##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2005
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from            to
 Commission file number: 333-117335
 
 Calpine Generating Company, LLC
 (A Delaware Limited Liability Company)
 CalGen Finance Corp.
 (A Delaware Corporation)
 I.R.S. Employer Identification Nos.  77-0555128
20-1162632
 50 West San Fernando Street, 5th Floor
San Jose, California 95113  Telephone: (408) 995-5115
 Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
None
 o þ
 o þ
 o þ
 þ
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 o þ




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##### Table of Contents



DOCUMENTS INCORPORATED BY REFERENCE
None
 TABLE OF ADDITIONAL REGISTRANTS
 State ofIncorporation
    
    Commission File
    
    I.R.S. EmployerRegistrant
    
    or Organization
    
    Number
    
    Identification NumberCalGen Finance Corp.
    
    Delaware
    
    
    333-117335-40
    
    
    
    20-1162632CalGen Expansion Company, LLC
    
    Delaware
    
    
    333-117335-39
    
    
    
    77-0555127Baytown Energy Center, LP
    
    Delaware
    
    
    333-117335-38
    
    
    
    77-0555135Calpine Baytown Energy Center GP, LLC
    
    Delaware
    
    
    333-117335-37
    
    
    
    77-0555133Calpine Baytown Energy Center LP, LLC
    
    Delaware
    
    
    333-117335-36
    
    
    
    77-0555138Baytown Power GP, LLC
    
    Delaware
    
    
    333-117335-35
    
    
    
    86-1056699Baytown Power, LP
    
    Delaware
    
    
    333-117335-34
    
    
    
    86-1056708Carville Energy LLC
    
    Delaware
    
    
    333-117335-33
    
    
    
    36-4309608Channel Energy Center, LP
    
    Delaware
    
    
    333-117335-32
    
    
    
    77-0555137Calpine Channel Energy Center GP, LLC
    
    Delaware
    
    
    333-117335-31
    
    
    
    77-0555139Calpine Channel Energy Center LP, LLC
    
    Delaware
    
    
    333-117335-09
    
    
    
    77-0555140Channel Power GP, LLC
    
    Delaware
    
    
    333-117335-08
    
    
    
    86-1056758Channel Power, LP
    
    Delaware
    
    
    333-117335-07
    
    
    
    86-1056755Columbia Energy LLC
    
    Delaware
    
    
    333-117335-06
    
    
    
    36-4380154Corpus Christi Cogeneration LP
    
    Delaware
    
    
    333-117335-05
    
    
    
    36-4337040Nueces Bay Energy LLC
    
    Delaware
    
    
    333-117335-04
    
    
    
    36-4216016Calpine Northbrook Southcoast Investors, LLC
    
    Delaware
    
    
    333-117335-03
    
    
    
    36-4337045Calpine Corpus Christi Energy GP, LLC
    
    Delaware
    
    
    333-117335-02
    
    
    
    86-1056770Calpine Corpus Christi Energy, LP
    
    Delaware
    
    
    333-117335-30
    
    
    
    86-1056497Decatur Energy Center, LLC
    
    Delaware
    
    
    333-117335-29
    
    
    
    77-0555708Delta Energy Center, LLC
    
    Delaware
    
    
    333-117335-28
    
    
    
    95-4812214CalGen Project Equipment Finance Company Two, LLC
    
    Delaware
    
    
    333-117335-27
    
    
    
    77-0585399Freestone Power Generation LP
    
    Texas
    
    
    333-117335-26
    
    
    
    76-0608559Calpine Freestone, LLC
    
    Delaware
    
    
    333-117335-25
    
    
    
    77-0486738CPN Freestone, LLC
    
    Delaware
    
    
    333-117335-24
    
    
    
    77-0545937Calpine Freestone Energy GP, LLC
    
    Delaware
    
    
    333-117335-23
    
    
    
    86-1056713Calpine Freestone Energy, LP
    
    Delaware
    
    
    333-117335-22
    
    
    
    86-1056720Calpine Power Equipment LP
    
    Texas
    
    
    333-117335-21
    
    
    
    76-0645514Los Medanos Energy Center, LLC
    
    Delaware
    
    
    333-117335-20
    
    
    
    77-0553164CalGen Project Equipment Finance Company One, LLC
    
    Delaware
    
    
    333-117335-19
    
    
    
    77-0556245Morgan Energy Center, LLC
    
    Delaware
    
    
    333-117335-18
    
    
    
    77-0555141Pastoria Energy Facility L.L.C
    
    Delaware
    
    
    333-117335-17
    
    
    
    77-0581976Calpine Pastoria Holdings, LLC
    
    Delaware
    
    
    333-117335-16
    
    
    
    77-0559247Calpine Oneta Power, L.P
    
    Delaware
    
    
    333-117335-15
    
    
    
    75-2815392Calpine Oneta Power I, LLC
    
    Delaware
    
    
    333-117335-14
    
    
    
    75-2815390Calpine Oneta Power II, LLC
    
    Delaware
    
    
    333-117335-13
    
    
    
    75-2815394Zion Energy LLC
    
    Delaware
    
    
    333-117335-12
    
    
    
    36-4330312CalGen Project Equipment Finance Company Three LLC
    
    Delaware
    
    
    333-117335-11
    
    
    
    10-0008436CalGen Equipment Finance Holdings, LLC
    
    Delaware
    
    
    333-117335-10
    
    
    
    77-0555519CalGen Equipment Finance Company, LLC
    
    Delaware
    
    
    333-117335-01
    
    
    
    77-0555523




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##### 



FORM 10-K
ANNUAL REPORT
For the Year Ended December 31, 2005
 TABLE OF CONTENTS
 PagePART IItem 1. Business
    
    
    7Item 1A. Risk Factors
    
    
    32Item 1B. Unresolved Staff Comments
    
    
    57Item 2. Properties
    
    
    57Item 3. Legal Proceedings
    
    
    58Item 4. Submission of Matters to a Vote of Security Holders
    
    
    58PART IIItem 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    58Item 6. Selected Financial Data
    
    
    58Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    59Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    79Item 8. Financial Statements and Supplementary Data
    
    
    80Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    80Item 9A. Controls and Procedures
    
    
    80Item 9B. Other Information
    
    
    82PART IIIItem 10. Directors and Executive Officers of the Registrant
    
    
    82Item 11. Executive Compensation
    
    
    82Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    82Item 13. Certain Relationships and Related Transactions
    
    
    82Item 14. Principal Accounting Fees and Services
    
    
    83PART IVItem 15. Exhibits, Financial Statement Schedule
    
    
    83Signatures and Power of Attorney
    
    
    84Index to Consolidated Financial Statements and Other Information
    
    
    F-1Fourth Amendment to Index Based AgreementComputation of Ratio of Earnings to Fixed ChargesCertification of President & Corporate Secretary Pursuant to Rule 13a-14(a)Certification of CFO & Treasurer Pursuant to Rule 13a-14(a)Certifications Pursuant to Section 906
   1




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##### Table of Contents



DEFINITIONS
  ABBREVIATION
    
    DEFINITION1933 Act
    
    Securities Act of 1933, as amended1934 Act
    
    Securities Act of 1934, as amended2004 Refinancing
    
    Refinancing of the Construction Facility, consummated on March 23, 2004, in
which CalGen issued the Notes and Term Loans and entered into the Revolving
Credit Facility345(b) Waiver Order
    
    Order pursuant to Section 345(b) of the Bankruptcy Code authorizing
continued (i) use of existing investment guidelines and (ii) operation of
certain bank accounts dated May 4, 2006Additional Registrants
    
    The registrants listed in the Table of Additional Registrants aboveAdministrative Agreement
    
    Master Administrative Services Agreement, dated as of March 23, 2004, among
CalGen, CalGen Finance, the subsidiaries of CalGen party thereto and
CASCIARO
    
    Asset Retirement ObligationBankruptcy Code
    
    United States Bankruptcy CodeBankruptcy Court
    
    United States Bankruptcy Court for the Southern District of New YorkBayer
    
    Bayer CorporationBP Amoco
    
    BP Amoco Chemical CompanyBPA
    
    Bonneville Power AdministrationBtu
    
    British thermal unitsCAISO
    
    California Independent System Operator CorporationCalGen Debtors
    
    CalGen and each of its subsidiaries that filed voluntary petitions for
reorganization under Chapter 11 of the Bankruptcy Code in the Bankruptcy
CourtCalGen Finance
    
    CalGen Finance Corp.CalGen Holdings
    
    Calpine CalGen Holdings, Inc.Calpine or Parent
    
    Calpine CorporationCalPX
    
    California Power ExchangeCASCI
    
    Calpine Administrative Services Company, Inc.Cash Collateral Order
    
    Second Amended Final Order of the
Bankruptcy Court Authorizing Use
of Cash Collateral and Granting
Adequate Protection, dated
February 24, 2006 as modified by
the Order Granting Debtors Motion
for Entry of an Order Pursuant to
11 U.S.C. Section 105,361 and
105,363 Modifying Order
Authorizing Use of Cash Collateral
and Granting Adequate Protection,
dated June 21, 2006CCFC II
    
    Calpine Construction Finance Company II, LLC, which was renamed Calpine
Generating Company, LLC (referred to herein as CalGen)) in connection with
the 2004 RefinancingCCMCI
    
    Calpine Construction Management Company, Inc.CenterPoint
    
    CenterPoint EnergyCERCLA or Superfund
    
    Comprehensive Environmental Response, Compensation and Liability Act of 1980CES
    
    Calpine Energy Services, L.P.Chapter 11
    
    Chapter 11 of the Bankruptcy CodeCIP
    
    Construction In ProgressCITGO
    
    CITGO Refining and Chemicals Company L.P.Clean Air Act
    
    Federal Clean Air Act of 1970Clean Water Act
    
    Federal Clean Water Act
 2




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##### Table of Contents



ABBREVIATION
    
    DEFINITIONConstruction Facility
    
    $2.5 billion Credit Agreement, dated as
of October 16, 2000, among CCFC II, as
borrower, the lenders from time to time
party thereto, The Bank of Nova Scotia,
as lead arranger, co-syndication agent
and bookrunner, Credit Suisse First
Boston, acting through its New York
Branch, as lead arranger and
administrative agent, Banc of America
Securities LLC, and ING (U.S.) Capital
LLC, as arrangers and co-syndication
agents, BayerischeLandesbank
Girozentrale, as arranger,
co-documentation agent and LC bank, and
CIBC World Markets Corp., Dresdner
Kleinword Benson North America Services
LLC, and TD Securities (USA) Inc., as
arrangers and co-documentation agentsCOSCI
    
    Calpine Operating Services Company, Inc.Cos-Mar
    
    Cos-Mar, Inc.CPUC
    
    California Public Utilities CommissionCrossTex
    
    CrossTex CCNG Transmission, Ltd.Debtors
    
    Calpine Corporation and each of its
subsidiaries, including the CalGen
Debtors, that have filed voluntary
petitions for reorganization under
Chapter 11 of the Bankruptcy Code in the
Bankruptcy CourtDecatur
    
    Decatur Energy Center, LLCDIP Facility
    
    Revolving Credit, Term Loan and Guarantee Agreement,
dated as of December 22, 2005, as amended on January
26, 2006, and as amended and restated by that certain
Amended and Restated Revolving Credit, Term Loan and
Guarantee Agreement, dated as of February 23, 2006,
among Calpine Corporation, as borrower, the
Guarantors party thereto, the Lenders from time to
time party thereto, Credit Suisse Securities (USA)
LLC and Deutsche Bank Securities Inc., as joint
syndication agents, Deutsche Bank Trust Company
Americas, as administrative agent for the First
Priority Lenders, General Electric Capital Corporation,
as sub-agent for the Revolving Lenders, Credit Suisse,
as administrative agent for the Second Priority Term
Lenders, Landesbank Hessen Thuringen Girozentrale, New
York Branch, General Electric Capital Corporation and
HSH Nordbank AG, New York Branch, as joint documentation
agents for the First Priority Lenders and Bayerische
Landesbank, General Electric Capital Corporation and
Union Bank of California, N.A., as joint documentation
agents for the Second Priority LendersDow
    
    The Dow Chemical CompanyEastman
    
    Eastman Chemical CompanyEITF
    
    Emerging Issues Task ForceElementis
    
    Elementis Chromium L.P.Enbridge
    
    Enbridge Pipelines (Bamagas Intrastate) LLCEPA
    
    United States Environmental Protection AgencyEPAct (1992) (2005)
    
    Energy Policy Act of 1992  or  Energy Policy Act of 2005ERCOT
    
    Electric Reliability Council of TexasEWG
    
    Exempt wholesale generatorFASB
    
    Financial Accounting Standards BoardFERC
    
    United States Federal Energy Regulatory CommissionFIN 46
    
    FASB Interpretation No. 46, Consolidation of Variable
Interest Entities, an interpretation of ARB 51FIN 46-R
    
    FIN 46 (revised December 31, 2003)FIN 47
    
    Interpretation of Statement of Financial Accounting
Standards No. 47, Accounting for Conditional Asset
Retirement Obligations
 3




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##### Table of Contents



ABBREVIATION
    
    DEFINITIONFixed Price Agreement
    
    WECC Fixed Price Gas Sale and Power Purchase
Agreement, dated as of March 23, 2004, among CES,
CalGen, Delta Energy Center, LLC and Los Medanos
Energy Center, LLCFlint Hills
    
    Flint Hills Resources, L.P.FPA
    
    United States Federal Power ActFUCO(s)
    
    Foreign Utility Company(ies)GAAP
    
    Accounting principles generally accepted in the
United States of AmericaHeat Rate
    
    A measure of the amount of fuel required to produce
a unit of electricityHRSG
    
    Heat recovery steam generatorIndex Based Agreement
    
    Index Based Gas Sale and Power Purchase Agreement,
dated as of March 23, 2004, among CES, CalGen and
the subsidiaries of CalGen party theretoIndex Hedge
    
    ISDA Master Agreement, Schedule and Confirmation,
dated as of March 12, 2004, between CalGen and MSCG,
guaranteed by Morgan Stanley pursuant to the
Guaranty, dated as of March 12, 2004, of Morgan
Stanley in favor of MSCGIPP(s)
    
    Independent power producer(s)ISO
    
    Independent Systems OperatorsKW
    
    Kilowatt(s)KWh
    
    Kilowatt hour(s)LCR
    
    Lyondell-CITGO Refining L.P.LDCs
    
    Local distribution companiesLIBOR
    
    London Inter-Bank Offered RateLSTC
    
    Liability(ies) subject to compromiseLTSA
    
    Long term service agreementMaintenance Agreement
    
    Master Maintenance Services Agreement, dated as of
March 23, 2004, among CalGen, the subsidiaries of
CalGen party thereto and COSCIMMBtu
    
    Million British thermal unitsMorgan Stanley
    
    Morgan Stanley & Co. IncorporatedMRTU
    
    The CAISOs Market Redesign
and Technology UpgradeMSCG
    
    Morgan Stanley Capital Group, Inc.MW
    
    Megawatt(s)MWh
    
    Megawatt hour(s)NERC
    
    North American Electric Reliability CouncilNESCO
    
    National Energy Systems CompanyNGA
    
    United States Natural Gas ActNOPR
    
    Notice of Proposed Rulemaking
 4




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##### Table of Contents



ABBREVIATION
    
    DEFINITIONNotes
    
    First Priority Secured Floating Rate Notes due 2009,
Second Priority Secured Floating Rate Notes due
2010, Third Priority Secured Floating Rate Notes due
2011 and Third Priority Secured Notes due 2011 in
the amounts of $235 million, $640 million, $680
million and $150 million, respectivelyO&M
    
    Operations and maintenanceO&M Agreement
    
    Master Operation and Maintenance Agreement, dated as
of March 23, 2004, among CalGen, its subsidiaries
party thereto and COSCIPanda
    
    Panda Energy International, Inc. and certain related
parties, including PLC II, LLCPetition Date
    
    December 20, 2005PG&E
    
    Pacific Gas and Electric CompanyPOX
    
    Plant operating expensePPA(s)
    
    Power purchase agreement(s)PRPs
    
    Potentially responsible partiesPSO
    
    Public Service Company of OklahomaPUC(s)
    
    Public Utility Commission(s)PUCT
    
    Public Utility Commission of TexasPUHCA 1935
    
    United States Public Utility Holding Company Act of
1935, as amendedPUHCA 2005
    
    United States Public Utility Holding Company Act of 2005PURPA
    
    United States Public Utility Regulatory Policies Act of 1978PwC
    
    PricewaterhouseCoopers LLPQF
    
    Qualifying facility under PURPARCRA
    
    United States Resource Conservation and Recovery ActRevolving Credit Facility
    
    Amended and Restated Credit Agreement, dated as of March 23,
2004, among Calpine Generating Company, LLC, as borrower, the
Guarantors party thereto from time to time, the Lenders party
thereto from time to time, The Bank of Nova Scotia, as
administrative agent, LC Bank, lead arranger and sole
bookrunner, and Bayerische Landesbank Cayman Islands Branch,
Credit Lyonnais New York Branch, ING Capital LLC, Toronto
Dominion (Texas) Inc. and Union Bank of California, N.A., as
arrangers and co-syndication agents, with respect to
$200,000,000 First Priority Secured Revolving LoansRMR
    
    Reliability-Must-RunRTO(s)
    
    Regional Transmission
Organization(s)S&P
    
    Standard and Poors, a division of The McGraw-Hill Companies, IncSAB
    
    Staff Accounting BulletinSEC
    
    United States Securities and Exchange CommissionSFAS
    
    Statement of Financial Accounting StandardsSFAS No. 5
    
    Statement of Financial Accounting Standards No. 5, Accounting
for ContingenciesSFAS No. 13
    
    Statement of Financial Accounting Standards No. 13, Accounting
for LeasesSFAS No. 34
    
    Statement of Financial Accounting Standards No. 34,
Capitalization of Interest CostSFAS No. 58
    
    Statement of Financial Accounting Standards No. 58,
Capitalization of Interest Cost in Financial Statements That
Include Investments Accounted for by the Equity Method (an
Amendment of FASB Statement No. 34)
 5




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##### Table of Contents



ABBREVIATION
    
    DEFINITIONSFAS No. 98
    
    Statement of Financial Accounting Standards No. 98,
Accounting for Leases; Sale-Leaseback Transactions Involving
Real Estate; Sales-Type Leases of Real Estate; Definition of
the Lease Term; Initial Direct Costs of Direct Financing
Lease  An Amendment of FASB Statements No. 13, 66, and 91
and a Rescission of FASB Statement No. 26 and Technical
Bulletin No. 79-11SFAS No. 109
    
    Statement of Financial Accounting Standards No. 109,
Accounting for Income TaxesSFAS No. 133
    
    Statement of Financial Accounting Standards No. 133,
Accounting for Derivative Instruments and Hedging
ActivitiesSFAS No. 140
    
    Statement of Financial Accounting Standard No. 140,
Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities-a replacement of FASB
Statement No. 125SFAS No. 141
    
    Statement of Financial Accounting Standard No. 141, Business
CombinationsSFAS No. 143
    
    Statement of Financial Accounting Standards No. 143,
Accounting for Asset Retirement ObligationsSFAS No. 144
    
    Statement of Financial Accounting Standards No. 144,
Accounting for the Impairment or Disposal of Long-Lived
Assets and for Long-Lived Assets to be Disposed ofSFAS No. 151
    
    Statement of Financial Accounting Standards No. 151,
Inventory Costs, an amendment of ARB No. 43, Chapter 4SFAS No. 153
    
    Statement of Financial Accounting Standards No. 153,
Exchanges of Nonmonetary Assets.SFAS No. 154
    
    Statement of Financial Accounting Standards No. 154,
Accounting Changes and Error CorrectionsSFAS No. 155
    
    Statement of Financial Accounting Standards No. 155,
Accounting for Certain Hybrid Financial Instrumentsan
amendment of FASB Statements No. 133 and 140SFAS No. 156
    
    Statement of Financial Accounting Standards No. 156,
Accounting for Servicing of Financial Assets  An Amendment
of FASB Statement No. 140.Solutia
    
    Solutia, Inc.SOP 90-7
    
    Statement of Position 90-7, Financial Reporting by Entities
in Reorganization Under the Bankruptcy CodeSPP
    
    Southwest Power PoolSubsidiary Guarantors
    
    Each of the Additional Registrants, other than CalGen Finance.Term Loans
    
    First Priority Secured Term Loans due 2009 and Second
Priority Secured Term Loans due 2010 in the amounts of $600
million and $100 million, respectivelyTVA
    
    Tennessee Valley AuthorityUPI
    
    USS-POSCO IndustriesVIEs
    
    Variable Interest EntitiesWater Agreement
    
    Raw Water Service Agreement, dated April 12, 2000 among
Contra Costa Water District, Calpine Construction Finance
Company, L.P. and Delta Energy Center, LLCWEPCo.
    
    Wisconsin Electric Power CompanyWorking Capital Facility
    
    Working Capital Facility Agreement, dated as of March 23,
2004, among CalGen, as borrower, CalGen Holdings, as lender,
and, for the limited purpose set forth therein, Calpine, as
guarantor, with respect to $750 million of unsecured
subordinated revolving loans
 6




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##### Table of Contents



PART I
 
 Item 1. Business
 In addition to historical information, this report contains forward-looking statements within
the meaning of Section 27A of the 1933 Act and Section 21E of the 1934 Act. We use words such as
believe, intend, expect, anticipate, plan, may, will and similar expressions to
identify forward-looking statements. Such statements include, among others, those concerning our
expected financial performance and strategic and operational plans, as well as all 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. Such risks and uncertainties include, but are not limited to, (i) the
risks and uncertainties associated with our Chapter 11 cases, including impact on operations; (ii)
risks relating to the Chapter 11 filings by Calpine and certain of its affiliates including CES,
COSCI and CASCI, which risks include: risks related to the ability of Calpine and its affiliates to
continue to perform under the various affiliate agreements, including the Fixed Price and Index
Based Agreements, and their ability to attract, retain and motivate key employees who provide
services to us; (iii) our and their ability to successfully implement new strategies; (iv) our
ability to successfully reorganize and emerge from Chapter 11; (v) our ability to attract and
retain customers and counterparties; (vi) our ability to implement our business plan; (vii)
financial results that may be volatile and may not reflect historical trends; (viii) our ability to
manage liquidity needs and comply with financing obligations; (ix) the direct or indirect effects
on our business of our and our affiliates (including Calpines) impaired credit; (x) potential
volatility in earnings and requirements for cash collateral associated with the use of commodity
contracts; (xi) price and supply of natural gas; (xii) unscheduled outages of operating plants;
(xiii) quarterly and seasonal fluctuations of our results; (xiv) competition; (xv) risks associated
with marketing and selling power from plants in the evolving energy markets; (xvi) present and
possible future claims, litigation and enforcement actions; (xvii) effects of the application of
laws or regulations, including changes in laws or regulations or the interpretation thereof;
(xviii) restrictions imposed by the instruments governing our debt, and (xix) other risks
identified in this report and the other reports that we file with the SEC. We undertake no
obligation to update any forward-looking statements, whether as a result of new information, future
developments or otherwise.
   COMPANY OVERVIEW
 In re Calpine Corporation et al.
 7




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PROCEEDINGS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
     8




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9




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##### Table of Contents



PRINCIPAL AGREEMENTS
  Purchase of Gas and Sale of Power
  Fixed Price Agreement.
 Index Based Agreement.
  10




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Index Hedge
  Operation of Facilities
 O&M Agreement.
 11




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##### Table of Contents



Maintenance Agreement.
  General Administrative Matters
 Administrative Agreement.
 THE MARKET FOR ELECTRICITY
  12




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##### Table of Contents



Regional Markets
 West.
 ERCOT.
 Southeast.
 Other.
 13




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##### Table of Contents



Peaking
    
    
    NominalCapacity Sold
    
    
    CapacityCapacity
    
    
    Capacity
    
    
    to CES at Fixed
    
    
    AvailableEstimated Peak
    
    
    Allocated to
    
    
    Sold to
    
    
    Price Under the
    
    
    Under theCapacity (MW)
    
    
    Third Party
    
    
    CES at
    
    
    Index
    
    
    Index BasedNumber of
    
    
    
    
    
    
    
    
    
    
    % of
    
    
    Agreements
    
    
    Fixed Price
    
    
    Based Agreement
    
    
    AgreementRegion
    
    Facilities
    
    
    States

    
    Total
    
    
    Total
    
    
    (MW) (1)
    
    
    (MW) (2)
    
    
    (MW) (3)
    
    
    (MW) (4)West(5)
    
    
    4
    
    
    CA, WA
    
    
    2,469
    
    
    
    26
    %
    
    
    32
    
    
    
    500
    
    
    
    196
    
    
    
    1,741ERCOT
    
    
    4
    
    
    TX
    
    
    2,963
    
    
    
    30
    %
    
    
    385
    
    
    
    
    
    
    
    258
    
    
    
    2,320Southeast
    
    
    4
    
    
    AL, LA, SC
    
    
    2,876
    
    
    
    29
    %
    
    
    119
    
    
    
    
    
    
    
    442
    
    
    
    2,315Other(6)
    
    
    2
    
    
    OK, IL
    
    
    1,507
    
    
    
    15
    %
    
    
    513
    
    
    
    
    
    
    
    
    
    
    
    994Total
    
    
    14
    
    
    
    
    
    
    
    9,815
    
    
    
    100
    %
    
    
    1,049
    
    
    
    500
    
    
    
    896
    
    
    
    7,370
 
 (1)
    
    These amounts represent the estimated average capacity to be delivered pursuant to third
party agreements based on firm commitments set forth in such agreements. Such third party
agreements are subject to a variety of terms and conditions including, in some circumstances,
termination rights, that could affect the amounts shown in this table.(2)
    
    500 MW of on-peak capacity generated by Delta and Los Medanos is sold to CES under the Fixed
Price Agreement through December 31, 2009.(3)
    
    896 MW of peaking and power augmentation products, and all off-peak products, are sold to CES
at a fixed price through December 31, 2013.(4)
    
    Represents the estimated remaining on-peak nominal capacity of our facilities available under
the Index Based Agreement, after delivery of committed capacity pursuant to third party
agreements and delivery of 500 MW of on-peak capacity and 896 MW of peaking and power
augmentation capacity to CES at a fixed price.(5)
    
    The Pastoria facility in the West was placed into service in two phases in May 2005 and July
2005. As of December 31, 2005, it has 750 MW of peak capacity.(6)
    
    The full 513MW capacity of one of these facilities, Zion Energy Center, is committed under a
third party agreement until at least May 2008. 14




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##### Table of Contents



Calpine
Generating Company
 
 Total Operating of 9,815 MW
 West
    
    2,469 MW
    
    
    26
    %ERCOT
    
    2,963 MW
    
    
    30
    %Southeast
    
    2,876 MW
    
    
    29
    %Other
    
    1,507 MW
    
    
    15
    %Total:
    
    9,815 MW
 15




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DESCRIPTION OF POWER GENERATION FACILITIES
    16




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##### Table of Contents



Power Plants
 WithBaseload
    
    Peaking
    
    Total 2005Capacity
    
    Capacity
    
    Generation
    
    Commercial OperationPower Plant(1)
    
    State
    
    (MW)
    
    (MW)
    
    (MWh)(2)
    
    Commencement DateFreestone Energy Center
    
    TX
    
    
    1,022.0
    
    
    
    1,022.0
    
    
    
    4,065,320
    
    
    June 2002Oneta Energy Center
    
    OK
    
    
    994.0
    
    
    
    994.0
    
    
    
    641,519
    
    
    Phase I July 2002Phase II June 2003Delta Energy Center
    
    CA
    
    
    799.0
    
    
    
    882.0
    
    
    
    5,359,000
    
    
    June 2002Morgan Energy Center
    
    AL
    
    
    722.0
    
    
    
    852.0
    
    
    
    1,168,365
    
    
    Phase I June 2003Phase II January 2004Decatur Energy Center
    
    AL
    
    
    793.0
    
    
    
    852.0
    
    
    
    669,698
    
    
    Phase I June 2002Phase II June 2003Baytown Energy Center
    
    TX
    
    
    742.0
    
    
    
    830.0
    
    
    
    4,108,334
    
    
    June 2002Pastoria Energy Center
    
    CA
    
    
    750.0
    
    
    
    750.0
    
    
    
    2,509,897
    
    
    Phase I May 2005Phase II July 2005Columbia Energy Center
    
    SC
    
    
    464.0
    
    
    
    641.0
    
    
    
    381,922
    
    
    May 2004Channel Energy Center
    
    TX
    
    
    527.0
    
    
    
    574.0
    
    
    
    2,724,906
    
    
    Phase I September 2001Phase II April 2002Los Medanos Energy Center
    
    CA
    
    
    497.0
    
    
    
    566.0
    
    
    
    3,613,934
    
    
    August 2001Corpus Christi Energy Center
    
    TX
    
    
    414.0
    
    
    
    537.0
    
    
    
    2,252,355
    
    
    October 2002Carville Energy Center
    
    LA
    
    
    455.0
    
    
    
    531.0
    
    
    
    2,069,824
    
    
    June 2003Zion Energy Center
    
    IL
    
    
    
    
    
    
    513.0
    
    
    
    35,056
    
    
    Phase I June 2002Phase II June 2003Goldendale Energy Center
    
    WA
    
    
    237.0
    
    
    
    271.0
    
    
    
    1,025,888
    
    
    September 2004Total Gas-Fired Power Plants (14 plants)
    
    
    
    
    8,416.0
    
    
    
    9,815.0
    
    
    
    30,626,018
 
 (1)
    
    All plants except Zion Energy Center are combined cycle technology. Zion Energy Center uses a
simple cycle technology.(2) Generation MWh is shown here as 100% of each plants gross
generation in MWh, which exceeds the net amounts sold due to the captive load requirements of
the power plants. The West (Delta, Goldendale, Los Medanos and Pastoria)
  Delta Facility.
  Goldendale Facility.
  17




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Los Medanos Facility.
  Pastoria Facility.
   .
 ERCOT (Baytown, Channel, Corpus Christi and Freestone)
  Baytown Facility.
   18




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Channel Facility.
   Corpus Christi Facility.
   Freestone Facility.
  The Southeast (Carville, Columbia, Decatur, Morgan)
  19




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Carville Facility.
  Columbia Facility.
   Decatur Facility.
    20




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Morgan Facility.
  Other (Oneta and Zion)
  Oneta Facility.
   Zion Facility.
   21




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STRATEGY
    GOVERNMENT REGULATION
     22




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Federal Regulation of Electricity
  FPA
   Market Based Rate Authorization
     23




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FERC Regulation of Transfers of Jurisdictional Facilities
    FERC Regulation Of Open Access Electric Transmission
   24




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##### Table of Contents



PUHCA 1935
     PURPA
  25




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Additional Provisions of EPAct 2005
  26




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Western Energy Markets
  FERC Regulation of Natural Gas Transportation
     27




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Environmental Regulations
   Clean Air Act
   Clean Water Act
  28




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RCRA
  CERCLA
  AB
32
  State Energy Regulation
   California
  29




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Texas
   30




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EMPLOYEES
  SUMMARY OF KEY EVENTS
 Chapter 11 Cases
  Senior Management
      31




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Finance
  Date
    
    Description05/09/05
    
    S&P assigns a B- rating on $100 million floating rate Second Priority Term Loan, CCC+ rating
on $150 million 11.5% Third Priority Secured Notes, B on $235 million First Priority Secured
Floating Rate Notes, B on $600 million First Priority Term Loan, B- on $640 million Second
Priority Secured Floating Rate Notes, CCC+ on $680 million Third Priority Secured Floating
Rate Notes, and B on $200 million First Priority Revolving Credit Facility. S&P also
lowered the corporate rating on CalGen to B- from B (with negative outlook).05/12/05
    
    Moodys Investors Services lowered its credit ratings on CalGens debt obligations, reducing
CalGens first priority debt rating to B2 from B1, its second priority debt to B3 from B2
and its third priority debt to Caal from B3 (with negative outlook).12/02/05
    
    Moodys assigns a Caa1 rating on $640 million Second Priority Secured Floating Rate Notes,
B3 rating on $235 million First Priority Secured Floating Rate Notes, Caa2 rating on $680
million Third Priority Secured Floating Rate Notes, Caa2 rating on $150 million 11.5% Third
Priority Secured Notes, B3 rating on $600 million First Priority Term Loan, B3 rating on
$200 million First Priority Credit Facility, and a Caa1 rating on $100 million Second
Priority Term Loan.12/21/05
    
    S&P assigns a D rating on $100 million floating rate Second Priority Term Loan, D rating on
$150 million 11.5% Third Priority Secured Notes, D on $235 million First Priority Secured
Floating Rate Notes, D on $600 million First Priority Term Loan, D on $640 million Second
Priority Secured Floating Rate Notes, and D on $680 million Third Priority Secured Floating
Rate Notes. S&P also lowered the corporate rating on CalGen to D from B- (with negative
outlook).03/01/06
    
    Moodys withdraws ratings on CalGen Notes and Term Loans.
 
 Item 1A. Risk Factors
 Risks Related to Chapter 11
 We are subject to the risks and uncertainties associated with our filing for reorganization.
  
    
    the actions and decisions of our creditors and other third parties with interests in
our Chapter 11 case, which may be inconsistent with our plans;
    
    objections to or limitations on our ability to obtain Bankruptcy Court approval with
respect to motions in the Chapter 11 case that we may seek from time to time or
potentially adverse decisions by the Bankruptcy Court with respect to such motions;
    
    objections to or limitations on our ability to avoid or reject contracts that are
burdensome or uneconomical;
    
    the expiration of the exclusivity period for us to propose and confirm a plan of
reorganization or delays, limitations or other impediments to our ability to develop,
propose, confirm and consummate a plan of reorganization;
    
    the ability of third parties to seek and obtain court approval to terminate or shorten
the exclusivity period for us to propose and confirm a plan of reorganization;
    
    our ability to obtain and maintain normal terms with customers, vendors and service providers; and
    
    our ability to maintain contracts and leases that are critical to our operations.
 32




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The Chapter 11 cases may adversely affect our operations going forward.
  We will be subject to claims made after the date that we filed for Chapter 11 protection and
other claims that are not discharged in the Chapter 11 cases, which could have a material adverse
effect on our results of operations and financial condition.
   33




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Our successful reorganization will depend on certain of Calpines key employees, who are also
officers of CalGen and its subsidiaries, and their, and our, ability to successfully implement new
strategies .
  We have recognized impairment charges of $1.2 billion for the period ending December 31, 2005
to certain of our projects and could recognize additional impairment charges in the future.
    Bankruptcy laws may limit our secured creditors ability to realize value from their
collateral .
  34




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
    
    how long payments under our secured debt could be delayed as a result of the Chapter 11 cases;
    
    whether or when secured creditors (or their applicable agents) could repossess or dispose of collateral;
    
    the value of the collateral; or
    
    whether or to what extent secured creditors would be compensated for any delay in
payment or loss of value of the collateral through the requirement of adequate
protection.
   Calpine or any affiliate in Chapter 11 may reject any executory contracts with us or our
subsidiaries.
  We and/or one or more of our subsidiaries could be substantively consolidated with Calpine or
one or more of the other Debtors in connection with the Chapter 11 filings by Calpine and such
other Debtors.
  35




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As a result of our and Calpines impaired credit status due to our respective Chapter 11
filings and earlier credit ratings downgrades, our operations may be restricted and our liquidity
requirements increased.
   We are subject to additional risks and uncertainties associated with revisions to the
Bankruptcy Code that took effect in October 2005.
   Our emergence from Chapter 11 is not assured .
  36




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Risks Relating to our Indebtedness and Limited Capital Resources
 Our
future financial results may be volatile and may not reflect historical trends.
  To service our indebtedness and other potential liquidity requirements we will require a
significant amount of cash.
    
    
    limiting our ability to borrow additional amounts for working capital, capital
expenditures, debt service requirements, execution of our growth strategy, or other
purposes;
    
    limiting our ability to use operating cash flow in other areas of our business because
we must dedicate a substantial portion of these funds to service the debt;
    
    increasing our vulnerability to general adverse economic and industry conditions;
    
    limiting our ability to capitalize on business opportunities and to react to
competitive pressures and adverse changes in government regulation; and
    
    limiting our ability or increasing the costs to refinance indebtedness
   37




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The DIP Facility imposes significant operating and financial restrictions on us; any
failure to comply with these restrictions could have a material adverse effect on our liquidity and
our operations.
  
    
    incur additional indebtedness and issue stock;
    
    make prepayments on or purchase indebtedness in whole or in part;
    
    pay dividends and other distributions with respect to our capital stock or repurchase
our capital stock or make other restricted payments;
    
    use amounts borrowed under the DIP Facility to make loans or payments to non Debtors;
    
    make certain investments;
    
    enter into transactions with affiliates on other than arms-length terms;
    
    create or incur liens to secure debt;
    
    consolidate or merge with another entity, or allow one of our subsidiaries to do so;
    
    lease, transfer or sell assets and use proceeds of permitted asset leases, transfers or sales;
    
    incur dividend or other payment restrictions affecting certain subsidiaries;
    
    make capital expenditures beyond specified limits;
    
    engage in certain business activities; and
    
    acquire facilities or other businesses.
   We have substantial liquidity needs and face significant liquidity pressure.
  38




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We may not have sufficient cash to service our indebtedness and other liquidity requirements.
  The recourse of holders of our debt is limited to the assets and cash flow of us and the
guarantors.
  We may not be able to generate sufficient cash flow to service our debt or meet unanticipated
capital needs.
    39




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##### Table of Contents



We may not be able to refinance the Notes, our Term Loans and our Revolving Credit Facility
when they become due.
  The Index Hedge provides limited protection against adverse changes in gas and electricity
prices as measured by defined market indices.
  We may be unable to secure additional financing in the future.
    40




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Holders of our secured debt have only an indirect claim on the assets of our subsidiary that
owns the Goldendale facility by means of pledges of the equity interests of such subsidiarys
ultimate parent entities.
  The liens on the collateral securing our debt may be subject to liens held by others. On an
event of default, the proceeds from any realization of the collateral may not be sufficient to
repay our debt.
   We are permitted to incur obligations to expand the facilities or to secure third party power
supply agreements in certain circumstances, and we may secure such obligations with priority liens
on the assets financed by or that support such obligations.
  Our secured creditors interest in their collateral may be adversely affected by the failure
to record and/or perfect security interests in certain collateral.
  41




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The lien ranking and voting provisions set forth in the collateral trust agreement and the
instruments governing our secured debt may limit the rights of the holders of such debt with
respect to the collateral securing their debt.
   Our ability to make distributions to our equity holders or similar payments is subject to
limited restrictions, and excess cash may be released in the form of
intercompany loans.
  The agreements governing our indebtedness, as well as indebtedness of our affiliates, impose
restrictions on our business.
 
 42




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##### Table of Contents




    
    incur indebtedness;
    
    make certain investments;
    
    create liens;
    
    agree to payment restrictions affecting the subsidiary guarantors;
    
    consolidate or merge;
    
    sell or otherwise transfer or dispose of assets, including equity interests in our subsidiaries;
    
    enter into transactions with our affiliates; and
    
    use the proceeds of permitted sales of our assets.
  A court could cancel the guarantees of the Notes, Term Loans and Revolving Credit Facility by
our subsidiaries under fraudulent transfer law.
   
    
    the subsidiary guarantor was insolvent or was rendered insolvent by reason of the
incurrence;
    
    the subsidiary guarantor was engaged in a business or transaction for which its
remaining assets constituted unreasonably small capital; or
    
    the subsidiary guarantor intended to incur, or believed (or reasonably should have
believed) that it would incur, debts beyond its ability to pay as those debts matured.
   The collateral may not be valuable enough to satisfy all of the obligations secured by the
collateral.
  43




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It may be difficult to realize the value of the collateral pledged to secure our debt.
   We have only obtained limited title insurance on the real property and the improvements
thereon that secure our obligations.
  State law may limit the ability of holders of our secured debt to foreclose on real property
and improvements included in their collateral.
   We may be unable to repurchase the Notes and repay the Term Loans upon a change of control.
  44




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Holders of Notes who hold via beneficial interests in global notes may be unable to transfer
or pledge such interests if physical delivery is required by applicable law.
  Our
indebtedness, substantially all of which, contains floating rate interest
provisions, could adversely affect our financial health and prevent us from fulfilling our
obligations under our debt.
  
    
    severely limiting our ability to borrow additional amounts for working capital,
capital expenditures, debt service requirements or other purposes;
    
    increasing our vulnerability to general adverse economic and industry conditions;
    
    requiring a substantial portion of our cash flow from operations to be used for debt
payments and reducing our ability to use cash flow to fund working capital, capital
expenditures and other general corporate purposes.
  The prices of our debt securities are volatile and, in connection with our reorganization,
holders of our securities or other debt may receive no payment, or payment that is less than the
face value or purchase price thereof.
  45




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Risks Relating to Our Business
 Our performance is dependent on market prices for gas and power, which are subject to
substantial fluctuation.
  
    
    global crude oil and products prices;
    
    available capacity of power and gas transmission lines;
    
    weather conditions;
    
    demand for energy commodities, general economic conditions and availability of
competitively priced alternative energy sources;
    
    addition of generating capacity;
    
    availability of natural gas, crude oil and refined products, and coal production
levels and availability and levels of storage and inventory for fuel stocks;
    
    the bankruptcy or other financial distress of market participants;
    
    natural disasters (including Hurricane Katrina in late 2005, whose damage to the
electric grid, natural gas production and transportation systems in the Gulf Coast
region continues to impact commodity prices), wars, embargoes, acts of terrorism and
other catastrophic events; and
    
    federal, state and foreign governmental regulation and legislation.
  Our ability to service our debt will depend principally on revenue to be received under our
power purchase agreements with CES and other third parties.
  46




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##### Table of Contents




    
    failure of the indices and pricing mechanisms to reflect actual market prices for electric power and natural gas;
    
    downward movement in the market for fixed-price power purchase agreements;
    
    our inability to effectively or efficiently market the power produced by the facilities;
    
    differences in facility operating characteristics from those contemplated in our
power purchase agreements with CES, especially the Index Based Agreement; or
    
    our inability to access adequate gas transportation or electric transmission
services.
  47




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We rely on other parties to provide substantially all of the services and other support we
need to operate our business; our ability to make payments of principal, premium if any, interest
and special interest, if any, on our debt may be impaired by the failure of any of those parties to
perform their contractual obligations or if any of those parties terminate their contractual
obligations.
   
    
    fails to perform its contractual or other obligations;
    
    disavows its obligations under its contracts with us or terminates its contracts;
    
    is excused from performance thereunder pursuant to any bankruptcy, insolvency or other similar proceedings; or
    
    is excused from performing its obligations because we have failed to perform our
obligations or because an event has occurred outside of its control;
  Our business is subject to substantial regulations and permitting requirements and may be
adversely affected if we are unable to comply with existing regulations or requirements or changes
in applicable regulations or requirements.
    48




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49




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##### Table of Contents



50




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51




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##### Table of Contents



We face ongoing changes in the United States electric utility industry, which, among other
consequences, could increase the number of our competitors.
  We could be exposed to significant liability for violations of hazardous substances laws
should any such substances be found at our projects.
  Competition could adversely affect our performance.
  Our operations are subject to hazards customary to the power generation industry. We may not
have adequate insurance to cover all of these hazards.
  52




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##### Table of Contents



RMR payments made to the Delta Energy Center have been challenged by certain parties as not
being just and reasonable.
   Risks Relating to the Facilities
 The facilities may not operate as planned.
  Construction, expansion, refurbishment and operation of facilities involve significant risks
that cannot always be covered by insurance or contractual protections and could have a material
adverse effect on our revenues, results of operations and cash flows.
  53




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
    
    dispatch at our facilities;
    
    supply interruptions;
    
    work stoppages;
    
    labor disputes;
    
    social unrest;
    
    weather interferences;
    
    unforeseen engineering, environmental and geological problems; and
    
    unanticipated cost overruns.
  Our ability to operate and maintain the facilities is dependent upon the availability of
various resources from affiliates and third-party suppliers.
     54




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Certain real estate matters may affect the operation of the facilities.
  Seismic disturbances could damage the facilities.
  Acts of terrorism could have a material adverse effect on our financial condition, results of
operations and cash flows.
  We rely on Calpine and its subsidiaries to provide many of the financial and other support and
services we need to operate our business; our ability to make payments on our debt may be impaired
by the failure of those affiliates to provide such support and services and perform their
contractual obligations.
  
    
    CES, which supplies the facilities with gas, purchases power generated by the
facilities under our power purchase agreements, and provides energy transmission and gas
transportation services;
    
    COSCI, which operates and maintains, and provides long-term major maintenance services for, the facilities;
    
    CPN Pipeline Company, which operates the gas pipeline serving the Delta and Los Medanos facilities;
    
    Calpine Texas Pipeline, which owns and operates gas pipelines serving the Baytown and
Freestone facilities and owns the wastewater pipeline serving the Freestone facility;
    
    CASCI, which provides administrative services for us and all of our subsidiaries; and
    
    Calpine, which guarantees the performance of certain obligations of our affiliates,
and pays certain additional costs related to certain facilities and includes us and our
subsidiaries under Calpines corporate insurance program.
  55




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Calpine is subject to conditions that restrict its activities and may make it difficult for it
and its subsidiaries to perform their obligations to us.
  
    
    general economic and capital market conditions;
    
    conditions in energy markets;
    
    regulatory developments;
    
    credit availability from banks or other lenders for Calpine and Calpines industry
peers, as well as the economy in general;
    
    our and Calpines credit ratings;
    
    investor confidence in the power generation industry and in the our ability and the
ability of Calpine to reorganize and emerge from Chapter 11;
    
    the continued success of our and Calpines current power generation facilities; and
    
    provisions of tax and securities laws that are conducive to raising capital.
  56




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The obligations of our affiliates under their agreements with us are guaranteed by Calpine but
such guarantees may not be satisfied.
  Our facilities may require significant capital expenditures for maintenance and updating.
  Combustion turbines of the same make as some of the turbines used in our projects have
experienced operational issues.
  The limited experience relating to self-performed combustion turbine maintenance may cause or
extend outages of the facilities or increase costs associated with major maintenance.
  Calpine controls us and its interest may come into conflict with yours.
   
 Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
   57




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Item 3. Legal Proceedings
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 PART II
 
 Item 5. Market for Registrants Common Equity and Related Stockholder Matters
  
 Item 6. Selected Financial Data
 Selected Consolidated Financial Data
  Years Ended December 31,2005
    
    2004 (Restated)
    
    2003 (Restated)
    
    2002 (Restated)
    
    2001 (Restated)(In millions)Consolidated
Statement of Operations data:Total revenue
    
    $
    2,724.7
    
    
    $
    1,708.3
    
    
    $
    1,159.4
    
    
    $
    544.0
    
    
    $
    41.7Loss before cumulative effect of a change in accounting principle
    
    
    (1,288.8
    )
    
    
    (34.7
    )
    
    
    (124.0
    )
    
    
    (96.6
    )
    
    
    (4.7
    )Cumulative effect of a change in accounting principle
    
    
    
    
    
    
    
    
    
    
    (0.2
    )
    
    
    
    
    
    
    Net loss
    
    $
    (1,288.8
    )
    
    $
    (34.7
    )
    
    $
    (124.2
    )
    
    $
    (96.6
    )
    
    $
    (4.7
    )
 As of December 31,2005
    

2004
(Restated)
    

2003
(Restated)
    

2002
(Restated)
    

2001
(Restated)(In millions)Consolidated
Balance Sheet data:Total assets
    
    $
    5,434.1
    
    
    $
    6,625.3
    
    
    $
    6,658.4
    
    
    $
    6,339.4
    
    
    $
    5,406.7Short-term debt
    
    
    2,438.2
    
    
    
    0.2
    
    
    
    2,200.5
    
    
    
    0.1
    
    
    
    Long-term debt
    
    $
    1.9
    
    
    $
    2,397.4
    
    
    $
    4,442.5
    
    
    $
    6,051.7
    
    
    $
    4,787.2
  Years Ended December 31,2002
    
    
    2001Previously
reported
    
    
    Restated
    
    
    Previously
reported
    
    
    Restated(in millions)Loss before cumulative effect of a change in
accounting principle
    
    
    
    
    
    
    
    
    
    $
    (150.1
    )
    
    $
    (96.6
    )
    
    $
    (7.4
    )
    
    $
    (4.7
    )Net loss
    
    
    
    
    
    
    
    
    
    $
    (150.1
    )
    
    $
    (96.6
    )
    
    $
    (7.4
    )
    
    $
    (4.7
    )
 As of December 31,2003
    
    

    2002
    
    

    2001Previously
reported
    
    
    Restated
    
    
    Previously reported
    
    
    Restated
    
    
    Previously
reported
    

    
    Restated(in millions)Long-term debt
    
    $
    4,617.6
    
    
    $
    4,442.5
    
    
    $
    6,226.8
    
    
    $
    6,051.7
    
    
    $
    4,962.3
    
    
    $
    4,787.2
 58




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Selected Operating Information
 Years Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(Dollars in millions, except production and pricing data)Power Plants:Electricity and steam revenues:Related party
    
    $
    2,184.0
    
    
    $
    1,258.1
    
    
    $
    779.2
    
    
    $
    388.6
    
    
    $
    18.3Other
    
    
    542.3
    
    
    
    452.8
    
    
    
    369.2
    
    
    
    152.1
    
    
    
    22.0Subtotal
    
    
    2,726.3
    
    
    
    1,710.9
    
    
    
    1,148.4
    
    
    
    540.7
    
    
    
    40.3Spread on sales of purchased power
    
    
    (4.3
    )
    
    
    (0.1
    )
    
    
    (4.7
    )
    
    
    
    
    
    
    Adjusted electricity and steam revenues
    
    
    2,722.0
    
    
    
    1,710.8
    
    
    
    1,143.7
    
    
    
    540.7
    
    
    
    40.3MWh produced
    
    
    30,626
    
    
    
    28,241
    
    
    
    26,048
    
    
    
    16,496
    
    
    
    1,574All-in electricity price per megawatt hour generated
    
    $
    88.88
    
    
    $
    60.58
    
    
    $
    43.91
    
    
    $
    32.78
    
    
    $
    25.60
 
 Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
       
    
    developing and executing a new business plan, to include
the CalGen Debtors, to enhance the value of our core assets
and businesses during the pendency of our Chapter 11 cases;
    
    preserving and enhancing liquidity while spark spreads (the differential
between power revenues and fuel costs) are depressed;
    
    lowering costs of production and overhead through various efficiency programs;
 59




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##### Table of Contents




    
    developing, proposing, confirming and implementing a plan or plans of reorganization; and
    
    emerging from Chapter 11 as a stronger, more competitive company.
 Restatement of Previously Issued Financial Statements
  Income taxes 
 Fuel Expense 
 Deferred transmission credits 
 Chapter 11 Considerations
   60




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61




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##### Table of Contents




    
    Stabilization  During this initial phase, Calpine is focused on stabilizing its business
operations, including those of the CalGen Debtors and adjusting to the changes caused by
Chapter 11. Its activities during this period include establishing working relationships
with our various creditor committees and their advisors and performing a comprehensive lease
and executory contract review process. Significant progress has been made in this phase and
stabilization efforts will continue throughout 2006, particularly with regard to the lease
and executory contract review process.
    
    Plan Design  In this phase, Calpine will assess the business and prepare a business
plan, evaluate claims made against the Debtors, including the CalGen Debtors, and prepare a
plan of reorganization that is intended to maximize the value of the Chapter 11 estates. We
are in the early stages of this phase now and will likely be in this phase throughout 2006.
The period during which we have the exclusive right to propose a plan or plans of
reorganization has been extended by the Bankruptcy Court to December 31, 2006, and we have
the exclusive right to solicit acceptances of any such plans until March 31, 2007.
    
    Implementation  In this phase, Calpine will continue to negotiate our plan of
reorganization with creditor committees with the expectation that an agreed plan of
reorganization, supported by Calpines official and ad hoc creditor committees, will be
proposed and filed with the Bankruptcy Court. In addition, during this phase we will
determine how the claims of various creditors, if any, will be satisfied. This is the final
phase and we expect that it will result in our emergence from Chapter 11. However, we cannot
be sure that at this time when or if we will emerge from Chapter 11. It is possible that
some or all of the assets of any one or more of the Debtors, including CalGen Debtors, may
be sold.
  Results of Operations
  
    
    the sale of approximately 1,049 MW of electrical capacity and energy as well as steam to
unrelated parties under several long-term agreements and the sale of RMR services to the
CAISO;
    
    the sale of 500 MW of on-peak capacity from our Delta and Los Medanos facilities, at a
fixed price, to CES through December 31, 2009 pursuant to the Fixed Price Agreement;
    
    the sale of off-peak, peaking and power augmentation products to CES at a fixed price
through December 31, 2013 pursuant to the Index Based Agreement;
    
    the sale of the remaining on-peak portion of our output (net of sales to unrelated
parties and sales to CES as described above) to CES at a floating spot price that reflects
the positive (if any, but never negative) difference between day-ahead power prices and
day-ahead gas prices using indices chosen to approximate the actual power price that would
be received and the actual gas price that would be paid in the market relevant for each
facility, pursuant to the Index Based Agreement; and
    
    payments to CalGen under a three-year Index Hedge with MSCG. The Index Hedge provides for
semi-annual payments to CalGen by MSCG equal to the amount, if any, by which the Aggregate
Spark Spread Amount calculated under the Index Hedge (which approximates the aggregate
Spark Spread Amount calculated under the Index Based Agreement) falls below $50.0 million
in each six-month period during the term of the Index Hedge. The Aggregate Spark Spread
Amount equals the sum over each such six-month period of the individual facilities Daily
On-Peak Spark Spread Amounts calculated under the Index Hedge.
 62




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##### Table of Contents



Year Ended December 31, 2005 compared to Year Ended December 31, 2004
   Revenue
 2005
    
    
    2004
    
    
    $ Change
    
    
    % ChangeElectricity revenue  related party
    
    $
    2,184.0
    
    
    $
    1,258.1
    
    
    $
    925.9
    
    
    
    73.6
    %Electricity and steam revenue  unrelated -party
    
    
    542.3
    
    
    
    452.8
    
    
    
    89.5
    
    
    
    19.8
    %Mark-to-market activity, net
    
    
    (11.4
    )
    
    
    (9.1
    )
    
    
    (2.3
    )
    
    
    (25.3
    )%Sale of purchased power
    
    
    5.5
    
    
    
    3.2
    
    
    
    2.3
    
    
    
    71.9
    %Other revenue
    
    
    4.3
    
    
    
    3.3
    
    
    
    1.0
    
    
    
    30.3
    %Total revenue
    
    $
    2,724.7
    
    
    $
    1,708.3
    
    
    $
    1,016.4
    
    
    
    59.5
    %
   63




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##### Table of Contents



Cost of Revenue
 2005
    
    
    2004
    
    
    $ Change
    
    
    % Change(restated)Plant operating expense  related party
    
    $
    218.9
    
    
    $
    173.2
    
    
    $
    (45.7
    )
    
    
    (26.3
    )%Fuel expense  related party
    
    
    1,991.2
    
    
    
    1,182.0
    
    
    
    (809.2
    )
    
    
    (68.5
    )%Purchased power expense
    
    
    9.8
    
    
    
    3.3
    
    
    
    (6.5
    )
    
    
    (197.0
    )%Depreciation and amortization expense
    
    
    181.7
    
    
    
    151.7
    
    
    
    (30.0
    )
    
    
    (19.8
    )%Power asset impairment expense
    
    
    1,188.0
    
    
    
    
    
    
    
    (1,188.0
    )
    
    
    (100.0
    )%Provision for doubtful accounts
    
    
    105.9
    
    
    
    5.4
    
    
    
    (100.5
    )
    
    
    (1861.1
    )%Total cost of revenue
    
    $
    3,695.5
    
    
    $
    1,515.6
    
    
    $
    (2,179.9
    )
    
    
    (143.8
    )%
   64




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Other (Income)/Expenses
 2005
    
    2004
    
    $ Change
    
    % ChangeLong-term service agreement cancellation charge
    
    $
    23.5
    
    
    $
    3.8
    
    
    $
    (19.7
    )
    
    
    (518.4
    )%Sales, general and administrative expense  related party
    
    
    16.2
    
    
    
    11.5
    
    
    
    (4.7
    )
    
    
    (40.9
    )%Interest expense  related party
    
    
    
    
    
    
    72.2
    
    
    
    72.2
    
    
    
    100.0
    %Interest expense  unrelated party
    
    
    240.6
    
    
    
    160.8
    
    
    
    (79.8
    )
    
    
    (49.6
    )%Interest income
    
    
    (4.8
    )
    
    
    (2.5
    )
    
    
    2.3
    
    
    
    92.0
    %Other expense, net
    
    
    4.1
    
    
    
    0.9
    
    
    
    (3.2
    )
    
    
    (355.6
    )%
      65




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Year Ended December 31, 2004 compared to Year Ended December 31, 2003
   Revenue
 2004
    
    
    2003
    
    
    $ Change
    
    
    % ChangeElectricity and steam revenue  related party
    
    $
    1,258.1
    
    
    $
    779.2
    
    
    $
    478.9
    
    
    
    61.5
    %Electricity and steam revenue  unrelated party
    
    
    452.8
    
    
    
    369.2
    
    
    
    83.6
    
    
    
    22.6
    %Mark-to-market activity, net
    
    
    (9.1
    )
    
    
    
    
    
    
    (9.1
    )
    
    
    (100.0
    )%Sale of purchased power
    
    
    3.2
    
    
    
    7.7
    
    
    
    (4.5
    )
    
    
    (58.4
    )%Other revenue
    
    
    3.3
    
    
    
    3.3
    
    
    
    
    
    
    
    Total revenue
    
    $
    1,708.3
    
    
    $
    1,159.4
    
    
    $
    548.9
    
    
    
    47.3
    %
   Cost of Revenue
 2004
    
    
    2003
    
    
    $ Change
    
    
    % Change(restated)Plant operating expense  related party
    
    $
    173.2
    
    
    $
    129.7
    
    
    $
    (43.5
    )
    
    
    (33.6
    )%Fuel expense
    
    
    1,182.0
    
    
    
    770.2
    
    
    
    (411.8
    )
    
    
    (53.5
    )%Purchased power expense
    
    
    3.3
    
    
    
    12.4
    
    
    
    9.1
    
    
    
    73.4
    %Depreciation and amortization expense
    
    
    151.7
    
    
    
    121.0
    
    
    
    (30.7
    )
    
    
    (25.4
    )%Provision for doubtful accounts
    
    
    5.4
    
    
    
    1.9
    
    
    
    (3.5
    )
    
    
    (184.2
    )%Total cost of revenue
    
    $
    1,515.6
    
    
    $
    1,035.2
    
    
    $
    (480.4
    )
    
    
    (46.4
    )%
    66




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##### Table of Contents



Other (Income)/Expenses
 2004
    
    2003
    
    $ Change
    
    % ChangeLong-term service agreement cancellation charge
    
    $
    3.8
    
    
    $
    
    
    
    $
    (3.8
    )
    
    
    (100.0
    )%Sales, general and administrative expense
    
    
    11.5
    
    
    
    5.6
    
    
    
    (5.9
    )
    
    
    (105.4
    )%Other operating expense
    
    
    
    
    
    
    0.2
    
    
    
    0.2
    
    
    
    100
    %Interest expense  related party
    
    
    72.2
    
    
    
    255.7
    
    
    
    183.5
    
    
    
    71.8
    %Interest expense  unrelated party
    
    
    160.8
    
    
    
    57.0
    
    
    
    (103.8
    )
    
    
    (182.1
    )%Interest income
    
    
    (2.5
    )
    
    
    (2.1
    )
    
    
    0.4
    
    
    
    19.0
    %Other expense, net
    
    
    0.9
    
    
    
    0.2
    
    
    
    (0.7
    )
    
    
    (350.0
    )%
      Liquidity and Capital Resources
   67




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Chapter 11 Cases and Financing Activities
    DIP Facility.
  68




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##### Table of Contents



Cash Management.
 Expedited Procedures for the Rejection of Executory Contracts and Unexpired Leases; Assumption
of Unexpired Leases
 2004 Refinancing.
    69




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##### Table of Contents



Cash Flow Activities
 Years Ended December 31,2005
    
    
    2004
    
    
    2003(Restated)
    
    
    (Restated)(In millions)Beginning cash and cash equivalents
    
    $
    64.5
    
    
    $
    39.6
    
    
    $
    25.6Net cash provided by (used in):Operating activities
    
    
    163.8
    
    
    
    268.1
    
    
    
    175.1Investing activities
    
    
    (84.7
    )
    
    
    (185.1
    )
    
    
    (597.6
    )Financing activities
    
    
    (0.2
    )
    
    
    (58.1
    )
    
    
    436.5Net increase in cash and cash equivalents
    
    
    78.9
    
    
    
    24.9
    
    
    
    14.0Ending cash and cash equivalents
    
    $
    143.4
    
    
    $
    64.5
    
    
    $
    39.6
  70




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##### Table of Contents



Letter of Credit Facilities
 Working Capital
 Credit Considerations
    Capital Expenditures and Sources
 Distributions to Sole Member
 71




---



##### Table of Contents



Capital Availability
 Long-term Service Agreement Cancellation
 Compliance with Covenants
   Guarantees
 Performance Indicators
 Off-Balance Sheet Commitments
 72




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##### Table of Contents



Contractual Obligations
 2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    Thereafter
    
    
    TotalDebt:First Priority Secured Floating Rate Notes Due 2009
    
    $
    
    
    
    $
    1,175
    
    
    $
    2,350
    
    
    $
    231,475
    
    
    $
    
    
    
    $
    
    
    
    $
    235,000Third Priority Secured Floating Rate Notes Due 2011
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    680,000
    
    
    
    680,000First Priority Secured Term Loans Due 2009
    
    
    
    
    
    
    3,000
    
    
    
    6,000
    
    
    
    591,000
    
    
    
    
    
    
    
    
    
    
    
    600,000Second Priority Secured Floating Rate Notes Due 2010
    
    
    
    
    
    
    
    
    
    
    3,200
    
    
    
    6,400
    
    
    
    630,400
    
    
    
    
    
    
    
    640,000Discount, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,761
    )
    
    
    
    
    
    
    (6,761
    )Second Priority Secured Term Loans Due 2010
    
    
    
    
    
    
    
    
    
    
    500
    
    
    
    1,000
    
    
    
    98,500
    
    
    
    
    
    
    
    100,000Discount, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,056
    )
    
    
    
    
    
    
    (1,056
    )Third Priority Secured Notes Due 2011
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150,000
    
    
    
    150,000Revolving Credit Facility
    
    
    
    
    
    
    40,799
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,799Notes payable
    
    
    171
    
    
    
    179
    
    
    
    187
    
    
    
    196
    
    
    
    205
    
    
    
    1,176
    
    
    
    2,114Total debt and notes payable
    
    $
    171
    
    
    $
    45,153
    
    
    $
    12,237
    
    
    $
    830,071
    
    
    $
    721,288
    
    
    $
    831,176
    
    
    $
    2,440,096Interest payments
    
    $
    263,109
    
    
    $
    253,797
    
    
    $
    250,702
    
    
    $
    213,377
    
    
    $
    142,154
    
    
    $
    49,638
    
    
    $
    1,172,777Purchase obligations:Long-term service agreements
    
    $
    11,810
    
    
    $
    23,509
    
    
    $
    13,523
    
    
    $
    8,531
    
    
    $
    20,321
    
    
    $
    93,053
    
    
    $
    170,747Fuel
    
    
    16,066
    
    
    
    16,066
    
    
    
    16,388
    
    
    
    16,540
    
    
    
    16,696
    
    
    
    208,292
    
    
    
    290,048Water
    
    
    3,923
    
    
    
    4,070
    
    
    
    4,219
    
    
    
    4,379
    
    
    
    4,550
    
    
    
    139,547
    
    
    
    160,688Operating & Maintenance
    
    
    1,366
    
    
    
    1,329
    
    
    
    1,245
    
    
    
    1,244
    
    
    
    1,141
    
    
    
    9,595
    
    
    
    15,920Land leases
    
    
    2,104
    
    
    
    2,236
    
    
    
    2,726
    
    
    
    3,172
    
    
    
    3,249
    
    
    
    87,248
    
    
    
    100,735Other purchase obligations
    
    
    960
    
    
    
    960
    
    
    
    846
    
    
    
    888
    
    
    
    933
    
    
    
    2,009
    
    
    
    6,596Total purchase obligations(1)
    
    $
    36,229
    
    
    $
    48,170
    
    
    $
    38,947
    
    
    $
    34,754
    
    
    $
    46,890
    
    
    $
    539,744
    
    
    $
    744,734
 
 (1)
    
    Included in the total are future minimum payments for operating leases, long-term service
agreements, and water and O&M agreements (See Note 12 of the Notes to Consolidated Financial
Statements for more information).   Performance Metrics
  MWh generated.
 Average availability and average baseload capacity factor.
 Average Heat Rate for gas-fired fleet of power plants expressed in Btus of fuel consumed per
KWh generated.
 Average all-in realized electric price expressed in dollars per MWh generated.
 73




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##### Table of Contents



Average cost of natural gas expressed in dollars per MMBtus of fuel consumed.
 Average spark spread expressed in dollars per MWh generated.
 Average POX per MWh.
  Years Ended December 31,2005
    
    
    2004
    
    
    2003(In thousands)Operating Performance Metrics:MWh generated
    
    
    30,626
    
    
    
    28,241
    
    
    
    26,048Average availability
    
    
    91.2
    %
    
    
    93.7
    %
    
    
    93.1
    %Average baseload capacity factor:Average total MW in operation
    
    
    9,475
    
    
    
    8,597
    
    
    
    6,841Less: Average MW of pure peakers
    
    
    513
    
    
    
    513
    
    
    
    382Average baseload MW in operation
    
    
    8,962
    
    
    
    8,084
    
    
    
    6,459Hours in the period
    
    
    8,760
    
    
    
    8,784
    
    
    
    8,760Potential baseload generation (MWh)
    
    
    78,504
    
    
    
    71,010
    
    
    
    56,581Actual total generation (MWh)
    
    
    30,626
    
    
    
    28,241
    
    
    
    26,048Less: Actual pure peakers generation (MWh)
    
    
    35
    
    
    
    30
    
    
    
    89Actual baseload generation (MWh)
    
    
    30,591
    
    
    
    28,211
    
    
    
    25,959Average baseload capacity factor
    
    
    39.0
    %
    
    
    39.7
    %
    
    
    45.9
    %Average heat rate for gas-fired power plants (excluding peakers)
(Btus/KWh):Not steam adjusted
    
    
    8,066
    
    
    
    7,970
    
    
    
    7,965Steam adjusted
    
    
    7,131
    
    
    
    7,110
    
    
    
    7,146Average all-in realized electric price:Electricity and steam revenue
    
    $
    2,726,290
    
    
    $
    1,710,906
    
    
    $
    1,148,371Spread on sales of purchased power for hedging and optimization
    
    
    (4,380
    )
    
    
    (100
    )
    
    
    (4,687
    )Adjusted electricity and steam revenue (in thousands)
    
    $
    2,721,910
    
    
    $
    1,710,806
    
    
    $
    1,143,684MWh generated (in thousands)
    
    
    30,626
    
    
    
    28,241
    
    
    
    26,048Average all-in realized electric price per MWh
    
    $
    88.88
    
    
    $
    60.58
    
    
    $
    43.91Average cost of natural gas:Fuel expense
    
    $
    1,991,229
    
    
    $
    1,181,959
    
    
    $
    770,208MMBtus of fuel consumed by generating plants. (in thousands)
    
    
    247,116
    
    
    
    200,217
    
    
    
    127,060Average cost of natural gas per MMBtu
    
    $
    8.06
    
    
    $
    5.90
    
    
    $
    6.06MWh generated (in thousands)
    
    
    30,626
    
    
    
    28,241
    
    
    
    26,048Average cost of adjusted fuel expense per MWh
    
    $
    65.02
    
    
    $
    41.85
    
    
    $
    29.57Average spark spread:Adjusted electricity and steam revenue (in thousands)
    
    $
    2,721,910
    
    
    $
    1,710,806
    
    
    $
    1,143,684Less: Fuel expense (in thousands)
    
    
    1,991,229
    
    
    
    1,181,959
    
    
    
    770,208Less: Realized amortization expense on Index Hedge (in thousands)
    
    
    9,272
    
    
    
    5,611
    
    
    
    Spark spread (in thousands)
    
    $
    721,409
    
    
    $
    523,236
    
    
    $
    373,476MWh generated (in thousands)
    
    
    30,626
    
    
    
    28,241
    
    
    
    26,048Average all-in realized spark spread per MWh
    
    $
    23.56
    
    
    $
    18.53
    
    
    $
    14.34Average POX per actual MWh:POX
    
    $
    218,918
    
    
    $
    173,263
    
    
    $
    129,705POX per actual MWh
    
    $
    7.15
    
    
    $
    6.14
    
    
    $
    4.98
 74




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##### Table of Contents



Financial Market Risks
 Debt Financing
  Fair Value2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010
    
    
    Thereafter
    
    
    12/31/2005(1)First Priority Secured Floating Rate Notes Due 2009
    
    $
    
    
    
    $
    1,175
    
    
    $
    2,350
    
    
    $
    231,475
    
    
    $
    
    
    
    $
    
    
    
    $
    235,000Second Priority Secured Floating Rate Notes Due 2010
    
    
    
    
    
    
    
    
    
    
    3,200
    
    
    
    6,400
    
    
    
    623,639
    
    
    
    
    
    
    
    633,239Third Priority Secured Floating Rate Notes Due 2011
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    680,000
    
    
    
    680,000Total Floating Rate Notes(2)
    
    
    
    
    
    
    1,175
    
    
    
    5,550
    
    
    
    237,875
    
    
    
    623,639
    
    
    
    680,000
    
    
    
    1,548,239First Priority Secured Term Loans Due 2009
    
    
    
    
    
    
    3,000
    
    
    
    6,000
    
    
    
    591,000
    
    
    
    
    
    
    
    
    
    
    
    600,000Second Priority Secured Term Loans Due 2010
    
    
    
    
    
    
    
    
    
    
    500
    
    
    
    1,000
    
    
    
    97,444
    
    
    
    
    
    
    
    98,944Total Floating Rate Term Loans(3)
    
    
    
    
    
    
    3,000
    
    
    
    6,500
    
    
    
    592,000
    
    
    
    97,444
    
    
    
    
    
    
    
    698,944Revolving Credit Facility(3)
    
    
    
    
    
    
    40,799
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,799Working Capital Facility(2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total Other Financings
    
    
    
    
    
    
    40,799
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,799Grand total variable-rate debt instruments
    
    $
    
    
    
    $
    44,974
    
    
    $
    12,050
    
    
    $
    829,875
    
    
    $
    721,083
    
    
    $
    680,000
    
    
    $
    2,287,982
 
 (1)
    
    Fair value equals carrying value, which is the aggregate principal amount subject to
variable rate risk.(2)
    
    Interest rate based on LIBOR plus a spread.(3)
    
    Interest rate based on LIBOR plus a spread; however the Company may elect the base rate
plus a spread (see Note 6 of the Notes to Consolidated Financial Statements). Derivatives
   Fair value of contracts outstanding at January 1, 2005
    
    $
    35,916Changes in fair value attributable to new contracts
    
    
    Amortization during the period, net(1)
    
    
    (9,272
    )Changes in fair value attributable to price movements, net
    
    
    (2,086
    )Fair value of contracts outstanding at December 31, 2005(2)
    
    $
    24,558
 
 (1)
    
    Non-cash losses from roll-off (amortization) of deferred premium (see discussion in Note 11
to Consolidated Financial Statements).(2)
    
    Net derivative assets are reported in Note 11 of the Notes to Consolidated Financial
Statements.  Fair Value Source
    
    2006
    
    
    2007-2008
    
    
    2009-2010
    
    
    After 2010
    
    
    TotalPrices actively quoted
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Prices provided by other external sources
    
    
    16,380
    
    
    
    8,178
    
    
    
    
    
    
    
    
    
    
    
    24,558Prices based on models and other valuation methods
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total fair value
    
    $
    16,380
    
    
    $
    8,178
    
    
    $
    
    
    
    $
    
    
    
    $
    24,558
 75




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##### Table of Contents



Fair ValueAfter 10% AdverseFair Value
    
    Price ChangeAt December 31, 2005:Other mark-to-market activity
    
    $
    24,558
    
    
    $
    23,422
   Application of Critical Accounting Policies
  Financial Reporting Under Chapter 11
  
    
    Reclassification of pre-petition liabilities that are unsecured, under-secured or where it
can not be determined that the liabilities are fully secured to a separate line item in the
balance sheet which we have called LSTC (liabilities subject to compromise);
    
    Segregation of reorganization items (direct and incremental costs, such as professional
fees, of being in Chapter 11) as a separate line in the statement of operations outside of
income from continuing operations;
    
    Evaluation of actual or potential claims, which are not already reflected as a liability
on our balance sheet, under SFAS No. 5. Due to the close proximity of our Chapter 11 filing
date to our fiscal year-end date, we have as of yet not been presented with significant
claims that meet the SFAS No. 5 criteria (probable and can be reasonably estimated) to be
accrued at December 31, 2005. If valid unrecorded claims meeting SFAS No. 5 criteria are
presented to the Company in future periods, we would accrue for these amounts, also at the
expected amount of the allowed claim rather than the expected settlement amount.
    
    Upon confirmation by the Bankruptcy Court of our plan of reorganization and our emergence
from Chapter 11 reorganization, fresh-start reporting must be adopted if the reorganization
value of our assets immediately before the date of confirmation is
 76




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##### Table of Contents



less than the total of all post-petition liabilities and allowed claims and if holders of
existing voting shares immediately before confirmation receive less than 50 percent of the
voting shares of the emerging entity. Essentially, the reorganization value of the entity
would be allocated to the entitys assets in conformity with the procedures specified by SFAS
No. 141.
  Fair Value of Our Index Hedge Derivative
   Accounting for Long-Lived Assets
 Plant Useful Lives
 Major Maintenance
 77




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##### Table of Contents



Impairment of Long-Lived Assets
   Capitalized Interest
  Revenue Recognition
  78




---



##### Table of Contents



Accounting for Income Taxes
     New Accounting Standards in 2005
  
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk
  79




---



##### Table of Contents



Item 8. Financial Statements and Supplementary Data
  
 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 Restatement of Financial
Statements
  Income taxes 
 Fuel Expense 
 Deferred
transmission credits
 80




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##### Table of Contents



Disclosure Controls and Procedures
   1)
    
    We did not maintain effective controls related to accounting for income taxes. Specifically,
we did not have controls over the accuracy and completeness of deferred tax assets, deferred tax
liabilities, the valuation allowance, the related income tax provision (benefit) account and beginning members equity.
This control deficiency resulted in the restatement of our consolidated
financial statements for the years ended December 31, 2004 and 2003 and each of the quarters of 2005 and 2004
as well as beginning members equity as of January 1, 2003. Additionally, this control
deficiency, until remediated, could result in misstatements to the aforementioned accounts that would
result in material misstatements to our annual and interim consolidated financial statements that would
not be prevented or detected. Accordingly, management determined that this control deficiency
constitutes a material weakness.2)
    
    We did not maintain effective controls over the accuracy of affiliate billings. Specifically,
we did not have controls over the accuracy of the reconciliation of affiliate fuel expenses and receivables between
Calpine subsidiaries. This control deficiency resulted in the restatement of our consolidated financial
statements for the year ended December 31, 2004 and each of the quarters of 2005 and 2004.
Additionally, this control deficiency, until remediated, could result in misstatements of aforementioned accounts
that would result in material misstatements to our
annual and interim consolidated financial statements that would not be prevented or detected. Accordingly,
management determined that this control deficiency constitutes a material weakness.
 Remediation of the Material Weaknesses
  
    
    Improving the processes over the underlying accounting data used for tax accounting purposes;
    
    Integrating and centralizing the fixed assets system to include both accounting and tax basis;
    
    Additional accounting resources are being added and additional tax accounting training is being provided
for key personnel; and
    
    Timely book-tax basis reconciliations are being performed on newly acquired property, plant and
equipment.
   
    
    We implemented a control checklist used to recalculate affiliate revenues based upon
the power purchase agreements.
    
    We enhanced our general review procedures over revenues generated from CES;
    
    We require additional analytical review and managerial approval of the monthly billings; and
    
    We implemented a system to automate the calculation of our affiliate billings in the
fourth quarter of 2005.
   81




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##### Table of Contents



Management Consideration of Cash Flow Restatement
   Changes in Internal Control Over Financial Reporting
  
 Item 9B. Other Information
  
 PART III
 
 Item 10. Directors and Executive Officer of the Registrant
  
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management
  
 Item 13. Certain Relationships and Related Transactions
  
 82




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##### Table of Contents



Item 14. Principal Accountant Fees and Services
 Audit Fees
  Audit-Related Fees
  Tax Fees
  All Other Fees
  Policy on Pre-Approval of Services
  
 PART IV
 
 Item 15. Exhibits, Financial Statement Schedule
 Financial Statements and Other Information
        Financial Statement Schedule
  Exhibits
  83




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SIGNATURES
  
 By:
    /s/ CHARLES B. CLARK, Jr.Charles B. Clark, Jr.Chief Financial Officer and Treasurer
(Principal Financial Officer)  84




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##### Table of Contents



POWER OF ATTORNEY
    Signature
    
    Title
    
    Date/s/ Scott J. Davido
    
    President and Corporate Secretary
    
    September 29, 2006Scott J. Davido
    
    (Principal Executive Officer)/s/ Charles B. Clark, Jr.
    
    Chief Financial Officer and Treasurer
    
    September 29, 2006Charles B. Clark, Jr.
    
    (Principal Financial Officer and Accounting Officer)/s/ Robert P. May
    
    Director
    
    September 29, 2006Robert P. May/s/ Eric N. Pryor
    
    Director
    
    September 29, 2006Eric N. Pryor
 85




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2005
 Report of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets December 31, 2005 and 2004
    
    
    F-3Consolidated Statements of Operations for the Years Ended December 31, 2005, 2004 and 2003
    
    
    F-4Consolidated Statements of Members Equity (Deficit) for the Years Ended December 31, 2005, 2004 and 2003
    
    
    F-5Consolidated Statements of Cash Flows for the Years Ended December 31, 2005, 2004 and 2003
    
    
    F-6Notes to Consolidated Financial Statements for the Years Ended December 31, 2005, 2004 and 2003
    
    
    F-8Schedule II  Valuation and Qualifying Accounts for the Years Ended December 31, 2005, 2004 and 2003
    
    
    S-1
 
 (1)
    
    The collateral for the Notes includes the pledge of CalGens membership interest in CalGen
Expansion Company, LLC. Separate financial statements pursuant to Rule 3.16 of Regulation S-X are
not included herein for CalGen Expansion Company, LLC because, with the exception of the nominal
capitalization of $1,000 associated with CalGen Finance, the financial statements of CalGen
Expansion Company, LLC are identical to the financial statements of CalGen included herein.(2)
    
    All other financial statement schedules are omitted because they are not applicable or not
required under the related instructions, or because the required information is shown either
in the financial statements or in the notes thereto. F-1




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
       
 F-2




---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 
 CONSOLIDATED BALANCE SHEETS
December 31, 2005 and 2004
 2005
    
    
    2004 (Restated)(In thousands)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    143,456
    
    
    $
    64,538Restricted cash, current portion
    
    
    55
    
    
    
    Accounts receivable, net of allowance of $4,649 and $1,589
    
    
    70,614
    
    
    
    59,320Accounts receivable, net  related party, net of allowance of $102,816 and $0
    
    
    5,455
    
    
    
    4,836Notes receivable, current portion
    
    
    436
    
    
    
    Inventories
    
    
    20,396
    
    
    
    19,601Current derivative assets
    
    
    16,380
    
    
    
    9,272Deferred tax asset, current
    
    
    5,055
    
    
    
    Prepaid expenses and other current assets
    
    
    19,481
    
    
    
    21,536Total current assets
    
    
    281,328
    
    
    
    179,103Property, plant and equipment, net
    
    
    5,053,715
    
    
    
    6,294,429Notes receivable, net of current portion
    
    
    18,977
    
    
    
    19,381Restricted cash, net of current portion
    
    
    95
    
    
    
    Deferred financing costs, net
    
    
    40,043
    
    
    
    51,496Long-term derivative assets
    
    
    8,178
    
    
    
    26,644Other assets
    
    
    31,719
    
    
    
    54,245Total assets
    
    $
    5,434,055
    
    
    $
    6,625,298LIABILITIES & MEMBERS EQUITYCurrent liabilities:Accounts payable
    
    $
    101,105
    
    
    $
    99,212Notes payable, current portion
    
    
    171
    
    
    
    168Priority notes, term loans and other financings, current portion
    
    
    2,437,982
    
    
    
    Accrued interest payable
    
    
    61,401
    
    
    
    53,324Deferred tax liability, current
    
    
    
    
    
    
    4,713Other current liabilities
    
    
    1,839
    
    
    
    2,970Total current liabilities
    
    
    2,602,498
    
    
    
    160,387Notes payable, net of current portion
    
    
    1,943
    
    
    
    2,109Priority notes, term loans and other financings, net of current portion
    
    
    
    
    
    
    2,395,332Deferred revenue
    
    
    8,770
    
    
    
    5,671Deferred tax liability
    
    
    73,130
    
    
    
    25,439Other liabilities
    
    
    17,478
    
    
    
    20,286Total liabilities
    
    
    2,703,819
    
    
    
    2,609,224Liabilities subject to compromise
    
    
    25,592
    
    
    
    Commitments and contingencies (see Note 12)Members equity
    
    
    2,704,644
    
    
    
    4,016,074Total liabilities and members equity
    
    $
    5,434,055
    
    
    $
    6,625,298
 The accompanying notes are an integral part of these consolidated financial statements.
 F-3




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31, 2005, 2004 and 2003
 2005
    
    
    2004 (Restated)
    
    
    2003 (Restated)(In thousands)Revenue:Electricity and steam revenue  related party
    
    $
    2,183,998
    
    
    $
    1,258,101
    
    
    $
    779,162Electricity and steam revenue  third-party
    
    
    542,292
    
    
    
    452,805
    
    
    
    369,209Total electricity and steam revenue
    
    
    2,726,290
    
    
    
    1,710,906
    
    
    
    1,148,371Mark-to-market activity, net
    
    
    (11,358
    )
    
    
    (9,084
    )
    
    
    Sale of purchased power
    
    
    5,459
    
    
    
    3,208
    
    
    
    7,708Other revenue
    
    
    4,262
    
    
    
    3,307
    
    
    
    3,297Total revenue
    
    
    2,724,653
    
    
    
    1,708,337
    
    
    
    1,159,376Cost of revenue:Plant operating expense  related party
    
    
    218,918
    
    
    
    173,263
    
    
    
    129,705Fuel expense  related party
    
    
    1,991,229
    
    
    
    1,181,959
    
    
    
    770,208Purchased power expense
    
    
    9,839
    
    
    
    3,308
    
    
    
    12,395Depreciation and amortization expense
    
    
    181,657
    
    
    
    151,720
    
    
    
    121,008Operating plant and asset impairments
    
    
    1,187,990
    
    
    
    
    
    
    
    Provision for doubtful accounts
    
    
    105,877
    
    
    
    5,355
    
    
    
    1,931Total cost of revenue
    
    
    3,695,510
    
    
    
    1,515,605
    
    
    
    1,035,247Gross profit (loss)
    
    
    (970,857
    )
    
    
    192,732
    
    
    
    124,129Long-term service agreement cancellation charge
    
    
    23,510
    
    
    
    3,754
    
    
    
    Sales, general and administrative expense  related party
    
    
    16,167
    
    
    
    11,540
    
    
    
    5,638Other operating expense
    
    
    
    
    
    
    
    
    
    
    173Income (loss) from operations
    
    
    (1,010,534
    )
    
    
    177,438
    
    
    
    118,318Interest expense  related party
    
    
    
    
    
    
    72,173
    
    
    
    255,687Interest expense  third party
    
    
    240,556
    
    
    
    160,823
    
    
    
    57,004Interest income
    
    
    (4,848
    )
    
    
    (2,536
    )
    
    
    (2,061
    )Other expense, net
    
    
    4,140
    
    
    
    887
    
    
    
    203Loss before
income tax expense (benefit) and cumulative effect of a change in
accounting principle
    
    
    (1,250,382
    )
    
    
    (53,909
    )
    
    
    (192,515
    )Income tax expense (benefit)
    
    
    38,386
    
    
    
    (19,164
    )
    
    
    (68,576
    )Loss before cumulative effect of a change in accounting principle
    
    
    (1,288,768
    )
    
    
    (34,745
    )
    
    
    (123,939
    )Cumulative effect of a change in accounting principle, net of tax
    
    
    
    
    
    
    
    
    
    
    (241
    )Net loss
    
    $
    (1,288,768
    )
    
    $
    (34,745
    )
    
    $
    (124,180
    )
 The accompanying notes are an integral part of these consolidated financial statements.
 F-4




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 
 CONSOLIDATED STATEMENTS OF MEMBERS EQUITY (DEFICIT)
For the Years Ended December 31, 2005, 2004 and 2003
 2005
    
    
    2004 (Restated)
    
    
    2003 (Restated)(In thousands)Members equity (deficit) at beginning of year as previously reported
    
    
    
    
    
    $
    (282,972
    )
    
    $
    (101,665
    )Prior period adjustment (Note 2)
    
    
    
    
    
    
    125,782
    
    
    
    57,206Members equity (deficit) at beginning of year (as restated)
    
    $
    4,016,074
    
    
    $
    (157,190
    )
    
    $
    (44,459
    )Parent contributions (distribution), net
    
    
    (22,662
    )
    
    
    4,208,009
    
    
    
    11,449Net loss
    
    
    (1,288,768
    )
    
    
    (34,745
    )
    
    
    (124,180
    )Members equity (deficit) at end of year
    
    $
    2,704,644
    
    
    $
    4,016,074
    
    
    $
    (157,190
    )
 The accompanying notes are an integral part of these consolidated financial statements.
 F-5




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2005, 2004 and 2003
 2005
    
    
    2004 (Restated)
    
    
    2003 (Restated)(In thousands)Cash flows from operating activities:Net loss
    
    $
    (1,288,768
    )
    
    $
    (34,745
    )
    
    $
    (124,180
    )Adjustments to reconcile net loss to net cash provided
by operating activities:Depreciation and amortization
    
    
    181,657
    
    
    
    151,720
    
    
    
    121,008Amortization of discount and deferred financing costs
    
    
    12,839
    
    
    
    11,511
    
    
    
    12,122Deferred income taxes
    
    
    37,923
    
    
    
    (19,164
    )
    
    
    (68,576
    )Write-off of deferred financing costs
    
    
    
    
    
    
    12,457
    
    
    
    Provision for doubtful accounts
    
    
    105,877
    
    
    
    5,355
    
    
    
    1,931Mark-to-market activities, net
    
    
    11,358
    
    
    
    9,084
    
    
    
    Long-term service agreement cancellation charge
    
    
    23,510
    
    
    
    3,754
    
    
    
    Operating plant and asset impairments
    
    
    1,187,990
    
    
    
    
    
    
    
    Interest on subordinated parent debt
    
    
    
    
    
    
    72,173
    
    
    
    255,687Cost allocated from parent
    
    
    8,821
    
    
    
    3,633
    
    
    
    11,449Cumulative effect of a change in accounting principle
    
    
    
    
    
    
    
    
    
    
    241Change in operating assets and liabilities:Accounts receivable
    
    
    (14,354
    )
    
    
    (18,641
    )
    
    
    (23,876
    )Accounts receivable  related party
    
    
    (142,304
    )
    
    
    (5,617
    )
    
    
    (8,925
    )Inventories
    
    
    (795
    )
    
    
    (4,701
    )
    
    
    (3,553
    )Prepaid and other current assets
    
    
    (11,046
    )
    
    
    24,839
    
    
    
    (9,628
    )Other assets
    
    
    7,315
    
    
    
    (33,496
    )
    
    
    581Accounts payable and accrued liabilities
    
    
    35,362
    
    
    
    23,051
    
    
    
    7,622Accrued interest payable
    
    
    8,077
    
    
    
    53,225
    
    
    
    (200
    )Other accrued liabilities
    
    
    291
    
    
    
    13,736
    
    
    
    3,363Net cash provided by operating activities
    
    
    163,753
    
    
    
    268,174
    
    
    
    175,066Cash flows from investing activities:(Increase) decrease in restricted cash
    
    
    (150
    )
    
    
    152,290
    
    
    
    (142,800
    )Purchases of derivative asset
    
    
    
    
    
    
    (45,000
    )
    
    
    Payments for deferred transmission credits
    
    
    (2,574
    )
    
    
    (14,017
    )
    
    
    (25,326
    )Proceeds from deferred transmission credits
    
    
    5,942
    
    
    
    24,500
    
    
    
    4,647Purchases of property, plant and equipment
    
    
    (88,225
    )
    
    
    (302,901
    )
    
    
    (434,149
    )Receipts from notes receivable
    
    
    335
    
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (84,672
    )
    
    
    (185,128
    )
    
    
    (597,628
    )Cash flows from financing activities:Financing costs
    
    
    
    
    
    
    (60,162
    )
    
    
    (6,258
    )Repayments of notes payable
    
    
    (163
    )
    
    
    (162
    )
    
    
    (147
    )Borrowings from subordinated parent debt
    
    
    
    
    
    
    46,813
    
    
    
    556,169Repayments of subordinated parent debt
    
    
    
    
    
    
    (238,137
    )
    
    
    Borrowings from credit facility
    
    
    
    
    
    
    178,995
    
    
    
    101,348Repayments of credit facility
    
    
    
    
    
    
    (2,379,353
    )
    
    
    (214,595
    )Issuance of Notes and Term Loans
    
    
    
    
    
    
    2,393,900
    
    
    
    Borrowings from revolver line of credit
    
    
    
    
    
    
    117,500
    
    
    
    Repayments of revolver line of credit
    
    
    
    
    
    
    (117,500
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    (163
    )
    
    
    (58,106
    )
    
    
    436,517Net increase in cash and cash equivalents
    
    
    78,918
    
    
    
    24,940
    
    
    
    13,955Cash and cash equivalents, beginning of period
    
    
    64,538
    
    
    
    39,598
    
    
    
    25,643Cash and cash equivalents, end of period
    
    $
    143,456
    
    
    $
    64,538
    
    
    $
    39,598
 The accompanying notes are an integral part of these consolidated financial statements.
 F-6




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the Years Ended December 31, 2005, 2004 and 2003
 2005
    
    
    2004 (Restated)
    
    
    2003 (Restated)(In thousands)Supplemental cash flow information:Cash paid during the period for:Interest, net of amounts capitalized
    
    $
    216,070
    
    
    $
    86,609
    
    
    $
    42,082Income taxes
    
    
    
    
    
    
    
    
    
    
    Non-cash transactions:Interest on subordinated parent debt added to principal balance
    
    $
    
    
    
    $
    72,173
    
    
    $
    255,687Capital expenditures included in accounts payable
    
    
    19,337
    
    
    
    1,599
    
    
    
    70,183Financing costs contributed by parent
    
    
    
    
    
    
    5,407
    
    
    
    Acquisition of property, plant and equipment through affiliate transfer
    
    
    9,589
    
    
    
    
    
    
    
    107,829Borrowings under revolving credit facility due from affiliate
    
    
    40,799
    
    
    
    
    
    
    
    Conversion of intercompany receivables to equity
    
    
    (53,769
    )
    
    
    
    
    
    
    Transfer of property, plant and equipment in satisfaction of subordinated parent debt
    
    
    
    
    
    
    119,647
    
    
    
    215,170Conversion of subordinated parent debt to equity
    
    $
    
    
    
    $
    4,208,009
    
    
    $
    
 The accompanying notes are an integral part of these consolidated financial statements.
 F-7




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
 1. Organization and Operations of the Company
 Business
   Commercial OperationPower Plant(1)
    
    City
    
    State
    
    Commencement DateFreestone Energy Center
    
    Fairfield
    
    TX
    
    June 2002Oneta Energy Center
    
    Coweta
    
    OK
    
    Phase I July 2002Phase II June 2003Delta Energy Center
    
    Pittsburg
    
    CA
    
    June 2002Morgan Energy Center
    
    Morgan County
    
    AL
    
    Phase I June 2003Phase II January 2004Decatur Energy Center
    
    Decatur
    
    AL
    
    Phase I June 2002Phase II June 2003Baytown Energy Center
    
    Baytown
    
    TX
    
    June 2002Pastoria Energy Center
    
    Kern County
    
    CA
    
    Phase I May 2005Phase II July 2005Columbia Energy Center
    
    Columbia
    
    SC
    
    May 2004Channel Energy Center
    
    Houston
    
    TX
    
    Phase I September 2001Phase II April 2002Los Medanos Energy Center
    
    Pittsburg
    
    CA
    
    August 2001Corpus Christi Energy Center
    
    Corpus Christi
    
    TX
    
    October 2002Carville Energy Center
    
    St. Gabriel
    
    LA
    
    June 2003Zion Energy Center
    
    Zion
    
    IL
    
    Phase I June 2002Phase II June 2003Goldendale Energy Center
    
    Goldendale
    
    WA
    
    September 2004Total Gas-Fired Power Plants (14 plants)
 
 (1)
    
    All plants except Zion Energy Center are combined cycle technology. Zion Energy Center
uses a simple cycle technology.   Basis of Presentation
   F-8




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
  2. Restatement of Previously Issued Financial Statements
  Income taxes 
 Fuel Expense 
 Deferred transmission credits 
  F-9




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
 December 31, 2004Previouslyreported
    
    Adjustments
    
    RestatedConsolidated Balance SheetAccounts receivable, related party
    
    $
    600
    
    
    $
    4,236
    
    
    $
    4,836
    
    
    
    1
    )Total current assets
    
    
    174,867
    
    
    
    4,236
    
    
    
    179,103
    
    
    
    1
    )Deferred tax asset
    
    
    17,672
    
    
    
    (17,672
    )
    
    
    
    
    
    
    2
    )Total assets
    
    
    6,638,734
    
    
    
    (13,436
    )
    
    
    6,625,298
    
    
    
    1), 2
    )Deferred tax liability, current
    
    
    17,672
    
    
    
    (12,959
    )
    
    
    4,713
    
    
    
    2
    )Total current liabilities
    
    
    173,346
    
    
    
    (12,959
    )
    
    
    160,387
    
    
    
    2
    )Deferred tax liability
    
    
    
    
    
    
    25,439
    
    
    
    25,439
    
    
    
    2
    )Total liabilities
    
    
    2,596,744
    
    
    
    12,480
    
    
    
    2,609,224
    
    
    
    2
    )Members equity
    
    $
    4,041,990
    
    
    $
    (25,916
    )
    
    
    4,016,074
    
    
    
    1), 2
    )
 Year Ended December 31, 2004
    
    
    
    
    
    
    
    
    
    Year Ended December 31, 2003Previously
    
    
    
    
    
    
    
    
    
    
    
    
    
    Previouslyreported
    
    Adjustments
    
    Restated
    
    
    
    
    
    reported
    
    Adjustments
    
    RestatedConsolidated Statements of OperationsFuel expense  related party
    
    $
    1,186,195
    
    
    $
    (4,236
    )
    
    $
    1,181,959
    
    
    
    1
    )Total costs of revenue
    
    
    1,519,841
    
    
    
    (4,236
    )
    
    
    1,515,605
    
    
    
    1
    )Gross profit (loss)
    
    
    188,496
    
    
    
    4,236
    
    
    
    192,732
    
    
    
    1
    )Income (loss) from operations
    
    
    173,202
    
    
    
    4,236
    
    
    
    177,438
    
    
    
    1
    )Loss before
income tax expense (benefit) and cumulative effect of a change in
accounting principle
    
    
    (58,145
    )
    
    

    4,236
    
    
    
    (53,909
    )
    
    
    1
    )Income tax expense (benefit)
    
    
    
    
    
    
    (19,164
    )
    
    
    (19,164
    )
    
    
    2
    )
    
    $
    
    
    
    $
    (68,576
    )
    
    $
    (68,576
    )
    
    
    2
    )Loss before cumulative effect of a change in accounting principle
    
    
    (58,145
    )
    
    
    23,400
    
    
    
    (34,745
    )
    
    
    1), 2
    )
    
    
    (192,515
    )
    
    
    68,576
    
    
    
    (123,939
    )
    
    
    2
    )Net loss
    
    $
    (58,145
    )
    
    $
    23,400
    
    
    $
    (34,745
    )
    
    
    1), 2
    )
    
    $
    (192,756
    )
    
    $
    68,576
    
    
    $
    (124,180
    )
    
    
    2
    )Consolidated Statements of Members Equity (Deficit)Parent
contributions (distributions), net
    
    $
    4,383,107
    
    
    $
    (175,098
    )
    
    $
    4,208,009
    
    
    
    2
    )Members
equity (deficit) at end of year
    
    $
    4,041,990
    
    
    $
    (25,916
    )
    
    $
    4,016,074
    
    
    
    1), 2
    )
    
    $
    (282,972
    )
    
    $
    125,782
    
    
    $
    (157,190
    )
    
    
    2
    )Consolidated Statements of Cash FlowsNet loss
    
    $
    (58,145
    )
    
    $
    23,400
    
    
    $
    (34,745
    )
    
    
    1), 2
    )
    
    $
    (192,756
    )
    
    $
    68,576
    
    
    $
    (124,180
    )
    
    
    2
    )Deferred income taxes
    
    
    
    
    
    
    (19,164
    )
    
    
    (19,164
    )
    
    
    2
    )
    
    
    
    
    
    
    (68,576
    )
    
    
    (68,576
    )
    
    
    2
    )Accounts receivable, related party
    
    
    (1,381
    )
    
    
    (4,236
    )
    
    
    (5,617
    )
    
    
    1
    )Other assets
    
    
    (23,013
    )
    
    
    (10,483
    )
    
    
    (33,496
    )
    
    
    3
    )
    
    
    (12,902
    )
    
    
    13,483
    
    
    
    581
    
    
    
    3
    )Net cash provided by operating
activities
    
    
    278,657
    
    
    
    (10,483
    )
    
    
    268,174
    
    
    
    3
    )
    
    
    161,583
    
    
    
    13,483
    
    
    
    175,066
    
    
    
    3
    )Payments for deferred
transmission credits
    
    
    
    
    
    
    (14,017
    )
    
    
    (14,017
    )
    
    
    3
    )
    
    
    
    
    
    
    (25,326
    )
    
    
    (25,326
    )
    
    
    3
    )Proceeds from deferred
transmission credits
    
    
    
    
    
    
    24,500
    
    
    
    24,500
    
    
    
    3
    )
    
    
    
    
    
    
    4,647
    
    
    
    4,647
    
    
    
    3
    )Purchases of property, plant
and equipment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (441,345
    )
    
    
    7,196
    
    
    
    (434,149
    )
    
    
    3
    )Net cash used in investing
activities
    
    $
    (195,611
    )
    
    $
    10,483
    
    
    $
    (185,128
    )
    
    
    3
    )
    
    $
    (584,145
    )
    
    $
    (13,483
    )
    
    $
    (597,628
    )
    
    
    3
    )
 
 1)
    
    Restatement to reflect fuel expense and accounts receivable due from CES by $4.2 million
as of and for the year ended December 31, 2004 for overpayments to CES by of $4.2 million.2)
    
    Restatement to reflect our deferred income tax liabilities in the amount of $30.2
million and $49.3 million as of December 31, 2004 and 2003, respectively and income tax
benefit in the amount of $(19.2) million and $(68.6) million for the years ended December
31, 2004 and 2003, respectively.3)
    
    Restatement to separately reflect cash payments (made) received in connection with firm
point-topoint deferred transmission credits as cash flows from investing activities in the
amount of $(14.0) million and 24.5 million for the year ended
December 31, 2004 and $(18.1)
million in payments included in changes in other assets and $(7.2)
million previously included in purchases of property, plant and
equipment for the year ended December 31, 2004 and $4.6 million
in payments received for the year ended December 31, 2003. F-10




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
 3. Summary of Significant Accounting Policies
 Principles
of Consolidation
 Changes in Accounting Principle 
 Reclassifications 
 Accounting for Reorganization
 
    
    Reclassification of unsecured or under-secured pre-petition liabilities (including
liabilities as to which there is uncertainty about whether the market value of the assets
securing the obligations is less than, equals or exceeds the amount of these obligations) to
a separate line item in the balance sheet which we have called liabilities subject to
compromise or LSTC;
    
    Segregation of reorganization items (direct and incremental costs, such as professional
fees, of being in Chapter 11) as a separate line item in the statement of operations outside
of income from continuing operations;
    
    Evaluation of actual or potential Chapter 11 claims, which are not already reflected as a
liability on the balance sheet, under SFAS No. 5. We have as of yet not been presented with
significant claims that meet the SFAS No. 5 criteria (probable and can be reasonably
estimated) to be accrued at December 31, 2005. If valid unrecorded claims meeting SFAS No. 5
criteria are presented to us in future periods, we would accrue for these amounts, also at
the expected amount of the allowed claim rather than at the expected settlement amount;
    
    Upon confirmation of a plan or plans of reorganization and our emergence from Chapter 11,
fresh-start reporting must be adopted if the reorganization value of our assets immediately
before the date of confirmation is less than the total of all post-petition liabilities and
allowed claims, and if holders of existing voting shares immediately before confirmation
receive less than 50% of the voting shares of the emerging entity. Essentially, the
reorganization value of the entity would be allocated to the entitys assets in conformity
with the procedures specified by SFAS No. 141. If we qualify for the fresh-start reporting
provisions of SOP 90-7, the amounts reported in subsequent financial statements may
materially change due to our reorganization as a result of the plan or plans of
reorganization and application of the provisions of SOP 90-7.
 F-11




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
 Use of Estimates in Preparation of Financial Statements
 Fair Value of Financial Instruments
 Cash and Cash Equivalents
 Restricted Cash
 Accounts Receivable and Accounts Payable
 Inventories
 Prepaid Expenses and Other Current Assets and Other Assets
 F-12




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
  2005
    
    
    2004Prepaid expenses and other current assets:Service agreements
    
    $
    910
    
    
    $
    9,191Deferred transmission credits
    
    
    11,072
    
    
    
    1,486Insurance and other
    
    
    7,499
    
    
    
    10,859Total
    
    $
    19,481
    
    
    $
    21,536
  2005
    
    
    2004Other assets:Service agreements and other
    
    $
    319
    
    
    $
    13,628Deferred transmission credits
    
    
    31,400
    
    
    
    40,617Total
    
    $
    31,719
    
    
    $
    54,245
 Property, Plant and Equipment, Net
 Project Development Costs
 Deferred Financing Costs
 Concentrations of Credit Risk
 Revenue Recognition
 F-13




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
  Comprehensive Income
 Derivative Instruments
  Mark-to-Market Activity, Net
 Other Revenue
 Plant Operating Expense
 Provision (Benefit) for Income Taxes 
 New Accounting Pronouncements
 SFAS No. 154
  F-14




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
   SFAS No. 155
  FIN 47
  FIN 48
  FAS 157
 Fair Value Measurements,
 4. Chapter 11 Proceedings and Going Concern
  F-15




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
       F-16




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
       F-17




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
  5. Property, Plant and Equipment, Net, and Capitalized Interest
  2005
    
    
    2004Buildings, machinery, and equipment
    
    $
    5,563,844
    
    
    $
    5,917,575Less: Accumulated depreciation and amortization
    
    
    (517,983
    )
    
    
    (338,172
    )5,045,861
    
    
    
    5,579,403Land
    
    
    7,854
    
    
    
    7,854Construction in Process (CIP)
    
    
    
    
    
    
    707,172Property, plant and equipment, net
    
    $
    5,053,715
    
    
    $
    6,294,429
   Buildings, Machinery, and Equipment
 Major Maintenance 
 CIP
 Capitalized Interest
 F-18




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
  Impairment Evaluation
    F-19




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
 ARO
  ARO at January 1, 2003
    
    $
    241Liabilities incurred in 2003
    
    
    3,065Liabilities settled in 2003
    
    
    Accretion expense
    
    
    345Revisions in the estimated cash flows
    
    
    ARO at January 1, 2004
    
    $
    3,651Liabilities incurred in 2004
    
    
    1,325Liabilities settled in 2004
    
    
    Accretion expense
    
    
    581Revisions in the estimated cash flows
    
    
    ARO at December 31, 2004
    
    $
    5,557Liabilities incurred in 2005
    
    
    74Liabilities settled in 2005
    
    
    Accretion expense
    
    
    670Revisions in the estimated cash flows
    
    
    ARO at December 31, 2005
    
    $
    6,301
 6. Notes, Term Loans and Other Financings
  F - 20




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
  Face Amount
    
    
    Description
    
    Interest Rate
    
    
    2005
    
    
    2004(In millions)
    
    
    
    
    
    
    
    
    (In millions)$
    235.0
    
    
    First Priority Secured Floating Rate Notes Due 2009
    
    LIBOR plus 375 basis points (1)
    
    $
    235.0
    
    
    $
    235.0640.0
    
    
    Second Priority Secured Floating Rate Notes Due 2010
    
    LIBOR plus 575 basis points (2)
    
    
    640.0
    
    
    
    640.0680.0
    
    
    Third Priority Secured Floating Rate Notes Due 2011
    
    LIBOR plus 900 basis points
    
    
    680.0
    
    
    
    680.0150.0
    
    
    Third Priority Secured Notes Due 2011
    
    11.50%
    

    
    
    
    150.0
    
    
    
    150.0600.0
    
    
    First Priority Secured Term Loans Due 2009
    
    LIBOR plus 375 basis points (1)
    
    
    600.0
    
    
    
    600.0100.0
    
    
    Second Priority Secured Term Loans Due 2010
    
    LIBOR plus 575 basis points (2)
    
    
    100.0
    
    
    
    100.0$
    2,405.0
    
    
    
    
    
    
    
    
    
    2,405.0
    
    
    
    2,405.0Less: Unamortized Discount
    
    
    
    
    
    
    (8.0
    )
    
    
    (9.7
    )Total Notes and Term Loans
    
    
    
    
    
    
    2,397.0
    
    
    
    2,395.3Revolving Credit Facility
    
    
    
    
    
    
    40.8
    
    
    
    Notes Payable
    
    
    
    
    
    
    2.1
    
    
    
    2.3Total Debt
    
    
    
    
    
    
    2,439.9
    
    
    
    2,397.6Less: current portion (3)
    
    
    
    
    
    
    (2,438.0
    )
    
    
    (0.2
    )Total Long-Term Debt
    
    
    
    
    
    $
    1.9
    
    
    $
    2,397.4
 
 (1)
    
    We may also elect a base rate plus 275 basis points.(2)
    
    We may also elect a base rate plus 475 basis points.(3)
    
    Due to the defaults occurring as a result of the Chapter 11 filings of CalGen and its
subsidiaries, including CalGen Finance, under the indentures and agreements governing the
Notes and Term Loans, all debt amounts are recorded as current liabilities.  First Priority Secured Floating Rate Notes Due 2009
  Second Priority Secured Floating Rate Notes Due 2010
  F - 21




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
  Third Priority Secured Floating and Fixed Rate Notes Due 2011
   First Priority Secured Term Loans Due 2009
  Second Priority Secured Term Loans Due 2010
   Other Financings
  F - 22




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
       F - 23




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
 Annual
Debt Maturities
 Priority Notesand Term
    
    
    NotesLoans
    
    
    Payable2006
    
    $
    
    
    
    $
    1712007
    
    
    44,974
    
    
    
    1792008
    
    
    12,050
    
    
    
    1872009
    
    
    829,875
    
    
    
    1962010
    
    
    728,900
    
    
    
    205Thereafter
    
    
    830,000
    
    
    
    1,176Total
    
    $
    2,445,799
    
    
    $
    2,114
 Compliance with Covenants
  7. Liabilities Subject to Compromise
   Pre-petition accounts payable
    
    $
    10,073Accrued liabilities
    
    
    15,519Total liabilities subject to compromise
    
    $
    25,592
 F - 24




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
 8. Provision for Income Taxes
  2004
    
    20032005
    
    (Restated)
    
    (Restated)Loss before benefit for income taxes
    
    $
    (1,250,382
    )
    
    $
    (53,909
    )
    
    $
    (192,515
    )
  2004
    
    
    20032005
    
    
    (Restated)
    
    
    (Restated)Current:Federal
    
    $
    
    
    
    $
    
    
    
    $
    State
    
    
    463
    
    
    
    
    
    
    
    Total current
    
    
    463
    
    
    
    
    
    
    
    Deferred:Federal
    
    
    39,854
    
    
    
    (18,827
    )
    
    
    (67,373
    )State
    
    
    (1,931
    )
    
    
    (337
    )
    
    
    (1,203
    )Total deferred
    
    
    37,923
    
    
    
    (19,164
    )
    
    
    (68,576
    )Total income tax expense (benefit) continuing operations
    
    $
    38,386
    
    
    $
    (19,164
    )
    
    $
    (68,576
    )
  2005
    
    
    2004 (Restated)
    
    
    2003 (Restated)Income tax computed at statutory tax rate
    
    $
    (437,634
    )
    
    
    35.0
    %
    
    $
    (18,868
    )
    
    
    35.0
    %
    
    $
    (67,380
    )
    
    
    35.0
    %State franchise taxes, net of federal benefit
    
    
    (41,160
    )
    
    
    3.3
    %
    
    
    (1,563
    )
    
    
    2.9
    %
    
    
    (5,583
    )
    
    
    2.9
    %Change in valuation allowance for losses not benefited
    
    
    516,996
    
    
    
    (41.4
    )%
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Permanent differences and other
    
    
    184
    
    
    
    (0.0
    )%
    
    
    1,267
    
    
    
    (2.4
    )%
    
    
    4,387
    
    
    
    (2.3
    )%Total tax expense (benefit)
    
    $
    38,386
    
    
    
    (3.1
    )%
    
    $
    (19,164
    )
    
    
    35.5
    %
    
    $
    (68,576
    )
    
    
    35.6
    %
  2005Current
    
    
    Noncurrent
    
    
    TotalDeferred tax assets:Allowance for doubtful accounts
    
    $
    39,469
    
    
    $
    
    
    
    $
    39,469Net operating loss carryforwards
    
    
    
    
    
    
    606,154
    
    
    
    606,154Accrued liabilities
    
    
    2,942
    
    
    
    870
    
    
    
    3,812Total gross deferred tax assets
    
    
    42,411
    
    
    
    607,024
    
    
    
    649,435Less valuation allowance
    
    
    (33,571
    )
    
    
    (483,425
    )
    
    
    (516,996
    )Net deferred tax assets
    
    
    8,840
    
    
    
    123,599
    
    
    
    132,439Deferred tax liabilities:Prepaid expenses
    
    
    (3,785
    )
    
    
    
    
    
    
    (3,785
    )Property differences
    
    
    
    
    
    
    (196,729
    )
    
    
    (196,729
    )Total deferred tax liabilities
    
    
    (3,785
    )
    
    
    (196,729
    )
    
    
    (200,514
    )Net deferred tax asset (liability)
    
    $
    5,055
    
    
    $
    (73,130
    )
    
    $
    (68,075
    )
 F - 25




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
 2004 (Restated)Current
    
    
    Noncurrent
    
    
    TotalDeferred tax assets:Net operating loss carryforwards
    
    $
    
    
    
    $
    574,097
    
    
    $
    574,097Accrued liabilities
    
    
    1,669
    
    
    
    
    
    
    
    1,669Total gross deferred tax assets
    
    
    1,669
    
    
    
    574,097
    
    
    
    575,766Less valuation allowance
    
    
    
    
    
    
    
    
    
    
    Net deferred tax assets
    
    
    1,669
    
    
    
    574,097
    
    
    
    575,766Deferred tax liabilities:Prepaid expenses
    
    
    (6,382
    )
    
    
    
    
    
    
    (6,382
    )Property differences
    
    
    
    
    
    
    (599,536
    )
    
    
    (599,536
    )Total deferred tax liabilities
    
    
    (6,382
    )
    
    
    (599,536
    )
    
    
    (605,918
    )Net deferred tax asset (liability)
    
    $
    (4,713
    )
    
    $
    (25,439
    )
    
    $
    (30,152
    )
    9. Significant Customers
  2005
    
    2004
    
    2003Revenues:CES
    
    $
    2,183,998
    
    
    $
    1,258,101
    
    
    $
    779,162
  F - 26




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
  20042005
    
    
    (Restated)Receivables:CES
    
    $
    85,152
    
    
    $
    4,836Other affiliates
    
    
    23,119
    
    
    
    Less allowance for doubtful accounts
    
    
    (102,816
    )
    
    
    Net receivable from affiliates
    
    $
    5,455
    
    
    $
    4,836
  10. Related-Party Transactions
      11. Derivative Instruments
   F - 27




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
 As of December 31,
    
    2005
    
    
    2004Current derivative assets
    
    $
    16,380
    
    
    $
    9,272Long-term derivative assets
    
    
    8,178
    
    
    
    26,644Total derivative assets
    
    
    24,558
    
    
    
    35,916Current derivative liabilities
    
    
    
    
    
    
    Long-term derivative liabilities
    
    
    
    
    
    
    Total derivative liabilities
    
    
    
    
    
    
    Net derivative assets (liabilities)
    
    $
    24,558
    
    
    $
    35,916
  For the Year Ended December 31,
    
    2005
    
    
    2004
    
    
    2003Unrealized mark-to-market loss
    
    $
    2,086
    
    
    $
    3,473
    
    
    $
    Realized mark-to-market loss
    
    
    9,272
    
    
    
    5,611
    
    
    
    Total mark-to-market activities, net
    
    $
    11,358
    
    
    $
    9,084
    
    
    $
    
 12. Commitments and Contingencies
     Long-TermService
    
    
    
    
    
    
    
    
    
    
    O&MAgreements
    
    
    Fuel
    
    
    Water
    
    
    Agreements
    
    
    Leases
    
    
    Other
    
    
    Total2006
    
    $
    11,810
    
    
    $
    16,066
    
    
    $
    3,923
    
    
    $
    1,366
    
    
    $
    2,104
    
    
    $
    960
    
    
    $
    36,2292007
    
    
    23,509
    
    
    
    16,066
    
    
    
    4,070
    
    
    
    1,329
    
    
    
    2,236
    
    
    
    960
    
    
    
    48,1702008
    
    
    13,523
    
    
    
    16,388
    
    
    
    4,219
    
    
    
    1,245
    
    
    
    2,726
    
    
    
    846
    
    
    
    38,9472009
    
    
    8,531
    
    
    
    16,540
    
    
    
    4,379
    
    
    
    1,244
    
    
    
    3,172
    
    
    
    888
    
    
    
    34,7542010
    
    
    20,321
    
    
    
    16,696
    
    
    
    4,550
    
    
    
    1,141
    
    
    
    3,249
    
    
    
    933
    
    
    
    46,8902011 and thereafter
    
    
    93,053
    
    
    
    208,292
    
    
    
    139,547
    
    
    
    9,595
    
    
    
    87,248
    
    
    
    2,009
    
    
    
    539,744Total
    
    $
    170,747
    
    
    $
    290,048
    
    
    $
    160,688
    
    
    $
    15,920
    
    
    $
    100,735
    
    
    $
    6,596
    
    
    $
    744,734
  F - 28




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
 Guarantees
  Litigation
   Estate of Jones, et al. v. Calpine
 Solutia Bankruptcy
 F - 29




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
  Panda Energy International, Inc., et al. v. Calpine, et al.
 Delta RMR Proceeding.
   F - 30




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
  13. Quarterly Consolidated Financial Data (unaudited)
  Quarter EndedDecember 31,
    
    September 30,
    
    June 30,
    
    March 31,(In thousands)2005, restated through September 30, 2005 1)Total revenue
    
    $
    829,125
    
    
    $
    953,814
    
    
    $
    489,434
    
    
    $
    452,280Gross profit (loss)
    
    
    (1,225,219
    )
    
    
    186,653
    
    
    
    38,519
    
    
    
    29,190Income from operations
    
    
    (1,230,147
    )
    
    
    182,538
    
    
    
    9,636
    
    
    
    27,439Income tax expense (benefit)
    
    
    17,951
    
    
    
    46,788
    
    
    
    (17,493
    )
    
    
    (8,860
    )Net income (loss)
    
    $
    (1,321,688
    )
    
    $
    75,375
    
    
    $
    (28,181
    )
    
    $
    (14,274
    )2005, as previously reported through September 30, 2005 1)Total revenue
    
    
    
    
    
    $
    953,814
    
    
    $
    489,434
    
    
    $
    452,280Gross profit
    
    
    
    
    
    
    178,782
    
    
    
    33,951
    
    
    
    23,020Income from operations
    
    
    
    
    
    
    174,667
    
    
    
    6,568
    
    
    
    19,769Income tax expense (benefit)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    
    
    
    
    $
    114,292
    
    
    $
    (48,742
    )
    
    $
    (30,804
    )2004, restatedTotal revenue
    
    $
    423,654
    
    
    $
    551,955
    
    
    $
    459,080
    
    
    $
    273,648Gross profit
    
    
    42,705
    
    
    
    89,707
    
    
    
    47,844
    
    
    
    12,476Income from operations
    
    
    36,647
    
    
    
    87,506
    
    
    
    45,490
    
    
    
    7,795Income tax expense (benefit)
    
    
    (4,734
    )
    
    
    16,362
    
    
    
    2,524
    
    
    
    (33,316
    )Net income (loss)
    
    $
    (8,582
    )
    
    $
    29,662
    
    
    $
    4,575
    
    
    $
    (60,400
    )2004, as previously reported 1)Total revenue
    
    $
    423,654
    
    
    $
    551,955
    
    
    $
    459,080
    
    
    $
    273,648
 F - 31




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
 Quarter EndedDecember 31,
    
    September 30,
    
    June 30,
    
    March 31,(In thousands)Gross profit
    
    
    40,143
    
    
    
    88,882
    
    
    
    46,997
    
    
    
    12,474Income from operations
    
    
    34,085
    
    
    
    86,681
    
    
    
    44,643
    
    
    
    7,793Income tax expense (benefit)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    (15,878
    )
    
    $
    45,199
    
    
    $
    6,252
    
    
    $
    (93,718
    )
 
 1)
    
    As discussed in Note 2, we have restated our consolidated financial statements. The quarterly information
as of and for the three months ended December 31, 2004 and September 30, June 30, and March
31, 2005 and 2004, previously reported in our respective quarterly reports and 2004 Form 10-K
are herein restated to correct fuel expense, gross profit, income from operations, income tax
expense (benefit) and net income as discussed below.   14. Guarantor Subsidiaries  Supplemental Consolidating Financial Statements
   F - 32




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
 SUPPLEMENTAL CONSOLIDATING BALANCE SHEET
December 31, 2005
 CalpineGeneratingCompany,Subsidiary
    
    
    Other
    
    
    Consolidating
    
    
    LLCCalGen
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    Consolidated(In thousands)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    143,427
    
    
    $
    26
    
    
    $
    3
    
    
    $
    
    
    
    $
    143,456Restricted cash
    
    
    
    
    
    
    
    
    
    
    55
    
    
    
    
    
    
    
    55Accounts receivable, net
    
    
    
    
    
    
    70,480
    
    
    
    134
    
    
    
    
    
    
    
    70,614Accounts receivable, net  related party
    
    
    (2,479
    )
    
    
    214,403
    
    
    
    321
    
    
    
    (206,790
    )
    
    
    5,455Notes receivable, current portion
    
    
    
    
    
    
    436
    
    
    
    
    
    
    
    
    
    
    
    436Inventories
    
    
    
    
    
    
    19,329
    
    
    
    1,067
    
    
    
    
    
    
    
    20,396Current derivative assets
    
    
    16,380
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,380Deferred tax asset, current
    
    
    
    
    
    
    5,055
    
    
    
    
    
    
    
    
    
    
    
    5,055Prepaid and other current assets
    
    
    497
    
    
    
    18,768
    
    
    
    216
    
    
    
    
    
    
    
    19,481Total current assets
    
    
    157,825
    
    
    
    328,497
    
    
    
    1,796
    
    
    
    (206,790
    )
    
    
    281,328Property, plant and equipment, net
    
    
    
    
    
    
    4,962,724
    
    
    
    90,991
    
    
    
    
    
    
    
    5,053,715Investment in affiliates
    
    
    2,725,161
    
    
    
    
    
    
    
    
    
    
    
    (2,725,161
    )
    
    
    Notes receivable, net of current portion
    
    
    
    
    
    
    18,977
    
    
    
    
    
    
    
    
    
    
    
    18,977Notes receivable  affiliate
    
    
    2,459,340
    
    
    
    
    
    
    
    
    
    
    
    (2,459,340
    )
    
    
    Restricted cash, net of current portion
    
    
    
    
    
    
    
    
    
    
    95
    
    
    
    
    
    
    
    95Deferred financing costs, net
    
    
    40,043
    
    
    
    38,205
    
    
    
    1,838
    
    
    
    (40,043
    )
    
    
    40,043Long-term derivative assets
    
    
    8,178
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,178Other assets
    
    
    1,686
    
    
    
    31,719
    
    
    
    

    
    
    
    (1,686
    )


    
    
    31,719Total assets
    
    $
    5,392,233
    
    
    $
    5,380,122
    
    
    $
    94,720
    
    
    $
    (5,433,020
    )
    
    $
    5,434,055LIABILITIES AND MEMBERS
EQUITY (DEFICIT)Current liabilities:Accounts payable
    
    $
    32,927
    
    
    $
    67,037
    
    
    $
    1,141
    
    
    $
    
    
    
    $
    101,105Accounts payable, net  related party
    
    
    155,279
    
    
    
    
    
    
    
    51,511
    
    
    
    (206,790
    )
    
    
    Notes payable, current portion
    
    
    
    
    
    
    171
    
    
    
    
    
    
    
    
    
    
    
    171Priority notes, term loans and other
financings, current portion
    
    
    2,437,982
    
    
    
    2,327,872
    
    
    
    110,110
    
    
    
    (2,437,982
    )
    
    
    2,437,982Accrued interest payable
    
    
    61,401
    
    
    
    58,586
    
    
    
    2,815
    
    
    
    (61,401
    )
    
    
    61,401Other current liabilities
    
    
    
    
    
    
    1,695
    
    
    
    144
    
    
    
    
    
    
    
    1,839Total current liabilities
    
    
    2,687,589
    
    
    
    2,455,361
    
    
    
    165,721
    
    
    
    (2,706,173
    )
    
    
    2,602,498Notes payable, net of current portion
    
    
    
    
    
    
    1,943
    
    
    
    
    
    
    
    
    
    
    
    1,943Priority notes, term loans and other
financings, net of current portion
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Deferred tax liability
    
    
    
    
    
    
    69,577
    
    
    
    5,239
    
    
    
    (1,686
    )
    
    
    73,130Deferred revenue
    
    
    
    
    
    
    8,770
    
    
    
    
    
    
    
    
    
    
    
    8,770Other liabilities
    
    
    
    
    
    
    17,478
    
    
    
    
    
    
    
    
    
    
    
    17,478Total liabilities
    
    
    2,687,589
    
    
    
    2,553,129
    
    
    
    170,960
    
    
    
    (2,707,859
    )
    
    
    2,703,819Liabilities subject to compromise
    
    
    
    
    
    
    24,977
    
    
    
    615
    
    
    
    
    
    
    
    25,592Commitments and contingenciesMembers equity (deficit)
    
    
    2,704,644
    
    
    
    2,802,016
    
    
    
    (76,855
    )
    
    
    (2,725,161
    )
    
    
    2,704,644Total liabilities and members deficit
    
    $
    5,392,233
    
    
    $
    5,380,122
    
    
    $
    94,720
    
    
    $
    (5,433,020
    )
    
    $
    5,434,055
 F- 33




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
 SUPPLEMENTAL CONSOLIDATING BALANCE SHEET,
December 31, 2004
(Restated)
 CalpineGeneratingCompany,Subsidiary
    
    
    Other
    
    
    Consolidating
    
    
    LLCCalGen
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    Consolidated(In thousands)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    64,510
    
    
    $
    28
    
    
    $
    
    
    
    $
    
    
    
    $
    64,538Accounts receivable, net
    
    
    
    
    
    
    59,302
    
    
    
    18
    
    
    
    
    
    
    
    59,320Accounts receivable, net  related party
    
    
    62,131
    
    
    
    123,825
    
    
    
    
    
    
    
    (181,120
    )
    
    
    4,836Inventories
    
    
    
    
    
    
    18,456
    
    
    
    1,145
    
    
    
    
    
    
    
    19,601Current derivative assets
    
    
    9,272
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,272Prepaid and other current assets
    
    
    62
    
    
    
    21,386
    
    
    
    88
    
    
    
    
    
    
    
    21,536Total current assets
    
    
    135,975
    
    
    
    222,997
    
    
    
    1,251
    
    
    
    (181,120
    )
    
    
    179,103Property, plant and equipment, net
    
    
    7
    
    
    
    5,969,576
    
    
    
    324,846
    
    
    
    
    
    
    
    6,294,429Investment in affiliates
    
    
    4,022,091
    
    
    
    
    
    
    
    
    
    
    
    (4,022,091
    )
    
    
    Notes receivable, net of current portion
    
    
    
    
    
    
    19,381
    
    
    
    
    
    
    
    
    
    
    
    19,381Notes receivable  affiliate
    
    
    2,397,160
    
    
    
    
    
    
    
    
    
    
    
    (2,397,160
    )
    
    
    Deferred financing costs, net
    
    
    51,496
    
    
    
    49,329
    
    
    
    2,167
    
    
    
    (51,496
    )
    
    
    51,496Long-term derivative assets
    
    
    26,644
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,644Other assets
    
    
    3,319
    
    
    
    54,245
    
    
    
    2,314
    
    
    
    (5,633
    )
    
    
    54,245Total assets
    
    $
    6,636,692
    
    
    $
    6,315,528
    
    
    $
    330,578
    
    
    $
    (6,657,500
    )
    
    $
    6,625,298LIABILITIES AND MEMBERS EQUITYCurrent liabilities:Accounts payable
    
    $
    31,809
    
    
    $
    66,880
    
    
    $
    523
    
    
    $
    
    
    
    $
    99,212Accounts payable, net  related party
    
    
    140,153
    
    
    
    
    
    
    
    40,967
    
    
    
    (181,120
    )
    
    
    Notes payable, current portion
    
    
    
    
    
    
    168
    
    
    
    
    
    
    
    
    
    
    
    168Accrued interest payable
    
    
    53,324
    
    
    
    51,028
    
    
    
    2,296
    
    
    
    (53,324
    )
    
    
    53,324Deferred tax liability
    
    
    
    
    
    
    4,713
    
    
    
    
    
    
    
    
    
    
    
    4,713Other current liabilities
    
    
    
    
    
    
    2,871
    
    
    
    99
    
    
    
    
    
    
    
    2,970Total current liabilities
    
    
    225,286
    
    
    
    125,660
    
    
    
    43,885
    
    
    
    (234,444
    )
    
    
    160,387Notes payable, net of current portion
    
    
    
    
    
    
    2,109
    
    
    
    
    
    
    
    
    
    
    
    2,109Priority notes and term loans
    
    
    2,395,332
    
    
    
    2,285,307
    
    
    
    110,025
    
    
    
    (2,395,332
    )
    
    
    2,395,332Deferred revenue
    
    
    
    
    
    
    5,671
    
    
    
    
    
    
    
    
    
    
    
    5,671Deferred tax liability
    
    
    
    
    
    
    31,072
    
    
    
    
    
    
    
    (5,633
    )
    
    
    25,439Other liabilities
    
    
    
    
    
    
    20,286
    
    
    
    
    
    
    
    
    
    
    
    20,286Total liabilities
    
    
    2,620,618
    
    
    
    2,470,105
    
    
    
    153,910
    
    
    
    (2,635,409
    )
    
    
    2,609,224Commitments
and contingenciesMembers equity
    
    
    4,016,074
    
    
    
    3,845,423
    
    
    
    176,668
    
    
    
    (4,022,091
    )
    
    
    4,016,074Total liabilities and members deficit
    
    $
    6,636,692
    
    
    $
    6,315,528
    
    
    $
    330,578
    
    
    $
    (6,657,500
    )
    
    $
    6,625,298
 F- 34




---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
 SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS
For the year ended December 31, 2005
 CalpineGeneratingCompany,Subsidiary
    
    
    Other
    
    
    Consolidating
    
    
    LLCCalGen
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    Consolidated(In thousands)Revenue:Electricity and steam revenue  related party
    
    $
    
    
    
    $
    2,106,870
    
    
    $
    77,128
    
    
    $
    
    
    
    $
    2,183,998Electricity and steam revenue  third-party
    
    
    
    
    
    
    542,292
    
    
    
    
    
    
    
    
    
    
    
    542,292Total electricity and steam revenue
    
    
    
    
    
    
    2,649,162
    
    
    
    77,128
    
    
    
    
    
    
    
    2,726,290Mark-to-market activity, net
    
    
    (11,358
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,358
    )Sale of purchased power
    
    
    
    
    
    
    5,459
    
    
    
    
    
    
    
    
    
    
    
    5,459Other revenue
    
    
    
    
    
    
    4,262
    
    
    
    
    
    
    
    
    
    
    
    4,262Total revenue
    
    
    (11,358
    )
    
    
    2,658,883
    
    
    
    77,128
    
    
    
    
    
    
    
    2,724,653Cost of revenue:Plant operating expense
    
    
    
    
    
    
    203,598
    
    
    
    15,320
    
    
    
    
    
    
    
    218,918Fuel expense
    
    
    
    
    
    
    1,930,850
    
    
    
    60,379
    
    
    
    
    
    
    
    1,991,229Purchased power expense
    
    
    
    
    
    
    9,839
    
    
    
    
    
    
    
    
    
    
    
    9,839Depreciation and amortization expense
    
    
    
    
    
    
    173,517
    
    
    
    8,140
    
    
    
    
    
    
    
    181,657Operating plant and asset impairments
    
    
    
    
    
    
    961,490
    
    
    
    226,500
    
    
    
    
    
    
    
    1,187,990Provision for doubtful accounts
    
    
    42,815
    
    
    
    62,309
    
    
    
    753
    
    
    
    
    
    
    
    105,877Total cost of revenue
    
    
    42,815
    
    
    
    3,341,603
    
    
    
    311,092
    
    
    
    
    
    
    
    3,695,510Gross profit (loss)
    
    
    (54,173
    )
    
    
    (682,720
    )
    
    
    (233,964
    )
    
    
    
    
    
    
    (970,857
    )Sales, general and administrative expense
    
    
    990
    
    
    
    14,529
    
    
    
    648
    
    
    
    
    
    
    
    16,167Long-term service agreement cancellation charge
    
    
    
    
    
    
    23,510
    
    
    
    
    
    
    
    
    
    
    
    23,510Income (loss) from operations
    
    
    (55,163
    )
    
    
    (720,759
    )
    
    
    (234,612
    )
    
    
    
    
    
    
    (1,010,534
    )Interest expense  third party
    
    
    240,556
    
    
    
    229,491
    
    
    
    11,065
    
    
    
    (240,556
    )
    
    
    240,556Interest (income)
    
    
    (243,133
    )
    
    
    (2,271
    )
    
    
    
    
    
    
    240,556
    
    
    
    (4,848
    )Equity loss
in subsidiaries
    
    
    1,233,931
    
    
    
    
    
    
    
    
    
    
    
    (1,233,931
    )
    
    
    Other expense (income), net
    
    
    618
    
    
    
    3,183
    
    
    
    339
    
    
    
    
    
    
    
    4,140Loss before income tax  expense (benefit)
    
    
    (1,287,135
    )
    
    
    (951,162
    )
    
    
    (246,016
    )
    
    
    1,233,931
    
    
    
    (1,250,382
    )Income tax expense (benefit)
    
    
    1,633
    
    
    
    29,200
    
    
    
    7,553
    
    
    
    
    
    
    
    38,386Net loss
    
    $
    (1,288,768
    )
    
    $
    (980,362
    )
    
    $
    (253,569
    )
    
    $
    1,233,931
    
    
    $
    (1,288,768
    )
 F- 35




---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
 SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS
For the year ended December 31, 2004
(Restated)
 CalpineGeneratingCompany,Subsidiary
    
    
    Other
    
    
    Consolidating
    
    
    LLCCalGen
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    Consolidated(In thousands)Revenue:Electricity and steam revenue  related party
    
    $
    
    
    
    $
    1,243,125
    
    
    $
    14,976
    
    
    $
    
    
    
    $
    1,258,101Electricity and steam revenue  third-party
    
    
    
    
    
    
    452,805
    
    
    
    
    
    
    
    
    
    
    
    452,805Total electricity and steam revenue
    
    
    
    
    
    
    1,695,930
    
    
    
    14,976
    
    
    
    
    
    
    
    1,710,906Mark-to-market activity, net
    
    
    (9,084
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,084
    )Sale of purchased power
    
    
    
    
    
    
    3,208
    
    
    
    
    
    
    
    
    
    
    
    3,208Other revenue
    
    
    
    
    
    
    3,307
    
    
    
    
    
    
    
    
    
    
    
    3,307Total revenue
    
    
    (9,084
    )
    
    
    1,702,445
    
    
    
    14,976
    
    
    
    
    
    
    
    1,708,337Cost of revenue:Plant operating expense
    
    
    
    
    
    
    170,038
    
    
    
    3,225
    
    
    
    
    
    
    
    173,263Fuel expense
    
    
    
    
    
    
    1,170,866
    
    
    
    11,093
    
    
    
    
    
    
    
    1,181,959Purchased power expense
    
    
    
    
    
    
    3,308
    
    
    
    
    
    
    
    
    
    
    
    3,308Depreciation and amortization expense
    
    
    
    
    
    
    148,902
    
    
    
    2,818
    
    
    
    
    
    
    
    151,720Provision for doubtful accounts
    
    
    
    
    
    
    5,355
    
    
    
    
    
    
    
    
    
    
    
    5,355Total cost of revenue
    
    
    
    
    
    
    1,498,469
    
    
    
    17,136
    
    
    
    
    
    
    
    1,515,605Gross profit (loss)
    
    
    (9,084
    )
    
    
    203,976
    
    
    
    (2,160
    )
    
    
    
    
    
    
    192,732Sales, general and administrative expense
    
    
    661
    
    
    
    9,527
    
    
    
    1,352
    
    
    
    
    
    
    
    11,540Other operating expense
    
    
    
    
    
    
    3,754
    
    
    
    
    
    
    
    
    
    
    
    3,754Income (loss) from operations
    
    
    (9,745
    )
    
    
    190,695
    
    
    
    (3,512
    )
    
    
    
    
    
    
    177,438Interest expense  related party
    
    
    
    
    
    
    72,026
    
    
    
    147
    
    
    
    
    
    
    
    72,173Interest expense  third party
    
    
    130,049
    
    
    
    158,046
    
    
    
    2,777
    
    
    
    (130,049
    )
    
    
    160,823Interest (income)
    
    
    (130,331
    )
    
    
    (2,254
    )
    
    
    
    
    
    
    130,049
    
    
    
    (2,536
    )Equity loss
in subsidiaries
    
    
    28,728
    
    
    
    
    
    
    
    
    
    
    
    (28,728
    )
    
    
    Other expense (income), net
    
    
    (127
    )
    
    
    940
    
    
    
    74
    
    
    
    
    
    
    
    887Loss before income tax  expense (benefit)
    
    
    (38,064
    )
    
    
    (38,063
    )
    
    
    (6,510
    )
    
    
    28,728
    
    
    
    (53,909
    )Income tax  expense (benefit)
    
    
    (3,319
    )
    
    
    (13,531
    )
    
    
    (2,314
    )
    
    
    
    
    
    
    (19,164
    )Net loss
    
    $
    (34,745
    )
    
    $
    (24,532
    )
    
    $
    (4,196
    )
    
    $
    28,728
    
    
    $
    (34,745
    )
 F- 36




---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
 SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS
For the year ended December 31, 2003
(Restated)
 CalpineGeneratingCompany,Subsidiary
    
    
    Other
    
    
    Consolidating
    
    
    LLCCalGen
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    Consolidated(In thousands)Revenue:Electricity and steam revenue  related party
    
    $
    
    
    
    $
    779,162
    
    
    $
    
    
    
    $
    
    
    
    $
    779,162Electricity and steam revenue  third-party
    
    
    
    
    
    
    369,206
    
    
    
    3
    
    
    
    
    
    
    
    369,209Total electricity and steam revenue
    
    
    
    
    
    
    1,148,368
    
    
    
    3
    
    
    
    
    
    
    
    1,148,371Sale of purchased power
    
    
    
    
    
    
    7,708
    
    
    
    
    
    
    
    
    
    
    
    7,708Other revenue
    
    
    
    
    
    
    3,297
    
    
    
    
    
    
    
    
    
    
    
    3,297Total revenue
    
    
    
    
    
    
    1,159,373
    
    
    
    3
    
    
    
    
    
    
    
    1,159,376Cost of revenue:Plant operating expense
    
    
    
    
    
    
    129,705
    
    
    
    
    
    
    
    
    
    
    
    129,705Fuel expense
    
    
    
    
    
    
    770,208
    
    
    
    
    
    
    
    
    
    
    
    770,208Purchased power expense
    
    
    
    
    
    
    12,395
    
    
    
    
    
    
    
    
    
    
    
    12,395Depreciation and amortization expense
    
    
    
    
    
    
    121,008
    
    
    
    
    
    
    
    
    
    
    
    121,008Provision for doubtful accounts
    
    
    
    
    
    
    1,931
    
    
    
    
    
    
    
    
    
    
    
    1,931Total cost of revenue
    
    
    
    
    
    
    1,035,247
    
    
    
    
    
    
    
    
    
    
    
    1,035,247Gross profit
    
    
    
    
    
    
    124,126
    
    
    
    3
    
    
    
    
    
    
    
    124,129Sales, general and administrative expense
    
    
    
    
    
    
    5,638
    
    
    
    
    
    
    
    
    
    
    
    5,638Other operating expense
    
    
    
    
    
    
    60
    
    
    
    113
    
    
    
    
    
    
    
    173Income (loss) from operations
    
    
    
    
    
    
    118,428
    
    
    
    (110
    )
    
    
    
    
    
    
    118,318Interest expense  related party
    
    
    
    
    
    
    255,036
    
    
    
    651
    
    
    
    
    
    
    
    255,687Interest expense  third party
    
    
    
    
    
    
    56,637
    
    
    
    367
    
    
    
    
    
    
    
    57,004Interest (income)
    
    
    
    
    
    
    (2,061
    )
    
    
    
    
    
    
    
    
    
    
    (2,061
    )Other
 expense, net (income)
    
    
    
    
    
    
    182
    
    
    
    21
    
    
    
    
    
    
    
    203Loss before Income tax expense (benefit) and cumulative effect of a change in accounting
principle
    
    
    
    
    
    
    (191,366
    )
    
    
    (1,149
    )
    
    
    
    
    
    
    (192,515
    )Income tax  expense (benefit)
    
    
    
    
    
    
    (68,576
    )
    
    
    
    
    
    
    
    
    
    
    (68,576
    )Loss before cumulative effect of a change in accounting principle, net of tax
    
    
    
    
    
    
    (122,790
    )
    
    
    (1,149
    )
    
    
    
    
    
    
    (123,939
    )Cumulative effect of a change in accounting principle, net of tax
    
    
    
    
    
    
    (241
    )
    
    
    
    
    
    
    
    
    
    
    (241
    )Net loss
    
    $
    
    
    
    $
    (123,031
    )
    
    $
    (1,149
    )
    
    $
    
    
    
    $
    (124,180
    )
 F- 37




---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
 SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS
For the year ended December 31, 2005
 CalpineGeneratingCompany,Subsidiary
    
    
    Other
    
    
    Consolidating
    
    
    LLCCalGen
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    Consolidated(In thousands)Cash flows from operating activities:Net income (loss)
    
    $
    (1,288,768
    )
    
    $
    (980,362
    )
    
    $
    (253,569
    )
    
    $
    1,233,931
    
    
    $
    (1,288,768
    )Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation and amortization
    
    
    
    
    
    
    173,517
    
    
    
    8,140
    
    
    
    
    
    
    
    181,657Amortization of discount and deferred financing costs
    
    
    12,839
    
    
    
    12,425
    
    
    
    414
    
    
    
    (12,839
    )
    
    
    12,839Provision for doubtful accounts
    
    
    42,815
    
    
    
    62,309
    
    
    
    753
    
    
    
    
    
    
    
    105,877Deferred income taxes
    
    
    1,633
    
    
    
    28,737
    
    
    
    7,553
    
    
    
    
    
    
    
    37,923Long-term service agreement cancellation charge
    
    
    
    
    
    
    23,510
    
    
    
    
    
    
    
    
    
    
    
    23,510Mark-to-market activities, net
    
    
    11,358
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,358Equity loss
in subsidiaries
    
    
    1,233,931
    
    
    
    
    
    
    
    
    
    
    
    (1,233,931
    )
    
    
    Operating plant and asset impairments
    
    
    
    
    
    
    961,490
    
    
    
    226,500
    
    
    
    
    
    
    
    1,187,990Cost allocated from parent
    
    
    
    
    
    
    8,821
    
    
    
    
    
    
    
    
    
    
    
    8,821Change in operating assets and liabilities:Accounts receivable
    
    
    
    
    
    
    (14,238
    )
    
    
    (116
    )
    
    
    
    
    
    
    (14,354
    )Accounts receivable/accounts payable, net  related party
    
    
    92,159
    
    
    
    (229,031
    )
    
    
    4,323
    
    
    
    (9,755
    )
    
    
    (142,304
    )Inventories
    
    
    
    
    
    
    (873
    )
    
    
    78
    
    
    
    
    
    
    
    (795
    )Prepaid and other current assets
    
    
    (435
    )
    
    
    (10,483
    )
    
    
    (128
    )
    
    
    
    
    
    
    (11,046
    )Other assets
    
    
    
    
    
    
    7,315
    
    
    
    
    
    
    
    
    
    
    
    7,315Accounts payable and accrued expenses
    
    
    27,016
    
    
    
    32,919
    
    
    
    6,471
    
    
    
    (31,044
    )
    
    
    35,362Accrued interest payable
    
    
    8,077
    
    
    
    7,558
    
    
    
    519
    
    
    
    (8,077
    )
    
    
    8,077Other accrued liabilities
    
    
    
    
    
    
    291
    
    
    
    
    
    
    
    
    
    
    
    291Net cash provided by (used in) operating activities
    
    
    140,625
    
    
    
    83,905
    
    
    
    938
    
    
    
    (61,715
    )
    
    
    163,753Cash flows from investing activities:(Increase) decrease in restricted cash
    
    
    
    
    
    
    
    
    
    
    (150
    )
    
    
    
    
    
    
    (150
    )Purchases of property, plant and equipment
    
    
    472
    
    
    
    (87,447
    )
    
    
    (785
    )
    
    
    (465
    )
    
    
    (88,225
    )Loans to subsidiaries for project financing
    
    
    (62,180
    )
    
    
    
    
    
    
    
    
    
    
    62,180
    
    
    
    Payments made for deferred transmission credits
    
    
    
    
    
    
    (2,574
    )
    
    
    
    
    
    
    
    
    
    
    (2,574
    )Proceeds received from payments from deferred
transmission credits
    
    
    
    
    
    
    5,942
    
    
    
    
    
    
    
    
    
    
    
    5,942Receipts of notes receivable
    
    
    
    
    
    
    335
    
    
    
    
    
    
    
    
    
    
    
    335Net cash used in investing activities
    
    
    (61,708
    )
    
    
    (83,744
    )
    
    
    (935
    )
    
    
    61,715
    
    
    
    (84,672
    )Cash flows from financing activities:Repayments of notes payable
    
    
    
    
    
    
    (163
    )
    
    
    
    
    
    
    
    
    
    
    (163
    )Net cash provided by (used in) financing activities
    
    
    
    
    
    
    (163
    )
    
    
    
    
    
    
    
    
    
    
    (163
    )Net increase (decrease) in cash and cash equivalents
    
    
    78,917
    
    
    
    (2
    )
    
    
    3
    
    
    
    
    
    
    
    78,918Cash and cash equivalents, beginning of period
    
    
    64,510
    
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    64,538Cash and cash equivalents, end of period
    
    $
    143,427
    
    
    $
    26
    
    
    $
    3
    
    
    $
    
    
    
    $
    143,456
 F- 38




---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
 SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS
For the year ended December 31, 2004
(Restated)
 CalpineGeneratingCompany,Subsidiary
    
    
    Other
    
    
    Consolidating
    
    
    LLCCalGen
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    Consolidated(In thousands)Cash flows from operating activities:Net income (loss)
    
    $
    (34,745
    )
    
    $
    (24,532
    )
    
    $
    (4,196
    )
    
    $
    28,728
    
    
    $
    (34,745
    )Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation and amortization
    
    
    
    
    
    
    148,902
    
    
    
    2,818
    
    
    
    
    
    
    
    151,720Amortization of discounted deferred financing costs
    
    
    11,511
    
    
    
    11,426
    
    
    
    85
    
    
    
    (11,511
    )
    
    
    11,511Provision for doubtful accounts
    
    
    
    
    
    
    5,355
    
    
    
    
    
    
    
    
    
    
    
    5,355Deferred income tax
    
    
    (3,319
    )
    
    
    (13,531
    )
    
    
    (2,314
    )
    
    
    
    
    
    
    (19,164
    )Write-off of deferred financing costs
    
    
    
    
    
    
    12,457
    
    
    
    
    
    
    
    
    
    
    
    12,457Mark-to-market activities, net
    
    
    9,084
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,084Long-term service agreement cancellation charge
    
    
    
    
    
    
    3,754
    
    
    
    
    
    
    
    
    
    
    
    3,754Interest on subordinated parent debt
    
    
    
    
    
    
    72,026
    
    
    
    147
    
    
    
    
    
    
    
    72,173Equity loss
in subsidiaries
    
    
    28,728
    
    
    
    
    
    
    
    
    
    
    
    (28,728
    )
    
    
    Cost allocated from parent
    
    
    
    
    
    
    3,633
    
    
    
    
    
    
    
    
    
    
    
    3,633Change in operating assets and liabilities:Accounts receivable
    
    
    
    
    
    
    (18,623
    )
    
    
    (18
    )
    
    
    
    
    
    
    (18,641
    )Accounts receivable/accounts payable, net  related party
    
    
    78,022
    
    
    
    (124,606
    )
    
    
    40,967
    
    
    
    
    
    
    
    (5,617
    )Inventories
    
    
    
    
    
    
    (3,556
    )
    
    
    (1,145
    )
    
    
    
    
    
    
    (4,701
    )Prepaid and other current assets
    
    
    (62
    )
    
    
    25,227
    
    
    
    (326
    )
    
    
    
    
    
    
    24,839Other assets
    
    
    
    
    
    
    (33,496
    )
    
    
    
    
    
    
    
    
    
    
    (33,496
    )Accounts payable
    
    
    31,809
    
    
    
    2,847
    
    
    
    (11,605
    )
    
    
    
    
    
    
    23,051Accrued interest payable
    
    
    53,324
    
    
    
    50,929
    
    
    
    2,296
    
    
    
    (53,324
    )
    
    
    53,225Other accrued liabilities
    
    
    
    
    
    
    13,648
    
    
    
    88
    
    
    
    
    
    
    
    13,736Net cash provided by (used in) operating activities
    
    
    174,352
    
    
    
    131,860
    
    
    
    26,797
    
    
    
    (64,835
    )
    
    
    268,174Cash flows from investing activities:(Increase) decrease in restricted cash
    
    
    
    
    
    
    152,290
    
    
    
    
    
    
    
    
    
    
    
    152,290Purchases of derivative asset
    
    
    (45,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (45,000
    )Purchases of property, plant and equipment
    
    
    (1,420
    )
    
    
    (259,096
    )
    
    
    (43,798
    )
    
    
    1,413
    
    
    
    (302,901
    )Loans to
subsidiaries for project financing
    
    
    (2,397,160
    )
    
    
    
    
    
    
    
    
    
    
    2,397,160
    
    
    
    Payment of deferred transmission credit
    
    
    
    
    
    
    (14,017
    )
    
    
    
    
    
    
    
    
    
    
    (14,017
    )Proceeds from deferred transmission credit
    
    
    
    
    
    
    24,500
    
    
    
    
    
    
    
    
    
    
    
    24,500Net cash used in investing activities
    
    
    (2,443,580
    )
    
    
    (96,323
    )
    
    
    (43,798
    )
    
    
    2,398,573
    
    
    
    (185,128
    )Cash flows from financing activities:Financing costs
    
    
    (60,162
    )
    
    
    (57,364
    )
    
    
    (2,798
    )
    
    
    60,162
    
    
    
    (60,162
    )Repayments of notes payable
    
    
    
    
    
    
    (162
    )
    
    
    
    
    
    
    
    
    
    
    (162
    )Borrowings from subordinated parent debt
    
    
    
    
    
    
    29,935
    
    
    
    16,878
    
    
    
    
    
    
    
    46,813Repayments of subordinated parent debt
    
    
    
    
    
    
    (131,096
    )
    
    
    (107,041
    )
    
    
    
    
    
    
    (238,137
    )Borrowings from credit facility
    
    
    
    
    
    
    178,995
    
    
    
    
    
    
    
    
    
    
    
    178,995Repayments of credit facility
    
    
    
    
    
    
    (2,379,353
    )
    
    
    
    
    
    
    
    
    
    
    (2,379,353
    )Issuance of secured notes and term loans
    
    
    2,393,900
    
    
    
    2,283,941
    
    
    
    109,959
    
    
    
    (2,393,900
    )
    
    
    2,393,900Borrowings under revolver line of credit
    
    
    117,500
    
    
    
    92,049
    
    
    
    25,451
    
    
    
    (117,500
    )
    
    
    117,500Repayments under revolver line of credit
    
    
    (117,500
    )
    
    
    (92,049
    )
    
    
    (25,451
    )
    
    
    117,500
    
    
    
    (117,500
    )Net cash provided by (used in) financing activities
    
    
    2,333,738
    
    
    
    (75,104
    )
    
    
    16,998
    
    
    
    (2,333,738
    )
    
    
    (58,106
    )Net increase (decrease) in cash and cash equivalents
    
    
    64,510
    
    
    
    (39,567
    )
    
    
    (3
    )
    
    
    
    
    
    
    24,940Cash and cash equivalents, beginning of period
    
    
    
    
    
    
    39,595
    
    
    
    3
    
    
    
    
    
    
    
    39,598Cash and cash equivalents, end of period
    
    $
    64,510
    
    
    $
    28
    
    
    $
    
    
    
    $
    
    
    
    $
    64,538
 F- 39




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine Corporation)
(Debtor-in-Possession)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2005, 2004 and 2003
 SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS
For the year ended December 31, 2003
(Restated)
 CalpineGeneratingCompany,Subsidiary
    
    
    Other
    
    
    Consolidating
    
    
    LLCCalGen
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    Consolidated(In thousands)Cash flows from operating activities:Net income (loss)
    
    $
    
    
    
    $
    (123,031
    )
    
    $
    (1,149
    )
    
    $
    
    
    
    $
    (124,180
    )Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation and amortization
    
    
    
    
    
    
    121,008
    
    
    
    
    
    
    
    
    
    
    
    121,008Amortization
of discount and deferred financing costs
    
    
    
    
    
    
    12,122
    
    
    
    
    
    
    
    
    
    
    
    12,122Deferred income tax
    
    
    
    
    
    
    (68,576
    )
    
    
    
    
    
    
    
    
    
    
    (68,576
    )Provision for doubtful accounts
    
    
    
    
    
    
    1,931
    
    
    
    
    
    
    
    
    
    
    
    1,931Interest on subordinated parent debt
    
    
    
    
    
    
    255,036
    
    
    
    651
    
    
    
    
    
    
    
    255,687Cost allocated from parent
    
    
    
    
    
    
    11,449
    
    
    
    
    
    
    
    
    
    
    
    11,449Cumulative effect of a change in accounting principle
    
    
    
    
    
    
    241
    
    
    
    
    
    
    
    
    
    
    
    241Change in operating assets and liabilities:Accounts receivable
    
    
    
    
    
    
    (23,895
    )
    
    
    19
    
    
    
    
    
    
    
    (23,876
    )Inventories
    
    
    
    
    
    
    (3,553
    )
    
    
    
    
    
    
    
    
    
    
    (3,553
    )Prepaid and other current assets
    
    
    
    
    
    
    (9,592
    )
    
    
    (36
    )
    
    
    
    
    
    
    (9,628
    )Other assets
    
    
    
    
    
    
    581
    
    
    
    
    
    
    
    
    
    
    
    581Accounts payable
    
    
    
    
    
    
    7,622
    
    
    
    
    
    
    
    
    
    
    
    7,622Accounts receivable/accounts payable  related party
    
    
    
    
    
    
    (8,925
    )
    
    
    
    
    
    
    
    
    
    
    (8,925
    )Accrued interest payable
    
    
    
    
    
    
    (200
    )
    
    
    
    
    
    
    
    
    
    
    (200
    )Other accrued liabilities
    
    
    
    
    
    
    3,370
    
    
    
    (7
    )
    
    
    
    
    
    
    3,363Net cash provided by (used in) operating activities
    
    
    
    
    
    
    175,588
    
    
    
    (522
    )
    
    
    
    
    
    
    175,066Cash flows from investing activities:(Increase) decrease in restricted cash
    
    
    
    
    
    
    (142,800
    )
    
    
    
    
    
    
    
    
    
    
    (142,800
    )Purchases of property, plant and equipment
    
    
    
    
    
    
    (389,793
    )
    
    
    (44,356
    )
    
    
    
    
    
    
    (434,149
    )Payments of transmission credit
    
    
    
    
    
    
    (25,326
    )
    
    
    
    
    
    
    
    
    
    
    (25,326
    )Proceeds from transmission credit
    
    
    
    
    
    
    4,647
    
    
    
    
    
    
    
    
    
    
    
    4,647Net cash used in investing activities
    
    
    
    
    
    
    (553,272
    )
    
    
    (44,356
    )
    
    
    
    
    
    
    (597,628
    )Cash flows from financing activities:Financing costs
    
    
    
    
    
    
    (6,258
    )
    
    
    
    
    
    
    
    
    
    
    (6,258
    )Repayments of notes payable
    
    
    
    
    
    
    (147
    )
    
    
    
    
    
    
    
    
    
    
    (147
    )Borrowings from subordinated parent debt
    
    
    
    
    
    
    511,288
    
    
    
    44,881
    
    
    
    
    
    
    
    556,169Borrowings from credit facility
    
    
    
    
    
    
    101,348
    
    
    
    
    
    
    
    
    
    
    
    101,348Repayments of credit facility
    
    
    
    
    
    
    (214,595
    )
    
    
    
    
    
    
    
    
    
    
    (214,595
    )Net cash provided by financing activities
    
    
    
    
    
    
    391,636
    
    
    
    44,881
    
    
    
    
    
    
    
    436,517Net increase in cash and cash equivalents
    
    
    
    
    
    
    13,952
    
    
    
    3
    
    
    
    
    
    
    
    13,955Cash and cash equivalents, beginning of period
    
    
    
    
    
    
    25,643
    
    
    
    
    
    
    
    
    
    
    
    25,643Cash and cash equivalents, end of period
    
    $
    
    
    
    $
    39,595
    
    
    $
    3
    
    
    $
    
    
    
    $
    39,598
 F- 40




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##### Table of Contents



SCHEDULE II
CALPINE GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine CalGen Holdings, Inc.)
 
 SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS
 Balance at
    
    
    Charged to
    
    
    Charged toBeginning
    
    
    Costs and
    
    
    Other
    
    
    
    
    
    
    Balance atDescription
    
    of Year
    
    
    Expense
    
    
    Accounts
    
    
    Reductions
    
    
    End of Year(In thousands)Year ended December 31, 2005Allowance for doubtful accounts
    
    $
    1,589
    
    
    $
    105,877
    
    
    $
    (1
    )
    
    $
    
    
    
    $
    107,465Deferred tax asset valuation allowance
    
    
    
    
    
    
    516,996
    
    
    
    
    
    
    
    
    
    
    
    516,996Year ended December 31, 2004 (Restated)Allowance for doubtful accounts
    
    $
    1,931
    
    
    $
    5,355
    
    
    $
    
    
    
    $
    (5,697
    )
    
    $
    1,589Deferred tax asset valuation allowance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Year ended December 31, 2003 (Restated)Allowance for doubtful accounts
    
    $
    
    
    
    $
    1,931
    
    
    $
    
    
    
    $
    
    
    
    $
    1,931Deferred tax asset valuation allowance
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 S-1




---



##### Table of Contents



EXHIBIT INDEX
 Exhibit Number
    
    Description1.1
    
    Purchase Agreement, dated March 12, 2004, between CalGen, CalGen Finance and Morgan Stanley.*3.1
    
    Amended and Restated Certificate of Formation of CalGen.*3.2
    
    Certificate of Incorporation of CalGen Finance.*3.3
    
    Certificate of Formation of CalGen Expansion Company, LLC (f/k/a CCFC II Development Company, LLC).*3.4
    
    Certificate of Amendment to Certificate of Formation of CalGen Expansion Company, LLC (f/k/a CCFC II
Development Company, LLC).*3.5
    
    Certificate of Amendment to Certificate of Formation of CalGen Expansion Company, LLC (f/k/a CCFC II
Development Company, LLC).*3.6
    
    Certificate of Limited Partnership of Baytown Energy Center, LP.*3.7
    
    Certificate of Amendment to Certificate of Limited Partnership of Baytown Energy Center, LP.*3.8
    
    Certificate of Formation of Calpine Baytown Energy Center GP, LLC.*3.9
    
    Certificate of Amendment to Certificate of Formation of Calpine Baytown Energy Center GP, LLC.*3.10
    
    Certificate of Formation of Calpine Baytown Energy Center LP, LLC.*3.11
    
    Certificate of Amendment to Certificate of Formation of Calpine Baytown Energy Center LP, LLC.*3.12
    
    Certificate of Formation of Baytown Power GP, LLC.*3.13
    
    Certificate of Amendment to Certificate of Formation of Baytown Power GP, LLC.*3.14
    
    Certificate of Limited Partnership of Baytown Power, LP.*3.15
    
    Certificate of Amendment to Certificate of Limited Partnership of Baytown Power, LP.*3.16
    
    Certificate of Formation of Carville Energy LLC (f/k/a Bayou Verret Energy LLC and Bayou Verret LLC).*3.17
    
    Certificate of Amendment to Certificate of Formation of Carville Energy LLC(f/k/a Bayou Verret Energy LLC and
Bayou Verret LLC).*3.18
    
    Certificate of Amendment to Certificate of Formation of Carville Energy LLC (f/k/a Bayou Verret Energy LLC and
Bayou Verret LLC).*3.19
    
    Certificate of Amendment to Certificate of Formation of Carville Energy LLC (f/k/a Bayou Verret Energy LLC and
Bayou Verret LLC).*3.20
    
    Certificate of Amendment to Certificate of Formation of Carville Energy LLC (f/k/a Bayou Verret Energy LLC and
Bayou Verret LLC).*3.21
    
    Certificate of Amendment to Certificate of Formation of Carville Energy LLC (f/k/a Bayou Verret Energy LLC and
Bayou Verret LLC).*3.22
    
    Certificate of Limited Partnership of Channel Energy Center, LP.*3.23
    
    Certificate of Amendment to Certificate of Limited Partnership of Channel Energy Center, LP.*




---



##### Table of Contents



Exhibit Number
    
    Description3.24
    
    Certificate of Formation of Calpine Channel Energy Center GP, LLC.*3.25
    
    Certificate of Amendment to Certificate of Formation of Calpine Channel Energy Center GP, LLC.*3.26
    
    Certificate of Formation of Calpine Channel Energy Center LP, LLC.*3.27
    
    Certificate of Amendment to Certificate of Formation of Calpine Channel Energy Center LP, LLC.*3.28
    
    Certificate of Formation of Channel Power GP, LLC.*3.29
    
    Certificate of Amendment to Certificate of Formation of Channel Power GP, LLC.*3.30
    
    Certificate of Limited Partnership of Channel Power, LP.*3.31
    
    Certificate of Amendment to Certificate of Limited Partnership of Channel Power, LP.*3.32
    
    Certificate of Formation of Columbia Energy LLC.*3.33
    
    Certificate of Amendment to Certificate of Formation of Columbia Energy LLC.*3.34
    
    Certificate of Amendment to Certificate of Formation of Columbia Energy LLC.*3.35
    
    Certificate of Limited Partnership of Corpus Christi Cogeneration LP.*3.36
    
    Certificate of Amendment to Certificate of Limited Partnership of Corpus Christi Cogeneration LP.*3.37
    
    Certificate of Amendment to Certificate of Limited Partnership of Corpus Christi Cogeneration LP.*3.38
    
    Certificate of Formation of Nueces Bay Energy LLC.*3.39
    
    Certificate of Amendment to Certificate of Formation of Nueces Bay Energy LLC.*3.40
    
    Certificate of Amendment to Certificate of Formation of Nueces Bay Energy LLC.*3.41
    
    Amended and Restated Certificate of Formation of Calpine Northbrook Southcoast Investors, LLC (f/k/a Skygen
Southcoast Investors LLC).*3.42
    
    Certificate of Amendment to Certificate of Formation of Calpine Northbrook Southcoast Investors, LLC (f/k/a
Skygen Southcoast Investors LLC).*3.43
    
    Certificate of Formation of Calpine Corpus Christi Energy GP, LLC.*3.44
    
    Certificate of Amendment to Certificate of Formation of Calpine Corpus Christi Energy GP, LLC.*3.45
    
    Certificate of Limited Partnership of Calpine Corpus Christi Energy, LP.*3.46
    
    Certificate of Amendment to Certificate of Limited Partnership of Calpine Corpus Christi Energy, LP.*3.47
    
    Certificate of Formation of Decatur.*3.48
    
    Certificate of Amendment to Certificate of Formation of Decatur.*3.49
    
    Certificate of Formation of Delta Energy Center, LLC.*3.50
    
    Certificate of Amendment to Certificate of Formation of Delta Energy Center, LLC.*3.51
    
    Certificate of Amendment to Certificate of Formation of Delta Energy Center, LLC.*3.52
    
    Certificate of Formation of CalGen Project Equipment Finance Company Two, LLC (f/k/a CCFC II Project Equipment
Finance Company Two, LLC).*




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Exhibit Number
    
    Description3.53
    
    Certificate of Amendment to Certificate of Formation of CalGen Project Equipment Finance Company Two, LLC
(f/k/a CCFC II Project Equipment Finance Company Two, LLC).*3.54
    
    Certificate of Amendment to Certificate of Formation of CalGen Project Equipment Finance Company Two, LLC
(f/k/a CCFC II Project Equipment Finance Company Two, LLC).*3.55
    
    Amended and Restated Certificate of Limited Partnership of Freestone Power Generation LP.*3.56
    
    Certificate of Formation of Calpine Freestone, LLC.*3.57
    
    Certificate of Formation of CPN Freestone, LLC.*3.58
    
    Certificate of Formation of Calpine Freestone Energy GP, LLC.*3.59
    
    Certificate of Amendment to Certificate of Formation of Calpine Freestone Energy GP, LLC.*3.60
    
    Certificate of Limited Partnership of Calpine Freestone Energy, LP.*3.61
    
    Certificate of Amendment to Certificate of Limited Partnership of Calpine Freestone Energy, LP.*3.62
    
    Amended and Restated Certificate of Limited Partnership of Calpine Power Equipment LP.*3.63
    
    Amended and Restated Certificate of Formation of Los Medanos Energy Center LLC (f/k/a Pittsburg District Energy
Facility, LLC).*3.64
    
    Certificate of Amendment to Certificate of Formation of Los Medanos Energy Center LLC (f/k/a Pittsburg District
Energy Facility, LLC).*3.65
    
    Certificate of Formation of CalGen Project Equipment Finance Company One, LLC (f/k/a CCFC II Project Equipment
Finance Company One, LLC).*3.66
    
    Certificate of Amendment to Certificate of Formation of CalGen Project Equipment Finance Company One, LLC
(f/k/a CCFC II Project Equipment Finance Company One, LLC).*3.67
    
    Certificate of Amendment to Certificate of Formation of CalGen Project Equipment Finance Company One, LLC
(f/k/a CCFC II Project Equipment Finance Company One, LLC).*3.68
    
    Certificate of Formation of Morgan Energy Center, LLC.*3.69
    
    Certificate of Amendment to Certificate of Formation of Morgan Energy Center, LLC.*3.70
    
    Certificate of Formation of Pastoria Energy Facility L.L.C.*3.71
    
    Certificate of Amendment to Certificate of Formation of Pastoria Energy Facility L.L.C.*3.72
    
    Certificate of Amendment to Certificate of Formation of Pastoria Energy Facility L.L.C.*3.73
    
    Amended and Restated Certificate of Formation of Calpine Pastoria Holdings, LLC (f/k/a Pastoria Energy Center,
LLC).*3.74
    
    Certificate of Amendment to Certificate of Formation of Calpine Pastoria Holdings, LLC (f/k/a Pastoria Energy
Center, LLC).*3.75
    
    Amended and Restated Certificate of Limited Partnership of Calpine Oneta Power, L.P. (f/k/a Panda Oneta Power,
L.P.).*3.76
    
    Certificate of Amendment to Certificate of Limited Partnership of Calpine Oneta Power, L.P. (f/k/a Panda Oneta
Power, L.P.).*3.77
    
    Amended and Restated Certificate of Formation of Calpine Oneta Power I, LLC (f/k/a Panda Oneta Power I, LLC).*3.78
    
    Certificate of Amendment to Certificate of Formation of Calpine Oneta Power I, LLC (f/k/a Panda Oneta Power I,
LLC).*




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Exhibit Number
    
    Description3.79
    
    Amended and Restated Certificate of Formation of Calpine Oneta Power II, LLC (f/k/a Panda Oneta Power II, LLC).*3.80
    
    Certificate of Amendment to Certificate of Formation of Calpine Oneta Power II, LLC (f/k/a Panda Oneta Power
II, LLC).*3.81
    
    Certificate of Formation of Zion Energy LLC.*3.82
    
    Certificate of Amendment to Certificate of Formation of Zion Energy LLC.*3.83
    
    Certificate of Amendment to Certificate of Formation of Zion Energy LLC.*3.84
    
    Certificate of Formation of CalGen Project Equipment Finance Company Three, LLC (f/k/a CCFC II Project
Equipment Finance Company Three, LLC).*3.85
    
    Certificate of Amendment to Certificate of Formation of CalGen Project Equipment Finance Company Three, LLC
(f/k/a CCFC II Project Equipment Finance Company Three, LLC).*3.86
    
    Certificate of Amendment to Certificate of Formation of CalGen Project Equipment Finance Company Three, LLC
(f/k/a CCFC II Project Equipment Finance Company Three, LLC).*3.87
    
    Amended and Restated Certificate of Formation of CalGen Equipment Finance Holdings, LLC (f/k/a CCFC II Leasing
Holdings, LLC and CCFC II Equipment Finance Holdings, LLC).*3.88
    
    Certificate of Amendment to Certificate of Formation of CalGen Equipment Finance Holdings, LLC (f/k/a CCFC II
Leasing Holdings, LLC and CCFC II Equipment Finance Holdings, LLC).*3.89
    
    Certificate of Amendment to Amended and Restated Certificate of Formation of CalGen Equipment Finance Holdings,
LLC (f/k/a CCFC II Leasing Holdings, LLC and CCFC II Equipment Finance Holdings, LLC).*3.90
    
    Amended and Restated Certificate of Formation of CalGen Equipment Finance Company, LLC (f/k/a CCFC II Leasing
Company, LLC and CCFC II Equipment Finance Company, LLC)*3.91
    
    Certificate of Amendment to Certificate of Formation of CalGen Equipment Finance Company, LLC (f/k/a CCFC II
Leasing Company, LLC and CCFC II Equipment Finance Company, LLC).*3.92
    
    Certificate of Amendment to Amended and Restated Certificate of Formation of CalGen Equipment Finance Company,
LLC (f/k/a CCFC II Leasing Company, LLC and CCFC II Equipment Finance Company, LLC).*3.93
    
    Limited Liability Company Operating Agreement of CalGen.*3.94
    
    Bylaws of CalGen Finance*3.95
    
    Limited Liability Company Operating Agreement of CalGen Expansion Company, LLC.*3.96
    
    Agreement of Limited Partnership of Baytown Energy Center, LP.*3.97
    
    Amended and Restated Limited Liability Company Operating Agreement of Calpine Baytown Energy Center GP, LLC.*3.98
    
    Amended and Restated Limited Liability Company Operating Agreement of Calpine Baytown Energy Center LP, LLC.*3.99
    
    Limited Liability Company Operating Agreement of Baytown Power GP, LLC.*3.100
    
    Agreement of Limited Partnership of Baytown Power, LP.*3.101
    
    Amended and Restated Limited Liability Company Operating Agreement of Carville Energy LLC.*3.102
    
    Agreement of Limited Partnership of Channel Energy Center, LP, October 2000.*3.103
    
    Amended and Restated Limited Liability Company Operating Agreement of Calpine Channel Energy Center GP, LLC.*3.104
    
    Amended and Restated Limited Liability Company Operating Agreement of Calpine Channel Energy Center LP, LLC.*




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Exhibit Number
    
    Description3.105
    
    Limited Liability Company Operating Agreement of Channel Power GP, LLC.*3.106
    
    Agreement of Limited Partnership of Channel Power, LP.*3.107
    
    Amended and Restated Limited Liability Company Operating Agreement of Columbia Energy LLC.*3.108
    
    Amended and Restated Agreement of Limited Partnership of Corpus Christi Cogeneration LP.*3.109
    
    Amended and Restated Limited Liability Company Operating Agreement of Nueces Bay Energy LLC.*3.110
    
    Amended and Restated Limited Liability Company Operating Agreement of Calpine Northbrook Southcoast Investors,
LLC.*3.111
    
    Limited Liability Company Operating Agreement of Calpine Corpus Christi Energy GP, LLC.*3.112
    
    Agreement of Limited Partnership of Calpine Corpus Christi Energy, LP.*3.113
    
    Amended and Restated Limited Liability Company Operating Agreement of Decatur.*3.114
    
    Amended and Restated Limited Liability Company Operating Agreement of Delta Energy Center, LLC.*3.115
    
    Limited Liability Company Operating Agreement of CalGen Project Equipment Finance Company Two, LLC.*3.116
    
    Second Amended and Restated Agreement of Limited Partnership of Freestone Power Generation LP.*3.117
    
    Limited Liability Company Operating Agreement of Calpine Freestone, LLC.*3.118
    
    Limited Liability Company Operating Agreement of CPN Freestone, LLC.*3.119
    
    Limited Liability Company Operating Agreement of Calpine Freestone Energy GP, LLC.*3.120
    
    Agreement of Limited Partnership of Calpine Freestone Energy, LP.*3.121
    
    Amended and Restated Agreement of Limited Partnership of Calpine Power Equipment LP.*3.122
    
    Amended and Restated Limited Liability Company Operating Agreement of Los Medanos Energy Center LLC.*3.123
    
    Limited Liability Company Operating Agreement of CalGen Project Equipment Finance Company One, LLC.*3.124
    
    Amended and Restated Limited Liability Company Operating Agreement of Morgan Energy Center, LLC.*3.125
    
    Amended and Restated Limited Liability Company Operating Agreement of Pastoria Energy Facility L.L.C.*3.126
    
    Limited Liability Company Operating Agreement of Calpine Pastoria Holdings, LLC.*3.127
    
    Amended and Restated Agreement of Limited Partnership of Calpine Oneta Power, L.P.*3.128
    
    Amended and Restated Limited Liability Company Operating Agreement of Calpine Oneta Power I, LLC.*3.129
    
    Amended and Restated Limited Liability Company Operating Agreement of Calpine Oneta Power II, LLC.*3.130
    
    Limited Liability Company Operating Agreement of Zion Energy LLC.*3.131
    
    Limited Liability Company Operating Agreement of CalGen Project Equipment Finance Company Three, LLC.*3.132
    
    Limited Liability Company Operating Agreement of CalGen Equipment Finance Holdings, LLC.*3.133
    
    Limited Liability Company Operating Agreement of CalGen Equipment Finance Company, LLC.*




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##### Table of Contents



Exhibit Number
    
    Description4.1
    
    First Priority Indenture, dated March 23, 2004, among CalGen, CalGen Finance, each of the Guarantors named
therein and Wilmington Trust FSB, as Trustee.*4.2
    
    Second Priority Indenture, dated March 23, 2004, among CalGen, CalGen Finance, each of the Guarantors named
therein and Wilmington Trust FSB, as Trustee.*4.3
    
    Third Priority Indenture, dated March 23, 2004, among CalGen, CalGen Finance, each of the Guarantors named
therein and Wilmington Trust FSB, as Trustee.*4.4
    
    Form of First Priority Secured Floating Rate Note due 2009 (included in Exhibit 4.1).*4.5
    
    Form of Second Priority Secured Floating Rate Note due 2010 (included in Exhibit 4.2).*4.6
    
    Form of Third Priority Secured Floating Rate Note due 2011 (included in Exhibit 4.3).*4.7
    
    Form of 11 1/2% Third Priority Secured Note due 2011 (included in Exhibit 4.3).*4.8
    
    Registration Rights Agreement, dated March 23, 2004, among Calpine Generating Company LLC, CalGen Finance, each
of the Guarantors named therein and Morgan Stanley*4.9
    
    Collateral Trust and Intercreditor Agreement, dated March 23, 2004, among CalGen Holdings, CalGen, each of the
Guarantors named therein, Wilmington Trust Company, as Trustee, Morgan Stanley Senior Funding Inc., as
Administrative Agent under the Term Loan Agreements, Bank of Nova Scotia, as Administrative Agent under the
Revolving Loan Agreements, and Wilmington Trust Company, as Collateral Agent.*4.10
    
    Membership Interest Pledge Agreement, dated March 23, 2004, among CalGen Holdings, as Pledgor, CalGen, CalGen
Expansion Company, LLC, and Wilmington Trust Company, as Collateral Agent.*4.11
    
    Membership Interest Pledge Agreement, dated March 23, 2004, among CalGen, as Pledgor, CalGen Expansion Company,
and Wilmington Trust, as Collateral Agent.*4.12
    
    Security Agreement, dated March 23, 2004, among CalGen, the Guarantors party therein from time to time; and
Wilmington Trust Company, as Collateral Agent.*4.13
    
    Collateral Account Control Agreement, dated March 23, 2004, among CalGen and Wilmington Trust Company, as
Collateral Agent.*10.1
    
    Credit and Guarantee Agreement of $600,000,000 First Priority Secured Institutional Term Loans Due 2009, dated
March 23, 2004, among CalGen, CalGen Finance, each of the Guarantors named therein, Morgan Stanley Senior
Funding Inc., as Administrative Agent and Arranger, and the Lenders party to the agreement from time to time.*10.2
    
    Credit and Guaranty Agreement of $100,000,000 Second Priority Secured Institutional Term Loans Due 2010, dated
March 23, 2004, among CalGen, CalGen Finance, each of the Guarantors named therein, Morgan Stanley Senior
Funding Inc., as Administrative Agent and Arranger, and the Lenders party to the agreement from time to time.*10.3
    
    Amended and Restated Credit Agreement of $200,000,000 First Priority Secured Revolving Loans, dated March 23,
2004, among CalGen, each of the Guarantors named therein, the Bank of Nova Scotia, as Administrative Agent and
Lead Arranger, Bayerische Landesbank Cayman Islands Branch, Credit Lyonnais New York Branch, ING Capital LLC,
Toronto Dominion Inc., each as Agent and Arranger, and the Lenders party to the agreement from time to time.*10.4
    
    ISDA Master Agreement, Schedule and Confirmation, dated March 12, 2004, between CalGen and MSCG.*10.5
    
    Guaranty, dated March 12, 2004, made by Morgan Stanley in favor of MSCG.*10.6
    
    Fixed Price Agreement, dated March 23, 2004, among CES, CalGen, Delta ProjectCo. and Los Medanos ProjectCo.*10.7
    
    Index Based Agreement, dated March 23, 2004, among CES and CalGen and each of CalGens subsidiaries named therein.*10.8
    
    First Amendment to Index Based Agreement, dated May 20, 2004, among CES and CalGen and each of CalGens subsidiaries
named therein.*




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##### Table of Contents



Exhibit Number
    
    Description10.9
    
    Second Amendment to Index Based Agreement, dated May 26, 2004, among CES and CalGen and each of its
Subsidiaries named therein.*10.9(a)
    
    Third Amendment to Index Based
Agreement, dated August 1, 2004, among CES and CalGen and each
of CalGens
subsidiaries named therein (incorporated by reference to Exhibit 10.10 to the Registrants Registration Statement on Form
S-4/A (Registration No. 333-117335), filed with the SEC on October 19, 2004).10.9(b)
    
    Fourth Amendment to Index Based Agreement, effective as of May 1, 2005, among CES and CalGen and each of CalGens
subsidiaries named therein.10.10
    
    O&M Agreement, dated March 23, 2004, among COSCI and CalGen and each of CalGens subsidiaries named therein.*10.11
    
    Maintenance Agreement, dated March 23, 2004, among COSCI and CalGen and each of its Subsidiaries named therein.*10.12
    
    Master Construction Management Agreement, dated March 23, 2004, among CCMCI, CalGen and certain of the Facility
Owners named therein.*10.13
    
    Administrative Agreement, dated March 23, 2004, among CalGen, each of its Subsidiaries named therein, and
CalGen Finance*10.14
    
    Project Undertaking and Agreement, dated March 23, 2004, among Calpine and CalGen and each of its Subsidiaries
named therein.*10.15
    
    Affiliate Party Agreement Guaranty, dated March 23, 2004, made by Calpine in favor of CalGen and each of its
Subsidiaries named therein.*10.16
    
    Working Capital Facility Agreement, dated March 23, 2004, among Calpine, CalGen Holdings and CalGen.*10.17.1
    
    $2,000,000,000 Amended & Restated Revolving Credit, Term Loan and Guarantee Agreement,
 dated as of February 23, 2006, among Calpine Corporation, as
borrower, its subsidiaries named therein, as guarantors, the
Lenders from time to time party thereto, Credit Suisse Securities (USA) LLC and Deutsche Bank Trust Company Americas, as Joint
Syndication Agents, Deutsche Bank Securities Inc. and Credit Suisse and Deutsche Bank Trust Company Americas, as Joint Administrative
 Agents (incorporated by reference to Exhibit 10.1.1.1 to Calpine Corporations Annual Report on Form 10-K for the year ended December
 31, 2005, filed with the SEC on May 19, 2006).10.17.2
    
    First Consent, Waiver and Amendment, dated as of May 3, 2006, to and under the Amended and Restated Revolving Credit, Term Loan and
Guarantee Agreement, dated as of February 23, 2006, among Calpine Corporation, as borrower, its subsidiaries named therein, as
guarantors, the Lenders party thereto, Deutsche Bank Trust Company Americas, as administrative agent for the First Priority Lenders,
and Credit Suisse, Cayman Islands Branch, as administrative agent for the
Second Priority Term Lenders (incorporated by reference to Exhibit 10.1.1.2 to Calpine Corporations Annual Report on Form 10-K for the year ended
December 31, 2005, filed with the SEC on May 19, 2006).10.17.3
    
    Consent, dated as of June 28, 2006, under the Amended and Restated Revolving Credit, Term Loan and Guarantee Agreement, dated as of
February 23, 2006, among Calpine Corporation, as borrower, its
subsidiaries named therein, as guarantors, the Lenders party thereto,
Deutsche Bank Trust Company Americas, as administrative agent for the
First Priority Lenders, and Credit Suisse, Cayman Islands Branch,
as administrative agent for the Second Priority Term Lenders.
(incorporated by reference to Exhibit 10.1.1.3 to Calpine
Corporations Quarterly Report on Form 10-Q for the quarter
ended June 30, 2006, filed with the SEC on August 14, 2006).10.18
    
    Amended and Restated Security and
Pledge Agreement, dated as of February 23, 2006, among Calpine
Corporation, its subsidiaries signatory thereto and Deutsche Bank Trust
Company Americas, as collateral agent (incorporated by reference to Exhibit 10.1.2 to Calpine
Corporations Annual Report on Form 10-K for the year ended
December 31, 2005, filed with the SEC on May 19, 2006).12.1
    
    Computation of Ratio of Earnings to Fixed Charges.24.1
    
    Powers of Attorney for CalGen, CalGen Finance and the other Additional Registrants (included in the signature pages hereof)31.1
    
    Certification of the President and Corporate Secretary pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the
Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of the Chief Financial Officer and Treasurer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under
the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of President and Corporate Secretary and Chief Financial Officer and Treasurer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
    
    Filed herewith.*
    
    Incorporated by reference to the corresponding exhibit to the Registrants Registration Statement
on Form S-4 (Registration No. 333-117335), filed with the SEC on July 13, 2004.