  Note that FOF is typically higher than EFOR due to the nature of the calculation.

0%

5%

10%

15%

20%

25%

2007

2008

2009

Source:

Conectiv

Energy.

Highly Flexible Units in World

of Increasing Intermittent Supply

Quick-start

Capabilities

MW Capacity

1

Time to Start

CCGT w/

Bypass Stack

2

2,260 MW

0.5 hrs (CT) /

2 hours (CCGT)

Combustion

Turbine

771 MW

<0.5 hours

Standard CCGT start time

is 4 hours

1

Capacities include ongoing upgrade projects.

2

Hay Road and Bethlehem.

Historical Coal Units

Can Run on Natural Gas

Edge Moor & Deep Water 2010E Commodity Margin:

Value Primarily from Regulatory Capacity

Source: Calpine estimates.

Key Integration Considerations

•

Commercial Operations

-

PHI to retain trading book and load serving auction positions

-

Calpine takes business without legacy positions or collateral

-

Fleet dispatch and hedging decisions managed from Houston

•

Fuel Conversion:  CALPINE DOES NOT INTEND TO BURN COAL

-

From Day 1, have positive environmental impact on local community

and send clear signal on future of power generation

-

Fuel oil as back-up for much of the capacity

•

Operations Management

-

New regional office with local operations, regulatory, origination and

legal functions

-

All other support (Accounting / back office, Maintenance) provided

from Houston

•

Calpine management and integration teams on-site

•

Calpine

to

be

informed

of

key

business

issues

during

transition

•

Coordination of transition plans between PHI and Calpine

How We Intend

to Operate

Between Now

and Close

12

Individual

Hedging

Profiles:

Energy

Margin

1

Pro

Forma

Calpine

Energy

Hedge

Profile

2

(Reflects Sale of Colorado)

2010

2011

2012

Hedged

Margin

($/MWh)

2

$23

$27

$30

Hedged

Gas

Price

($/mmbtu)

4

$6.35

$7.05

n/a

Capacity (MW)

5

24,738

23,852

23,897

1

Energy Margin + Regulatory & Other Margin = Total Commodity Margin.

2

Estimated as of 4/9/10. Calpine figures reflect sale of Colorado plants as of 12/1/10.  Hedged margin

excludes

unconsolidated

projects.

Changing

market

heat

rates

will

change

delta

volumes

and

gas

price

exposures.

Sensitivities

are

assumed

to

occur

across

the

portfolio.

3

Volumes are on a delta hedge basis. Delta volumes are the expected volume based on the probability of economic dispatch at a future date based on current market prices for that future date. This is typically lower

than the notional volume, which is plant capacity, less known performance and operating constraints.

4

Pertains to Hedged Gas Length (shown above) only.

5

Represents forecasted net ownership interest with peaking capacity.  New capacity shown during first full year of operation.

6

CPN

capacity

factor

shown

for

gas

fleet

only,

excluding

peakers.

Conectiv

capacity

factor

shown

for

CCGT

units

only.

7

Premium

applies

to

all

MWh

generated

by

entire

gas

fleet.

Percentages

calculated

assuming

7.0

mmbtu/MWh

heat

rate.

Reliability Margin

1,2

as % of Total Commodity Margin (by year):

13%

15%

15%

Est.

Conectiv

Energy

Hedge

Profile

2

Reliability Margin

1,2

as % of Total Commodity Margin (by year):

69%

64%

62%

2010

2011

2012

Capacity (MW)

5

3,845

3,925

4,490

2009 Capacity Factor

6

Premium to Peak Spark

7

CPN

43%

8%

Conectiv

13%

35%

Pro Forma

10 -

15%

90%

58%

39%

8%

10%

2%

32%

61%

2010

2011

2012

Hedged Volume ³

Additional Hedged Gas Length, ³

Open HR

Open Volume ³

11%

19%

100%

89%

81%

2010

2011

2012

Hedged Volume ³

Open Volume ³

13

Growth Opportunities

DELTA –

PHASE 1

Under Construction

•

565 MW Combined-Cycle Plant

•

Targeted COD:  2Q 2011

•

6-year PPA with Constellation

covering Energy, Capacity and

Ancillary Services

•

Growth CapEx

requirements

-

2010: $45 million

-

2011: $15 million

OTHER OPPORTUNITIES

•

Up to 1,000MW of additional gas generation new build opportunities, across 4 sites

•

PJM

queue

position

in

place

across

gas

projects,

existing

permit

in

place

for

Delta

2

•

Land and infrastructure for up to 50 MW of Solar

A

Delta Phase 2

-

565 MW CCGT

-

Permits & infrastructure

B

Talbert & Powell

-

400 MW CT

-

PJM Queue, land optioned

C

Cumberland 3

-

100 MW CT

-

PJM Queue, infrastructure in

place

D

Potential for Solar Expansion

-

Additional PV solar opportunities

at various locations

A

B

C

D

14

Source: Conectiv

Energy

FINANCIAL CONSIDERATIONS

15

Key Financial Messages

Pro forma 2010 and 2011

Adjusted EBITDA and

Adjusted Free Cash Flow

guidance demonstrate

accretion

Conectiv

acquisition

funded through subsidiary-

level term loan and

corporate cash

Net liquidity impact of

both transactions limited

to <$200 million

Delivering value

through accretive

transactions

Efficiently

deploying

capital without

diluting equity base

Achieving strategic

growth while

maintaining strong

liquidity

16

Updated Guidance (pro forma)

($ millions)

Adj. EBITDA, As Is

$1,500 -

$1,600

$1,525 -

$1,725

Colorado sale

$(5)

$(80)

Conectiv acquisition

$130

$240

Adj. EBITDA, Pro Forma

$1,625 -

$1,725

$1,685 –

$1,885

Adj. Free Cash Flow, As Is

$400 -

$500

$300 -

$500

Colorado sale

—

$(55)

Adj. Free Cash Flow, Pro Forma

$400 -

$500

$245 -

$445

Conectiv acquisition

$65

$120

Adj. Free Cash Flow, Pro Forma

$465 –

$565

$365 -

$565

Note: Figures assume closing dates of 12/1/10 and 7/1/10 for Colorado and Conectiv, respectively.

1

Calculation based upon midpoint of 2011 guidance range.

“Peak”

Major

Maintenance year +

“Peak”

South Point

lease payment

35% accretive

2010

2011

1

Even after “normalizing”

to run rate

major maintenance and lease payments,

transaction is

24% accretive

1

17

Project Debt

$1,035

Calpine Corp

$5,961

Pro Forma Capital Structure: Base Case Financing

•

Description:

Term loan plus Revolver

•

Term Loan:

$1,300 million

•

Revolver:

$100 million

•

Tenor:

7 years

Financing Terms

CCFC

$959

Other

1

$977

New Borrower

$1,300

($ millions)

Note:  All balances shown as of 12/31/09, excluding New Borrower.  Project Debt shown pro forma, assuming repayment of Blue Spruce, Riverside and Rocky Mountain.  Chart does not include debt from

unconsolidated projects.

1

Other includes preferred interests, notes payable, capital leases and other debt.

Advantages of Subsidiary Level Financing:

•

Lower cost of debt

•

Pre-payable

•

Rapidly amortizing term loan without any

restrictions added at corporate level

•

No corporate term loan amendment required

18

Conectiv Acquisition: Sources and Uses of Cash

Sources

Amount

Uses

Amount

Secured Term Loan

$1,300

Payment to Pepco Holdings

$1,650

Corporate Cash

535

Fees and Transaction Costs¹

(est.)

75

Remaining Delta Construction Costs (est.)

60

Liquid Fuel Inventory²

(est.)

50

Total Sources

$1,835

Total Uses³

$1,835

($ millions)

1

Includes financing and general transaction costs.

2

Will be adjusted to market value of viable inventory at close.

3

Does

not

include

any

additional

adjustments

for

working

capital

or

other

items.

•

Base Case debt funding assumes term loan, but is subject to change

-

Commitments

received

from

Credit

Suisse,

Citi

and

Deutsche

Bank

•

Initial focus is to fund the balance of the acquisition price with cash

We do not intend to use stock as a source of capital

19

$100

$1,000

$2,264

$89

$4,100

2010

2011

2012

2013

2014

2015

2016

2017

CCR

Project Debt

Exit Facility

CCFC

Senior Secured Notes

Term Loan

Liquidity and Debt Maturity Impacts (pro forma)

12/31/09

Colorado Sale 

12/31/09

(pro forma)

Conectiv

Acquisition

12/31/09

(pro forma)

Liquidity

2,379

315

2,694

(485)

2,209

Net Debt

(Consolidated)

7,908

(710)

7,198

1,835

9,033

Net Debt (Incl.

Unconsolidated Plants)

8,503

7,793

9,628

Net Debt /

Adj. EBITDA

4.6x

4.4x

4.8x

Note:  The debt maturity schedules shown here are not prepared on a GAAP basis and do not conform to the debt maturity schedule presented in Calpine’s Form 10-K.  (Refer to the Form 10-K for further

information regarding GAAP-basis debt maturities.)  Assumptions used in debt maturity charts shown here include: (i) excludes letter of credit facilities; (ii) maturity balances assume cash sweeps; and

(iii) all other debt maturities are paid from operating cash flows at the project level.  The debt maturity charts exclude anticipated maturities less than $50 million.

1

Estimates.

Amounts

subject

to

change

in

connection

with

actual

close

of

transaction.

2

Liquidity impacts include changes in LC and Revolver availability.

3

Colorado reduction of Net Debt reflects payment $29 million estimated cash taxes, which are netted against pre-tax proceeds of $739 million.

4

Calculation

not

performed

in

accordance

with

debt

covenant

definitions.

Based

on

LTM

Adjusted

EBITDA.

Adjusted

EBITDA

from

Otay

Mesa

Energy

Center,

which

opened

during

the

fourth

quarter

of

2009,

has

been

annualized

for

the

purposes

of

this

calculation.

Pro

Forma

calculation

with

Conectiv

acquisition

assumes

$240

million

of

Adjusted

EBITDA

for

Conectiv.

($ millions)

Improved Debt

Maturity Profile

COLORADO SALE:

Blue Spruce, Rocky Mountain,

& Riverside Retired

CONECTIV ACQUISITION:

New term loan

~ $90 million

Restricted Cash

Released

2

3

4

1

1

20

CONCLUSION

21

Enhanced Company

Summary Statistics

•

Operating capacity¹:

28,297 MW

•

Plants

:

93

•

States:

20

1

Includes plants/capacity currently under construction, including ongoing upgrade projects.

Southeast

6,083 MW

22%

Texas

7,392 MW

26%

West

6,915 MW

24%

North

7,907 MW

28%

Source:  2009 SEC filings, Company presentations.  Items marked by * indicate pro forma

capacity assuming completion of announced transactions.

1

Geographic Diversity

in Strategic Markets

Scale

0

25,000

50,000

75,000

100,000

Calpine*

NRG

GenOn Energy*

Dynegy

Largest Pure-Play Independent Power Provider

22

(pro forma)

APPENDIX

23

Conectiv

Transaction

Scope

What is Calpine Acquiring?

What is Pepco Holdings Inc. Retaining?

•

Conectiv

Energy power plants:  18 operating + 1 under

construction

•

Usable liquid fuel inventory (valued at market, not included

in purchase price)

•

All spare parts (included in purchase price)

•

All emissions allowances (included in purchase price)

•

Legacy hedge book and load-serving auction positions

•

Collateral requirements

•

RPM capacity awards

•

Tolling agreement for Delta CCGT construction project

•

Other contracts needed for plant operations (e.g., local

fuel supply)

•

Tolled capacity

•

Future pension costs for union employees as incurred, but

no obligation to cover any pre-close under-funding

•

Historical pension accruals

•

Retiree medical

•

On-site environmental liabilities, but indemnified above

$10 million for New Jersey ISRA

•

Off-site environmental liabilities, including coal/ash

disposal

•

>$10 million New Jersey ISRA obligations

•

Plant employees

•

Selected employees for regional office needs

•

All non-union employees not selected by Calpine

24

Conectiv

Plant Overview

Source:  Conectiv

Energy, Calpine.  Note: Capacities above include 3,860 MW of capacity expected to be in operation as of the close of the transaction, 65 MW of upgrades to be completed after the close

of the transaction, and 565 MW of capacity under construction.

25

Technology

Load

Type

Location

PJM Capacity

Pricing Zone

COD

With

Peaking

Capacity

CPN

Interest

With Peaking

Capacity, Net

2009

Generation

(000 MWh)

Bethlehem

Natural Gas/Oil

Intermediate

PA

MACC

2003

1,130

100%

1,130

1,320

Hay Road

Natural Gas/Oil

Intermediate

DE

E-MACC

1993 / 2002

1,130

100%

1,130

1,301

Edge Moor

Natural Gas/Oil

Peaking

DE

E-MACC

1954 - 1973

723

100%

723

591

Cumberland

Natural Gas/Oil

Peaking

NJ

E-MACC

1990 / 2009

194

100%

194

27

Deep Water

Natural Gas/Oil

Peaking

NJ

E-MACC

1954 / 1958

158

100%

158

74

Sherman Avenue

Natural Gas/Oil

Peaking

NJ

E-MACC

1991

92

100%

92

7

Middle

Oil

Peaking

NJ

E-MACC

1970 / 1971

77

100%

77

0

Carlls Corner

Natural Gas/Oil

Peaking

NJ

E-MACC

1973

73

100%

73

1

Cedar

Oil

Peaking

NJ

E-MACC

1972

68

100%

68

3

Missouri Avenue

Oil

Peaking

NJ

E-MACC

1969

60

100%

60

0

Mickleton

Natural Gas/Oil

Peaking

NJ

E-MACC

1974

67

100%

67

0

Christiana

Oil

Peaking

DE

E-MACC

1973

53

100%

53

1

Tasley

Oil

Peaking

VA

DPL-S

1972

31

100%

31

0

Delaware City

Oil

Peaking

DE

E-MACC

1968

23

100%

23

0

West

Oil

Peaking

DE

E-MACC

1964

20

100%

20

0

Bayview

Oil

Peaking

VA

DPL-S

1963

12

100%

12

1

Crisfield

Oil

Peaking

MD

DPL-S

1968

10

100%

10

0

Vineland

Solar

Peaking

NJ

E-MACC

2009

4

100%

4

1

TOTAL - CONECTIV

3,925

3,925

3,327

Delta - Under Construction

Natural Gas/Oil

Intermediate

E-MACC

565

100%

565

87%

56%

38%

8%

9%

5%

35%

62%

2010

2011

2012

Pro

Forma

Hedging

Profile:

Energy

Margin

1

Energy

Hedge

Profile

2

(based on March curves and assuming 7/1/10 close)

2010

2011

2012

Hedged

Margin

($/MWh)

2

$23

$27

$31

Hedged Gas Price ($/mmbtu)

4

$6.35

$7.05

n/a

Capacity (MW)

5

28,583

27,777

28,387

1

Energy Margin + Regulatory & Other Margin = Total Commodity Margin. 

2

Estimated as of 4/9/10. Hedged margin excludes unconsolidated projects.  Changing market heat rates will change delta volumes and

gas price exposures. Sensitivities are assumed to occur across the portfolio.

3

Volumes are on a delta hedge basis. Delta volumes are the expected volume based on the probability of economic dispatch at a future

date based on current market prices for that future date. This is typically lower than the notional volume, which is plant capacity, less

known performance and operating constraints.

4

Pertains to Hedged Gas Length (shown above) only.

5

Represents Calpine’s forecasted net ownership interest with peaking capacity.  New capacity shown during first full year of operation.

$48M

Premiums

collected

Reliability Margin

1,2

as % of Total Commodity Margin (by year):

17%

22%

21%

26

27

94

208

(33)

(99)

(194)

($250)

($200)

($100)

($50)

$0

$50

$100

$150

$200

$250

2010

2011

2012

Natural Gas +$1/mmbtu

Natural Gas -

$1/mmbtu

17

52

73

(16)

(49)

(70)

($200)

($150)

($100)

($50)

$0

$50

$100

$150

$200

2010

2011

2012

Heat Rate +170 btu/KWh

Heat Rate -

170 btu/KWh

Natural

Gas

Price

Sensitivity

($mm)

2

Market

Heat

Rate

Sensitivity

($mm)

1

($150)

Hedged

Volume

3

Additional

Hedged

Gas

Length,

3

Open

Volume

3

Open HR

Reg G Reconciliations: 2010 and 2011 Guidance

Adjusted EBITDA represents net income (loss) before interest,

taxes, depreciation and amortization, adjusted for certain

non-cash or non-recurring items as detailed in the following

reconciliation.  Adjusted EBITDA is presented because our

management uses Adjusted EBITDA (i) as a measure of

operating performance to assist in comparing performance

from period to period on a consistent basis and to readily

view operating trends; (ii) as a measure for planning and

forecasting overall expectations and for evaluating actual

results against such expectations; and (iii) in communications

with our Board of Directors, shareholders, creditors, analysts

and investors concerning our financial performance.  We

believe Adjusted EBITDA is also used by and is useful to

investors and other users of our financial statements in

evaluating our operating performance because it provides

them with an additional tool to compare business

performance across companies and across periods. Adjusted

EBITDA is not a measure calculated in accordance with GAAP,

and should be viewed as a supplement to and not a substitute

for our results of operations presented in accordance with

GAAP.  Adjusted EBITDA is not intended to represent cash

flows from operations or net income (loss) as defined by

GAAP as an indicator of operating performance. Furthermore,

Adjusted EBITDA is not necessarily comparable to similarly-

titled measures reported by other companies.

Adjusted Free Cash Flow represents net income before

interest, taxes, depreciation and amortization, as adjusted,

less operating lease payments, major maintenance expense

and maintenance capital expenditures, net cash interest, cash

taxes, working capital and other adjustments.  Adjusted Free

Cash Flow is presented because our management uses this

measure, among others, to make decisions about capital

allocation.  Adjusted Free Cash Flow is not intended to

represent cash flows from operations as defined by GAAP as

an indicator of operating performance and is not necessarily

comparable to similarly-titled measures reported by other

companies.

__________

Full Year 2010 Range:

Low

High

(in millions)

GAAP Net Income (Loss)

$

(30)

$

70

Plus:

Interest expense, net of interest income

710

710

465

465

Major  maintenance expense

180

180

Operating lease expense

50

50

Other

(1)

125

125

Adjusted EBITDA

$

1,500

$

1,600

Less:

Operating lease payments

50

50

290

290

(3)

750

750

Cash  taxes

10

10

Adjusted Free Cash Flow

$

400

$

500

Full Year 2011 Range:

Low

High

(in millions)

GAAP Net Income

$

30

$

230

Plus:

Interest expense, net of interest income

695

695

460

460

Major maintenance expense

210

210

45

45

Other

(1)

85

85

Adjusted EBITDA

$

1,525

$

1,725

Less:

Operating lease payments

100

100

(2)

375

375

Cash interest, net

(3)

735

735

15

15

Adjusted Free Cash Flow

$

300

$

500

(2)

(1) 

Other includes stock-based compensation expense, adjustments to reflect Adjusted EBITDA from unconsolidated investments

and other items. 

(2)

Includes projected Major Maintenance Expense of $178 million and $205 million in 2010 and 2011, respectively and

maintenance Capital Expenditures of $112 million and $170 million in 2010 and 2011, respectively.  Capital expenditures

exclude major construction and development projects. 

(3)

Includes fees for letters of credit, net of interest income.

Cash

interest,

net

Cash  taxes

Depreciation and amortization expense

Depreciation and amortization expense

Operating lease expense

Major

maintenance

expense

and

maintenance

capital

expenditures

Major

maintenance

expense

and

maintenance

capital

expenditures

27