##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the fiscal year ended December 31, 2004                                                 
|          
|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


þ o


þ


o þ










(Continued on next page)










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(Continued from previous page)


DOCUMENTS INCORPORATED BY REFERENCE


None


OMISSION OF CERTAIN INFORMATION




| |                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In
    accordance with General Instruction I (1)(a) and
    (b) of Form 10-K, the registrant is omitting
    Items 4, 10, 11, 12 and 13 (and related Exhibits)
    because:



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) All of the equity securities of Calpine Generating
    Company, LLC, CalGen Finance Corp. and each of the
    additional registrants listed below are owned, indirectly, by
    Calpine Corporation which is a reporting company under the
    Securities Exchange Act of 1934 and which has filed all material
    required to be filed by it pursuant to Section 13, 14,
    or 15(d) thereof and is named in conjunction with the
    registrants description of their business; and                           
|
| | (2) during the preceding thirty-six calendar months and any
    subsequent period of days, there has not been any material
    default in the payment of principal, interest, sinking or
    purchase fund installment, or any other material default not
    cured within thirty days with respect to any indebtedness of the
    registrant or its subsidiaries, and there has not been any
    material default in the payment by the registrant or its
    subsidiaries of rentals under material long-term leases.

TABLE OF ADDITIONAL REGISTRANTS


|                                                   |  |                 |          |  |                 |  |               |                       |  |  |            | 
|-------------------------------------------------- |  | --------------- | -------- |  | --------------- |  | ------------- | --------------------- |  |  | ---------- | 
|                                                   |  | State of        |          |  |                 |  |              
|                                                   |  | Incorporation   |          |  | Commission File |  |               | I.R.S. Employer       | 
|Registrant                                         |  | or Organization |          |  | Number          |  |               | Identification Number | 
|                                                   |  |                 |          |  |                 |  |               |                       | 
|CalGen Expansion Company, LLC                      |  |                 | Delaware |  |                 |  | 333-117335-39 |                       |  |  | 77-0555127 | 
|Baytown Energy Center, LP                          |  |                 | Delaware |  |                 |  | 333-117335-38 |                       |  |  | 77-0555135 | 
|Calpine Baytown Energy Center GP, LLC              |  |                 | Delaware |  |                 |  | 333-117335-37 |                       |  |  | 77-0555133 | 
|Calpine Baytown Energy Center LP, LLC              |  |                 | Delaware |  |                 |  | 333-117335-36 |                       |  |  | 77-0555138 | 
|Baytown Power GP, LLC                              |  |                 | Delaware |  |                 |  | 333-117335-35 |                       |  |  | 86-1056699 | 
|Baytown Power, LP                                  |  |                 | Delaware |  |                 |  | 333-117335-34 |                       |  |  | 86-1056708 | 
|Carville Energy LLC                                |  |                 | Delaware |  |                 |  | 333-117335-33 |                       |  |  | 36-4309608 | 
|Channel Energy Center, LP                          |  |                 | Delaware |  |                 |  | 333-117335-32 |                       |  |  | 77-0555137 | 
|Calpine Channel Energy Center GP, LLC              |  |                 | Delaware |  |                 |  | 333-117335-31 |                       |  |  | 77-0555139 | 
|Calpine Channel Energy Center LP, LLC              |  |                 | Delaware |  |                 |  | 333-117335-09 |                       |  |  | 77-0555140 | 
|Channel Power GP, LLC                              |  |                 | Delaware |  |                 |  | 333-117335-08 |                       |  |  | 86-1056758 | 
|Channel Power, LP                                  |  |                 | Delaware |  |                 |  | 333-117335-07 |                       |  |  | 86-1056755 | 
|Columbia Energy LLC                                |  |                 | Delaware |  |                 |  | 333-117335-06 |                       |  |  | 36-4380154 | 
|Corpus Christi Cogeneration LP                     |  |                 | Delaware |  |                 |  | 333-117335-05 |                       |  |  | 36-4337040 | 
|Nueces Bay Energy LLC                              |  |                 | Delaware |  |                 |  | 333-117335-04 |                       |  |  | 36-4216016 | 
|Calpine Northbrook Southcoast Investors, LLC       |  |                 | Delaware |  |                 |  | 333-117335-03 |                       |  |  | 36-4337045 | 
|Calpine Corpus Christi Energy GP, LLC              |  |                 | Delaware |  |                 |  | 333-117335-02 |                       |  |  | 86-1056770 | 
|Calpine Corpus Christi Energy, LP                  |  |                 | Delaware |  |                 |  | 333-117335-30 |                       |  |  | 86-1056497 | 
|Decatur Energy Center, LLC                         |  |                 | Delaware |  |                 |  | 333-117335-29 |                       |  |  | 77-0555708 | 
|Delta Energy Center, LLC                           |  |                 | Delaware |  |                 |  | 333-117335-28 |                       |  |  | 95-4812214 | 
|CalGen Project Equipment Finance Company Two, LLC  |  |                 | Delaware |  |                 |  | 333-117335-27 |                       |  |  | 77-0585399 | 
|Freestone Power Generation LP                      |  |                 | Texas    |  |                 |  | 333-117335-26 |                       |  |  | 76-0608559 | 
|Calpine Freestone, LLC                             |  |                 | Delaware |  |                 |  | 333-117335-25 |                       |  |  | 77-0486738 | 
|CPN Freestone, LLC                                 |  |                 | Delaware |  |                 |  | 333-117335-24 |                       |  |  | 77-0545937 | 
|Calpine Freestone Energy GP, LLC                   |  |                 | Delaware |  |                 |  | 333-117335-23 |                       |  |  | 86-1056713 | 
|Calpine Freestone Energy, LP                       |  |                 | Delaware |  |                 |  | 333-117335-22 |                       |  |  | 86-1056720 | 
|Calpine Power Equipment LP                         |  |                 | Texas    |  |                 |  | 333-117335-21 |                       |  |  | 76-0645514 | 
|Los Medanos Energy Center, LLC                     |  |                 | Delaware |  |                 |  | 333-117335-20 |                       |  |  | 77-0553164 | 
|CalGen Project Equipment Finance Company One, LLC  |  |                 | Delaware |  |                 |  | 333-117335-19 |                       |  |  | 77-0556245 | 
|Morgan Energy Center, LLC                          |  |                 | Delaware |  |                 |  | 333-117335-18 |                       |  |  | 77-0555141 | 
|Pastoria Energy Facility L.L.C.                    |  |                 | Delaware |  |                 |  | 333-117335-17 |                       |  |  | 77-0581976 | 
|Calpine Pastoria Holdings, LLC                     |  |                 | Delaware |  |                 |  | 333-117335-16 |                       |  |  | 77-0559247 | 
|Calpine Oneta Power, L.P.                          |  |                 | Delaware |  |                 |  | 333-117335-15 |                       |  |  | 75-2815392 | 
|Calpine Oneta Power I, LLC                         |  |                 | Delaware |  |                 |  | 333-117335-14 |                       |  |  | 75-2815390 | 
|Calpine Oneta Power II, LLC                        |  |                 | Delaware |  |                 |  | 333-117335-13 |                       |  |  | 75-2815394 | 
|Zion Energy LLC                                    |  |                 | Delaware |  |                 |  | 333-117335-12 |                       |  |  | 36-4330312 | 
|CalGen Project Equipment Finance Company Three LLC |  |                 | Delaware |  |                 |  | 333-117335-11 |                       |  |  | 10-0008436 | 
|CalGen Equipment Finance Holdings, LLC             |  |                 | Delaware |  |                 |  | 333-117335-10 |                       |  |  | 77-0555519 | 
|CalGen Equipment Finance Company, LLC              |  |                 | Delaware |  |                 |  | 333-117335-01 |                       |  |  | 77-0555523 | 



---



FORM 10-K


ANNUAL REPORT


For the Year Ended December 31, 2004


TABLE OF CONTENTS







|                                                                     |  |                                                                                                                      |     |      |    | 
|-------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------- | --- | ---- | -- | 
|                                                                     |  |                                                                                                                      |     | Page |   
|                                                                     |  |                                                                                                                      |     |      |   
|PART I                                                              
|Item 1.                                                              |  | Business                                                                                                             |     |      | 2  | 
|Item 2.                                                              |  | Properties                                                                                                           |     |      | 23 | 
|Item 3.                                                              |  | Legal Proceedings                                                                                                    |     |      | 23 | 
|Item 4.                                                              |  | Submission of Matters to a Vote of Security
    Holders                                                              |     |      | 23 | 
|                                                                    
|PART II                                                             
|Item 5.                                                              |  | Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities |     |      | 23 | 
|Item 6.                                                              |  | Selected Financial Data                                                                                              |     |      | 23 | 
|Item 7.                                                              |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                            |     |      | 24 | 
|Item 7A.                                                             |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                       |     |      | 40 | 
|Item 8.                                                              |  | Financial Statements and Supplementary
    Data                                                                      |     |      | 41 | 
|Item 9.                                                              |  | Changes in and Disagreements With
    Accountants on Accounting and Financial Disclosure                             |     |      | 41 | 
|Item 9A.                                                             |  | Controls and Procedures                                                                                              |     |      | 41 | 
|Item 9B.                                                             |  | Other Information                                                                                                    |     |      | 42 | 
|                                                                    
|PART III                                                            
|Item 10.                                                             |  | Directors and Executive Officers of the
    Registrant                                                               |     |      | 42 | 
|Item 11.                                                             |  | Executive Compensation                                                                                               |     |      | 42 | 
|Item 12.                                                             |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters                   |     |      | 42 | 
|Item 13.                                                             |  | Certain Relationships and Related
    Transactions                                                                   |     |      | 42 | 
|Item 14.                                                             |  | Principal Accounting Fees and Services                                                                               |     |      | 42 | 
|                                                                    
|PART IV                                                             
|Item 15.                                                             |  | Exhibits, Financial Statement Schedule                                                                               |     |      | 43 | 
|Signatures and Power of Attorney                                     |  |                                                                                                                      | 44  |     
|Index to Consolidated Financial Statements
    and Other Information |  |                                                                                                                      | F-1 |     
|EXHIBIT 12.1                                                        
|EXHIBIT 31.1                                                        
|EXHIBIT 31.2                                                        
|EXHIBIT 32.1                                                        





1



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##### Table of Contents






PART I







|        |         
|------- | --------
|Item 1. | Business

In addition to historical information, this report contains
forward-looking statements. Such statements include those
concerning Calpine Generating Company, LLCs
(CalGen or the Company) expected
financial performance and its 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 involve a number of risks and
uncertainties that could cause actual results to differ
materially from the forward-looking statements such as, but not
limited to, (i) the timing and extent of deregulation of
energy markets and the rules and regulations adopted with
respect thereto, (ii) the timing and extent of changes in
commodity prices for energy, particularly natural gas and
electricity, and the impact of related derivatives transactions,
(iii) unscheduled outages of operating plants,
(iv) unseasonable weather patterns that reduce demand for
power, (v) economic slowdowns, that can adversely affect
consumption of power by businesses and consumers,
(vi) various development and construction risks that may
delay or prevent commercial operation of the Pastoria facility,
such as failure to obtain the necessary permits to operate or
failure of third-party contractors to perform their contractual
obligations, (vii) uncertainties associated with cost
estimates, that actual costs may be higher than estimated,
(viii) development of lower-cost power plants or of a lower
cost means of operating a fleet of power plants by our
competitors, (ix) risks associated with marketing and
selling power from power plants in the evolving energy market,
(x) uncertainties associated with sources and uses of cash
, that actual sources may be lower and actual uses may be higher
than estimated, (xi) present and possible future claims,
litigation and enforcement actions, (xii) effects of the
application of regulations, including changes in regulations or
the interpretation thereof, or (xiii) other risks as
identified herein. You should also carefully review the risks
described in other reports that we file with the Securities and
Exchange Commission, including without limitation our
Form S-4 filed on July 13, 2004 and amended on
October 19, 2004. We undertake no obligation to update any
forward-looking statements, whether as a result of new
information, future developments or otherwise. The Risk Factors
presented in our Form S-4 filed on July 13, 2004 and
amended on October 19, 2004 are hereby incorporated by
reference.


http://www.sec.gov




COMPANY OVERVIEW




2



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PRINCIPAL AGREEMENTS




Purchase of Gas and Sale of Power




Fixed Price Agreement.


3



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Index Based Agreement.






| |                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) an aggregate net payment for products provided during
    on-peak periods calculated in accordance with the agreement, plus                                                                                           
|
| | (2) an aggregate fixed monthly payment for all other
    products, including off-peak, peaking and power augmentation
    products, generated by each facility, which will equal
    $13,677,843, plus                    
|
| | (3) a total variable operation and maintenance payment for
    the facilities (which will depend on the actual time the
    facilities are operating and delivering energy subject to the
    Index Based Agreement), plus
|
| | (4) the amount paid under the Amoco Contract with respect
    to the Morgan facility, plus                                                                                                                                
|
| | (5) certain adjustments with respect to gas transportation
    and electric transmission charges, minimum generation
    requirements and certain power purchase arrangements, minus                                      
|
| | (6) the cost of gas supplied to support certain other power
    purchase agreements, and steam sale agreements (including, as
    applicable, power and/or steam sold to certain facilities
    industrial hosts)        



Operation of Facilities


Master Operation and Maintenance Agreement.




4



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Master Maintenance Services Agreement.




Project Construction


Master Construction Management Agreement.




General Administrative Matters


Administrative Services Agreement.


THE MARKET FOR ELECTRICITY




5



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Regional Markets


West.


6



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ERCOT.


Southeast.


Other.




|          |  |            |    |  |        |                |            |       |              |  |       |            |  |         |             |         |         |             |       |         |           |  |         |  |  |  |     |  |  |  |       | 
|--------- |  | ---------- | -- |  | ------ | -------------- | ---------- | ----- | ------------ |  | ----- | ---------- |  | ------- | ----------- | ------- | ------- | ----------- | ----- | ------- | --------- |  | ------- |  |  |  | --- |  |  |  | ----- | 
|          |  |            |    |  |        |                |            |       |              |  |       |            |  |         |             | Nominal |        
|          |  |            |    |  |        |                |            |       |              |  |       | Peaking    |  |         | Capacity    |        
|          |  |            |    |  |        | Estimated Peak |            |       | Capacity     |  |       | Capacity   |  |         | Capacity    |         |         | Available   |      
|          |  |            |    |  |        | Capacity (MW)  |            |       | Allocated to |  |       | Sold to    |  |         | Index Price |         |         | Under the   |      
|          |  |            |    |  |        |                |            |       | Third Party  |  |       | CES at     |  |         | CES at      |         |         | Index Based |      
|          |  | Number of  |    |  |        |                |            |       | % of         |  |       | Agreements |  |         | Fixed Price |         |         | Fixed Price |       |         | Agreement | 
|Region    |  | Facilities |    |  | States |                |            | Total |              |  | Total |            |  | (MW)(1) |             |         | (MW)(2) |             |       | (MW)(3) |           |  | (MW)(4) | 
|          |  |            |    |  |        |                |            |       |              |  |       |            |  |         |             |         |         |             |       |         |           |  |         | 
|West(5)   |  |            | 4  |  |        |                | CA, WA     |       |              |  | 2,488 |            |  |         | 26          | %       |         |             | 32    |         |           |  | 500     |  |  |  | 196 |  |  |  | 1,760 | 
|ERCOT     |  |            | 4  |  |        |                | TX         |       |              |  | 2,963 |            |  |         | 30          | %       |         |             | 385   |         |           |  |        |  |  |  | 258 |  |  |  | 2,320 | 
|Southeast |  |            | 4  |  |        |                | AL, LA, SC |       |              |  | 2,876 |            |  |         | 29          | %       |         |             | 119   |         |           |  |        |  |  |  | 442 |  |  |  | 2,315 | 
|Other     |  |            | 2  |  |        |                | OK, IL     |       |              |  | 1,507 |            |  |         | 15          | %       |         |             | 513   | (6)     |           |  |        |  |  |  |    |  |  |  | 994   | 
|          |  |            |    |  |        |                |            |       |              |  |       |            |  |         |             |         |         |             |       |         |           |  |         | 
|Total     |  |            | 14 |  |        |                |            |       |              |  | 9,834 |            |  |         | 100         | %       |         |             | 1,049 |         |           |  | 500     |  |  |  | 896 |  |  |  | 7,389 | 
|          |  |            |    |  |        |                |            |       |              |  |       |            |  |         |             |         |         |             |       |         |           |  |         | 








|    |                                                                                                                                                                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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, is 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                                                                                                                                                  

7



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|    |                                                                                                                                                                                                                            
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | 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 is currently under
    construction. We anticipate that the Pastoria facility will have
    769 MW of peak capacity upon expected completion in two
    phases in May 2005 and June 2005.
|   
|(6) | The full capacity of one of these facilities is committed under
    a third party agreement until at least May 2008.                                                                                                       

8



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DESCRIPTION OF POWER GENERATION FACILITIES






Operating Power Plants


|                             |                                          |       |    |          |      |      |          |         |  |            |          |         |                      |                   |           |            |  |                                        |                   |  | 
|---------------------------- | ---------------------------------------- | ----- | -- | -------- | ---- | ---- | -------- | ------- |  | ---------- | -------- | ------- | -------------------- | ----------------- | --------- | ---------- |  | -------------------------------------- | ----------------- |  | 
|                             |                                          |       |    |          |      | With |          |         |  |            |         
|                             |                                          |       |    | Baseload |      |      | Peaking  |         |  | Total 2004 |          |         |                     
|                             |                                          |       |    | Capacity |      |      | Capacity |         |  | Generation |          |         | Commercial Operation |                  
|Power Plant(2)               |                                          | State |    |          | (MW) |      |          | (MW)    |  |            | (MWh)(1) |         |                      | Commencement Date |          
|                             |                                          |       |    |          |      |      |          |         |  |            |          |         |                      |                   |          
|Freestone Energy Center      |                                          |       | TX |          |      |      | 1,022.0  |         |  |            | 1,022.0  |         |                      |                   | 4,569,089 |            |  |                                        | June 2002         | 
|Oneta Energy Center          |                                          |       | OK |          |      |      | 994.0    |         |  |            | 994.0    |         |                      |                   | 827,661   |            |  |                                        | Phase I July 2002 | 
|Delta Energy Center          |                                          |       | CA |          |      |      | 799.0    |         |  |            | 882.0    |         |                      |                   | 5,765,080 |            |  |                                        | June 2002         | 
|Morgan Energy Center         |                                          |       | AL |          |      |      | 722.0    |         |  |            | 852.0    |         |                      |                   | 848,933   |            |  | Phase I January 2004Phase II June 2003
|Decatur Energy Center        |                                          |       | AL |          |      |      | 793.0    |         |  |            | 852.0    |         |                      |                   | 311,531   |            |  | Phase I June 2002Phase II June 2003   
|Baytown Energy Center        |                                          |       | TX |          |      |      | 742.0    |         |  |            | 830.0    |         |                      |                   | 4,632,478 |            |  |                                        | June 2002         | 
|Pastoria Energy Center(3)    |                                          |       | CA |          |      |      | 759.0    |         |  |            | 769.0    |         |                      |                   |          |            |  | Phase I May 2005Phase II June 2005    
|Columbia Energy Center       |                                          |       | SC |          |      |      | 464.0    |         |  |            | 641.0    |         |                      |                   | 542,376   |            |  |                                        | March 2004        | 
|Channel Energy Center        |                                          |       | TX |          |      |      | 527.0    |         |  |            | 574.0    |         |                      |                   | 3,467,759 |            |  | Phase I August 2001Phase II April 2002
|Los Medanos Energy Center    |                                          |       | CA |          |      |      | 497.0    |         |  |            | 566.0    |         |                      |                   | 3,693,759 |            |  |                                        | August 2001       | 
|Corpus Christi Energy Center |                                          |       | TX |          |      |      | 414.0    |         |  |            | 537.0    |         |                      |                   | 2,297,928 |            |  |                                        | October 2002      | 
|Carville Energy Center       |                                          |       | LA |          |      |      | 455.0    |         |  |            | 531.0    |         |                      |                   | 1,755,790 |            |  |                                        | June 2003         | 
|Zion Energy Center           |                                          |       | IL |          |      |      |         |         |  |            | 513.0    |         |                      |                   | 29,978    |            |  | Phase I June 2002Phase II June 2003   
|Goldendale Energy Center     |                                          |       | WA |          |      |      | 237.0    |         |  |            | 271.0    |         |                      |                   | 210,601   |            |  |                                        | September 2004    | 
|                             |                                          |       |    |          |      |      |          |         |  |            |          |         |                      |                   |          
|                             | Total Gas-Fired Power Plants (14 plants) |       |    |          |      |      |          | 8,425.0 |  |            |          | 9,834.0 |                      |                   |           | 28,952,963 |  |                                        |                   |  | 
|                             |                                          |       |    |          |      |      |          |         |  |            |          |         |                      |                   |          






|    |                                                                                                                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Generation MWh is shown here as 100% of each plants gross
    generation in megawatt hours (MWh), which exceeds
    the net amounts sold due to the captive load requirements of the
    power plants.

10



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|    |                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------
|(2) | All plants except Zion Energy Center are combined cycle
    technology. Zion Energy Center uses a simple cycle technology.
|   
|(3) | Plant is under construction. Dates are the anticipated
    commercial operation commencement dates for each phase.        

The West (Delta, Goldendale, Los Medanos and Pastoria)




Delta Facility.








Goldendale Facility.






Los Medanos Facility.


11



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Pastoria Facility.








ERCOT (Baytown, Channel, Corpus Christi and Freestone)




Baytown Facility.






12



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Channel Facility.








Corpus Christi Facility.








Freestone Facility.


13



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The Southeast (Carville, Columbia, Decatur, Morgan)




Carville Facility.






Columbia Facility.








Decatur Facility.






14



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Morgan Facility.








Other (Oneta and Zion)




Oneta Facility.




15



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Zion Facility.






STRATEGY








| |   |                                                                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Continuing to operate our facilities with a focus on reliability
    and low operating costs                                                                                                
|
| |  | Continuing to achieve economic efficiencies by applying a
    system-approach to managing our facilities where possible                                                                     
|
| |  | Continuing to mitigate certain risks related to fuel
    procurement, operations and maintenance services, availability
    and commodity price volatility through our relationship with CES
|
| |  | Pursuing opportunities to increase the percentage of our revenue
    from longer-term power contracts                                                                                       



GOVERNMENT REGULATION




16



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Federal Energy Regulation




| |                                       
| | --------------------------------------
| | Public Utility Regulatory Policies Act









17



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| |                                          
| | -----------------------------------------
| | Public Utility Holding Company Regulation







| |                                              
| | ---------------------------------------------
| | Federal Natural Gas Transportation Regulation







| |                             
| | ----------------------------
| | Federal Power Act Regulation



18



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##### Table of Contents











| |                                                         
| | --------------------------------------------------------
| | Federal Open Access Electric Transmission
    Regulation

In 1996, FERC issued Order Nos.




19



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##### Table of Contents



Western Energy Markets








State Regulation






20



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##### Table of Contents





Environmental Regulations








| |              
| | -------------
| | Clean Air Act





| |                
| | ---------------
| | Clean Water Act





| |                        
| | -----------------------
| | Safe Drinking Water Act





| |                                       
| | --------------------------------------
| | Resource Conservation and Recovery Act





| |                                                                          
| | -------------------------------------------------------------------------
| | Comprehensive Environmental Response, Compensation, and
    Liability Act



21



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##### Table of Contents





EMPLOYEES




SUMMARY OF KEY EVENTS


Finance




|               |  |                                                      |  |                               
|-------------- |  | ---------------------------------------------------- |  | ------------------------------
|Amount         |  | Description                                          |  | Interest Rate                 
|               |  |                                                      |  |                               
|$235.0 million |  | First Priority Secured Floating Rate Notes Due 2009  |  | LIBOR plus 375 basis points   
|$640.0 million |  | Second Priority Secured Floating Rate Notes Due 2010 |  | LIBOR plus 575 basis points   
|$680.0 million |  | Third Priority Secured Floating Rate Notes Due 2011  |  | LIBOR plus 900 basis points   
|$150.0 million |  | Third Priority Secured Notes Due 2011                |  | 11.50%                        
|$600.0 million |  | First Priority Secured Term Loans due 2009           |  | LIBOR plus 375 basis points(1)
|$100.0 million |  | Second Priority Secured Term Loans due 2010          |  | LIBOR plus 575 basis points(2)






|    |                                                     
|--- | ----------------------------------------------------
|(1) | We may also elect a Base Rate plus 275 basis points.
|   
|(2) | We may also elect a Base Rate plus 475 basis points.



22



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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Date    |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|5/17/04 |  | Moodys assigns a BB rating on $640 million Second
    Priority Secured Floating Rate Notes, B rating on
    $235 million First Priority Secured Floating Rate Notes,
    BBB rating on $680 million Third Priority Secured Floating
    Rate Notes, BBB rating on $150 million 11.5% Third Priority
    Secured Notes, B rating on $600 million First Priority Term
    Loan, B rating on $200 million First Priority Credit
    Facility, and a BB rating on $100 million Second Priority
    Term Loan.
|       
|3/22/04 |  | Standard & Poors 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,
    and CCC+ on $680 million Third Priority Secured Floating
    Rate Notes.                                                                 






|        |           
|------- | ----------
|Item 2. | Properties










|        |                  
|------- | -----------------
|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, |        
|                                                                  |  |                          |        
|                                                                  |  | 2004                     |         |   | 2003 |   |         | 2002 |  |   | 2001   |   |  | 2000 (1) |     
|                                                                  |  |                          |         |   |      |   |         |      |  |   |        |   |  |          |     
|                                                                  |  | (In millions)            |        
|Consolidated Statement of Operations data:                        |  |                          |         |   |      |   |         |      |  |   |        |   |  |          |      |   |  |   |      |  
|Total revenue                                                     |  | $                        | 1,708.3 |   |      | $ | 1,159.4 |      |  | $ | 544.0  |   |  | $        | 41.7 |   |  | $ |     |  
|Loss before cumulative effect of a change in accounting principle |  |                          | (58.1   | ) |      |   | (192.5  | )    |  |   | (150.1 | ) |  |          | (7.4 | ) |  |   | (3.0 | )
|Cumulative effect of a change in accounting principle             |  |                          |        |   |      |   | (0.2    | )    |  |   |       |   |  |          |     |   |  |   |     |  
|Net loss                                                          |  |                          | (58.1   | ) |      |   | (192.7  | )    |  |   | (150.1 | ) |  |          | (7.4 | ) |  |   | (3.0 | )

23



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##### Table of Contents



|                                 |  |                    |         |  |      |   |         |      |  |   |         |  |  |      |         |  |  |   |         | 
|-------------------------------- |  | ------------------ | ------- |  | ---- | - | ------- | ---- |  | - | ------- |  |  | ---- | ------- |  |  | - | ------- | 
|                                 |  | As of December 31, |        
|                                 |  |                    |        
|                                 |  | 2004               |         |  | 2003 |   |         | 2002 |  |   | 2001    |  |  | 2000 |        
|                                 |  |                    |         |  |      |   |         |      |  |   |         |  |  |      |        
|Consolidated Balance Sheet data: |  |                    |         |  |      |   |         |      |  |   |         |  |  |      |         |  |  |   |         | 
|Total assets                     |  | $                  | 6,638.7 |  |      | $ | 6,658.4 |      |  | $ | 6,339.4 |  |  | $    | 5,406.7 |  |  | $ | 1,514.1 | 
|Short-term debt                  |  |                    | 0.2     |  |      |   | 2,200.5 |      |  |   | 0.1     |  |  |      |        |  |  |   |        | 
|Long-term debt                   |  |                    | 2,397.4 |  |      |   | 4,617.6 |      |  |   | 6,226.8 |  |  |      | 4,962.3 |  |  |   | 1,283.2 | 






|    |                                                                      
|--- | ---------------------------------------------------------------------
|(1) | Period from inception (August 31, 2000 through
    December 31, 2000)

Selected Operating Information


|              |                                         |                                                           |   |         |         |  |   |        |         |  |      |        |       |      |   |       |       |  |   |   |   | 
|------------- | --------------------------------------- | --------------------------------------------------------- | - | ------- | ------- |  | - | ------ | ------- |  | ---- | ------ | ----- | ---- | - | ----- | ----- |  | - | - | - | 
|              |                                         | Years Ended December 31,                                 
|              |                                         |                                                          
|              |                                         | 2004                                                      |   |         | 2003    |  |   | 2002   |         |  | 2001 |        |       | 2000
|              |                                         |                                                           |   |         |         |  |   |        |         |  |      |        |       |     
|              |                                         | (Dollars in millions, except production and pricing data)
|Power Plants: |                                         |                                                           |   |         |         |  |   |        |         |  |      |        |       |      |   |       |       |  |   |  
|              | Electricity and steam (E&S) revenues: |                                                           |   |         |         |  |   |        |         |  |      |        |       |      |   |       |       |  |   |   |  
|              | Related party                           |                                                           | $ | 1,258.1 |         |  | $ | 779.2  |         |  | $    | 388.6  |       |      | $ | 18.3  |       |  | $ |  |  
|              | Other                                   |                                                           |   | 452.8   |         |  |   | 369.2  |         |  |      | 152.1  |       |      |   | 22.0  |       |  |   |  |  
|              |                                         |                                                           |   |         |         |  |   |        |         |  |      |        |       |      |  
|              |                                         | Subtotal                                                  |   |         | 1,710.9 |  |   |        | 1,148.4 |  |      |        | 540.7 |      |   |       | 40.3  |  |   |   |   | 
|              | Spread on sales of purchased power      |                                                           |   | (0.1    | )       |  |   | (4.7   | )       |  |      |       |       |      |   |      |       |  |   |  |  
|              |                                         |                                                           |   |         |         |  |   |        |         |  |      |        |       |      |  
|              |                                         | Adjusted electricity and steam revenues                   |   |         | 1,710.8 |  |   |        | 1,143.7 |  |      |        | 540.7 |      |   |       | 40.3  |  |   |   |  | 
|              | Megawatt hours produced                 |                                                           |   | 28,241  |         |  |   | 26,048 |         |  |      | 16,496 |       |      |   | 1,574 |       |  |   |  |  
|              |                                         | All-in electricity price per megawatt hour generated      |   | $       | 60.58   |  |   | $      | 43.91   |  |      | $      | 32.78 |      |   | $     | 25.60 |  |   | $ |  | 






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

Executive Overview






24



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##### Table of Contents







Results of Operations






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the sale of approximately 1,049 MW of electrical capacity
    and energy as well as steam to third parties under several
    long-term agreements and the sale of RMR services to the
    California Independent System Operator Corporation
    (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;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|
| |  | the sale of off-peak, peaking and power augmentation products to
    CES at a fixed price through December 31, 2013;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | the sale of the remaining on-peak portion of our output (net of
    sales to third 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 Morgan
    Stanley Capital Group, Inc. (Morgan Stanley Capital
    Group). The Index Hedge provides for semi-annual payments
    to CalGen by Morgan Stanley Capital Group 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.







25



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Year Ended December 31, 2004 compared to Year Ended
December 31, 2003






| |        
| | -------
| | Revenue

|                                              |               |      |         |         |      |   |       |          |  |   |          |       |  |  |        |      |  
|--------------------------------------------- | ------------- | ---- | ------- | ------- | ---- | - | ----- | -------- |  | - | -------- | ----- |  |  | ------ | ---- | -
|                                              |               | 2004 |         |         | 2003 |   |       | $ Change |  |   | % Change |      
|                                              |               |      |         |         |      |   |       |          |  |   |          |      
|Electricity and steam revenue  related party |               | $    | 1,258.1 |         |      | $ | 779.2 |          |  | $ | 478.9    |       |  |  | 61.5   | %   
|Electricity and steam revenue  third-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 | %
|                                              |               |      |         |         |      |   |       |          |  |   |          |      



|                                                 |                              |      |      |      |      |   |          |   |  |          |      |      |   |  |        |        |   
|------------------------------------------------ | ---------------------------- | ---- | ---- | ---- | ---- | - | -------- | - |  | -------- | ---- | ---- | - |  | ------ | ------ | --
|                                                 |                              | 2004 |      |      | 2003 |   | $ Change |   |  | % Change |     
|                                                 |                              |      |      |      |      |   |          |   |  |          |     
|Realized (loss) on derivative instruments, net   |                              | $    | (5.6 | )    |      | $ |         |   |  | $        | (5.6 | )    |   |  | (100.0 | )%    
|Unrealized (loss) on derivative instruments, net |                              |      | (3.5 | )    |      |   |         |   |  |          | (3.5 | )    |   |  | (100.0 | )%    
|                                                 |                              |      |      |      |      |   |          |   |  |          |      |     
|                                                 | Mark-to-market activity, net |      | $    | (9.1 | )    |   | $        |  |  |          | $    | (9.1 | ) |  |        | (100.0 | )%
|                                                 |                              |      |      |      |      |   |          |   |  |          |      |     



26



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| |                
| | ---------------
| | Cost of Revenue

|                        |  |      |       |  |      |   |       |          |  |   |          |   |  |  |       |   
|----------------------- |  | ---- | ----- |  | ---- | - | ----- | -------- |  | - | -------- | - |  |  | ----- | --
|                        |  | 2004 |       |  | 2003 |   |       | $ Change |  |   | % Change |  
|                        |  |      |       |  |      |   |       |          |  |   |          |  
|Plant operating expense |  | $    | 178.6 |  |      | $ | 131.6 |          |  | $ | (47.0    | ) |  |  | (35.7 | )%



|                        |  |      |     |  |      |   |      |          |  |   |          |  |  |   |      |  
|----------------------- |  | ---- | --- |  | ---- | - | ---- | -------- |  | - | -------- |  |  | - | ---- | -
|                        |  | 2004 |     |  | 2003 |   |      | $ Change |  |   | % Change | 
|                        |  |      |     |  |      |   |      |          |  |   |          | 
|Purchased power expense |  | $    | 3.3 |  |      | $ | 12.4 |          |  | $ | 9.1      |  |  | $ | 73.4 | %



|             |  |      |         |  |      |   |       |          |  |   |          |   |  |  |       |   
|------------ |  | ---- | ------- |  | ---- | - | ----- | -------- |  | - | -------- | - |  |  | ----- | --
|             |  | 2004 |         |  | 2003 |   |       | $ Change |  |   | % Change |  
|             |  |      |         |  |      |   |       |          |  |   |          |  
|Fuel expense |  | $    | 1,186.2 |  |      | $ | 770.2 |          |  | $ | (416.0   | ) |  |  | (54.0 | )%



|                                      |  |      |       |  |      |   |       |          |  |   |          |   |  |  |       |   
|------------------------------------- |  | ---- | ----- |  | ---- | - | ----- | -------- |  | - | -------- | - |  |  | ----- | --
|                                      |  | 2004 |       |  | 2003 |   |       | $ Change |  |   | % Change |  
|                                      |  |      |       |  |      |   |       |          |  |   |          |  
|Depreciation and amortization expense |  | $    | 151.7 |  |      | $ | 121.0 |          |  | $ | (30.7    | ) |  |  | (25.4 | )%





| |                         
| | ------------------------
| | Other (Income)/ Expenses

|                                          |  |      |      |  |      |   |     |          |  |   |          |   |  |  |        |   
|----------------------------------------- |  | ---- | ---- |  | ---- | - | --- | -------- |  | - | -------- | - |  |  | ------ | --
|                                          |  | 2004 |      |  | 2003 |   |     | $ Change |  |   | % Change |  
|                                          |  |      |      |  |      |   |     |          |  |   |          |  
|Sales, general and administrative expense |  | $    | 11.5 |  |      | $ | 5.6 |          |  | $ | (5.9     | ) |  |  | (105.4 | )%



|                        |  |      |     |  |      |   |     |          |  |   |          |   |  |  |          |   
|----------------------- |  | ---- | --- |  | ---- | - | --- | -------- |  | - | -------- | - |  |  | -------- | --
|                        |  | 2004 |     |  | 2003 |   |     | $ Change |  |   | % Change |  
|                        |  |      |     |  |      |   |     |          |  |   |          |  
|Other operating expense |  | $    | 3.8 |  |      | $ | 0.2 |          |  | $ | (3.6     | ) |  |  | (1,800.0 | )%



|                                |  |      |       |  |      |   |       |          |  |   |          |   |  |  |        |   
|------------------------------- |  | ---- | ----- |  | ---- | - | ----- | -------- |  | - | -------- | - |  |  | ------ | --
|                                |  | 2004 |       |  | 2003 |   |       | $ Change |  |   | % Change |  
|                                |  |      |       |  |      |   |       |          |  |   |          |  
|Interest expense, related party |  | $    | 72.2  |  |      | $ | 255.7 |          |  | $ | 183.5    |   |  |  | 71.8   | % 
|Interest expense, third-party   |  |      | 160.8 |  |      |   | 57.0  |          |  |   | (103.8   | ) |  |  | (182.1 | )%
|                                |  |      |       |  |      |   |       |          |  |   |          |  
|Total interest expense          |  | $    | 233.0 |  |      | $ | 312.7 |          |  | $ | 79.7     |   |  |  | 25.5   | % 
|                                |  |      |       |  |      |   |       |          |  |   |          |  

27



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|                |  |      |     |  |      |   |     |          |  |   |          |  |  |  |      |  
|--------------- |  | ---- | --- |  | ---- | - | --- | -------- |  | - | -------- |  |  |  | ---- | -
|                |  | 2004 |     |  | 2003 |   |     | $ Change |  |   | % Change | 
|                |  |      |     |  |      |   |     |          |  |   |          | 
|Interest income |  | $    | 2.5 |  |      | $ | 2.1 |          |  | $ | 0.4      |  |  |  | 19.0 | %



|                   |  |      |     |  |      |   |     |          |  |   |          |   |  |  |        |   
|------------------ |  | ---- | --- |  | ---- | - | --- | -------- |  | - | -------- | - |  |  | ------ | --
|                   |  | 2004 |     |  | 2003 |   |     | $ Change |  |   | % Change |  
|                   |  |      |     |  |      |   |     |          |  |   |          |  
|Other expense, net |  | $    | 0.9 |  |      | $ | 0.2 |          |  | $ | (0.7     | ) |  |  | (350.0 | )%



Year Ended December 31, 2003 compared to Year Ended
December 31, 2002




| |        
| | -------
| | Revenue

|                                              |                                                 |      |       |         |      |   |       |          |  |   |          |       |  |  |       |       |  
|--------------------------------------------- | ----------------------------------------------- | ---- | ----- | ------- | ---- | - | ----- | -------- |  | - | -------- | ----- |  |  | ----- | ----- | -
|                                              |                                                 | 2003 |       |         | 2002 |   |       | $ Change |  |   | % Change |      
|                                              |                                                 |      |       |         |      |   |       |          |  |   |          |      
|Electricity and steam revenue  related party |                                                 | $    | 779.2 |         |      | $ | 388.6 |          |  | $ | 390.6    |       |  |  | 100.5 | %    
|Electricity and steam revenue  third-party   |                                                 |      | 369.2 |         |      |   | 152.1 |          |  |   | 217.1    |       |  |  | 142.7 | %    
|Sale of purchased power                       |                                                 |      | 7.7   |         |      |   |      |          |  |   | 7.7      |       |  |  | 100.0 | %    
|Other revenue                                 |                                                 |      | 3.3   |         |      |   | 3.3   |          |  |   |         |       |  |  |      |      
|                                              |                                                 |      |       |         |      |   |       |          |  |   |          |      
|                                              | Total electric generation and marketing revenue |      | $     | 1,159.4 |      |   | $     | 544.0    |  |   | $        | 615.4 |  |  |       | 113.1 | %
|                                              |                                                 |      |       |         |      |   |       |          |  |   |          |      



28



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##### Table of Contents





| |                
| | ---------------
| | Cost of Revenue

|                        |  |      |       |  |      |   |      |          |  |   |          |   |  |  |       |   
|----------------------- |  | ---- | ----- |  | ---- | - | ---- | -------- |  | - | -------- | - |  |  | ----- | --
|                        |  | 2003 |       |  | 2002 |   |      | $ Change |  |   | % Change |  
|                        |  |      |       |  |      |   |      |          |  |   |          |  
|Plant operating expense |  | $    | 131.6 |  |      | $ | 80.8 |          |  | $ | (50.8    | ) |  |  | (62.9 | )%



|                        |  |      |      |  |      |   |          |  |  |          |         |  |  |  |        |   
|----------------------- |  | ---- | ---- |  | ---- | - | -------- |  |  | -------- | ------- |  |  |  | ------ | --
|                        |  | 2003 |      |  | 2002 |   | $ Change |  |  | % Change |        
|                        |  |      |      |  |      |   |          |  |  |          |        
|Purchased power expense |  | $    | 12.4 |  |      | $ |         |  |  |          | $(12.4) |  |  |  | (100.0 | )%



|             |  |      |       |  |      |   |       |          |  |  |          |  |  |  |        |   
|------------ |  | ---- | ----- |  | ---- | - | ----- | -------- |  |  | -------- |  |  |  | ------ | --
|             |  | 2003 |       |  | 2002 |   |       | $ Change |  |  | % Change | 
|             |  |      |       |  |      |   |       |          |  |  |          | 
|Fuel expense |  | $    | 770.2 |  |      | $ | 288.9 |          |  |  | $(481.3) |  |  |  | (166.6 | )%



|                                      |  |      |       |  |      |   |      |          |  |   |          |   |  |  |        |   
|------------------------------------- |  | ---- | ----- |  | ---- | - | ---- | -------- |  | - | -------- | - |  |  | ------ | --
|                                      |  | 2003 |       |  | 2002 |   |      | $ Change |  |   | % Change |  
|                                      |  |      |       |  |      |   |      |          |  |   |          |  
|Depreciation and amortization expense |  | $    | 121.0 |  |      | $ | 59.9 |          |  | $ | (61.1    | ) |  |  | (102.0 | )%





| |                         
| | ------------------------
| | Other (Income)/ Expenses

|                                           |  |      |   |      |  |   |          |  |  |          |       |  |  |  |       |  
|------------------------------------------ |  | ---- | - | ---- |  | - | -------- |  |  | -------- | ----- |  |  |  | ----- | -
|                                           |  | 2003 |   | 2002 |  |   | $ Change |  |  | % Change |      
|                                           |  |      |   |      |  |   |          |  |  |          |      
|Equipment cancellation and impairment cost |  | $    |  |      |  | $ | 115.1    |  |  | $        | 115.1 |  |  |  | 100.0 | %



|                                          |  |      |     |  |      |   |     |          |  |   |          |   |  |  |       |   
|----------------------------------------- |  | ---- | --- |  | ---- | - | --- | -------- |  | - | -------- | - |  |  | ----- | --
|                                          |  | 2003 |     |  | 2002 |   |     | $ Change |  |   | % Change |  
|                                          |  |      |     |  |      |   |     |          |  |   |          |  
|Sales, general and administrative expense |  | $    | 5.6 |  |      | $ | 3.3 |          |  | $ | (2.3     | ) |  |  | (69.7 | )%



|                                |  |      |       |  |      |   |        |          |  |   |          |   |  |  |        |   
|------------------------------- |  | ---- | ----- |  | ---- | - | ------ | -------- |  | - | -------- | - |  |  | ------ | --
|                                |  | 2003 |       |  | 2002 |   |        | $ Change |  |   | % Change |  
|                                |  |      |       |  |      |   |        |          |  |   |          |  
|Interest expense, related party |  | $    | 255.7 |  |      |   | 113.36 |          |  |   | (144.4   | ) |  |  | (56.5  | )%
|Interest expense, third party   |  | $    | 57.0  |  |      |   | 33.5   |          |  |   | (23.7    | ) |  |  | (71.2  | )%
|Interest expense                |  | $    | 312.7 |  |      | $ | 144.6  |          |  | $ | (168.1   | ) |  |  | (116.3 | )%
|                                |  |      |       |  |      |   |        |          |  |   |          |  

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|                  |  |      |      |   |      |   |      |          |  |   |          |  |  |  |       |  
|----------------- |  | ---- | ---- | - | ---- | - | ---- | -------- |  | - | -------- |  |  |  | ----- | -
|                  |  | 2003 |      |   | 2002 |   |      | $ Change |  |   | % Change | 
|                  |  |      |      |   |      |   |      |          |  |   |          | 
|Interest (income) |  | $    | (2.1 | ) |      | $ | (0.5 | )        |  | $ | 1.6      |  |  |  | 320.0 | %



|                   |  |      |     |  |      |   |     |          |  |   |          |  |  |  |      |  
|------------------ |  | ---- | --- |  | ---- | - | --- | -------- |  | - | -------- |  |  |  | ---- | -
|                   |  | 2003 |     |  | 2002 |   |     | $ Change |  |   | % Change | 
|                   |  |      |     |  |      |   |     |          |  |   |          | 
|Other expense, net |  | $    | 0.2 |  |      | $ | 1.5 |          |  | $ | 1.3      |  |  |  | 86.7 | %



Liquidity and Capital Resources














30



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##### Table of Contents









Cash Flow Activities


|                                    |                                                      |                          |      |        |      |   |      |        |   |   |      |          |  
|----------------------------------- | ---------------------------------------------------- | ------------------------ | ---- | ------ | ---- | - | ---- | ------ | - | - | ---- | -------- | -
|                                    |                                                      | Years Ended December 31, |     
|                                    |                                                      |                          |     
|                                    |                                                      | 2004                     |      |        | 2003 |   |      | 2002   |  
|                                    |                                                      |                          |      |        |      |   |      |        |  
|                                    |                                                      | (In thousands)           |     
|Beginning cash and cash equivalents |                                                      | $                        | 39.6 |        |      | $ | 25.6 |        |   | $ | 30.3 |         
|Net cash provided by:               |                                                      |                          |      |        |      |   |      |        |   |   |      |         
|                                    | Operating activities                                 |                          |      | 278.6  |      |   |      | 161.6  |   |   |      | 133.4    |  
|                                    | Investing activities                                 |                          |      | (195.6 | )    |   |      | (584.1 | ) |   |      | (1,570.9 | )
|                                    | Financing activities                                 |                          |      | (58.1  | )    |   |      | 436.5  |   |   |      | 1,432.8  |  
|                                    |                                                      |                          |      |        |      |   |      |        |  
|                                    | Net increase (decrease) in cash and cash equivalents |                          |      | 24.9   |      |   |      | 14.0   |   |   |      | (4.7     | )
|                                    |                                                      |                          |      |        |      |   |      |        |  
|Ending cash and cash equivalents    |                                                      | $                        | 64.5 |        |      | $ | 39.6 |        |   | $ | 25.6 |         
|                                    |                                                      |                          |      |        |      |   |      |        |  







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Letter of Credit Facilities


Working Capital


Capital Expenditures and Sources


Distributions to Sole Member


Capital Availability


Performance Indicators


Off-Balance Sheet Commitments


Compliance with Covenants


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Contractual Obligations


|                                                     |                               |      |         |        |      |   |         |        |  |   |         |        |  |      |         |        |            |   |         |         |  |   |         |           |   |   |           |           |  
|---------------------------------------------------- | ----------------------------- | ---- | ------- | ------ | ---- | - | ------- | ------ |  | - | ------- | ------ |  | ---- | ------- | ------ | ---------- | - | ------- | ------- |  | - | ------- | --------- | - | - | --------- | --------- | -
|                                                     |                               | 2005 |         |        | 2006 |   |         | 2007   |  |   | 2008    |        |  | 2009 |         |        | Thereafter |   |         | Total   | 
|                                                     |                               |      |         |        |      |   |         |        |  |   |         |        |  |      |         |        |            |   |         |         | 
|Debt:                                                |                               |      |         |        |      |   |         |        |  |   |         |        |  |      |         |        |            |   |         |         |  |   |         |           |   |   |           |          
|First Priority Secured Floating Rate Notes Due 2009  |                               | $    |        |        |      | $ |        |        |  | $ | 1,175   |        |  | $    | 2,350   |        |            | $ | 231,475 |         |  | $ |        |           |   | $ | 235,000   |          
|Third Priority Secured Floating Rate Notes Due 2011  |                               |      |        |        |      |   |        |        |  |   |        |        |  |      |        |        |            |   |        |         |  |   | 680,000 |           |   |   | 680,000   |          
|First Priority Secured Term Loans Due 2009           |                               |      |        |        |      |   |        |        |  |   | 3,000   |        |  |      | 6,000   |        |            |   | 591,000 |         |  |   |        |           |   |   | 600,000   |          
|Second Priority Secured Floating Rate Notes Due 2010 |                               |      |        |        |      |   |        |        |  |   |        |        |  |      | 3,200   |        |            |   | 6,400   |         |  |   | 630,400 |           |   |   | 640,000   |          
|                                                     | Discount, net                 |      |         |       |      |   |         |       |  |   |         |       |  |      |         |       |            |   |         |        |  |   |         | (8,361    | ) |   |           | (8,361    | )
|Second Priority Secured Term Loans Due 2010          |                               |      |        |        |      |   |        |        |  |   |        |        |  |      | 500     |        |            |   | 1,000   |         |  |   | 98,500  |           |   |   | 100,000   |          
|                                                     | Discount, net                 |      |         |       |      |   |         |       |  |   |         |       |  |      |         |       |            |   |         |        |  |   |         | (1,306    | ) |   |           | (1,306    | )
|Third Priority Secured Notes Due 2011                |                               |      |        |        |      |   |        |        |  |   |        |        |  |      |        |        |            |   |        |         |  |   | 150,000 |           |   |   | 150,000   |          
|Revolving Credit Facility                            |                               |      |        |        |      |   |        |        |  |   |        |        |  |      |        |        |            |   |        |         |  |   |        |           |   |   |          |          
|Notes payable                                        |                               |      | 168     |        |      |   | 175     |        |  |   | 182     |        |  |      | 190     |        |            |   | 197     |         |  |   | 1,365   |           |   |   | 2,277     |          
|                                                     |                               |      |         |        |      |   |         |        |  |   |         |        |  |      |         |        |            |   |         |         | 
|                                                     | Total debt and notes payable  |      | $       | 168    |      |   | $       | 175    |  |   | $       | 4,357  |  |      | $       | 12,240 |            |   | $       | 830,072 |  |   | $       | 1,550,598 |   |   | $         | 2,397,610 |  
|                                                     |                               |      |         |        |      |   |         |        |  |   |         |        |  |      |         |        |            |   |         |         | 
|Interest payments                                    |                               | $    | 210,985 |        |      | $ | 210,956 |        |  | $ | 205,920 |        |  | $    | 204,175 |        |            | $ | 176,312 |         |  | $ | 164,354 |           |   | $ | 1,172,704 |          
|                                                     |                               |      |         |        |      |   |         |        |  |   |         |        |  |      |         |        |            |   |         |         | 
|Purchase obligations:                                |                               |      |         |        |      |   |         |        |  |   |         |        |  |      |         |        |            |   |         |         |  |   |         |           |   |   |           |          
|Long-term service agreements(1)                      |                               | $    | 36,765  |        |      | $ | 44,025  |        |  | $ | 52,946  |        |  | $    | 45,135  |        |            | $ | 45,937  |         |  | $ | 460,679 |           |   | $ | 685,487   |          
|Fuel                                                 |                               |      | 16,066  |        |      |   | 16,066  |        |  |   | 16,066  |        |  |      | 16,387  |        |            |   | 16,540  |         |  |   | 224,989 |           |   |   | 306,114   |          
|Water                                                |                               |      | 2,992   |        |      |   | 3,651   |        |  |   | 3,799   |        |  |      | 3,947   |        |            |   | 4,107   |         |  |   | 142,069 |           |   |   | 160,565   |          
|Operating & Maintenance                              |                               |      | 1,382   |        |      |   | 952     |        |  |   | 882     |        |  |      | 831     |        |            |   | 831     |         |  |   | 10,537  |           |   |   | 15,415    |          
|Land leases                                          |                               |      | 1,974   |        |      |   | 2,104   |        |  |   | 2,236   |        |  |      | 2,726   |        |            |   | 3,172   |         |  |   | 90,511  |           |   |   | 102,723   |          
|Other purchase obligations                           |                               |      | 960     |        |      |   | 960     |        |  |   | 960     |        |  |      | 846     |        |            |   | 888     |         |  |   | 2,941   |           |   |   | 7,555     |          
|                                                     |                               |      |         |        |      |   |         |        |  |   |         |        |  |      |         |        |            |   |         |         | 
|                                                     | Total purchase obligations(2) |      | $       | 60,139 |      |   | $       | 67,758 |  |   | $       | 76,889 |  |      | $       | 69,872 |            |   | $       | 71,475  |  |   | $       | 931,726   |   |   | $         | 1,277,859 |  
|                                                     |                               |      |         |        |      |   |         |        |  |   |         |        |  |      |         |        |            |   |         |         | 






|    |                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | We expect to terminate certain of our long-term service
    agreements for major maintenance, or assign them to COSCI, over
    the next 12-24 months. Any termination payments will be the
    responsibility of Calpine.          
|   
|(2) | Included in the total are future minimum payments for operating
    leases, long-term service agreements, and water and O&M
    agreements (See Note 11 of the Notes to Consolidated
    Financial Statements for more information).



33



---



##### Table of Contents



Performance Metrics




Total deliveries of power.


Average availability and average baseload capacity
factor.


Average heat rate for gas-fired fleet of power plants
expressed in Btus of fuel consumed per KWh generated.


Average all-in realized electric price expressed in dollars
per MWh generated.


Average cost of natural gas expressed in dollars per millions
of Btus of fuel consumed.


Average spark spread expressed in dollars per MWh
generated.


Average plant operating expense per normalized MWh.


34



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|                                                                                  |                                                                                   |                                                                       |      |           |           |  |      |           |         |  |      |         |         | 
|--------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | --------------------------------------------------------------------- | ---- | --------- | --------- |  | ---- | --------- | ------- |  | ---- | ------- | ------- | 
|                                                                                  |                                                                                   | Years Ended December 31,                                              |     
|                                                                                  |                                                                                   |                                                                       |     
|                                                                                  |                                                                                   | 2004                                                                  |      |           | 2003      |  |      | 2002      |        
|                                                                                  |                                                                                   |                                                                       |      |           |           |  |      |           |        
|                                                                                  |                                                                                   | (In thousands)                                                        |     
|Operating Performance Metrics:                                                    |                                                                                   |                                                                       |      |           |           |  |      |           |         |  |      |        
|Total deliveries of power:                                                        |                                                                                   |                                                                       |      |           |           |  |      |           |         |  |      |        
|                                                                                  | MWh generated and delivered                                                       |                                                                       |      | 28,241    |           |  |      | 26,048    |         |  |      | 16,496  |        
|Average availability                                                              |                                                                                   |                                                                       | 93.7 | %         |           |  | 93.1 | %         |         |  | 92.2 | %      
|Average baseload capacity factor:                                                 |                                                                                   |                                                                       |      |           |           |  |      |           |         |  |      |        
|                                                                                  | Average total MW in operation                                                     |                                                                       |      | 8,597     |           |  |      | 6,841     |         |  |      | 3,203   |        
|                                                                                  |                                                                                   | Less: Average MW of pure peakers                                      |      |           | 513       |  |      |           | 382     |  |      |         | 152     | 
|                                                                                  |                                                                                   |                                                                       |      |           |           |  |      |           |        
|                                                                                  | Average baseload MW in operation                                                  |                                                                       |      | 8,084     |           |  |      | 6,459     |         |  |      | 3,051   |        
|                                                                                  | Hours in the period                                                               |                                                                       |      | 8,784     |           |  |      | 8,760     |         |  |      | 8,760   |        
|                                                                                  | Potential baseload generation (MWh)                                               |                                                                       |      | 71,010    |           |  |      | 56,581    |         |  |      | 26,727  |        
|                                                                                  | Actual total generation (MWh)                                                     |                                                                       |      | 28,241    |           |  |      | 26,048    |         |  |      | 16,496  |        
|                                                                                  |                                                                                   | Less: Actual pure peakers generation (MWh)                           |      |           | 30        |  |      |           | 89      |  |      |         | 140     | 
|                                                                                  |                                                                                   |                                                                       |      |           |           |  |      |           |        
|                                                                                  | Actual baseload generation (MWh)                                                  |                                                                       |      | 28,211    |           |  |      | 25,959    |         |  |      | 16,356  |        
|                                                                                  | Average baseload capacity factor                                                  |                                                                       |      | 39.7      | %         |  |      | 45.9      | %       |  |      | 61.2    | %      
|Average heat rate for gas-fired power plants
    (excluding peakers)(Btus/ KWh): |                                                                                   |                                                                       |      |           |           |  |      |           |         |  |      |        
|                                                                                  | Not steam adjusted                                                                |                                                                       |      | 7,970     |           |  |      | 7,965     |         |  |      | 7,726   |        
|                                                                                  | Steam adjusted                                                                    |                                                                       |      | 7,110     |           |  |      | 7,146     |         |  |      | 7,111   |        
|Average all-in realized electric price:                                           |                                                                                   |                                                                       |      |           |           |  |      |           |         |  |      |        
|                                                                                  | Electricity and steam revenue                                                     |                                                                       | $    | 1,710,906 |           |  | $    | 1,148,371 |         |  | $    | 540,696 |        
|                                                                                  | Spread on sales of purchased power for hedging and optimization                   |                                                                       |      | (100      | )         |  |      | (4,687    | )       |  |      |        |        
|                                                                                  |                                                                                   |                                                                       |      |           |           |  |      |           |        
|                                                                                  | Adjusted electricity and steam revenue (in thousands)                             |                                                                       | $    | 1,710,806 |           |  | $    | 1,143,684 |         |  | $    | 540,696 |        
|                                                                                  | MWh generated (in thousands)                                                      |                                                                       |      | 28,241    |           |  |      | 26,048    |         |  |      | 16,496  |        
|                                                                                  | Average all-in realized electric price per MWh                                    |                                                                       | $    | 60.58     |           |  | $    | 43.91     |         |  | $    | 32.78   |        
|Average cost of natural gas:                                                      |                                                                                   |                                                                       |      |           |           |  |      |           |         |  |      |        
|                                                                                  | Fuel expense                                                                      |                                                                       | $    | 1,186,195 |           |  | $    | 770,208   |         |  | $    | 288,894 |        
|                                                                                  | Million Btus (MMBtu) of fuel consumed by
    generating plants. (in thousands) |                                                                       |      | 200,217   |           |  |      | 127,060   |         |  |      | 77,871  |        
|                                                                                  | Average cost of natural gas per MMBtu                                             |                                                                       | $    | 5.92      |           |  | $    | 6.06      |         |  | $    | 3.71    |        
|                                                                                  | MWh generated (in thousands)                                                      |                                                                       |      | 28,241    |           |  |      | 26,048    |         |  |      | 16,496  |        
|                                                                                  | Average cost of adjusted fuel expense per MWh                                     |                                                                       | $    | 42.00     |           |  | $    | 29.57     |         |  | $    | 17.51   |        
|Average spark spread:                                                             |                                                                                   |                                                                       |      |           |           |  |      |           |         |  |      |        
|                                                                                  | Adjusted electricity and steam revenue (in thousands)                             |                                                                       | $    | 1,710,806 |           |  | $    | 1,143,684 |         |  | $    | 540,696 |        
|                                                                                  |                                                                                   | Less: Fuel expense (in thousands)                                     |      |           | 1,186,195 |  |      |           | 770,208 |  |      |         | 288,894 | 
|                                                                                  |                                                                                   | Less: Realized amortization expense on Index Hedge
    (in thousands) |      |           | 5,611     |  |      |           |        |  |      |         |        | 
|                                                                                  |                                                                                   |                                                                       |      |           |           |  |      |           |        
|                                                                                  | Spark spread (in thousands)                                                       |                                                                       | $    | 519,000   |           |  | $    | 373,476   |         |  | $    | 251,802 |        
|                                                                                  | MWh generated (in thousands)                                                      |                                                                       |      | 28,241    |           |  |      | 26,048    |         |  |      | 16,496  |        
|                                                                                  | Average spark spread per MWh                                                      |                                                                       | $    | 18.38     |           |  | $    | 14.34     |         |  | $    | 15.26   |        

35



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|                                                                                                                                 |                                             |                          |   |         |      |  |   |         |  |  |   |        | 
|-------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------- | ------------------------ | - | ------- | ---- |  | - | ------- |  |  | - | ------ | 
|                                                                                                                                 |                                             | Years Ended December 31, |  
|                                                                                                                                 |                                             |                          |  
|                                                                                                                                 |                                             | 2004                     |   |         | 2003 |  |   | 2002    | 
|                                                                                                                                 |                                             |                          |   |         |      |  |   |         | 
|                                                                                                                                 |                                             | (In thousands)           |  
|Average plant operating expense (POX) per
    normalized MWh (for comparison purposes we also include POX per
    actual MWh): |                                             |                          |   |         |      |  |   |         |  |  |   |       
|                                                                                                                                 | Average total consolidated MW in operations |                          |   | 8,597   |      |  |   | 6,841   |  |  |   | 3,203  | 
|                                                                                                                                 | Hours per year                              |                          |   | 8,784   |      |  |   | 8,760   |  |  |   | 8,760  | 
|                                                                                                                                 | Total potential MWh                         |                          |   | 75,516  |      |  |   | 59,927  |  |  |   | 28,058 | 
|                                                                                                                                 | Normalized MWh (at 70% capacity factor)     |                          |   | 52,861  |      |  |   | 41,949  |  |  |   | 19,641 | 
|                                                                                                                                 | Plant operating expense (POX)               |                          | $ | 178,618 |      |  | $ | 131,636 |  |  | $ | 80,834 | 
|                                                                                                                                 | POX per normalized MWh                      |                          | $ | 3.38    |      |  | $ | 3.14    |  |  | $ | 4.12   | 
|                                                                                                                                 | POX per actual MWh                          |                          | $ | 6.32    |      |  | $ | 5.05    |  |  | $ | 4.90   | 

Financial Market Risks


Debt Financing




|                                                     |                                   |      |   |      |  |      |   |   |      |   |       |       |  |            |            |       |  |               |         |         |  |   |           |           |  |   |           |           | 
|---------------------------------------------------- | --------------------------------- | ---- | - | ---- |  | ---- | - | - | ---- | - | ----- | ----- |  | ---------- | ---------- | ----- |  | ------------- | ------- | ------- |  | - | --------- | --------- |  | - | --------- | --------- | 
|                                                     |                                   |      |   |      |  |      |   |   |      |   |       |       |  | Fair Value |           
|                                                     |                                   | 2005 |   | 2006 |  | 2007 |   |   | 2008 |   |       | 2009  |  |            | Thereafter |       |  | 12/31/2004(1) |        
|                                                     |                                   |      |   |      |  |      |   |   |      |   |       |       |  |            |            |       |  |               |        
|First Priority Secured Floating Rate Notes Due 2009  |                                   | $    |  |      |  | $    |  |   |      | $ | 1,175 |       |  | $          | 2,350      |       |  | $             | 231,475 |         |  | $ |          |           |  | $ | 235,000   |          
|Second Priority Secured Floating Rate Notes Due 2010 |                                   |      |  |      |  |      |  |   |      |   |      |       |  |            | 3,200      |       |  |               | 6,400   |         |  |   | 622,039   |           |  |   | 631,639   |          
|Third Priority Secured Floating Rate Notes Due 2011  |                                   |      |  |      |  |      |  |   |      |   |      |       |  |            |           |       |  |               |        |         |  |   | 680,000   |           |  |   | 680,000   |          
|                                                     |                                   |      |   |      |  |      |   |   |      |   |       |       |  |            |            |       |  |               |         |         | 
|                                                     | Total Floating Rate Notes(2)      |      |   |     |  |      |   |  |      |   |       | 1,175 |  |            |            | 5,550 |  |               |         | 237,875 |  |   |           | 1,302,039 |  |   |           | 1,546,639 | 
|First Priority Secured Term Loans Due 2009           |                                   |      |  |      |  |      |  |   |      |   | 3,000 |       |  |            | 6,000      |       |  |               | 591,000 |         |  |   |          |           |  |   | 600,000   |          
|Second Priority Secured Term Loans Due 2010          |                                   |      |  |      |  |      |  |   |      |   |      |       |  |            | 500        |       |  |               | 1,000   |         |  |   | 97,194    |           |  |   | 98,694    |          
|                                                     |                                   |      |   |      |  |      |   |   |      |   |       |       |  |            |            |       |  |               |         |         | 
|                                                     | Total Floating Rate Term Loans(3) |      |   |      |  |      |   |   |      |   |       | 3,000 |  |            |            | 6,500 |  |               |         | 592,000 |  |   |           | 97,194    |  |   |           | 698,694   | 
|Revolving Credit Facility(3)                         |                                   |      |  |      |  |      |  |   |      |   |      |       |  |            |           |       |  |               |        |         |  |   |          |           |  |   |          |          
|Working Capital Facility(2)                          |                                   |      |  |      |  |      |  |   |      |   |      |       |  |            |           |       |  |               |        |         |  |   |          |           |  |   |          |          
|                                                     |                                   |      |   |      |  |      |   |   |      |   |       |       |  |            |            |       |  |               |         |         | 
|                                                     | Total Other Financings            |      |   |     |  |      |   |  |      |   |       |      |  |            |            |      |  |               |         |        |  |   |           |          |  |   |           |          | 
|Grand total variable-rate debt instruments           |                                   | $    |  |      |  | $    |  |   |      | $ | 4,175 |       |  | $          | 12,050     |       |  | $             | 829,875 |         |  | $ | 1,399,233 |           |  | $ | 2,245,333 |          
|                                                     |                                   |      |   |      |  |      |   |   |      |   |       |       |  |            |            |       |  |               |         |         | 






|    |                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Fair value equals carrying value.                                                                                                                                  
|   
|(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 5 to the
    Consolidated Financial Statements)

Derivatives


36



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##### Table of Contents









|                                                            |  |   |        |  
|----------------------------------------------------------- |  | - | ------ | -
|Fair value of contracts outstanding at January 1, 2004      |  | $ |       |  
|Changes in fair value attributable to new contracts         |  |   | 45,000 |  
|Amortization during the period, net(1)                      |  |   | (5,611 | )
|Changes in fair value attributable to price movements, net  |  |   | (3,473 | )
|                                                            |  |   |       
|Fair value of contracts outstanding at December 31, 2004(2) |  | $ | 35,916 |  
|                                                            |  |   |       






|    |                                                                                                                                  
|--- | ---------------------------------------------------------------------------------------------------------------------------------
|(1) | Non-cash losses from roll-off (amortization) of deferred
    premium (see discussion in Note 10 to the financial
    statements).
|   
|(2) | Net derivative assets are reported in Note 10 of the Notes
    to the Consolidated Financial Statements.                         



|                                                   |  |      |       |  |           |   |        |           |  |            |   |       |  |   |   |  |  |   |        | 
|-------------------------------------------------- |  | ---- | ----- |  | --------- | - | ------ | --------- |  | ---------- | - | ----- |  | - | - |  |  | - | ------ | 
|Fair Value Source                                  |  | 2005 |       |  | 2006-2007 |   |        | 2008-2009 |  | After 2009 |   | Total | 
|                                                   |  |      |       |  |           |   |        |           |  |            |   |       | 
|Prices actively quoted                             |  | $    |      |  |           | $ |       |           |  | $          |  |       |  | $ |  |  |  | $ |       | 
|Prices provided by other external sources          |  |      | 9,272 |  |           |   | 20,605 |           |  |            |  |       |  |   |  |  |  |   | 29,877 | 
|Prices based on models and other valuation methods |  |      |      |  |           |   | 6,039  |           |  |            |  |       |  |   |  |  |  |   | 6,039  | 
|                                                   |  |      |       |  |           |   |        |           |  |            |   |       |  |   |  
|Total fair value                                   |  | $    | 9,272 |  |           | $ | 26,644 |           |  | $          |  |       |  | $ |  |  |  | $ | 35,916 | 
|                                                   |  |      |       |  |           |   |        |           |  |            |   |       |  |   |  







|                      |                               |            |   |                   |              |  |   |        | 
|--------------------- | ----------------------------- | ---------- | - | ----------------- | ------------ |  | - | ------ | 
|                      |                               |            |   | Fair Value        |             
|                      |                               |            |   | After 10% Adverse |             
|                      |                               | Fair Value |   |                   | Price Change | 
|                      |                               |            |   |                   |              | 
|At December 31, 2004: |                               |            |   |                   |              |  |   |       
|                      | Other mark-to-market activity |            | $ | 35,916            |              |  | $ | 32,913 | 



37



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##### Table of Contents







Application of Critical Accounting Policies






| |                                         
| | ----------------------------------------
| | Fair Value of Our Index Hedge Derivative







| |                                 
| | --------------------------------
| | Accounting for Long-Lived Assets

Plant Useful Lives


Major Maintenance


Impairment of Long-Lived Assets


38



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##### Table of Contents









Capitalized Interest






| |                    
| | -------------------
| | Revenue Recognition



39



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##### Table of Contents







| |                            
| | ---------------------------
| | Accounting for Income Taxes









Initial Adoption of New Accounting Standards in 2004









|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market
    Risk



40



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##### 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









41



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##### Table of Contents








|         |                  
|-------- | -----------------
|Item 9B. | Other Information






PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant








|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation








|         |                                                                   
|-------- | ------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management








|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services

Audit Fees




Audit-Related Fees




Tax Fees




All Other Fees






| |                                   
| | ----------------------------------
| | Policy on Pre-Approval of Services



42



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##### Table of Contents






PART IV







|         |                                       
|-------- | --------------------------------------
|Item 15. | Exhibits, Financial Statement Schedule

Financial Statements and Other Information






| |                                                                                                              
| | -------------------------------------------------------------------------------------------------------------
| | Report of Independent Registered Public Accounting Firm                                                      
|
| | Consolidated Balance Sheets, December 31, 2004 and 2003                                                      
|
| | Consolidated Statements of Operations for the Years Ended
    December 31, 2004, 2003 and 2002               
|
| | Consolidated Statements of Members Equity (Deficit) for
    the Years Ended December 31, 2004, 2003 and 2002
|
| | Consolidated Statements of Cash Flows for the Years Ended
    December 31, 2004, 2003 and 2002               
|
| | Notes to Consolidated Financial Statements for the Years Ended
    December 31, 2004, 2003 and 2002          

Financial Statement Schedule






| |     |         
| | --- | --------
| | (b) | Exhibits



| |                                                                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Those exhibits required to be filed by Item 601 of
    Regulation S-K are listed in the Index to Exhibits
    immediately preceding the exhibits filed herewith and such
    listing is incorporated herein by reference.

43



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##### Table of Contents






SIGNATURES






| |                                                      
| | -----------------------------------------------------
| | Calpine Generating
    Company, LLC                  
| | CalGen Finance Corp.                                 
| | CalGen Expansion Company,
    LLC                    
| | Baytown Energy Center, LP                            
| | Calpine Baytown Energy
    Center GP, LLC            
| | Calpine Baytown Energy
    Center LP, LLC            
| | Baytown Power GP, LLC                                
| | Baytown Power, LP                                    
| | Carville Energy LLC                                  
| | Channel Energy Center, LP                            
| | Calpine Channel Energy
    Center GP, LLC            
| | Calpine Channel Energy
    Center LP, LLC            
| | Channel Power GP, LLC                                
| | Channel Power, LP                                    
| | Columbia Energy LLC                                  
| | Corpus Christi
    Cogeneration LP                   
| | Nueces Bay Energy LLC                                
| | Calpine Northbrook
    Southcoast Investors, LLC     
| | Calpine Corpus Christi
    Energy GP, LLC            
| | Calpine Corpus Christi
    Energy, LP                
| | Decatur Energy
    Center, LLC                       
| | Delta Energy
    Center, LLC                         
| | CalGen Project Equipment
    Finance Company Two, LLC
| | Freestone Power Generation
    LP                    
| | Calpine Freestone, LLC                               
| | CPN Freestone, LLC                                   
| | Calpine Freestone Energy
    GP, LLC                 
| | Calpine Freestone Energy,
    LP                     
| | Calpine Power Equipment LP                           
| | Los Medanos Energy
    Center, LLC                   
| | CalGen Project Equipment
    Finance Company One, LLC
| | Morgan Energy
    Center, LLC                        
| | Pastoria Energy Facility
    L.L.C.                  
| | Calpine Pastoria Holdings,
    LLC                   
| | Calpine Oneta Power, L.P.                            
| | Calpine Oneta
    Power I, LLC                       

44



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##### Table of Contents



| |                                                       
| | ------------------------------------------------------
| | Calpine Oneta
    Power II, LLC                       
| | Zion Energy LLC                                       
| | CalGen Project Equipment
    Finance Company Three LLC
| | CalGen Equipment Finance
    Holdings, LLC            
| | CalGen Equipment Finance
    Company, LLC             



| |     |                    
| | --- | -------------------
| | By: | /s/ Robert D. Kelly

| |                              
| | -----------------------------
| |                              
| | Robert D. Kelly              
| | Executive Vice President and 
| | Chief Financial Officer      
| | (Principal Financial Officer)



45



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##### Table of Contents



POWER OF ATTORNEY








|                                                   |  |                                                                                                       |  |                |  |  |  | 
|-------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------- |  | -------------- |  |  |  | 
|Signature                                          |  |                                                                                                       |  |                |  | 
|                                                   |  |                                                                                                       |  |                |  | 
|                                                   |  | Title                                                                                                 |  | Date           |  | 
|                                                   |  |                                                                                                       |  |                |  | 
|                                                  
|/s/ Peter CartwrightPeter
    Cartwright           |  | Chairman, President, Chief
    Executive Officer and Director
    (Principal Executive Officer)       |  | April 15, 2005 |  | 
|                                                  
|/s/ Ann B. CurtisAnn
    B. Curtis                 |  | Executive Vice President
    and Director                                                             |  | April 15, 2005 |  | 
|                                                  
|/s/ Robert D. KellyRobert
    D. Kelly             |  | Executive Vice President
    and Chief Financial Officer
    (Principal Financial Officer)            |  | April 15, 2005 |  | 
|                                                  
|/s/ Charles B. Clark, Jr.Charles
    B. Clark, Jr. |  | Senior Vice President, Controller
    and Chief Accounting Officer
    (Principal Accounting Officer) |  | April 15, 2005 |  | 

46



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##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)





INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


December 31, 2004


|                                                                                                                  |  |  |     | 
|----------------------------------------------------------------------------------------------------------------- |  |  | --- | 
|Report of Independent Registered Public
    Accounting Firm                                                       |  |  | F-2 | 
|Consolidated Balance Sheets
    December 31, 2004 and 2003                                                        |  |  | F-3 | 
|Consolidated Statements of Operations for
    the Years Ended December 31, 2004, 2003 and 2002                    |  |  | F-4 | 
|Consolidated Statements of Members
    Equity (Deficit) for the Years Ended December 31, 2004,
    2003 and 2002 |  |  | F-5 | 
|Consolidated Statements of Cash Flows for
    the Years Ended December 31, 2004, 2003 and 2002                    |  |  | F-6 | 
|Notes to Consolidated Financial Statements
    for the Years Ended December 31, 2004, 2003 and 2002               |  |  | F-8 | 
|Schedule II  Valuation and
    Qualifying Accounts for the Years Ended December 31, 2004,
    2003 and 2002      |  |  | S-1 | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The collateral for the notes includes the pledge of Calpine
    Generating Company, LLC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 Corp., the financial statements of CalGen Expansion
    Company, LLC are identical to the financial statements of
    Calpine Generating Company, LLC 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



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##### Table of Contents






CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


CONSOLIDATED BALANCE SHEETS


December 31, 2004 and 2003


|                                                |                                                            |                           |           |           |           |   |           |           |           | 
|----------------------------------------------- | ---------------------------------------------------------- | ------------------------- | --------- | --------- | --------- | - | --------- | --------- | --------- | 
|                                                |                                                            | 2004                      |           |           | 2003      |  
|                                                |                                                            |                           |           |           |           |  
|                                                |                                                            | (In thousands)            |          
|ASSETS                                         
|Current assets:                                 |                                                            |                           |           |           |           |   |           |          
|                                                | Cash and cash equivalents                                  |                           | $         | 64,538    |           |   | $         | 39,598    |          
|                                                | Restricted cash                                            |                           |           |          |           |   |           | 152,290   |          
|                                                | Accounts receivable, net of allowance of $1,589 and $1,931 |                           |           | 59,320    |           |   |           | 47,555    |          
|                                                | Accounts receivable, net  related party                   |                           |           | 600       |           |   |           |          |          
|                                                | Inventories                                                |                           |           | 19,601    |           |   |           | 13,301    |          
|                                                | Current derivative assets                                  |                           |           | 9,272     |           |   |           |          |          
|                                                | Prepaid and other current assets                           |                           |           | 21,536    |           |   |           | 29,444    |          
|                                                |                                                            |                           |           |           |           |  
|                                                |                                                            | Total current assets      |           |           | 174,867   |   |           |           | 282,188   | 
|                                                |                                                            |                           |           |           |           |  
|                                                | Property, plant and equipment, net                         |                           |           | 6,294,429 |           |   |           | 6,314,166 |          
|                                                | Notes receivable, net of current portion                   |                           |           | 19,381    |           |   |           |          |          
|                                                | Deferred financing costs, net                              |                           |           | 51,496    |           |   |           | 17,775    |          
|                                                | Long-term derivative assets                                |                           |           | 26,644    |           |   |           |          |          
|                                                | Deferred tax asset                                         |                           |           | 17,672    |           |   |           |          |          
|                                                | Other assets                                               |                           |           | 54,245    |           |   |           | 44,289    |          
|                                                |                                                            |                           |           |           |           |  
|                                                |                                                            | Total assets              |           | $         | 6,638,734 |   |           | $         | 6,658,418 | 
|                                                |                                                            |                           |           |           |           |  
|                                               
|LIABILITIES & MEMBERS EQUITY (DEFICIT)        
|Current liabilities:                            |                                                            |                           |           |           |           |   |           |          
|                                                | Accounts payable                                           |                           | $         | 99,212    |           |   | $         | 113,947   |          
|                                                | Accounts payable, net  related party                      |                           |           |          |           |   |           | 781       |          
|                                                | Notes payable, current portion                             |                           |           | 168       |           |   |           | 154       |          
|                                                | Construction credit facility                               |                           |           |          |           |   |           | 2,200,358 |          
|                                                | Accrued interest payable                                   |                           |           | 53,324    |           |   |           | 99        |          
|                                                | Deferred tax liability                                     |                           |           | 17,672    |           |   |           |          |          
|                                                | Other current liabilities                                  |                           |           | 2,970     |           |   |           | 4,839     |          
|                                                |                                                            |                           |           |           |           |  
|                                                |                                                            | Total current liabilities |           |           | 173,346   |   |           |           | 2,320,178 | 
|                                                |                                                            |                           |           |           |           |  
|                                                | Notes payable, net of current portion                      |                           |           | 2,109     |           |   |           | 2,285     |          
|                                                | Subordinated parent debt                                   |                           |           |          |           |   |           | 4,615,276 |          
|                                                | Priority notes and term loans                              |                           |           | 2,395,332 |           |   |           |          |          
|                                                | Deferred revenue                                           |                           |           | 5,671     |           |   |           |          |          
|                                                | Other liabilities                                          |                           |           | 20,286    |           |   |           | 3,651     |          
|                                                |                                                            |                           |           |           |           |  
|                                                |                                                            | Total liabilities         |           |           | 2,596,744 |   |           |           | 6,941,390 | 
|                                                |                                                            |                           |           |           |           |  
|Commitments and contingencies (see Note 11)     |                                                            |                           |           |           |           |   |           |          
|                                                | Members equity (deficit)                                  |                           |           | 4,041,990 |           |   |           | (282,972  | )        
|                                                |                                                            |                           |           |           |           |  
|Total liabilities and members equity (deficit) |                                                            | $                         | 6,638,734 |           |           | $ | 6,658,418 |          
|                                                |                                                            |                           |           |           |           |  

The accompanying notes are an integral part of these
consolidated financial statements.


F-3



---



##### Table of Contents






CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


CONSOLIDATED STATEMENTS OF OPERATIONS


For the Years Ended December 31, 2004, 2003 and 2002


|                 |                                                                   |                                     |                                                                                        |           |           |         |   |         |           |          |   |         |         |          |  
|---------------- | ----------------------------------------------------------------- | ----------------------------------- | -------------------------------------------------------------------------------------- | --------- | --------- | ------- | - | ------- | --------- | -------- | - | ------- | ------- | -------- | -
|                 |                                                                   | 2004                                |                                                                                        |           | 2003      |         |   | 2002    |          
|                 |                                                                   |                                     |                                                                                        |           |           |         |   |         |          
|                 |                                                                   | (In thousands)                      |                                                                                       
|Revenue:         |                                                                   |                                     |                                                                                        |           |           |         |   |         |           |          |   |        
|                 | Electricity and steam revenue  related party                     |                                     | $                                                                                      | 1,258,101 |           |         | $ | 779,162 |           |          | $ | 388,586 |        
|                 | Electricity and steam revenue  third-party                       |                                     |                                                                                        | 452,805   |           |         |   | 369,209 |           |          |   | 152,110 |        
|                 |                                                                   |                                     |                                                                                        |           |           |         |   |         |          
|                 |                                                                   | Total electricity and steam revenue |                                                                                        |           | 1,710,906 |         |   |         | 1,148,371 |          |   |         | 540,696 |         
|                 | Mark-to-market activity, net                                      |                                     |                                                                                        | (9,084    | )         |         |   |        |           |          |   |        |        
|                 | Sale of purchased power                                           |                                     |                                                                                        | 3,208     |           |         |   | 7,708   |           |          |   |        |        
|                 | Other revenue                                                     |                                     |                                                                                        | 3,307     |           |         |   | 3,297   |           |          |   | 3,297   |        
|                 |                                                                   |                                     |                                                                                        |           |           |         |   |         |          
|                 |                                                                   | Total revenue                       |                                                                                        |           | 1,708,337 |         |   |         | 1,159,376 |          |   |         | 543,993 |         
|                 |                                                                   |                                     |                                                                                        |           |           |         |   |         |          
|Cost of revenue: |                                                                   |                                     |                                                                                        |           |           |         |   |         |           |          |   |        
|                 | Plant operating expense                                           |                                     |                                                                                        | 178,618   |           |         |   | 131,636 |           |          |   | 80,834  |        
|                 | Fuel expense                                                      |                                     |                                                                                        | 1,186,195 |           |         |   | 770,208 |           |          |   | 288,894 |        
|                 | Purchased power expense                                           |                                     |                                                                                        | 3,308     |           |         |   | 12,395  |           |          |   |        |        
|                 | Depreciation and amortization expense                             |                                     |                                                                                        | 151,720   |           |         |   | 121,008 |           |          |   | 59,907  |        
|                 |                                                                   |                                     |                                                                                        |           |           |         |   |         |          
|                 |                                                                   | Total cost of revenue               |                                                                                        |           | 1,519,841 |         |   |         | 1,035,247 |          |   |         | 429,635 |         
|                 |                                                                   |                                     |                                                                                        |           |           |         |   |         |          
|                 |                                                                   |                                     | Gross profit                                                                           |           |           | 188,496 |   |         |           | 124,129  |   |         |         | 114,358  |  
|                 | Equipment cancellation and impairment cost                        |                                     |                                                                                        |          |           |         |   |        |           |          |   | 115,121 |        
|                 | Sales, general and administrative expense                         |                                     |                                                                                        | 11,540    |           |         |   | 5,638   |           |          |   | 3,347   |        
|                 | Other operating expense                                           |                                     |                                                                                        | 3,754     |           |         |   | 173     |           |          |   | 432     |        
|                 |                                                                   |                                     |                                                                                        |           |           |         |   |         |          
|                 |                                                                   | Income (loss) from operations       |                                                                                        |           | 173,202   |         |   |         | 118,318   |          |   |         | (4,542  | )       
|                 |                                                                   |                                     |                                                                                        |           |           |         |   |         |          
|                 | Interest expense  related party                                  |                                     |                                                                                        | 72,173    |           |         |   | 255,687 |           |          |   | 111,304 |        
|                 | Interest expense  third party                                    |                                     |                                                                                        | 160,823   |           |         |   | 57,004  |           |          |   | 33,320  |        
|                 | Interest income                                                   |                                     |                                                                                        | (2,536    | )         |         |   | (2,061  | )         |          |   | (537    | )      
|                 | Other expense, net                                                |                                     |                                                                                        | 887       |           |         |   | 203     |           |          |   | 1,515   |        
|                 |                                                                   |                                     |                                                                                        |           |           |         |   |         |          
|                 |                                                                   |                                     | Loss before income taxes and cumulative effect of a change in
    accounting principle |           |           | (58,145 | ) |         |           | (192,515 | ) |         |         | (150,144 | )
|                 | Income taxes                                                      |                                     |                                                                                        |          |           |         |   |        |           |          |   |        |        
|                 |                                                                   |                                     |                                                                                        |           |           |         |   |         |          
|                 |                                                                   |                                     | Loss before cumulative effect of a change in accounting principle                      |           |           | (58,145 | ) |         |           | (192,515 | ) |         |         | (150,144 | )
|                 | Cumulative effect of a change in accounting principle, net of tax |                                     |                                                                                        |          |           |         |   | (241    | )         |          |   |        |        
|                 |                                                                   |                                     |                                                                                        |           |           |         |   |         |          
|                 |                                                                   |                                     | Net loss                                                                               |           | $         | (58,145 | ) |         | $         | (192,756 | ) |         | $       | (150,144 | )
|                 |                                                                   |                                     |                                                                                        |           |           |         |   |         |          

The accompanying notes are an integral part of these
consolidated financial statements.


F-4



---



##### Table of Contents






CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


CONSOLIDATED STATEMENTS OF MEMBERS EQUITY (DEFICIT)


For the Years Ended December 31, 2004, 2003 and 2002


|                                               |                      |                                          |          |           |           |   |          |          |          |   |        |          |          |  
|---------------------------------------------- | -------------------- | ---------------------------------------- | -------- | --------- | --------- | - | -------- | -------- | -------- | - | ------ | -------- | -------- | -
|                                               |                      | 2004                                     |          |           | 2003      |   |          | 2002     |         
|                                               |                      |                                          |          |           |           |   |          |          |         
|                                               |                      | (In thousands)                           |         
|Members equity (deficit) at beginning of year |                      | $                                        | (282,972 | )         |           | $ | (101,665 | )        |          | $ | 40,664 |         
|                                               | Parent contributions |                                          |          | 4,383,107 |           |   |          | 11,449   |          |   |        | 7,815    |         
|                                               | Net loss             |                                          |          | (58,145   | )         |   |          | (192,756 | )        |   |        | (150,144 | )       
|                                               |                      |                                          |          |           |           |   |          |          |         
|                                               |                      | Members equity (deficit) at end of year |          | $         | 4,041,990 |   |          | $        | (282,972 | ) |        | $        | (101,665 | )
|                                               |                      |                                          |          |           |           |   |          |          |         

The accompanying notes are an integral part of these
consolidated financial statements.


F-5



---



##### Table of Contents






CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


CONSOLIDATED STATEMENTS OF CASH FLOWS


For the Years Ended December 31, 2004, 2003 and 2002


|                                               |                                                                                     |                                                       |                                                     |         |            |          |        |          |          |          |        |          |            |            |  
|---------------------------------------------- | ----------------------------------------------------------------------------------- | ----------------------------------------------------- | --------------------------------------------------- | ------- | ---------- | -------- | ------ | -------- | -------- | -------- | ------ | -------- | ---------- | ---------- | -
|                                               |                                                                                     | 2004                                                  |                                                     |         | 2003       |          |        | 2002     |         
|                                               |                                                                                     |                                                       |                                                     |         |            |          |        |          |         
|                                               |                                                                                     | (In thousands)                                        |                                                    
|Cash flows from operating activities:          |                                                                                     |                                                       |                                                     |         |            |          |        |          |          |          |        |         
|                                               | Net loss                                                                            |                                                       | $                                                   | (58,145 | )          |          | $      | (192,756 | )        |          | $      | (150,144 | )         
|                                               | Adjustments to reconcile net loss to net cash provided by
    operating activities: |                                                       |                                                     |         |            |          |        |          |          |          |        |          |           
|                                               |                                                                                     | Depreciation and amortization                         |                                                     |         | 151,720    |          |        |          | 121,008  |          |        |          | 59,907     |           
|                                               |                                                                                     | Amortization of deferred financing costs              |                                                     |         | 11,511     |          |        |          | 12,122   |          |        |          | 5,043      |           
|                                               |                                                                                     | Write-off of deferred financing costs                 |                                                     |         | 12,457     |          |        |          |         |          |        |          |           |           
|                                               |                                                                                     | Change in derivative assets and liabilities           |                                                     |         | 9,084      |          |        |          |         |          |        |          |           |           
|                                               |                                                                                     | Equipment cancellation and asset impairment charge    |                                                     |         |           |          |        |          |         |          |        |          | 115,121    |           
|                                               |                                                                                     | Interest on subordinated parent debt                  |                                                     |         | 72,173     |          |        |          | 255,687  |          |        |          | 111,304    |           
|                                               |                                                                                     | Cost allocated from parent                            |                                                     |         | 3,633      |          |        |          | 11,449   |          |        |          | 7,815      |           
|                                               |                                                                                     | Cumulative effect of a change in accounting principle |                                                     |         |           |          |        |          | 241      |          |        |          |           |           
|                                               | Change in operating assets and liabilities:                                         |                                                       |                                                     |         |            |          |        |          |          |          |        |          |           
|                                               |                                                                                     | Accounts receivable                                   |                                                     |         | (13,286    | )        |        |          | (21,945  | )        |        |          | (14,368    | )         
|                                               |                                                                                     | Accounts receivable/accounts payable  related party  |                                                     |         | (1,381     | )        |        |          | (8,925   | )        |        |          | (1,925     | )         
|                                               |                                                                                     | Inventories                                           |                                                     |         | (4,701     | )        |        |          | (3,553   | )        |        |          | (8,028     | )         
|                                               |                                                                                     | Prepaid and other current assets                      |                                                     |         | 24,839     |          |        |          | (9,628   | )        |        |          | (15,222    | )         
|                                               |                                                                                     | Other assets                                          |                                                     |         | (23,013    | )        |        |          | (12,902  | )        |        |          | (7,819     | )         
|                                               |                                                                                     | Accounts payable                                      |                                                     |         | 26,805     |          |        |          | 7,622    |          |        |          | 30,536     |           
|                                               |                                                                                     | Accrued interest payable                              |                                                     |         | 53,225     |          |        |          | (200     | )        |        |          | 299        |           
|                                               |                                                                                     | Other accrued liabilities                             |                                                     |         | 13,736     |          |        |          | 3,363    |          |        |          | 884        |           
|                                               |                                                                                     |                                                       |                                                     |         |            |          |        |          |         
|                                               |                                                                                     |                                                       | Net cash provided by operating activities           |         |            | 278,657  |        |          |          | 161,583  |        |          |            | 133,403    |  
|                                               |                                                                                     |                                                       |                                                     |         |            |          |        |          |         
|Cash flows from investing activities:          |                                                                                     |                                                       |                                                     |         |            |          |        |          |          |          |        |         
|                                               |                                                                                     | (Increase) decrease in restricted cash                |                                                     |         | 152,290    |          |        |          | (142,800 | )        |        |          | 107,972    |           
|                                               |                                                                                     | Purchases of derivative asset                         |                                                     |         | (45,000    | )        |        |          |         |          |        |          |           |           
|                                               |                                                                                     | Purchases of property, plant and equipment            |                                                     |         | (302,901   | )        |        |          | (441,345 | )        |        |          | (1,678,874 | )         
|                                               |                                                                                     |                                                       |                                                     |         |            |          |        |          |         
|                                               |                                                                                     |                                                       | Net cash used in investing activities               |         |            | (195,611 | )      |          |          | (584,145 | )      |          |            | (1,570,902 | )
|                                               |                                                                                     |                                                       |                                                     |         |            |          |        |          |         
|Cash flows from financing activities:          |                                                                                     |                                                       |                                                     |         |            |          |        |          |          |          |        |         
|                                               |                                                                                     | Financing costs                                       |                                                     |         | (60,162    | )        |        |          | (6,258   | )        |        |          | (4,635     | )         
|                                               |                                                                                     | Repayments of notes payable                           |                                                     |         | (162       | )        |        |          | (147     | )        |        |          |           |           
|                                               |                                                                                     | Borrowings from subordinated parent debt              |                                                     |         | 46,813     |          |        |          | 556,169  |          |        |          | 1,354,803  |           
|                                               |                                                                                     | Repayments of subordinated parent debt                |                                                     |         | (238,137   | )        |        |          |         |          |        |          |           |           
|                                               |                                                                                     | Borrowings from credit facility                       |                                                     |         | 178,995    |          |        |          | 101,348  |          |        |          | 323,675    |           
|                                               |                                                                                     | Repayments of credit facility                         |                                                     |         | (2,379,353 | )        |        |          | (214,595 | )        |        |          | (241,014   | )         
|                                               |                                                                                     | Issuance of secured notes and term loans              |                                                     |         | 2,393,900  |          |        |          |         |          |        |          |           |           
|                                               |                                                                                     | Borrowings under revolver line of credit              |                                                     |         | 117,500    |          |        |          |         |          |        |          |           |           
|                                               |                                                                                     | Repayments under revolver line of credit              |                                                     |         | (117,500   | )        |        |          |         |          |        |          |           |           
|                                               |                                                                                     |                                                       |                                                     |         |            |          |        |          |         
|                                               |                                                                                     |                                                       | Net cash provided by (used in) financing activities |         |            | (58,106  | )      |          |          | 436,517  |        |          |            | 1,432,829  |  
|                                               |                                                                                     |                                                       |                                                     |         |            |          |        |          |         
|                                               |                                                                                     | Net increase (decrease) in cash and cash equivalents  |                                                     |         | 24,940     |          |        |          | 13,955   |          |        |          | (4,670     | )         
|Cash and cash equivalents, beginning of period |                                                                                     |                                                       | 39,598                                              |         |            |          | 25,643 |          |          |          | 30,313 |         
|                                               |                                                                                     |                                                       |                                                     |         |            |          |        |          |         
|Cash and cash equivalents, end of period       |                                                                                     | $                                                     | 64,538                                              |         |            | $        | 39,598 |          |          | $        | 25,643 |         
|                                               |                                                                                     |                                                       |                                                     |         |            |          |        |          |         

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 CalGen Holdings,
Inc.)


CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)


For the Years Ended December 31, 2004, 2003 and 2002


|                                    |                                                                                   |                |   |           |      |  |   |         |  |  |   |         | 
|----------------------------------- | --------------------------------------------------------------------------------- | -------------- | - | --------- | ---- |  | - | ------- |  |  | - | ------- | 
|                                    |                                                                                   | 2004           |   |           | 2003 |  |   | 2002    | 
|                                    |                                                                                   |                |   |           |      |  |   |         | 
|                                    |                                                                                   | (In thousands) |  
|Supplemental cash flow information: |                                                                                   |                |   |           |      |  |   |         |  |  |   |        
|Cash paid during the period for:    |                                                                                   |                |   |           |      |  |   |         |  |  |   |        
|                                    | Interest, net of amounts capitalized                                              |                | $ | 86,609    |      |  | $ | 42,082  |  |  | $ | 27,364  | 
|                                    | Income taxes                                                                      |                |   |          |      |  |   |        |  |  |   |        | 
|Non cash transactions:              |                                                                                   |                |   |           |      |  |   |         |  |  |   |        
|                                    | Interest on subordinated parent debt added to principal balance                   |                | $ | 72,173    |      |  | $ | 255,687 |  |  | $ | 111,304 | 
|                                    | Capital expenditures included in accounts payable                                 |                |   | 1,599     |      |  |   | 70,183  |  |  |   | 147,074 | 
|                                    | Financing costs contributed by parent                                             |                |   | 5,407     |      |  |   |        |  |  |   |        | 
|                                    | Acquisition of property, plant and equipment through
    subordinated parent debt |                |   |          |      |  |   | 107,829 |  |  |   | 108,898 | 
|                                    | Disposition of property, plant and equipment through
    subordinated parent debt |                |   | 119,647   |      |  |   | 215,170 |  |  |   | 322,884 | 
|                                    | Third party debt paid through subordinated parent debt                            |                |   |          |      |  |   |        |  |  |   | 27,085  | 
|                                    | Conversion of subordinated parent debt to equity                                  |                |   | 4,383,107 |      |  |   |        |  |  |   |        | 

The accompanying notes are an integral part of these
consolidated financial statements.


F-7



---



##### Table of Contents






CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


For the Years Ended December 31, 2004, 2003 and 2002




|   |                                           
|-- | ------------------------------------------
|1. | Organization and Operations of the Company

Business








Basis of Presentation






F-8



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|   |                                
|-- | -------------------------------
|2. | Changes in Accounting Principle





|   |                                           
|-- | ------------------------------------------
|3. | Summary of Significant Accounting Policies

Principles of Consolidation


Reclassifications


Use of Estimates in Preparation of Financial
Statements


Fair Value of Financial Instruments


F-9



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Cash and Cash Equivalents


Restricted Cash


Accounts Receivable and Accounts Payable


Inventories


Prepaid Expenses and Other Current Assets and Other
Assets


F-10



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                           |                     |       |   |        |        |  |   |        |        | 
|------------------------------------------ | ------------------- | ----- | - | ------ | ------ |  | - | ------ | ------ | 
|                                           |                     | 2004  |   |        | 2003   | 
|                                           |                     |       |   |        |        | 
|Prepaid expenses and other current assets: |                     |       |   |        |        |  |   |       
|                                           | Service agreements  |       | $ | 9,191  |        |  | $ | 18,886 |       
|                                           | Insurance and other |       |   | 12,345 |        |  |   | 10,558 |       
|                                           |                     |       |   |        |        | 
|                                           |                     | Total |   | $      | 21,536 |  |   | $      | 29,444 | 
|                                           |                     |       |   |        |        | 



|                              |       |      |        |        |      |   |        |        | 
|----------------------------- | ----- | ---- | ------ | ------ | ---- | - | ------ | ------ | 
|                              |       | 2004 |        |        | 2003 |  
|                              |       |      |        |        |      |  
|Other assets:                 |       |      |        |        |      |   |        |       
|Service agreements and other  |       | $    | 13,628 |        |      | $ | 6,981  |       
|Deferred transmission credits |       |      | 40,617 |        |      |   | 37,308 |       
|                              |       |      |        |        |      |  
|                              | Total |      | $      | 54,245 |      |   | $      | 44,289 | 
|                              |       |      |        |        |      |  



Property, Plant and Equipment, Net


Project Development Costs


Deferred Financing Costs


Long-Lived Assets


F-11



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Concentrations of Credit Risk


Revenue Recognition




Comprehensive Income


Derivative Instruments




Mark-to-Market Activity, Net


F-12



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Other Revenue


Plant Operating Expense


Provision (Benefit) for Income Taxes


New Accounting Pronouncements




| |                    
| | -------------------
| | FIN 46 and FIN 46-R







F-13



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |          
| | ---------
| | EITF 04-7



financial fair value non-financial cash flow




| |             
| | ------------
| | SFAS No. 151





| |             
| | ------------
| | SFAS No. 153



F-14



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|   |                                                                 
|-- | ----------------------------------------------------------------
|4. | Property, Plant and Equipment, Net, and Capitalized
    Interest



|                                                |  |      |           |   |      |   |           |  
|----------------------------------------------- |  | ---- | --------- | - | ---- | - | --------- | -
|                                                |  | 2004 |           |   | 2003 |  
|                                                |  |      |           |   |      |  
|Buildings, machinery, and equipment             |  | $    | 5,917,575 |   |      | $ | 4,847,734 |  
|Less: Accumulated depreciation and amortization |  |      | (338,172  | ) |      |   | (187,557  | )
|                                                |  |      |           |   |      |  
|                                                |  |      | 5,579,403 |   |      |   | 4,660,177 |  
|Land                                            |  |      | 7,854     |   |      |   | 7,235     |  
|Construction in progress                        |  |      | 707,172   |   |      |   | 1,646,754 |  
|                                                |  |      |           |   |      |  
|Property, plant and equipment, net              |  | $    | 6,294,429 |   |      | $ | 6,314,166 |  
|                                                |  |      |           |   |      |  







Buildings, Machinery, and Equipment


Major Maintenance 


F-15



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Construction in Progress


Capitalized Interest




Impairment Evaluation






F-16



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Asset Retirement Obligation




|                                                 |  |   |       | 
|------------------------------------------------ |  | - | ----- | 
|Asset retirement obligation at January 1, 2003   |  | $ | 241   | 
|Liabilities incurred in 2003                     |  |   | 3,065 | 
|Liabilities settled in 2003                      |  |   |      | 
|Accretion expense                                |  |   | 345   | 
|Revisions in the estimated cash flows            |  |   |      | 
|                                                 |  |   |      
|Asset retirement obligation at December 31, 2003 |  | $ | 3,651 | 
|Liabilities incurred in 2004                     |  |   | 1,325 | 
|Liabilities settled in 2004                      |  |   |      | 
|Accretion expense                                |  |   | 581   | 
|Revisions in the estimated cash flows            |  |   |      | 
|                                                 |  |   |      
|Asset retirement obligation at December 31, 2004 |  | $ | 5,557 | 
|                                                 |  |   |      



|   |                                               
|-- | ----------------------------------------------
|5. | Notes Payable, Term Loans and Other Financings



F-17



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                     |                                        |               |         |         |      |   |          |         | 
|---------------------------------------------------- | -------------------------------------- | ------------- | ------- | ------- | ---- | - | -------- | ------- | 
|                                                     |                                        | 2004          |         |         | 2003 |  
|                                                     |                                        |               |         |         |      |  
|                                                     |                                        | (In millions) |        
|First Priority Secured Floating Rate Notes Due 2009  |                                        | $             | 235.0   |         |      | $ |         |        
|Second Priority Secured Floating Rate Notes Due 2010 |                                        |               | 640.0   |         |      |   |         |        
|Third Priority Secured Floating Rate Notes Due 2011  |                                        |               | 680.0   |         |      |   |         |        
|Third Priority Secured Notes Due 2011                |                                        |               | 150.0   |         |      |   |         |        
|First Priority Secured Term Loans Due 2009           |                                        |               | 600.0   |         |      |   |         |        
|Second Priority Secured Term Loans Due 2010          |                                        |               | 100.0   |         |      |   |         |        
|Construction Facility                                |                                        |               |        |         |      |   | 2,200.3  |        
|Subordinated Parent Debt                             |                                        |               |        |         |      |   | 4,615.3  |        
|                                                     |                                        |               |         |         |      |  
|                                                     |                                        |               | 2,405.0 |         |      |   | 6,815.6  |        
|Less: Unamortized Discount                           |                                        |               | (9.7    | )       |      |   |         |        
|                                                     |                                        |               |         |         |      |  
|                                                     | Total Debt                             |               |         | 2,395.3 |      |   |          | 6,815.6 | 
|Notes Payable                                        |                                        |               | 2.3     |         |      |   | 2.4      |        
|                                                     |                                        |               |         |         |      |  
|                                                     | Total Debt and Notes Payable           |               |         | 2,397.6 |      |   |          | 6,818.0 | 
|Less: current portion                                |                                        |               | (0.2    | )       |      |   | (2,200.4 | )      
|                                                     |                                        |               |         |         |      |  
|                                                     | Total Long-Term Debt and Notes Payable |               | $       | 2,397.4 |      |   | $        | 4,617.6 | 
|                                                     |                                        |               |         |         |      |  

First Priority Secured Floating Rate Notes Due 2009




Second Priority Secured Floating Rate Notes Due 2010




Third Priority Secured Floating and Fixed Rate Notes Due
2011




F-18



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






First Priority Secured Term Loans Due 2009




Second Priority Secured Term Loans Due 2010






Other Financings




F-19



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










F-20



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|   |                       
|-- | ----------------------
|6. | Annual Debt Maturities



Annual Debt Repayments or Maturities


|           |       |                |           |           |         |   |       |       | 
|---------- | ----- | -------------- | --------- | --------- | ------- | - | ----- | ----- | 
|           |       | Priority Notes |           |           |        
|           |       | and Term       |           |           | Notes   |  
|           |       | Loans          |           |           | Payable |  
|           |       |                |           |           |         |  
|2005       |       | $              |          |           |         | $ | 168   |      
|2006       |       |                |          |           |         |   | 175   |      
|2007       |       |                | 4,175     |           |         |   | 182   |      
|2008       |       |                | 12,050    |           |         |   | 190   |      
|2009       |       |                | 829,875   |           |         |   | 197   |      
|Thereafter |       |                | 1,558,900 |           |         |   | 1,365 |      
|           |       |                |           |           |         |  
|           | Total |                | $         | 2,405,000 |         |   | $     | 2,277 | 
|           |       |                |           |           |         |  



|   |                           
|-- | --------------------------
|7. | Provision for Income Taxes



|                                     |  |      |         |   |      |   |          |      |  |   |          |  
|------------------------------------ |  | ---- | ------- | - | ---- | - | -------- | ---- |  | - | -------- | -
|                                     |  | 2004 |         |   | 2003 |   |          | 2002 | 
|                                     |  |      |         |   |      |   |          |      | 
|Loss before benefit for income taxes |  | $    | (58,145 | ) |      | $ | (192,515 | )    |  | $ | (150,144 | )



|                                                             |                           |      |       |    |      |  |       |    |  
|------------------------------------------------------------ | ------------------------- | ---- | ----- | -- | ---- |  | ----- | -- | -
|                                                             |                           | 2004 |       |    | 2003 | 
|                                                             |                           |      |       |    |      | 
|Expected tax benefit at the United States statutory tax rate |                           |      | 35.0  | %  |      |  | 35.0  | % 
|Future benefits not recognized                               |                           |      | (35.0 | )% |      |  | (35.0 | )%
|                                                             |                           |      |       |    |      | 
|                                                             | Effective income tax rate |      |       |   | %    |  |       |   | %
|                                                             |                           |      |       |    |      | 

F-21



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                   |                                  |                                 |         |         |            |   |        |          |         |   |   |          |         | 
|---------------------------------- | -------------------------------- | ------------------------------- | ------- | ------- | ---------- | - | ------ | -------- | ------- | - | - | -------- | ------- | 
|                                   |                                  | 2004                            |        
|                                   |                                  |                                 |        
|                                   |                                  | Current                         |         |         | Noncurrent |   |        | Total    |        
|                                   |                                  |                                 |         |         |            |   |        |          |        
|Deferred tax assets:               |                                  |                                 |         |         |            |   |        |          |         |   |   |         
|                                   | Net operating loss carryforwards |                                 | $       |        |            |   | $      | 667,105  |         |   | $ | 667,105  |        
|                                   | Accrued liabilities              |                                 |         | 94      |            |   |        | 1,389    |         |   |   | 1,483    |        
|                                   |                                  |                                 |         |         |            |   |        |          |        
|                                   |                                  | Total gross deferred tax assets |         |         | 94         |   |        |          | 668,494 |   |   |          | 668,588 | 
|                                   | Less valuation allowance         |                                 |         |        |            |   |        | (140,336 | )       |   |   | (140,336 | )      
|                                   |                                  |                                 |         |         |            |   |        |          |        
|                                   |                                  | Net deferred tax assets         |         | $       | 94         |   |        | $        | 528,158 |   |   | $        | 528,252 | 
|Deferred tax liabilities:          |                                  |                                 |         |         |            |   |        |          |         |   |   |         
|                                   | Accrued liabilities              |                                 | $       | (17,766 | )          |   | $      |         |         |   | $ | (17,766  | )      
|                                   | Property differences             |                                 |         |        |            |   |        | (510,486 | )       |   |   | (510,486 | )      
|                                   |                                  |                                 |         |         |            |   |        |          |        
|                                   |                                  | Total deferred tax liabilities  |         |         |           |   |        |          |        |   |   |          |        | 
|Net deferred tax asset (liability) |                                  | $                               | (17,672 | )       |            | $ | 17,672 |          |         | $ |  |         
|                                   |                                  |                                 |         |         |            |   |        |          |        

|                                   |                                  |                                 |   |            |   |   |       |          |          |   |   |          |          |  
|---------------------------------- | -------------------------------- | ------------------------------- | - | ---------- | - | - | ----- | -------- | -------- | - | - | -------- | -------- | -
|                                   |                                  | 2003                            |  
|                                   |                                  |                                 |  
|                                   |                                  | Current                         |   | Noncurrent |   |   | Total |         
|                                   |                                  |                                 |   |            |   |   |       |         
|Deferred tax assets:               |                                  |                                 |   |            |   |   |       |          |          |   |   |         
|                                   | Net operating loss carryforwards |                                 | $ |           |   |   | $     | 557,970  |          |   | $ | 557,970  |         
|                                   |                                  |                                 |   |            |   |   |       |          |         
|                                   |                                  | Total gross deferred tax assets |   |            |  |   |       |          | 557,970  |   |   |          | 557,970  |  
|                                   | Less valuation allowance         |                                 |   |           |   |   |       | (117,126 | )        |   |   | (117,126 | )       
|                                   |                                  |                                 |   |            |   |   |       |          |         
|                                   |                                  | Net deferred tax assets         |   | $          |  |   |       | $        | 440,844  |   |   | $        | 440,844  |  
|Deferred tax liabilities:          |                                  |                                 |   |            |   |   |       |          |          |   |   |         
|                                   | Property differences             |                                 | $ |           |   |   | $     | (440,844 | )        |   | $ | (440,844 | )       
|                                   |                                  |                                 |   |            |   |   |       |          |         
|                                   |                                  | Total deferred tax liabilities  |   |            |  |   |       |          | (440,844 | ) |   |          | (440,844 | )
|Net deferred tax asset (liability) |                                  | $                               |  |            |   | $ |      |          |          | $ |  |         
|                                   |                                  |                                 |   |            |   |   |       |          |         







|   |          
|-- | ---------
|8. | Customers



F-22



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






















F-23



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                             |  |      |           |  |      |   |         |      |  |   |         | 
|---------------------------- |  | ---- | --------- |  | ---- | - | ------- | ---- |  | - | ------- | 
|                             |  | 2004 |           |  | 2003 |   |         | 2002 | 
|                             |  |      |           |  |      |   |         |      | 
|Revenues:                    |  |      |           |  |      |   |         |      |  |   |         | 
|CES                          |  | $    | 1,258,101 |  |      | $ | 779,162 |      |  | $ | 388,586 | 
|Lyondell-Citgo Refining L.P. |  |      | *         |  |      |   | *       |      |  |   | 65,312  | 



|                                                      |  |      |     |  |      |   |   | 
|----------------------------------------------------- |  | ---- | --- |  | ---- | - | - | 
|                                                      |  | 2004 |     |  | 2003
|                                                      |  |      |     |  |     
|Receivables:                                          |  |      |     |  |      |   |   | 
|Calpine and related subsidiaries, net (primarily CES) |  | $    | 600 |  |      | $ |  | 






|  |                                             
|- | --------------------------------------------
|* | Customer not significant in respective year.



|   |                           
|-- | --------------------------
|9. | Related-Party Transactions



WECC Fixed Price Gas Sale and Power Purchase
Agreement


Index Based Gas Sale and Power Purchase
Agreement


Master Operation and Maintenance Agreement




F-24



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Master Maintenance Services Agreement




Master Construction Management Agreement


Administrative Services Agreement






F-25



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                   |                          |      |   |     |      |  |   |           | 
|------------------ | ------------------------ | ---- | - | --- | ---- |  | - | --------- | 
|                   |                          | 2004 |   |     | 2003 | 
|                   |                          |      |   |     |      | 
|As of December 31, |                          |      |   |     |      |  |   |          
|                   | Accounts receivable, net |      | $ | 600 |      |  | $ |          | 
|                   | Accounts payable, net    |      |   |    |      |  |   | 781       | 
|                   | Subordinated parent debt |      |   |    |      |  |   | 4,615,276 | 

|                                |                                    |      |   |           |      |  |   |         |  |  |   |         | 
|------------------------------- | ---------------------------------- | ---- | - | --------- | ---- |  | - | ------- |  |  | - | ------- | 
|                                |                                    | 2004 |   |           | 2003 |  |   | 2002    | 
|                                |                                    |      |   |           |      |  |   |         | 
|For the Year Ended December 31, |                                    |      |   |           |      |  |   |         |  |  |   |        
|                                | Revenue                            |      | $ | 1,258,101 |      |  | $ | 779,162 |  |  | $ | 388,586 | 
|                                | Fuel expense                       |      |   | 1,084,181 |      |  |   | 765,457 |  |  |   | 282,500 | 
|                                | Plant operating expense            |      |   | 7,367     |      |  |   | 37,639  |  |  |   | 16,035  | 
|                                | General and administrative expense |      |   | 5,340     |      |  |   | 5,150   |  |  |   | 3,086   | 
|                                | Interest expense                   |      |   | 72,173    |      |  |   | 255,687 |  |  |   | 111,304 | 





|    |                       
|--- | ----------------------
|10. | Derivative Instruments



F-26



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                 |                   |                                     |        |        |        | 
|-------------------------------- | ----------------- | ----------------------------------- | ------ | ------ | ------ | 
|Current derivative assets        |                   | $                                   | 9,272  |       
|Long-term derivative assets      |                   |                                     | 26,644 |       
|                                 |                   |                                     |       
|                                 | Total assets      |                                     | $      | 35,916 |       
|                                 |                   |                                     |       
|Current derivative liabilities   |                   | $                                   |       |       
|Long-term derivative liabilities |                   |                                     |       |       
|                                 |                   |                                     |       
|                                 | Total liabilities |                                     | $      |       |       
|                                 |                   |                                     |       
|                                 |                   | Net derivative assets (liabilities) |        | $      | 35,916 | 
|                                 |                   |                                     |       



|    |                              
|--- | -----------------------------
|11. | Commitments and Contingencies





|                    |       |            |         |         |      |   |         |         |     |   |            |         |  |        |        |        |       |   |        |         |  |   |       |       |  |   |         |           | 
|------------------- | ----- | ---------- | ------- | ------- | ---- | - | ------- | ------- | --- | - | ---------- | ------- |  | ------ | ------ | ------ | ----- | - | ------ | ------- |  | - | ----- | ----- |  | - | ------- | --------- | 
|                    |       | Long-Term  |         |         |      |   |         |         |     |   |            |         |  |        |       
|                    |       | Service    |         |         |      |   |         |         | O&M |   |            |         |  |        |        |       
|                    |       | Agreements |         |         | Fuel |   |         | Water   |     |   | Agreements |         |  | Leases |        |        | Other |   |        | Total   | 
|                    |       |            |         |         |      |   |         |         |     |   |            |         |  |        |        |        |       |   |        |         | 
|2005                |       | $          | 36,765  |         |      | $ | 16,066  |         |     | $ | 2,992      |         |  | $      | 1,382  |        |       | $ | 1,974  |         |  | $ | 960   |       |  | $ | 60,139  |          
|2006                |       |            | 44,025  |         |      |   | 16,066  |         |     |   | 3,651      |         |  |        | 952    |        |       |   | 2,104  |         |  |   | 960   |       |  |   | 67,758  |          
|2007                |       |            | 52,946  |         |      |   | 16,066  |         |     |   | 3,799      |         |  |        | 882    |        |       |   | 2,236  |         |  |   | 960   |       |  |   | 76,889  |          
|2008                |       |            | 45,135  |         |      |   | 16,387  |         |     |   | 3,947      |         |  |        | 831    |        |       |   | 2,726  |         |  |   | 846   |       |  |   | 69,872  |          
|2009                |       |            | 45,937  |         |      |   | 16,540  |         |     |   | 4,107      |         |  |        | 831    |        |       |   | 3,172  |         |  |   | 888   |       |  |   | 71,475  |          
|2010 and thereafter |       |            | 460,679 |         |      |   | 224,989 |         |     |   | 142,069    |         |  |        | 10,537 |        |       |   | 90,511 |         |  |   | 2,941 |       |  |   | 931,726 |          
|                    |       |            |         |         |      |   |         |         |     |   |            |         |  |        |        |        |       |   |        |         | 
|                    | Total |            | $       | 685,487 |      |   | $       | 306,114 |     |   | $          | 160,565 |  |        | $      | 15,415 |       |   | $      | 102,723 |  |   | $     | 7,555 |  |   | $       | 1,277,859 | 
|                    |       |            |         |         |      |   |         |         |     |   |            |         |  |        |        |        |       |   |        |         | 



Litigation




F-27



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Gary E. Jones, et al v. Calpine
Corporation


Solutia Bankruptcy


Panda Energy International, Inc., et al. v. Calpine
Corporation, et al.


F-28



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|    |                                                  
|--- | -------------------------------------------------
|12. | Quarterly Consolidated Financial Data (unaudited)



|                                                            |  |                |         |   |               |   |         |          |  |   |           |   |  |   |         |  
|----------------------------------------------------------- |  | -------------- | ------- | - | ------------- | - | ------- | -------- |  | - | --------- | - |  | - | ------- | -
|                                                            |  | Quarter Ended  |        
|                                                            |  |                |        
|                                                            |  | December 31,   |         |   | September 30, |   |         | June 30, |  |   | March 31, |  
|                                                            |  |                |         |   |               |   |         |          |  |   |           |  
|                                                            |  | (In thousands) |        
|2004, Restated (for periods through September 30,
    2004) |  |                |         |   |               |   |         |          |  |   |           |   |  |   |         |  
|Total revenue                                               |  | $              | 406,775 |   |               | $ | 551,955 |          |  | $ | 459,080   |   |  |   | 273,648 |  
|Gross profit                                                |  |                | 40,143  |   |               |   | 88,882  |          |  |   | 46,997    |   |  |   | 12,474  |  
|Income from operations                                      |  |                | 34,085  |   |               |   | 86,681  |          |  |   | 44,643    |   |  |   | 7,793   |  
|Net income (loss)                                           |  | $              | (15,878 | ) |               | $ | 45,199  |          |  | $ | 6,252     |   |  | $ | (93,718 | )
|2004, As reported(i)                                        |  |                |         |   |               |   |         |          |  |   |           |   |  |   |         |  
|Total revenue                                               |  | $              | 406,775 |   |               | $ | 561,762 |          |  | $ | 465,836   |   |  | $ | 273,964 |  
|Gross profit                                                |  |                | 40,143  |   |               |   | 98,689  |          |  |   | 53,753    |   |  |   | 12,790  |  
|Income from operations                                      |  |                | 34,085  |   |               |   | 96,488  |          |  |   | 51,399    |   |  |   | 8,109   |  
|Net income (loss)                                           |  | $              | (15,878 | ) |               | $ | 55,006  |          |  | $ | 13,008    |   |  | $ | (93,402 | )
|2003                                                        |  |                |         |   |               |   |         |          |  |   |           |   |  |   |         |  
|Total revenue                                               |  | $              | 247,802 |   |               | $ | 377,642 |          |  | $ | 268,353   |   |  | $ | 265,579 |  
|Gross profit                                                |  |                | 14,866  |   |               |   | 72,670  |          |  |   | 22,536    |   |  |   | 14,057  |  
|Income from operations                                      |  |                | 12,945  |   |               |   | 70,996  |          |  |   | 21,505    |   |  |   | 12,872  |  
|Cumulative effect of a change in accounting principle       |  |                |        |   |               |   |        |          |  |   |          |   |  |   | (241    | )
|Net loss                                                    |  | $              | (75,492 | ) |               | $ | (18,660 | )        |  | $ | (51,370   | ) |  | $ | (47,234 | )






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i) | As reported in the Companys Form 10-Q filing for
    quarter ended September 30, 2004 or in the Companys
    Form S-4 registration statements previously filed during
    2004. The consolidated financial statements as of and for the
    three and nine months ended September 30, 2004, the three
    and six months ended June 30, 2004 and the three months
    ended March 31, 2004 are herein restated to correct
    revenue, gross profit, income from operations and net income,
    which had been overstated due to the billing error discussed
    below.



F-29



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|    |                                                                             
|--- | ----------------------------------------------------------------------------
|13. | Guarantor Subsidiaries  Supplemental Consolidating
    Financial Statements





F-30



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


SUPPLEMENTAL CONSOLIDATING BALANCE SHEET


December 31, 2004


|                                 |                                          |                                        |   |            |            |  |       |              |           |               |             |         |         |              |   |            |            |   |   |           |           | 
|-------------------------------- | ---------------------------------------- | -------------------------------------- | - | ---------- | ---------- |  | ----- | ------------ | --------- | ------------- | ----------- | ------- | ------- | ------------ | - | ---------- | ---------- | - | - | --------- | --------- | 
|                                 |                                          |                                        |   |            |            |  |       |              |           | Calpine       |            
|                                 |                                          |                                        |   |            |            |  |       |              |           | Generating    |            
|                                 |                                          |                                        |   |            |            |  |       |              |           | Company,      |            
|                                 |                                          |                                        |   | Subsidiary |            |  | Other |              |           | Consolidating |             |         | LLC     |             
|                                 |                                          | Parent                                 |   |            | Guarantors |  |       | Subsidiaries |           |               | Adjustments |         |         | Consolidated |  
|                                 |                                          |                                        |   |            |            |  |       |              |           |               |             |         |         |              |  
|                                 |                                          | (In thousands)                         |  
|ASSETS                          
|Current assets:                  |                                          |                                        |   |            |            |  |       |              |           |               |             |         |         |              |   |            |            |   |   |          
|                                 | Cash and cash equivalents                |                                        | $ | 64,510     |            |  | $     | 28           |           |               | $           |        |         |              | $ |           |            |   | $ | 64,538    |          
|                                 | Accounts receivable, net                 |                                        |   |           |            |  |       | 59,302       |           |               |             | 18      |         |              |   |           |            |   |   | 59,320    |          
|                                 | Accounts receivable, net  related party |                                        |   | 62,131     |            |  |       | 119,589      |           |               |             |        |         |              |   | (181,120   | )          |   |   | 600       |          
|                                 | Inventories                              |                                        |   |           |            |  |       | 18,456       |           |               |             | 1,145   |         |              |   |           |            |   |   | 19,601    |          
|                                 | Current derivative assets                |                                        |   | 9,272      |            |  |       |             |           |               |             |        |         |              |   |           |            |   |   | 9,272     |          
|                                 | Prepaid and other current assets         |                                        |   | 62         |            |  |       | 21,386       |           |               |             | 88      |         |              |   |           |            |   |   | 21,536    |          
|                                 |                                          |                                        |   |            |            |  |       |              |           |               |             |         |         |              |  
|                                 |                                          | Total current assets                   |   |            | 135,975    |  |       |              | 218,761   |               |             |         | 1,251   |              |   |            | (181,120   | ) |   |           | 174,867   | 
|                                 |                                          |                                        |   |            |            |  |       |              |           |               |             |         |         |              |  
|                                 | Property, plant and equipment, net       |                                        |   | 7          |            |  |       | 5,969,576    |           |               |             | 324,846 |         |              |   |           |            |   |   | 6,294,429 |          
|                                 | Investment in affiliates                 |                                        |   | 4,051,326  |            |  |       |             |           |               |             |        |         |              |   | (4,051,326 | )          |   |   |          |          
|                                 | Notes receivable, net of current portion |                                        |   |           |            |  |       | 19,381       |           |               |             |        |         |              |   |           |            |   |   | 19,381    |          
|                                 | Notes receivable  affiliate             |                                        |   | 2,397,160  |            |  |       |             |           |               |             |        |         |              |   | (2,397,160 | )          |   |   |          |          
|                                 | Deferred financing costs, net            |                                        |   | 51,496     |            |  |       | 49,329       |           |               |             | 2,167   |         |              |   | (51,496    | )          |   |   | 51,496    |          
|                                 | Long-term derivative assets              |                                        |   | 26,644     |            |  |       |             |           |               |             |        |         |              |   |           |            |   |   | 26,644    |          
|                                 | Deferred tax asset                       |                                        |   |           |            |  |       | 16,310       |           |               |             | 1,362   |         |              |   |           |            |   |   | 17,672    |          
|                                 | Other assets                             |                                        |   |           |            |  |       | 54,245       |           |               |             |        |         |              |   |           |            |   |   | 54,245    |          
|                                 |                                          |                                        |   |            |            |  |       |              |           |               |             |         |         |              |  
|                                 |                                          | Total assets                           |   | $          | 6,662,608  |  |       | $            | 6,327,602 |               |             | $       | 329,626 |              |   | $          | (6,681,102 | ) |   | $         | 6,638,734 | 
|                                 |                                          |                                        |   |            |            |  |       |              |           |               |             |         |         |              |  
|                                
|LIABILITIES AND MEMBERS DEFICIT
|Current liabilities:             |                                          |                                        |   |            |            |  |       |              |           |               |             |         |         |              |   |            |            |   |   |          
|                                 | Accounts payable                         |                                        | $ | 31,809     |            |  | $     | 66,880       |           |               | $           | 523     |         |              | $ |           |            |   | $ | 99,212    |          
|                                 | Accounts payable, net  related party    |                                        |   | 140,153    |            |  |       |             |           |               |             | 40,967  |         |              |   | (181,120   | )          |   |   |          |          
|                                 | Notes payable, current portion           |                                        |   |           |            |  |       | 168          |           |               |             |        |         |              |   |           |            |   |   | 168       |          
|                                 | Accrued interest payable                 |                                        |   | 53,324     |            |  |       | 51,028       |           |               |             | 2,296   |         |              |   | (53,324    | )          |   |   | 53,324    |          
|                                 | Deferred tax liability                   |                                        |   |           |            |  |       | 16,310       |           |               |             | 1,362   |         |              |   |           |            |   |   | 17,672    |          
|                                 | Other current liabilities                |                                        |   |           |            |  |       | 2,871        |           |               |             | 99      |         |              |   |           |            |   |   | 2,970     |          
|                                 |                                          |                                        |   |            |            |  |       |              |           |               |             |         |         |              |  
|                                 |                                          | Total current liabilities              |   |            | 225,286    |  |       |              | 137,257   |               |             |         | 45,247  |              |   |            | (234,444   | ) |   |           | 173,346   | 
|                                 |                                          |                                        |   |            |            |  |       |              |           |               |             |         |         |              |  
|                                 | Notes payable, net of current portion    |                                        |   |           |            |  |       | 2,109        |           |               |             |        |         |              |   |           |            |   |   | 2,109     |          
|                                 | Priority notes and term loans            |                                        |   | 2,395,332  |            |  |       | 2,285,307    |           |               |             | 110,025 |         |              |   | (2,395,332 | )          |   |   | 2,395,332 |          
|                                 | Deferred revenue                         |                                        |   |           |            |  |       | 5,671        |           |               |             |        |         |              |   |           |            |   |   | 5,671     |          
|                                 | Other liabilities                        |                                        |   |           |            |  |       | 20,286       |           |               |             |        |         |              |   |           |            |   |   | 20,286    |          
|                                 |                                          |                                        |   |            |            |  |       |              |           |               |             |         |         |              |  
|                                 |                                          | Total liabilities                      |   |            | 2,620,618  |  |       |              | 2,450,630 |               |             |         | 155,272 |              |   |            | (2,629,776 | ) |   |           | 2,596,744 | 
|Commitments and contingencies    |                                          |                                        |   |            |            |  |       |              |           |               |             |         |         |              |   |            |            |   |   |          
|                                 | Members equity                          |                                        |   | 4,041,990  |            |  |       | 3,876,972    |           |               |             | 174,354 |         |              |   | (4,051,326 | )          |   |   | 4,041,990 |          
|                                 |                                          |                                        |   |            |            |  |       |              |           |               |             |         |         |              |  
|                                 |                                          | Total liabilities and members deficit |   | $          | 6,662,608  |  |       | $            | 6,327,602 |               |             | $       | 329,626 |              |   | $          | (6,681,102 | ) |   | $         | 6,638,734 | 
|                                 |                                          |                                        |   |            |            |  |       |              |           |               |             |         |         |              |  

F-31



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


SUPPLEMENTAL CONSOLIDATING BALANCE SHEET


December 31, 2003


|                                 |                                       |                                        |   |            |   |  |              |           |           |               |   |              |         |  |   |   |   |  |   |           |           | 
|-------------------------------- | ------------------------------------- | -------------------------------------- | - | ---------- | - |  | ------------ | --------- | --------- | ------------- | - | ------------ | ------- |  | - | - | - |  | - | --------- | --------- | 
|                                 |                                       |                                        |   |            |   |  |              |           |           | Calpine       |  
|                                 |                                       |                                        |   |            |   |  |              |           |           | Generating    |  
|                                 |                                       |                                        |   |            |   |  |              |           |           | Company,      |  
|                                 |                                       |                                        |   | Subsidiary |   |  | Other        |           |           | Consolidating |   | LLC          |        
|                                 |                                       | Parent                                 |   | Guarantors |   |  | Subsidiaries |           |           | Adjustments   |   | Consolidated |        
|                                 |                                       |                                        |   |            |   |  |              |           |           |               |   |              |        
|                                 |                                       | (In thousands)                         |  
|ASSETS                          
|Current assets:                  |                                       |                                        |   |            |   |  |              |           |           |               |   |              |         |  |   |   |   |  |   |          
|                                 | Cash and cash equivalents             |                                        | $ |           |   |  | $            | 39,595    |           |               | $ | 3            |         |  | $ |  |   |  | $ | 39,598    |          
|                                 | Restricted cash                       |                                        |   |           |   |  |              | 152,290   |           |               |   |             |         |  |   |  |   |  |   | 152,290   |          
|                                 | Accounts receivable, net              |                                        |   |           |   |  |              | 47,555    |           |               |   |             |         |  |   |  |   |  |   | 47,555    |          
|                                 | Inventories                           |                                        |   |           |   |  |              | 13,301    |           |               |   |             |         |  |   |  |   |  |   | 13,301    |          
|                                 | Prepaid and other current assets      |                                        |   |           |   |  |              | 28,818    |           |               |   | 626          |         |  |   |  |   |  |   | 29,444    |          
|                                 |                                       |                                        |   |            |   |  |              |           |           |               |   |              |         |  |  
|                                 |                                       | Total current assets                   |   |            |  |  |              |           | 281,559   |               |   |              | 629     |  |   |   |  |  |   |           | 282,188   | 
|                                 | Property, plant and equipment, net    |                                        |   |           |   |  |              | 6,034,006 |           |               |   | 280,160      |         |  |   |  |   |  |   | 6,314,166 |          
|                                 | Deferred financing costs, net         |                                        |   |           |   |  |              | 17,775    |           |               |   |             |         |  |   |  |   |  |   | 17,775    |          
|                                 | Other assets                          |                                        |   |           |   |  |              | 44,289    |           |               |   |             |         |  |   |  |   |  |   | 44,289    |          
|                                 |                                       |                                        |   |            |   |  |              |           |           |               |   |              |         |  |  
|                                 |                                       | Total assets                           |   | $          |  |  |              | $         | 6,377,629 |               |   | $            | 280,789 |  |   | $ |  |  |   | $         | 6,658,418 | 
|                                 |                                       |                                        |   |            |   |  |              |           |           |               |   |              |         |  |  
|                                
|LIABILITIES AND MEMBERS DEFICIT
|Current liabilities:             |                                       |                                        |   |            |   |  |              |           |           |               |   |              |         |  |   |   |   |  |   |          
|                                 | Accounts payable                      |                                        | $ |           |   |  | $            | 104,049   |           |               | $ | 9,898        |         |  | $ |  |   |  | $ | 113,947   |          
|                                 | Accounts payable, net  related party |                                        |   |           |   |  |              | 781       |           |               |   |             |         |  |   |  |   |  |   | 781       |          
|                                 | Notes payable, current portion        |                                        |   |           |   |  |              | 154       |           |               |   |             |         |  |   |  |   |  |   | 154       |          
|                                 | Construction credit facility          |                                        |   |           |   |  |              | 2,200,358 |           |               |   |             |         |  |   |  |   |  |   | 2,200,358 |          
|                                 | Accrued interest payable              |                                        |   |           |   |  |              | 99        |           |               |   |             |         |  |   |  |   |  |   | 99        |          
|                                 | Other current liabilities             |                                        |   |           |   |  |              | 4,828     |           |               |   | 11           |         |  |   |  |   |  |   | 4,839     |          
|                                 |                                       |                                        |   |            |   |  |              |           |           |               |   |              |         |  |  
|                                 |                                       | Total current liabilities              |   |            |  |  |              |           | 2,310,269 |               |   |              | 9,909   |  |   |   |  |  |   |           | 2,320,178 | 
|                                 | Notes payable, net of current portion |                                        |   |           |   |  |              | 2,285     |           |               |   |             |         |  |   |  |   |  |   | 2,285     |          
|                                 | Subordinated parent debt              |                                        |   |           |   |  |              | 4,343,254 |           |               |   | 272,022      |         |  |   |  |   |  |   | 4,615,276 |          
|                                 | Other liabilities                     |                                        |   |           |   |  |              | 3,651     |           |               |   |             |         |  |   |  |   |  |   | 3,651     |          
|                                 |                                       |                                        |   |            |   |  |              |           |           |               |   |              |         |  |  
|                                 |                                       | Total liabilities                      |   |            |  |  |              |           | 6,659,459 |               |   |              | 281,931 |  |   |   |  |  |   |           | 6,941,390 | 
|Commitments and contingencies    |                                       |                                        |   |            |   |  |              |           |           |               |   |              |         |  |   |   |   |  |   |          
|                                 | Members deficit                      |                                        |   |           |   |  |              | (281,830  | )         |               |   | (1,142       | )       |  |   |  |   |  |   | (282,972  | )        
|                                 |                                       |                                        |   |            |   |  |              |           |           |               |   |              |         |  |  
|                                 |                                       | Total liabilities and members deficit |   | $          |  |  |              | $         | 6,377,629 |               |   | $            | 280,789 |  |   | $ |  |  |   | $         | 6,658,418 | 
|                                 |                                       |                                        |   |            |   |  |              |           |           |               |   |              |         |  |  

F-32



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS


For the year ended December 31, 2004


|                 |                                               |                                     |                     |            |            |         |       |              |           |               |             |        |        |              |   |          |        |        |   |           |           |         |  
|---------------- | --------------------------------------------- | ----------------------------------- | ------------------- | ---------- | ---------- | ------- | ----- | ------------ | --------- | ------------- | ----------- | ------ | ------ | ------------ | - | -------- | ------ | ------ | - | --------- | --------- | ------- | -
|                 |                                               |                                     |                     |            |            |         |       |              |           | Calpine       |            
|                 |                                               |                                     |                     |            |            |         |       |              |           | Generating    |            
|                 |                                               |                                     |                     |            |            |         |       |              |           | Company,      |            
|                 |                                               |                                     |                     | Subsidiary |            |         | Other |              |           | Consolidating |             |        | LLC    |             
|                 |                                               | Parent                              |                     |            | Guarantors |         |       | Subsidiaries |           |               | Adjustments |        |        | Consolidated |  
|                 |                                               |                                     |                     |            |            |         |       |              |           |               |             |        |        |              |  
|                 |                                               | (In thousands)                      |                    
|Revenue:         |                                               |                                     |                     |            |            |         |       |              |           |               |             |        |        |              |   |          |        |        |   |          
|                 | Electricity and steam revenue  related party |                                     | $                   |           |            |         | $     | 1,243,125    |           |               | $           | 14,976 |        |              | $ |         |        |        | $ | 1,258,101 |          
|                 | Electricity and steam revenue  third-party   |                                     |                     |           |            |         |       | 452,805      |           |               |             |       |        |              |   |         |        |        |   | 452,805   |          
|                 |                                               |                                     |                     |            |            |         |       |              |           |               |             |        |        |              |  
|                 |                                               | Total electricity and steam revenue |                     |            |           |         |       |              | 1,695,930 |               |             |        | 14,976 |              |   |          |       |        |   |           | 1,710,906 |        
|                 | Mark-to-market activity, net                  |                                     |                     | (9,084     | )          |         |       |             |           |               |             |       |        |              |   |         |        |        |   | (9,084    | )        
|                 | Sale of purchased power                       |                                     |                     |           |            |         |       | 3,208        |           |               |             |       |        |              |   |         |        |        |   | 3,208     |          
|                 | Other revenue                                 |                                     |                     |           |            |         |       | 3,307        |           |               |             |       |        |              |   |         |        |        |   | 3,307     |          
|                 |                                               |                                     |                     |            |            |         |       |              |           |               |             |        |        |              |  
|                 |                                               | Total revenue                       |                     |            | (9,084     | )       |       |              | 1,702,445 |               |             |        | 14,976 |              |   |          |       |        |   |           | 1,708,337 |        
|                 |                                               |                                     |                     |            |            |         |       |              |           |               |             |        |        |              |  
|Cost of revenue: |                                               |                                     |                     |            |            |         |       |              |           |               |             |        |        |              |   |          |        |        |   |          
|                 | Plant operating expense                       |                                     |                     |           |            |         |       | 175,393      |           |               |             | 3,225  |        |              |   |         |        |        |   | 178,618   |          
|                 | Fuel expense                                  |                                     |                     |           |            |         |       | 1,175,102    |           |               |             | 11,093 |        |              |   |         |        |        |   | 1,186,195 |          
|                 | Purchased power expense                       |                                     |                     |           |            |         |       | 3,308        |           |               |             |       |        |              |   |         |        |        |   | 3,308     |          
|                 | Depreciation and amortization expense         |                                     |                     |           |            |         |       | 148,902      |           |               |             | 2,818  |        |              |   |         |        |        |   | 151,720   |          
|                 |                                               |                                     |                     |            |            |         |       |              |           |               |             |        |        |              |  
|                 |                                               | Total cost of revenue               |                     |            |           |         |       |              | 1,502,705 |               |             |        | 17,136 |              |   |          |       |        |   |           | 1,519,841 |        
|                 |                                               |                                     |                     |            |            |         |       |              |           |               |             |        |        |              |  
|                 |                                               |                                     | Gross profit (loss) |            |            | (9,084  | )     |              |           | 199,740       |             |        |        | (2,160       | ) |          |        |       |   |           |           | 188,496 |  
|                 | Sales, general and administrative expense     |                                     |                     | 661        |            |         |       | 9,527        |           |               |             | 1,352  |        |              |   |         |        |        |   | 11,540    |          
|                 | Other operating expense                       |                                     |                     |           |            |         |       | 3,754        |           |               |             |       |        |              |   |         |        |        |   | 3,754     |          
|                 |                                               |                                     |                     |            |            |         |       |              |           |               |             |        |        |              |  
|                 |                                               | Income (loss) from operations       |                     |            | (9,745     | )       |       |              | 186,459   |               |             |        | (3,512 | )            |   |          |       |        |   |           | 173,202   |        
|                 |                                               |                                     |                     |            |            |         |       |              |           |               |             |        |        |              |  
|                 | Interest expense  related party              |                                     |                     |           |            |         |       | 72,026       |           |               |             | 147    |        |              |   |         |        |        |   | 72,173    |          
|                 | Interest expense  third party                |                                     |                     | 130,049    |            |         |       | 158,046      |           |               |             | 2,777  |        |              |   | (130,049 | )      |        |   | 160,823   |          
|                 | Interest (income)                             |                                     |                     | (130,331   | )          |         |       | (2,254       | )         |               |             |       |        |              |   | 130,049  |        |        |   | (2,536    | )        
|                 | Equity loss in subsidiary                     |                                     |                     | (48,809    | )          |         |       |             |           |               |             |       |        |              |   | 48,809   |        |        |   |          |          
|                 | Other expense, net (income)                   |                                     |                     | (127       | )          |         |       | 940          |           |               |             | 74     |        |              |   |         |        |        |   | 887       |          
|                 |                                               |                                     |                     |            |            |         |       |              |           |               |             |        |        |              |  
|                 |                                               | Loss before income taxes            |                     |            | (58,145    | )       |       |              | (42,999   | )             |             |        | (6,510 | )            |   |          | 48,809 |        |   |           | (58,145   | )      
|                 | Income taxes                                  |                                     |                     |           |            |         |       |             |           |               |             |       |        |              |   |         |        |        |   |          |          
|                 |                                               |                                     |                     |            |            |         |       |              |           |               |             |        |        |              |  
|                 |                                               |                                     | Net loss            |            | $          | (58,145 | )     |              | $         | (42,999       | )           |        | $      | (6,510       | ) |          | $      | 48,809 |   |           | $         | (58,145 | )
|                 |                                               |                                     |                     |            |            |         |       |              |           |               |             |        |        |              |  

F-33



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS


For the year ended December 31, 2003


|                 |                                                       |                                                                                              |              |            |   |   |              |         |           |               |   |              |        |   |   |   |   |   |   |         |           |         | 
|---------------- | ----------------------------------------------------- | -------------------------------------------------------------------------------------------- | ------------ | ---------- | - | - | ------------ | ------- | --------- | ------------- | - | ------------ | ------ | - | - | - | - | - | - | ------- | --------- | ------- | 
|                 |                                                       |                                                                                              |              |            |   |   |              |         |           | Calpine       |  
|                 |                                                       |                                                                                              |              |            |   |   |              |         |           | Generating    |  
|                 |                                                       |                                                                                              |              |            |   |   |              |         |           | Company,      |  
|                 |                                                       |                                                                                              |              | Subsidiary |   |   | Other        |         |           | Consolidating |   | LLC          |       
|                 |                                                       | Parent                                                                                       |              | Guarantors |   |   | Subsidiaries |         |           | Adjustments   |   | Consolidated |       
|                 |                                                       |                                                                                              |              |            |   |   |              |         |           |               |   |              |       
|                 |                                                       | (In thousands)                                                                               |             
|Revenue:         |                                                       |                                                                                              |              |            |   |   |              |         |           |               |   |              |        |   |   |   |   |   |   |        
|                 | Electricity and steam revenue  related party         |                                                                                              | $            |           |   |   | $            | 779,162 |           |               | $ |             |        |   | $ |  |   |   | $ | 779,162 |          
|                 | Electricity and steam revenue  third-party           |                                                                                              |              |           |   |   |              | 369,206 |           |               |   | 3            |        |   |   |  |   |   |   | 369,209 |          
|                 |                                                       |                                                                                              |              |            |   |   |              |         |           |               |   |              |        |   |  
|                 |                                                       | Total electricity and steam revenue                                                          |              |            |  |   |              |         | 1,148,368 |               |   |              | 3      |   |   |   |  |   |   |         | 1,148,371 |        
|                 | Sale of purchased power                               |                                                                                              |              |           |   |   |              | 7,708   |           |               |   |             |        |   |   |  |   |   |   | 7,708   |          
|                 | Other revenue                                         |                                                                                              |              |           |   |   |              | 3,297   |           |               |   |             |        |   |   |  |   |   |   | 3,297   |          
|                 |                                                       |                                                                                              |              |            |   |   |              |         |           |               |   |              |        |   |  
|                 |                                                       | Total revenue                                                                                |              |            |  |   |              |         | 1,159,373 |               |   |              | 3      |   |   |   |  |   |   |         | 1,159,376 |        
|                 |                                                       |                                                                                              |              |            |   |   |              |         |           |               |   |              |        |   |  
|Cost of revenue: |                                                       |                                                                                              |              |            |   |   |              |         |           |               |   |              |        |   |   |   |   |   |   |        
|                 | Plant operating expense                               |                                                                                              |              |           |   |   |              | 131,636 |           |               |   |             |        |   |   |  |   |   |   | 131,636 |          
|                 | Fuel expense                                          |                                                                                              |              |           |   |   |              | 770,208 |           |               |   |             |        |   |   |  |   |   |   | 770,208 |          
|                 | Purchased power expense                               |                                                                                              |              |           |   |   |              | 12,395  |           |               |   |             |        |   |   |  |   |   |   | 12,395  |          
|                 | Depreciation and amortization expense                 |                                                                                              |              |           |   |   |              | 121,008 |           |               |   |             |        |   |   |  |   |   |   | 121,008 |          
|                 |                                                       |                                                                                              |              |            |   |   |              |         |           |               |   |              |        |   |  
|                 |                                                       | Total cost of revenue                                                                        |              |            |  |   |              |         | 1,035,247 |               |   |              |       |   |   |   |  |   |   |         | 1,035,247 |        
|                 |                                                       |                                                                                              |              |            |   |   |              |         |           |               |   |              |        |   |  
|                 |                                                       |                                                                                              | Gross profit |            |   |  |              |         |           | 124,126       |   |              |        | 3 |   |   |   |  |   |         |           | 124,129 | 
|                 | Sales, general and administrative expense             |                                                                                              |              |           |   |   |              | 5,638   |           |               |   |             |        |   |   |  |   |   |   | 5,638   |          
|                 | Other operating expense                               |                                                                                              |              |           |   |   |              | 60      |           |               |   | 113          |        |   |   |  |   |   |   | 173     |          
|                 |                                                       |                                                                                              |              |            |   |   |              |         |           |               |   |              |        |   |  
|                 |                                                       | Income (loss) from operations                                                                |              |            |  |   |              |         | 118,428   |               |   |              | (110   | ) |   |   |  |   |   |         | 118,318   |        
|                 |                                                       |                                                                                              |              |            |   |   |              |         |           |               |   |              |        |   |  
|                 | Interest expense  related party                      |                                                                                              |              |           |   |   |              | 255,036 |           |               |   | 651          |        |   |   |  |   |   |   | 255,687 |          
|                 | Interest expense  third party                        |                                                                                              |              |           |   |   |              | 56,637  |           |               |   | 367          |        |   |   |  |   |   |   | 57,004  |          
|                 | Interest (income)                                     |                                                                                              |              |           |   |   |              | (2,061  | )         |               |   |             |        |   |   |  |   |   |   | (2,061  | )        
|                 | Other expense, net (income)                           |                                                                                              |              |           |   |   |              | 182     |           |               |   | 21           |        |   |   |  |   |   |   | 203     |          
|                 |                                                       |                                                                                              |              |            |   |   |              |         |           |               |   |              |        |   |  
|                 |                                                       | Loss before income taxes and cumulative effect of a change in
    accounting principle taxes |              |            |  |   |              |         | (191,366  | )             |   |              | (1,149 | ) |   |   |  |   |   |         | (192,515  | )      
|                 | Income taxes                                          |                                                                                              |              |           |   |   |              |        |           |               |   |             |        |   |   |  |   |   |   |        |          
|                 |                                                       |                                                                                              |             |            |   |   |             |         |           |               |  |              |        |   |  |   |   |   |  |        
|                 |                                                       | Loss before cumulative effect of a change in accounting principle                            |              |            |  |   |              |         | (191,366  | )             |   |              | (1,149 | ) |   |   |  |   |   |         | (192,515  | )      
|                 | Cumulative effect of a change in accounting principle |                                                                                              |              |           |   |   |              | (241    | )         |               |   |             |        |   |   |  |   |   |   | (241    | )        
|                 |                                                       |                                                                                              |              |            |   |   |              |         |           |               |   |              |        |   |  
|                 |                                                       | Net loss                                                                                     |              | $          |  |   |              | $       | (191,607  | )             |   | $            | (1,149 | ) |   | $ |  |   |   | $       | (192,756  | )      
|                 |                                                       |                                                                                              |              |            |   |   |              |         |           |               |   |              |        |   |  

F-34



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


SUPPLEMENTAL CONSOLIDATING STATEMENT OF OPERATIONS


For the year ended December 31, 2002


|                 |                                               |                                     |                   |            |   |   |              |         |          |               |   |              |    |    |   |   |   |   |   |         |          |          |  
|---------------- | --------------------------------------------- | ----------------------------------- | ----------------- | ---------- | - | - | ------------ | ------- | -------- | ------------- | - | ------------ | -- | -- | - | - | - | - | - | ------- | -------- | -------- | -
|                 |                                               |                                     |                   |            |   |   |              |         |          | Calpine       |  
|                 |                                               |                                     |                   |            |   |   |              |         |          | Generating    |  
|                 |                                               |                                     |                   |            |   |   |              |         |          | Company,      |  
|                 |                                               |                                     |                   | Subsidiary |   |   | Other        |         |          | Consolidating |   | LLC          |   
|                 |                                               | Parent                              |                   | Guarantors |   |   | Subsidiaries |         |          | Adjustments   |   | Consolidated |   
|                 |                                               |                                     |                   |            |   |   |              |         |          |               |   |              |   
|                 |                                               | (In thousands)                      |                  
|Revenue:         |                                               |                                     |                   |            |   |   |              |         |          |               |   |              |    |    |   |   |   |   |   |        
|                 | Electricity and steam revenue  related party |                                     | $                 |           |   |   | $            | 388,586 |          |               | $ |             |    |    | $ |  |   |   | $ | 388,586 |         
|                 | Electricity and steam revenue  third-party   |                                     |                   |           |   |   |              | 152,091 |          |               |   | 19           |    |    |   |  |   |   |   | 152,110 |         
|                 |                                               |                                     |                   |            |   |   |              |         |          |               |   |              |    |    |  
|                 |                                               | Total electricity and steam revenue |                   |            |  |   |              |         | 540,677  |               |   |              | 19 |    |   |   |  |   |   |         | 540,696  |         
|                 | Other revenue                                 |                                     |                   |           |   |   |              | 3,297   |          |               |   |             |    |    |   |  |   |   |   | 3,297   |         
|                 |                                               |                                     |                   |            |   |   |              |         |          |               |   |              |    |    |  
|                 |                                               | Total revenue                       |                   |            |  |   |              |         | 543,974  |               |   |              | 19 |    |   |   |  |   |   |         | 543,993  |         
|                 |                                               |                                     |                   |            |   |   |              |         |          |               |   |              |    |    |  
|Cost of revenue: |                                               |                                     |                   |            |   |   |              |         |          |               |   |              |    |    |   |   |   |   |   |        
|                 | Plant operating expense                       |                                     |                   |           |   |   |              | 80,834  |          |               |   |             |    |    |   |  |   |   |   | 80,834  |         
|                 | Fuel expense                                  |                                     |                   |           |   |   |              | 288,894 |          |               |   |             |    |    |   |  |   |   |   | 288,894 |         
|                 | Depreciation and amortization expense         |                                     |                   |           |   |   |              | 59,907  |          |               |   |             |    |    |   |  |   |   |   | 59,907  |         
|                 |                                               |                                     |                   |            |   |   |              |         |          |               |   |              |    |    |  
|                 |                                               | Total cost of revenue               |                   |            |  |   |              |         | 429,635  |               |   |              |   |    |   |   |  |   |   |         | 429,635  |         
|                 |                                               |                                     |                   |            |   |   |              |         |          |               |   |              |    |    |  
|                 |                                               |                                     | Gross profit      |            |   |  |              |         |          | 114,339       |   |              |    | 19 |   |   |   |  |   |         |          | 114,358  |  
|                 | Equipment cancellation and impairment cost    |                                     |                   |           |   |   |              | 115,121 |          |               |   |             |    |    |   |  |   |   |   | 115,121 |         
|                 | Sales, general and administrative expense     |                                     |                   |           |   |   |              | 3,347   |          |               |   |             |    |    |   |  |   |   |   | 3,347   |         
|                 | Other operating expense                       |                                     |                   |           |   |   |              | 429     |          |               |   | 3            |    |    |   |  |   |   |   | 432     |         
|                 |                                               |                                     |                   |            |   |   |              |         |          |               |   |              |    |    |  
|                 |                                               | Income (loss) from operations       |                   |            |  |   |              |         | (4,558   | )             |   |              | 16 |    |   |   |  |   |   |         | (4,542   | )       
|                 |                                               |                                     |                   |            |   |   |              |         |          |               |   |              |    |    |  
|                 | Interest expense  related party              |                                     |                   |           |   |   |              | 111,304 |          |               |   |             |    |    |   |  |   |   |   | 111,304 |         
|                 | Interest expense  third party                |                                     |                   |           |   |   |              | 33,320  |          |               |   |             |    |    |   |  |   |   |   | 33,320  |         
|                 | Interest (income)                             |                                     |                   |           |   |   |              | (537    | )        |               |   |             |    |    |   |  |   |   |   | (537    | )       
|                 | Other expense, net (income)                   |                                     |                   |           |   |   |              | 1,515   |          |               |   |             |    |    |   |  |   |   |   | 1,515   |         
|                 |                                               |                                     |                   |            |   |   |              |         |          |               |   |              |    |    |  
|                 |                                               | Loss before income taxes            |                   |            |  |   |              |         | (150,160 | )             |   |              | 16 |    |   |   |  |   |   |         | (150,144 | )       
|                 | Income taxes                                  |                                     |                   |           |   |   |              |        |          |               |   |             |    |    |   |  |   |   |   |        |         
|                 |                                               |                                     |                   |            |   |   |              |         |          |               |   |              |    |    |  
|                 |                                               |                                     | Net income (loss) |            | $ |  |              |         | $        | (150,160      | ) |              | $  | 16 |   |   | $ |  |   |         | $        | (150,144 | )
|                 |                                               |                                     |                   |            |   |   |              |         |          |               |   |              |    |    |  

F-35



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS


For the year ended December 31, 2004


|                                               |                                                                                       |                                                               |                                                      |                                                     |            |           |            |              |          |               |             |        |         |              |         |        |           |            |            |         |          |            |          |  
|---------------------------------------------- | ------------------------------------------------------------------------------------- | ------------------------------------------------------------- | ---------------------------------------------------- | --------------------------------------------------- | ---------- | --------- | ---------- | ------------ | -------- | ------------- | ----------- | ------ | ------- | ------------ | ------- | ------ | --------- | ---------- | ---------- | ------- | -------- | ---------- | -------- | -
|                                               |                                                                                       |                                                               |                                                      |                                                     |            |           |            |              |          | Calpine       |            
|                                               |                                                                                       |                                                               |                                                      |                                                     |            |           |            |              |          | Generating    |            
|                                               |                                                                                       |                                                               |                                                      |                                                     |            |           |            |              |          | Company,      |            
|                                               |                                                                                       |                                                               |                                                      | Subsidiary                                          |            |           | Other      |              |          | Consolidating |             |        | LLC     |             
|                                               |                                                                                       | Parent                                                        |                                                      |                                                     | Guarantors |           |            | Subsidiaries |          |               | Adjustments |        |         | Consolidated |        
|                                               |                                                                                       |                                                               |                                                      |                                                     |            |           |            |              |          |               |             |        |         |              |        
|                                               |                                                                                       | (In thousands)                                                |                                                     
|Cash flows from operating activities:          |                                                                                       |                                                               |                                                      |                                                     |            |           |            |              |          |               |             |        |         |              |         |        |           |            |            |        
|                                               | Net income (loss)                                                                     |                                                               | $                                                    | (58,145                                             | )          |           | $          | (42,299      | )        |               | $           | (6,510 | )       |              | $       | 48,809 |           |            | $          | (58,145 | )       
|                                               | Adjustments to reconcile net income to net cash provided by
    operating activities: |                                                               |                                                      |                                                     |            |           |            |              |          |               |             |        |         |              |         |        |           |            |            |         |         
|                                               |                                                                                       |                                                               | Depreciation and amortization                        |                                                     |            |          |            |              |          | 148,902       |             |        |         | 2,818        |         |        |           |           |            |         |          | 151,720    |         
|                                               |                                                                                       |                                                               | Amortization of deferred financing costs             |                                                     |            | 11,511    |            |              |          | 11,426        |             |        |         | 85           |         |        |           | (11,511    | )          |         |          | 11,511     |         
|                                               |                                                                                       |                                                               | Write-off of deferred financing costs                |                                                     |            |          |            |              |          | 12,457        |             |        |         |             |         |        |           |           |            |         |          | 12,457     |         
|                                               |                                                                                       |                                                               | Change in derivative assets and liabilities          |                                                     |            | 9,084     |            |              |          |              |             |        |         |             |         |        |           |           |            |         |          | 9,084      |         
|                                               |                                                                                       |                                                               | Interest on subordinated parent debt                 |                                                     |            |          |            |              |          | 72,026        |             |        |         | 147          |         |        |           |           |            |         |          | 72,173     |         
|                                               |                                                                                       |                                                               | Equity loss in subsidiary                            |                                                     |            | 48,809    |            |              |          |              |             |        |         |             |         |        |           | (48,809    | )          |         |          |           |         
|                                               |                                                                                       |                                                               | Cost allocated from parent                           |                                                     |            |          |            |              |          | 3,633         |             |        |         |             |         |        |           |           |            |         |          | 3,633      |         
|                                               | Change in operating assets and liabilities:                                           |                                                               |                                                      |                                                     |            |           |            |              |          |               |             |        |         |              |         |        |           |            |            |         |         
|                                               |                                                                                       | Accounts receivable                                           |                                                      |                                                     |           |           |            |              | (13,268  | )             |             |        | (18     | )            |         |        |          |            |            |         | (13,286  | )         
|                                               |                                                                                       | Accounts receivable/accounts payable, net  related
    party |                                                      |                                                     | 78,022     |           |            |              | (120,370 | )             |             |        | 40,967  |              |         |        |          |            |            |         | (1,381   | )         
|                                               |                                                                                       | Inventories                                                   |                                                      |                                                     |           |           |            |              | (3,556   | )             |             |        | (1,145  | )            |         |        |          |            |            |         | (4,701   | )         
|                                               |                                                                                       | Prepaid and other current assets                              |                                                      |                                                     | (62        | )         |            |              | 25,227   |               |             |        | (326    | )            |         |        |          |            |            |         | 24,839   |           
|                                               |                                                                                       | Other assets                                                  |                                                      |                                                     | (2,397,160 | )         |            |              | (23,013  | )             |             |        |        |              |         |        | 2,397,160 |            |            |         | (23,013  | )         
|                                               |                                                                                       | Accounts payable                                              |                                                      |                                                     | 31,809     |           |            |              | 6,601    |               |             |        | (11,605 | )            |         |        |          |            |            |         | 26,805   |           
|                                               |                                                                                       | Accrued interest payable                                      |                                                      |                                                     | 53,324     |           |            |              | 50,929   |               |             |        | 2,296   |              |         |        | (53,324   | )          |            |         | 53,225   |           
|                                               |                                                                                       | Other accrued liabilities                                     |                                                      |                                                     |           |           |            |              | 13,648   |               |             |        | 88      |              |         |        |          |            |            |         | 13,736   |           
|                                               |                                                                                       |                                                               |                                                      |                                                     |            |           |            |              |          |               |             |        |         |              |        
|                                               |                                                                                       |                                                               |                                                      | Net cash provided by (used in) operating activities |            |           | (2,222,808 | )            |          |               | 142,343     |        |         |              | 26,797  |        |           |            | 2,332,325  |         |          |            | 278,657  |  
|                                               |                                                                                       |                                                               |                                                      |                                                     |            |           |            |              |          |               |             |        |         |              |        
|Cash flows from investing activities:          |                                                                                       |                                                               |                                                      |                                                     |            |           |            |              |          |               |             |        |         |              |         |        |           |            |            |        
|                                               |                                                                                       | (Increase) decrease in restricted cash                        |                                                      |                                                     |           |           |            |              | 152,290  |               |             |        |        |              |         |        |          |            |            |         | 152,290  |           
|                                               |                                                                                       | Purchases of derivative asset                                 |                                                      |                                                     | (45,000    | )         |            |              |         |               |             |        |        |              |         |        |          |            |            |         | (45,000  | )         
|                                               |                                                                                       | Purchases of property, plant and equipment                    |                                                      |                                                     | (1,420     | )         |            |              | (259,096 | )             |             |        | (43,798 | )            |         |        | 1,413     |            |            |         | (302,901 | )         
|                                               |                                                                                       |                                                               |                                                      |                                                     |            |           |            |              |          |               |             |        |         |              |        
|                                               |                                                                                       |                                                               |                                                      | Net cash used in investing activities               |            |           | (46,420    | )            |          |               | (106,806    | )      |         |              | (43,798 | )      |           |            | 1,413      |         |          |            | (195,611 | )
|                                               |                                                                                       |                                                               |                                                      |                                                     |            |           |            |              |          |               |             |        |         |              |        
|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       |         |        |           |           |            |         |          | 46,813     |         
|                                               |                                                                                       |                                                               | Repayments of subordinated parent debt               |                                                     |            |          |            |              |          | (131,096      | )           |        |         | (107,041     | )       |        |           |           |            |         |          | (238,137   | )       
|                                               |                                                                                       |                                                               | Borrowings from credit facility                      |                                                     |            |          |            |              |          | 178,995       |             |        |         |             |         |        |           |           |            |         |          | 178,995    |         
|                                               |                                                                                       |                                                               | Repayments 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 | )          |         |          | 2,393,900  |         
|                                               |                                                                                       |                                                               | Borrowings under revolver line of credit             |                                                     |            | 117,500   |            |              |          | 92,049        |             |        |         | 25,451       |         |        |           | (117,500   | )          |         |          | 117,500    |         
|                                               |                                                                                       |                                                               | Repayments 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           | )       |        |           |           |            |         |          | 24,940     |         
|Cash and cash equivalents, beginning of period |                                                                                       |                                                               |                                                     |                                                     |            |           | 39,595     |              |          |               | 3           |        |         |              |        |        |           |            | 39,598     |        
|                                               |                                                                                       |                                                               |                                                      |                                                     |            |           |            |              |          |               |             |        |         |              |        
|Cash and cash equivalents, end of period       |                                                                                       | $                                                             | 64,510                                               |                                                     |            | $         | 28         |              |          | $             |            |        |         | $            |        |        |           | $          | 64,538     |        
|                                               |                                                                                       |                                                               |                                                      |                                                     |            |           |            |              |          |               |             |        |         |              |        

F-36



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS


For the year ended December 31, 2003


|                                               |                                                                                       |                                                      |                                                       |                                                     |   |   |              |          |         |               |          |              |     |     |         |   |   |   |        |          |         |         |          |  
|---------------------------------------------- | ------------------------------------------------------------------------------------- | ---------------------------------------------------- | ----------------------------------------------------- | --------------------------------------------------- | - | - | ------------ | -------- | ------- | ------------- | -------- | ------------ | --- | --- | ------- | - | - | - | ------ | -------- | ------- | ------- | -------- | -
|                                               |                                                                                       |                                                      |                                                       |                                                     |   |   |              |          |         | Calpine       |         
|                                               |                                                                                       |                                                      |                                                       |                                                     |   |   |              |          |         | Generating    |         
|                                               |                                                                                       |                                                      |                                                       |                                                     |   |   |              |          |         | Company,      |         
|                                               |                                                                                       |                                                      |                                                       | Subsidiary                                          |   |   | Other        |          |         | Consolidating |          | LLC          |    
|                                               |                                                                                       | Parent                                               |                                                       | Guarantors                                          |   |   | Subsidiaries |          |         | Adjustments   |          | Consolidated |    
|                                               |                                                                                       |                                                      |                                                       |                                                     |   |   |              |          |         |               |          |              |    
|                                               |                                                                                       | (In thousands)                                       |                                                      
|Cash flows from operating activities:          |                                                                                       |                                                      |                                                       |                                                     |   |   |              |          |         |               |          |              |     |     |         |   |   |   |        |         
|                                               | Net income (loss)                                                                     |                                                      | $                                                     |                                                    |   |   | $            | (191,607 | )       |               | $        | (1,149       | )   |     | $       |  |   |   | $      | (192,756 | )      
|                                               | Adjustments to reconcile net income to net cash provided by
    operating activities: |                                                      |                                                       |                                                     |   |   |              |          |         |               |          |              |     |     |         |   |   |   |        |          |        
|                                               |                                                                                       |                                                      | Depreciation and amortization                         |                                                     |   |  |              |          |         | 121,008       |          |              |     |    |         |   |   |  |        |          |         | 121,008 |         
|                                               |                                                                                       |                                                      | Amortization of deferred financing costs              |                                                     |   |  |              |          |         | 12,122        |          |              |     |    |         |   |   |  |        |          |         | 12,122  |         
|                                               |                                                                                       |                                                      | Interest on subordinated parent debt                  |                                                     |   |  |              |          |         | 255,036       |          |              |     | 651 |         |   |   |  |        |          |         | 255,687 |         
|                                               |                                                                                       |                                                      | Cost allocated from parent                            |                                                     |   |  |              |          |         | 11,449        |          |              |     |    |         |   |   |  |        |          |         | 11,449  |         
|                                               |                                                                                       |                                                      | Cumulative effect of a change in accounting principle |                                                     |   |  |              |          |         | 241           |          |              |     |    |         |   |   |  |        |          |         | 241     |         
|                                               | Change in operating assets and liabilities:                                           |                                                      |                                                       |                                                     |   |   |              |          |         |               |          |              |     |     |         |   |   |   |        |          |        
|                                               |                                                                                       | Accounts receivable                                  |                                                       |                                                     |  |   |              |          | (21,964 | )             |          |              | 19  |     |         |   |  |   |        |          | (21,945 | )      
|                                               |                                                                                       | Inventories                                          |                                                       |                                                     |  |   |              |          | (3,553  | )             |          |              |    |     |         |   |  |   |        |          | (3,553  | )      
|                                               |                                                                                       | Prepaid and other current assets                     |                                                       |                                                     |  |   |              |          | (9,592  | )             |          |              | (36 | )   |         |   |  |   |        |          | (9,628  | )      
|                                               |                                                                                       | Other assets                                         |                                                       |                                                     |  |   |              |          | (12,902 | )             |          |              |    |     |         |   |  |   |        |          | (12,902 | )      
|                                               |                                                                                       | Accounts payable                                     |                                                       |                                                     |  |   |              |          | 7,622   |               |          |              |    |     |         |   |  |   |        |          | 7,622   |        
|                                               |                                                                                       | Accounts receivable/accounts payable  related party |                                                       |                                                     |  |   |              |          | (8,925  | )             |          |              |    |     |         |   |  |   |        |          | (8,925  | )      
|                                               |                                                                                       | Accrued interest payable                             |                                                       |                                                     |  |   |              |          | (200    | )             |          |              |    |     |         |   |  |   |        |          | (200    | )      
|                                               |                                                                                       | Other accrued liabilities                            |                                                       |                                                     |  |   |              |          | 3,370   |               |          |              | (7  | )   |         |   |  |   |        |          | 3,363   |        
|                                               |                                                                                       |                                                      |                                                       |                                                     |   |   |              |          |         |               |          |              |     |     |        
|                                               |                                                                                       |                                                      |                                                       | Net cash provided by (used in) operating activities |   |   |             |          |         |               | 162,105  |              |     |     | (522    | ) |   |   |       |          |         |         | 161,583  |  
|                                               |                                                                                       |                                                      |                                                       |                                                     |   |   |              |          |         |               |          |              |     |     |        
|Cash flows from investing activities:          |                                                                                       |                                                      |                                                       |                                                     |   |   |              |          |         |               |          |              |     |     |         |   |   |   |        |         
|                                               | (Increase) decrease in restricted cash                                                |                                                      |                                                       |                                                    |   |   |              | (142,800 | )       |               |          |             |     |     |         |  |   |   |        | (142,800 | )      
|                                               | Purchases of property, plant and equipment                                            |                                                      |                                                       |                                                    |   |   |              | (396,989 | )       |               |          | (44,356      | )   |     |         |  |   |   |        | (441,345 | )      
|                                               |                                                                                       |                                                      |                                                       |                                                     |   |   |              |          |         |               |          |              |     |     |        
|                                               |                                                                                       |                                                      |                                                       | Net cash used in investing activities               |   |   |             |          |         |               | (539,789 | )            |     |     | (44,356 | ) |   |   |       |          |         |         | (584,145 | )
|                                               |                                                                                       |                                                      |                                                       |                                                     |   |   |              |          |         |               |          |              |     |     |        
|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       |     |     |         |  |   |   |        | 556,169  |        
|                                               | Borrowings from credit facility                                                       |                                                      |                                                       |                                                    |   |   |              | 101,348  |         |               |          |             |     |     |         |  |   |   |        | 101,348  |        
|                                               | Repayments of credit facility                                                         |                                                      |                                                       |                                                    |   |   |              | (214,595 | )       |               |          |             |     |     |         |  |   |   |        | (214,595 | )      
|                                               |                                                                                       |                                                      |                                                       |                                                     |   |   |              |          |         |               |          |              |     |     |        
|                                               |                                                                                       |                                                      |                                                       | Net cash provided by financing activities           |   |   |             |          |         |               | 391,636  |              |     |     | 44,881  |   |   |   |       |          |         |         | 436,517  |  
|                                               |                                                                                       |                                                      |                                                       |                                                     |   |   |              |          |         |               |          |              |     |     |        
|                                               | Net increase in cash and cash equivalents                                             |                                                      |                                                       |                                                    |   |   |              | 13,952   |         |               |          | 3            |     |     |         |  |   |   |        | 13,955   |        
|Cash and cash equivalents, beginning of period |                                                                                       |                                                      |                                                      |                                                     |   |   | 25,643       |          |         |               |         |              |     |     |        |   |   |   | 25,643 |         
|                                               |                                                                                       |                                                      |                                                       |                                                     |   |   |              |          |         |               |          |              |     |     |        

F-37



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                         |  |                |   |            |  |   |              |  |  |               |   |              |  |   |   |  |  |   |        | 
|---------------------------------------- |  | -------------- | - | ---------- |  | - | ------------ |  |  | ------------- | - | ------------ |  | - | - |  |  | - | ------ | 
|                                         |  |                |   |            |  |   |              |  |  | Calpine       |  
|                                         |  |                |   |            |  |   |              |  |  | Generating    |  
|                                         |  |                |   |            |  |   |              |  |  | Company,      |  
|                                         |  |                |   | Subsidiary |  |   | Other        |  |  | Consolidating |   | LLC          | 
|                                         |  | Parent         |   | Guarantors |  |   | Subsidiaries |  |  | Adjustments   |   | Consolidated | 
|                                         |  |                |   |            |  |   |              |  |  |               |   |              | 
|                                         |  | (In thousands) |  
|Cash and cash equivalents, end of period |  | $              |  |            |  | $ | 39,595       |  |  | $             | 3 |              |  | $ |  |  |  | $ | 39,598 | 
|                                         |  |                |   |            |  |   |              |  |  |               |   |              |  |   |  

F-38



---



##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


SUPPLEMENTAL CONSOLIDATING STATEMENT OF CASH FLOWS


For the year ended December 31, 2002


|                                               |                                                                                       |                                                      |                                                    |                                           |   |   |              |            |         |               |            |              |     |   |         |   |   |   |        |            |         |         |            |  
|---------------------------------------------- | ------------------------------------------------------------------------------------- | ---------------------------------------------------- | -------------------------------------------------- | ----------------------------------------- | - | - | ------------ | ---------- | ------- | ------------- | ---------- | ------------ | --- | - | ------- | - | - | - | ------ | ---------- | ------- | ------- | ---------- | -
|                                               |                                                                                       |                                                      |                                                    |                                           |   |   |              |            |         | Calpine       |           
|                                               |                                                                                       |                                                      |                                                    |                                           |   |   |              |            |         | Generating    |           
|                                               |                                                                                       |                                                      |                                                    |                                           |   |   |              |            |         | Company,      |           
|                                               |                                                                                       |                                                      |                                                    | Subsidiary                                |   |   | Other        |            |         | Consolidating |            | LLC          |    
|                                               |                                                                                       | Parent                                               |                                                    | Guarantors                                |   |   | Subsidiaries |            |         | Adjustments   |            | Consolidated |    
|                                               |                                                                                       |                                                      |                                                    |                                           |   |   |              |            |         |               |            |              |    
|                                               |                                                                                       | (In thousands)                                       |                                                   
|Cash flows from operating activities:          |                                                                                       |                                                      |                                                    |                                           |   |   |              |            |         |               |            |              |     |   |         |   |   |   |        |           
|                                               | Net income (loss)                                                                     |                                                      | $                                                  |                                          |   |   | $            | (150,160   | )       |               | $          | 16           |     |   | $       |  |   |   | $      | (150,144   | )      
|                                               | Adjustments to reconcile net income to net cash provided by
    operating activities: |                                                      |                                                    |                                           |   |   |              |            |         |               |            |              |     |   |         |   |   |   |        |            |        
|                                               |                                                                                       |                                                      | Depreciation and amortization                      |                                           |   |  |              |            |         | 59,907        |            |              |     |  |         |   |   |  |        |            |         | 59,907  |           
|                                               |                                                                                       |                                                      | Amortization of deferred financing costs           |                                           |   |  |              |            |         | 5,043         |            |              |     |  |         |   |   |  |        |            |         | 5,043   |           
|                                               |                                                                                       |                                                      | Equipment cancellation and asset impairment charge |                                           |   |  |              |            |         | 115,121       |            |              |     |  |         |   |   |  |        |            |         | 115,121 |           
|                                               |                                                                                       |                                                      | Interest on subordinated parent debt               |                                           |   |  |              |            |         | 111,304       |            |              |     |  |         |   |   |  |        |            |         | 111,304 |           
|                                               |                                                                                       |                                                      | Cost allocated from parent                         |                                           |   |  |              |            |         | 7,815         |            |              |     |  |         |   |   |  |        |            |         | 7,815   |           
|                                               | Change in operating assets and liabilities:                                           |                                                      |                                                    |                                           |   |   |              |            |         |               |            |              |     |   |         |   |   |   |        |            |        
|                                               |                                                                                       | Accounts receivable                                  |                                                    |                                           |  |   |              |            | (14,349 | )             |            |              | (19 | ) |         |   |  |   |        |            | (14,368 | )      
|                                               |                                                                                       | Inventories                                          |                                                    |                                           |  |   |              |            | (8,028  | )             |            |              |    |   |         |   |  |   |        |            | (8,028  | )      
|                                               |                                                                                       | Prepaid and other current assets                     |                                                    |                                           |  |   |              |            | (15,225 | )             |            |              | 3   |   |         |   |  |   |        |            | (15,222 | )      
|                                               |                                                                                       | Other assets                                         |                                                    |                                           |  |   |              |            | (7,819  | )             |            |              |    |   |         |   |  |   |        |            | (7,819  | )      
|                                               |                                                                                       | Accounts payable                                     |                                                    |                                           |  |   |              |            | 30,536  |               |            |              |    |   |         |   |  |   |        |            | 30,536  |        
|                                               |                                                                                       | Accounts receivable/accounts payable  related party |                                                    |                                           |  |   |              |            | (1,925  | )             |            |              |    |   |         |   |  |   |        |            | (1,925  | )      
|                                               |                                                                                       | Accrued interest payable                             |                                                    |                                           |  |   |              |            | 299     |               |            |              |    |   |         |   |  |   |        |            | 299     |        
|                                               |                                                                                       | Other accrued liabilities                            |                                                    |                                           |  |   |              |            | 884     |               |            |              |    |   |         |   |  |   |        |            | 884     |        
|                                               |                                                                                       |                                                      |                                                    |                                           |   |   |              |            |         |               |            |              |     |   |        
|                                               |                                                                                       |                                                      |                                                    | Net cash provided by operating activities |   |   |             |            |         |               | 133,403    |              |     |   |        |   |   |   |       |            |         |         | 133,403    |  
|                                               |                                                                                       |                                                      |                                                    |                                           |   |   |              |            |         |               |            |              |     |   |        
|Cash flows from investing activities:          |                                                                                       |                                                      |                                                    |                                           |   |   |              |            |         |               |            |              |     |   |         |   |   |   |        |           
|                                               | (Increase) decrease in restricted cash                                                |                                                      |                                                    |                                          |   |   |              | 107,972    |         |               |            |             |     |   |         |  |   |   |        | 107,972    |        
|                                               | Purchases of property, plant and equipment                                            |                                                      |                                                    |                                          |   |   |              | (1,618,008 | )       |               |            | (60,866      | )   |   |         |  |   |   |        | (1,678,874 | )      
|                                               |                                                                                       |                                                      |                                                    |                                           |   |   |              |            |         |               |            |              |     |   |        
|                                               |                                                                                       |                                                      |                                                    | Net cash used in investing activities     |   |   |             |            |         |               | (1,510,036 | )            |     |   | (60,866 | ) |   |   |       |            |         |         | (1,570,902 | )
|                                               |                                                                                       |                                                      |                                                    |                                           |   |   |              |            |         |               |            |              |     |   |        
|Cash flows from financing activities:          |                                                                                       |                                                      |                                                    |                                           |   |   |              |            |         |               |            |              |     |   |         |   |   |   |        |           
|                                               | Financing costs                                                                       |                                                      |                                                    |                                          |   |   |              | (4,635     | )       |               |            |             |     |   |         |  |   |   |        | (4,635     | )      
|                                               | Borrowings from subordinated parent debt                                              |                                                      |                                                    |                                          |   |   |              | 1,293,937  |         |               |            | 60,866       |     |   |         |  |   |   |        | 1,354,803  |        
|                                               | Borrowings from credit facility                                                       |                                                      |                                                    |                                          |   |   |              | 323,675    |         |               |            |             |     |   |         |  |   |   |        | 323,675    |        
|                                               | Repayments of credit facility                                                         |                                                      |                                                    |                                          |   |   |              | (241,014   | )       |               |            |             |     |   |         |  |   |   |        | (241,014   | )      
|                                               |                                                                                       |                                                      |                                                    |                                           |   |   |              |            |         |               |            |              |     |   |        
|                                               |                                                                                       |                                                      |                                                    | Net cash provided by financing activities |   |   |             |            |         |               | 1,371,963  |              |     |   | 60,866  |   |   |   |       |            |         |         | 1,432,829  |  
|                                               |                                                                                       |                                                      |                                                    |                                           |   |   |              |            |         |               |            |              |     |   |        
|                                               | Net decrease in cash and cash equivalents                                             |                                                      |                                                    |                                          |   |   |              | (4,670     | )       |               |            |             |     |   |         |  |   |   |        | (4,670     | )      
|Cash and cash equivalents, beginning of period |                                                                                       |                                                      |                                                   |                                           |   |   | 30,313       |            |         |               |           |              |     |   |        |   |   |   | 30,313 |           
|                                               |                                                                                       |                                                      |                                                    |                                           |   |   |              |            |         |               |            |              |     |   |        

F-39



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##### Table of Contents



CALPINE GENERATING COMPANY, LLC


(a wholly-owned subsidiary of Calpine CalGen Holdings,
Inc.)


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                         |  |                |   |            |  |   |              |  |               |            |              |  |  |   |   |  |  |   |        | 
|---------------------------------------- |  | -------------- | - | ---------- |  | - | ------------ |  | ------------- | ---------- | ------------ |  |  | - | - |  |  | - | ------ | 
|                                         |  |                |   |            |  |   |              |  |               | Calpine    |             
|                                         |  |                |   |            |  |   |              |  |               | Generating |             
|                                         |  |                |   |            |  |   |              |  |               | Company,   |             
|                                         |  |                |   | Subsidiary |  |   | Other        |  | Consolidating |            | LLC          | 
|                                         |  | Parent         |   | Guarantors |  |   | Subsidiaries |  | Adjustments   |            | Consolidated | 
|                                         |  |                |   |            |  |   |              |  |               |            |              | 
|                                         |  | (In thousands) |  
|Cash and cash equivalents, end of period |  | $              |  |            |  | $ | 25,643       |  |               | $          |             |  |  | $ |  |  |  | $ | 25,643 | 
|                                         |  |                |   |            |  |   |              |  |               |            |              |  |  |   |  

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 to |  |            |   |           
|                             |                                        | Beginning      |   |         | Costs and  |  |   | Other      |  |            |   | Balance at |            
|Description                  |                                        | of Year        |   |         | Expense    |  |   | Accounts   |  | Reductions |   |            | End of Year | 
|                             |                                        |                |   |         |            |  |   |            |  |            |   |            |             | 
|                             |                                        | (In thousands) |  
|Year ended December 31, 2004 |                                        |                |   |         |            |  |   |            |  |            |   |            |             |  |   |        |   |  |   |        
|                             | Allowance for doubtful accounts        |                | $ | 1,931   |            |  | $ | 5,355      |  |            | $ |           |             |  | $ | (5,697 | ) |  | $ | 1,589   | 
|                             | Deferred tax asset valuation allowance |                |   | 117,126 |            |  |   | 23,210     |  |            |   |           |             |  |   |       |   |  |   | 140,336 | 
|Year ended December 31, 2003 |                                        |                |   |         |            |  |   |            |  |            |   |            |             |  |   |        |   |  |   |        
|                             | Allowance for doubtful accounts        |                | $ |        |            |  | $ | 1,931      |  |            | $ |           |             |  | $ |       |   |  | $ | 1,931   | 
|                             | Deferred tax asset valuation allowance |                |   | 32,435  |            |  |   | 84,691     |  |            |   |           |             |  |   |       |   |  |   | 117,126 | 
|Year ended December 31, 2002 |                                        |                |   |         |            |  |   |            |  |            |   |            |             |  |   |        |   |  |   |        
|                             | Allowance for doubtful accounts        |                | $ |        |            |  | $ |           |  |            | $ |           |             |  | $ |       |   |  | $ |        | 
|                             | Deferred tax asset valuation allowance |                |   |        |            |  |   | 32,435     |  |            |   |           |             |  |   |       |   |  |   | 32,435  | 

S-1



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##### Table of Contents





EXHIBIT INDEX


|        |   |     |             |                                                                                                                                               
|------- | - | --- | ----------- | ----------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |   |     |            
|Number  |   |     | Description
|        |   |     |            
|        | 1 | .1  |             | Purchase Agreement, dated March 12, 2004, between Calpine
    Generating Company, LLC, CalGen Finance Corp. and Morgan
    Stanley & Co. Inc.*
|        | 3 | .1  |             | Amended and Restated Certificate of Formation of Calpine
    Generating Company, LLC.*                                                        
|        | 3 | .2  |             | Certificate of Incorporation of CalGen Finance Corp.*                                                                                         
|        | 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.*                                             
|        | 3 | .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.*                                                             



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##### Table of Contents



|        |   |     |             |                                                                                                                                                                               
|------- | - | --- | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |   |     |            
|Number  |   |     | Description
|        |   |     |            
|        | 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 Energy Center, LLC.*                                                                                                                      
|        | 3 | .48 |             | Certificate of Amendment to Certificate of Formation of Decatur
    Energy Center, LLC.*                                                                                      
|        | 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).*                            
|        | 3 | .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.*                                                                                                                  



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##### Table of Contents



|        |   |     |             |                                                                                                                                                                                                                    
|------- | - | --- | ----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |   |     |            
|Number  |   |     | Description
|        |   |     |            
|        | 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).*                                                                                          
|        | 3 | .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 Calpine
    Generating Company, LLC.*                                                                                                                             
|        | 3 | .94 |             | Bylaws of CalGen Finance Corp.*                                                                                                                                                                                    
|        | 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.*                                                                                                  



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##### Table of Contents



|        |   |      |             |                                                                                                                         
|------- | - | ---- | ----------- | ------------------------------------------------------------------------------------------------------------------------
|Exhibit |   |      |            
|Number  |   |      | Description
|        |   |      |            
|        | 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.*       
|        | 3 | .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 Energy Center, LLC.*                  
|        | 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.*              



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##### Table of Contents



|        |    |      |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|------- | -- | ---- | ----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |      |            
|Number  |    |      | Description
|        |    |      |            
|        | 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.*                                                                                                                                                                                                                                                                                                                                                                                                                 
|        | 4  | .1   |             | First Priority Indenture, dated March 23, 2004, among
    Calpine Generating Company, LLC, CalGen Finance Corp., each of
    the Guarantors named therein and Wilmington Trust FSB, as
    Trustee.*                                                                                                                                                                                                                                                                                                         
|        | 4  | .2   |             | Second Priority Indenture, dated March 23, 2004, among
    Calpine Generating Company, LLC, CalGen Finance Corp., each of
    the Guarantors named therein and Wilmington Trust FSB, as
    Trustee.*                                                                                                                                                                                                                                                                                                        
|        | 4  | .3   |             | Third Priority Indenture, dated March 23, 2004, among
    Calpine Generating Company, LLC, CalGen Finance Corp., 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
    111/2%
    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 Corp., each of
    the Guarantors named therein and Morgan Stanley & Co.
    Inc.*                                                                                                                                                                                                                                                                                                             
|        | 4  | .9   |             | Collateral Trust and Intercreditor Agreement, dated
    March 23, 2004, among CalGen Holdings, Inc., Calpine
    Generating Company, LLC, 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 Inc., as Pledgor, Calpine Generating
    Company, LLC, CalGen Expansion Company, LLC, and Wilmington
    Trust Company, as Collateral Agent.*                                                                                                                                                                                                                                                                          
|        | 4  | .11  |             | Membership Interest Pledge Agreement, dated March 23, 2004,
    among Calpine Generating Company, LLC, as Pledgor, CalGen
    Expansion Company, and Wilmington Trust, as Collateral Agent.*                                                                                                                                                                                                                                                                                                                 
|        | 4  | .12  |             | Security Agreement, dated March 23, 2004, among Calpine
    Generating Company, LLC, 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 Calpine Generating Company, LLC 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 Calpine Generating Company, LLC, CalGen Finance
    Corp., 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 Calpine Generating Company, LLC, CalGen Finance
    Corp., 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 Calpine Generating Company, LLC, 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, dated March 12, 2004, between
    Calpine Generating Company, LLC and Morgan Stanley Capital
    Group, Inc.*                                                                                                                                                                                                                                                                                                                                                                         
|        | 10 | .5   |             | Guaranty, dated March 12, 2004, made by Morgan
    Stanley & Co. Incorporated in favor of Morgan Stanley
    Capital Group, Inc.*                                                                                                                                                                                                                                                                                                                                                                            
|        | 10 | .6   |             | WECC Fixed Price Gas Sale and Power Purchase Agreement, dated
    March 23, 2004, among Calpine Energy Services, L.P.,
    Calpine Generating Company, LLC, Delta ProjectCo. and Los
    Medanos ProjectCo.*                                                                                                                                                                                                                                                                                                 



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##### Table of Contents



|        |    |     |             |                                                                                                                                                                                                                                                         
|------- | -- | --- | ----------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |     |            
|Number  |    |     | Description
|        |    |     |            
|        | 10 | .7  |             | Index Based Gas Sale and Power Purchase Agreement, dated
    March 23, 2004, among Calpine Energy Services, L.P. and
    Calpine Generating Company, LLC and each of its Subsidiaries
    named therein.*                                               
|        | 10 | .8  |             | First Amendment to Index Based Gas Sale and Power Purchase
    Agreement, dated May 20, 2004, among Calpine Energy
    Services, L.P. and Calpine Generating Company, LLC and each of
    its Subsidiaries named therein.*                              
|        | 10 | .9  |             | Second Amendment to Index Based Gas Sale and Power Purchase
    Agreement, dated May 26, 2004, among Calpine Energy
    Services, L.P. and Calpine Generating Company, LLC and each of
    its Subsidiaries named therein.*                             
|        | 10 | .10 |             | Third Amendment to Index Based Gas Sale and Power Purchase
    Agreement, dated August 1, 2004, among Calpine Energy
    Services, L.P. and Calpine Generating Company, LLC and each of
    its subsidiaries named therein.*                            
|        | 10 | .11 |             | Master Operation and Maintenance Agreement, dated March 23,
    2004, among Calpine Operating Services Company, Inc. and Calpine
    Generating Company, LLC and each of its Subsidiaries named
    therein.*                                           
|        | 10 | .12 |             | Master Maintenance Services Agreement, dated March 23,
    2004, among Calpine Operating Services Company, Inc. and Calpine
    Generating Company, LLC and each of its Subsidiaries named
    therein.*                                                
|        | 10 | .13 |             | Master Construction Management Agreement, dated March 23,
    2004, among Calpine Construction Management Company, Inc.,
    Calpine Generating Company, LLC and certain of the Facility
    Owners named therein.*                                     
|        | 10 | .14 |             | Administrative Services Agreement, dated March 23, 2004,
    among Calpine Generating Company, LLC, each of its Subsidiaries
    named therein, and CalGen Finance Corp.*                                                                               
|        | 10 | .15 |             | Project Undertaking and Agreement, dated March 23, 2004,
    among Calpine Corporation and Calpine Generating Company, LLC
    and each of its Subsidiaries named therein.*                                                                             
|        | 10 | .16 |             | Affiliate Party Agreement Guaranty, dated March 23, 2004,
    made by Calpine Corporation in favor of Calpine Generating
    Company, LLC and each of its Subsidiaries named therein.*                                                                  
|        | 10 | .17 |             | Working Capital Facility Agreement, dated March 23, 2004,
    among Calpine Corporation, CalGen Holdings, Inc. and Calpine
    Generating Company, LLC.*                                                                                                
|        | 12 | .1  |             | Computation of Ratio of Earnings to Fixed Charges.                                                                                                                                                                                                     
|        | 24 | .1  |             | Powers of Attorney for Calpine Generating Company, LLC, CalGen
    Finance Corp. and the Co-Registrants (included in the signature
    pages hereof)                                                                                                    
|        | 31 | .1  |             | Certification of the Chairman, President and Chief Executive
    Officer 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 Executive Vice President and Chief
    Financial Officer 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 Chief Executive Officer and Chief Financial
    Officer pursuant to 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of
    2002.                                                             








|  |                          
|- | -------------------------
|* | Incorporated by reference