##### Table of Contents



UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
 
 Form 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2005
 Or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For
the transition period from to
 Commission file number: 333-117335
 
 Calpine Generating Company, LLC
 (A Delaware Limited Liability Company)
 CalGen Finance Corp.  (A Delaware Corporation)
 I.R.S. Employer Identification Nos.  77-0555128
20-1162632
 
 þ o
 o þ
 o þ




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##### Table of Contents



TABLE OF ADDITIONAL REGISTRANTS
 State of
    
    
    
    I.R.S. EmployerIncorporation
    
    Commission File
    
    IdentificationRegistrant
    
    or Organization
    
    Number
    
    NumberCalGen Expansion Company, LLC
    
    Delaware
    
    333-117335-39
    
    77-0555127Baytown Energy Center, LP
    
    Delaware
    
    333-117335-38
    
    77-0555135Calpine Baytown Energy Center GP, LLC
    
    Delaware
    
    333-117335-37
    
    77-0555133Calpine Baytown Energy Center LP, LLC
    
    Delaware
    
    333-117335-36
    
    77-0555138Baytown Power GP, LLC
    
    Delaware
    
    333-117335-35
    
    86-1056699Baytown Power, LP
    
    Delaware
    
    333-117335-34
    
    86-1056708Carville Energy LLC
    
    Delaware
    
    333-117335-33
    
    36-4309608Channel Energy Center, LP
    
    Delaware
    
    333-117335-32
    
    77-0555137Calpine Channel Energy Center GP, LLC
    
    Delaware
    
    333-117335-31
    
    77-0555139Calpine Channel Energy Center LP, LLC
    
    Delaware
    
    333-117335-09
    
    77-0555140Channel Power GP, LLC
    
    Delaware
    
    333-117335-08
    
    86-1056758Channel Power, LP
    
    Delaware
    
    333-117335-07
    
    86-1056755Columbia Energy LLC
    
    Delaware
    
    333-117335-06
    
    36-4380154Corpus Christi Cogeneration LP
    
    Delaware
    
    333-117335-05
    
    36-4337040Nueces Bay Energy LLC
    
    Delaware
    
    333-117335-04
    
    36-4216016Calpine Northbrook Southcoast Investors, LLC
    
    Delaware
    
    333-117335-03
    
    36-4337045Calpine Corpus Christi Energy GP, LLC
    
    Delaware
    
    333-117335-02
    
    86-1056770Calpine Corpus Christi Energy, LP
    
    Delaware
    
    333-117335-30
    
    86-1056497Decatur Energy Center, LLC
    
    Delaware
    
    333-117335-29
    
    77-0555708Delta Energy Center, LLC
    
    Delaware
    
    333-117335-28
    
    95-4812214CalGen Project Equipment Finance Company Two, LLC
    
    Delaware
    
    333-117335-27
    
    77-0585399Freestone Power Generation LP
    
    Texas
    
    333-117335-26
    
    76-0608559Calpine Freestone, LLC
    
    Delaware
    
    333-117335-25
    
    77-0486738CPN Freestone, LLC
    
    Delaware
    
    333-117335-24
    
    77-0545937Calpine Freestone Energy GP, LLC
    
    Delaware
    
    333-117335-23
    
    86-1056713Calpine Freestone Energy, LP
    
    Delaware
    
    333-117335-22
    
    86-1056720Calpine Power Equipment LP
    
    Texas
    
    333-117335-21
    
    76-0645514Los Medanos Energy Center, LLC
    
    Delaware
    
    333-117335-20
    
    77-0553164CalGen Project Equipment Finance Company One, LLC
    
    Delaware
    
    333-117335-19
    
    77-0556245Morgan Energy Center, LLC
    
    Delaware
    
    333-117335-18
    
    77-0555141Pastoria Energy Facility L.L.C.
    
    Delaware
    
    333-117335-17
    
    77-0581976Calpine Pastoria Holdings, LLC
    
    Delaware
    
    333-117335-16
    
    77-0559247Calpine Oneta Power, L.P.
    
    Delaware
    
    333-117335-15
    
    75-2815392Calpine Oneta Power I, LLC
    
    Delaware
    
    333-117335-14
    
    75-2815390Calpine Oneta Power II, LLC
    
    Delaware
    
    333-117335-13
    
    75-2815394Zion Energy LLC
    
    Delaware
    
    333-117335-12
    
    36-4330312CalGen Project Equipment Finance Company Three LLC
    
    Delaware
    
    333-117335-11
    
    10-0008436CalGen Equipment Finance Holdings, LLC
    
    Delaware
    
    333-117335-10
    
    77-0555519CalGen Equipment Finance Company, LLC
    
    Delaware
    
    333-117335-01
    
    77-0555523
 2




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CALPINE GENERATING COMPANY, LLC
 (a wholly-owned subsidiary of Calpine CalGen Holdings, Inc.)
 REPORT ON FORM 10-Q
For the Quarter Ended September 30, 2005
 INDEX
 PageNo.PART I  FINANCIAL INFORMATIONItem 1. Financial Statements
    
    
    5Consolidated Condensed Balance Sheets as of September 30, 2005 and December 31, 2004
    
    
    5Consolidated Condensed Statements of Operations for the Three Months and Nine Months Ended
September 30, 2005 and 2004
    
    
    6Consolidated Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2005 and 2004
    
    
    7Notes to Consolidated Condensed Financial Statements
    
    
    9Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    25Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    36Item 4. Controls and Procedures
    
    
    36PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    37Item 6. Exhibits
    
    
    37Signatures
    
    
    38Certification of CEO & President Pursuant to Rule 13a-14(a)Certification of VP & CFO Pursuant to Rule 13a-14(a)Certification of CEO & CFO Pursuant to Section 1350
  3




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##### Table of Contents



ABBREVIATION
    
    DEFINITIONBtu
    
    British thermal unitsCalGen
    
    Calpine Generating Company, LLCCalpine
    
    Calpine CorporationCES
    
    Calpine Energy Services, L.P.COD
    
    Commercial operations dateE&S
    
    Electricity and steamEITF
    
    Emerging Issues Task ForceFASB
    
    Financial Accounting Standards BoardGAAP
    
    Generally accepted accounting principlesKW
    
    Kilowatt(s)KWh
    
    Kilowatt hour(s)LIBOR
    
    London Inter-Bank Offered RateLTSA
    
    Long Term Service AgreementMMBtu
    
    Million BtuMSCG
    
    Morgan Stanley Capital GroupMW
    
    Megawatt(s)MWh
    
    Megawatt hour(s)O&M
    
    Operations and maintenancePOX
    
    Plant operating expenseSAB
    
    Staff Accounting BulletinSEC
    
    Securities and Exchange CommissionS&P
    
    Standard and PoorsSecurities Act
    
    Securities Act of 1933, as amendedSFAS
    
    Statement of Financial Accounting Standards
 4




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 CALPINE GENERATING COMPANY, LLC
 (a wholly-owned subsidiary of Calpine CalGen Holdings, Inc.)
 
 CONSOLIDATED CONDENSED BALANCE SHEETS
September 30, 2005 and December 31, 2004
(Unaudited)
 September 30,
    
    
    December 31,2005
    
    
    2004(In thousands)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    158,955
    
    
    $
    64,538Restricted cash, current portion
    
    
    58
    
    
    
    Accounts receivable, net
    
    
    96,570
    
    
    
    59,320Accounts receivable, net  related party
    
    
    80,864
    
    
    
    600Notes receivable, current portion
    
    
    394
    
    
    
    367Inventories
    
    
    20,017
    
    
    
    19,601Current derivative assets
    
    
    12,742
    
    
    
    9,272Prepaid and other current assets
    
    
    10,628
    
    
    
    21,169Total current assets
    
    
    380,228
    
    
    
    174,867Property, plant and equipment, net
    
    
    6,256,315
    
    
    
    6,294,429Notes receivable, net of current portion
    
    
    19,082
    
    
    
    19,381Restricted cash, net of current portion
    
    
    95
    
    
    
    Deferred financing costs, net
    
    
    42,920
    
    
    
    51,496Long-term derivative assets
    
    
    15,219
    
    
    
    26,644Deferred tax asset
    
    
    17,672
    
    
    
    17,672Other assets
    
    
    38,144
    
    
    
    54,245Total assets
    
    $
    6,769,675
    
    
    $
    6,638,734LIABILITIES & MEMBERS EQUITYCurrent liabilities:Accounts payable
    
    $
    127,336
    
    
    $
    99,212Notes payable, current portion
    
    
    171
    
    
    
    168Accrued interest payable
    
    
    83,394
    
    
    
    53,324Deferred tax liability
    
    
    17,672
    
    
    
    17,672Other current liabilities
    
    
    3,763
    
    
    
    2,970Total current liabilities
    
    
    232,336
    
    
    
    173,346Notes payable, net of current portion
    
    
    1,943
    
    
    
    2,109Priority notes and term loans
    
    
    2,396,720
    
    
    
    2,395,332Deferred revenue
    
    
    7,832
    
    
    
    5,671Other liabilities
    
    
    21,899
    
    
    
    20,286Total liabilities
    
    
    2,660,730
    
    
    
    2,596,744Commitments
and Contingencies (Note 10)Members equity
    
    
    4,108,945
    
    
    
    4,041,990Total liabilities and members equity
    
    $
    6,769,675
    
    
    $
    6,638,734
  5




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
 (a wholly-owned subsidiary of Calpine CalGen Holdings, Inc.)
 
 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
For the Three Months and Nine Months Ended September 30, 2005 and 2004
(Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2004
    
    
    
    
    
    
    20042005
    
    
    (Restated)
    
    
    2005
    
    
    (Restated)(In thousands)
    
    
    (In thousands)Revenue:Electricity and steam revenue  related party
    
    $
    813,715
    
    
    $
    428,888
    
    
    $
    1,521,056
    
    
    $
    942,784Electricity and steam revenue  third-party
    
    
    139,765
    
    
    
    122,817
    
    
    
    374,495
    
    
    
    339,062Total electricity and steam revenue
    
    
    953,480
    
    
    
    551,705
    
    
    
    1,895,551
    
    
    
    1,281,846Mark-to-market activity, net
    
    
    (490
    )
    
    
    (574
    )
    
    
    (7,954
    )
    
    
    (2,495
    )Sale of purchased power
    
    
    
    
    
    
    
    
    
    
    5,459
    
    
    
    2,860Other revenue
    
    
    824
    
    
    
    824
    
    
    
    2,472
    
    
    
    2,472Total revenue
    
    
    953,814
    
    
    
    551,955
    
    
    
    1,895,528
    
    
    
    1,284,683Cost of revenue:Plant operating expense  related party
    
    
    46,737
    
    
    
    38,056
    
    
    
    161,764
    
    
    
    134,781Fuel expense  related party
    
    
    680,004
    
    
    
    385,347
    
    
    
    1,358,039
    
    
    
    887,575Purchased power expense
    
    
    269
    
    
    
    446
    
    
    
    7,582
    
    
    
    3,014Depreciation and amortization expense
    
    
    48,022
    
    
    
    39,224
    
    
    
    132,390
    
    
    
    110,960Total cost of revenue
    
    
    775,032
    
    
    
    463,073
    
    
    
    1,659,775
    
    
    
    1,136,330Gross profit
    
    
    178,782
    
    
    
    88,882
    
    
    
    235,753
    
    
    
    148,353Long-term service agreement cancellation charge
    
    
    
    
    
    
    
    
    
    
    23,860
    
    
    
    Sales, general and administrative expense  related party
    
    
    4,115
    
    
    
    2,201
    
    
    
    10,889
    
    
    
    9,236Income from operations
    
    
    174,667
    
    
    
    86,681
    
    
    
    201,004
    
    
    
    139,117Interest expense  related party
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    72,173Interest expense  third party
    
    
    61,358
    
    
    
    41,175
    
    
    
    167,415
    
    
    
    110,814Interest (income)
    
    
    (1,582
    )
    
    
    (444
    )
    
    
    (2,979
    )
    
    
    (1,939
    )Other expense (income), net
    
    
    599
    
    
    
    751
    
    
    
    1,822
    
    
    
    336Income (loss) before income taxes
    
    
    114,292
    
    
    
    45,199
    
    
    
    34,746
    
    
    
    (42,267
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    114,292
    
    
    $
    45,199
    
    
    $
    34,746
    
    
    $
    (42,267
    )
  6




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##### Table of Contents



CALPINE GENERATING COMPANY, LLC
 (a wholly-owned subsidiary of Calpine CalGen Holdings, Inc.)
 
 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2005 and 2004
(Unaudited)
 Nine Months EndedSeptember 30,20042005
    
    
    (Restated) (1)(In thousands)Cash flows from operating activities:Net income (loss)
    
    $
    34,746
    
    
    $
    (42,267
    )Adjustments to reconcile net loss to net cash provided by operating activities:Depreciation and amortization
    
    
    132,390
    
    
    
    110,960Amortization of discount and deferred financing costs
    
    
    9,499
    
    
    
    7,238Write-off of deferred financing costs
    
    
    
    
    
    
    12,457Mark-to-market activities, net
    
    
    7,954
    
    
    
    2,495Long-term service agreement cancellation charge
    
    
    23,860
    
    
    
    Interest on subordinated parent debt
    
    
    
    
    
    
    72,173Change in operating assets and liabilities:Accounts receivable, net
    
    
    (37,250
    )
    
    
    (5,248
    )Accounts receivable, net  related party
    
    
    (67,994
    )
    
    
    5,292Inventories
    
    
    (416
    )
    
    
    (2,724
    )Prepaid and other current assets
    
    
    (2,219
    )
    
    
    (12,403
    )Other assets
    
    
    5,928
    
    
    
    (17,771
    )Accounts payable
    
    
    30,221
    
    
    
    30,277Accrued interest payable
    
    
    30,070
    
    
    
    73,170Other accrued liabilities
    
    
    4,570
    
    
    
    473Net cash provided by operating activities
    
    
    171,359
    
    
    
    234,122Cash flows from investing activities:(Increase) decrease in restricted cash
    
    
    (153
    )
    
    
    152,290Purchase of derivative asset
    
    
    
    
    
    
    (45,000
    )Purchases of property, plant and equipment
    
    
    (76,623
    )
    
    
    (262,426
    )Net cash used in investing activities
    
    
    (76,776
    )
    
    
    (155,136
    )Cash flows from financing activities:Financing costs
    
    
    
    
    
    
    (59,389
    )Repayment of notes payable
    
    
    (166
    )
    
    
    (162
    )Borrowings from subordinated parent debt
    
    
    
    
    
    
    46,813Repayments of subordinated parent debt
    
    
    
    
    
    
    (238,137
    )Borrowings
from project financing
    
    
    
    
    
    
    2,393,900Borrowings
from revolver line of credit
    
    
    
    
    
    
    117,500Repayments of revolver line of credit
    
    
    
    
    
    
    (81,000
    )Borrowings from credit facility
    
    
    
    
    
    
    178,995Repayments of credit facility
    
    
    
    
    
    
    (2,379,353
    )Net cash used in financing activities
    
    
    (166
    )
    
    
    (20,833
    )Net increase in cash and cash equivalents
    
    
    94,417
    
    
    
    58,153Cash and cash equivalents, beginning of period
    
    
    64,538
    
    
    
    39,598Cash and cash equivalents, end of period
    
    $
    158,955
    
    
    $
    97,751
 
 (1)
    
    Only individual line items in cash flows from operating activities have been restated. Cash
flows from operating activities did not change in total and cash flows from investing and
financing activities were unaffected. See Note 3.  7




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CALPINE GENERATING COMPANY, LLC
 (a wholly-owned subsidiary of Calpine CalGen Holdings, Inc.)
 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (CONTINUED)
For the Nine Months Ended September 30, 2005 and 2004
(Unaudited)
 Nine Months EndedSeptember 30,20042005
    
    
    (Restated)(In thousands)Supplemental cash flow information:Cash paid during the period for:Interest, net of amounts capitalized
    
    $
    132,434
    
    
    $
    34,741Non-cash transactions:Interest on subordinated parent debt added to principal balance
    
    $
    
    
    
    $
    72,173Capital expenditures included in accounts payable
    
    
    
    
    
    
    25,694Financing costs contributed by parent
    
    
    
    
    
    
    5,407Long term service agreement cancellation costs contributed by parent
    
    
    30,900
    
    
    
    Acquisition of property, plant and equipment through affiliate transfer
    
    
    7,196
    
    
    
    Transfer of
property, plant and equipment in satisfaction of subordinated parent
debt
    
    
    
    
    
    
    119,647Conversion of subordinated parent debt to equity
    
    
    
    
    
    
    4,381,619
  8




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##### Table of Contents



CALPINE GENERATION COMPANY, LLC
 (a wholly-owned subsidiary of Calpine CalGen Holdings, Inc.)
 
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
September 30, 2005
(Unaudited)
 1. Organization and Operations of the Company
   2. Basis of Interim Presentation
     9




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##### Table of Contents



CALPINE GENERATION COMPANY, LLC
 (a wholly-owned subsidiary of Calpine CalGen Holdings, Inc.)
 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
September 30, 2005
(Unaudited)
 3. Restatement
    Three Months Ended
    
    
    Nine Months EndedSeptember 30, 2004
    
    
    September 30, 2004As previously
    
    
    
    
    
    
    As previouslyRestated
    
    
    reported(i)
    
    
    Restated
    
    
    reported(i)Electricity and steam revenue-related party
    
    $
    428,888
    
    
    $
    438,695
    
    
    $
    942,784
    
    
    $
    959,663Total revenue
    
    
    551,955
    
    
    
    561,762
    
    
    
    1,284,683
    
    
    
    1,301,562Gross profit
    
    
    88,882
    
    
    
    98,689
    
    
    
    148,353
    
    
    
    165,232Income from operations
    
    
    86,681
    
    
    
    96,488
    
    
    
    139,117
    
    
    
    155,996Net income (loss)
    
    
    45,199
    
    
    
    55,006
    
    
    
    (42,267
    )
    
    
    (25,388
    )
 
 (i)
    
    The consolidated condensed financial statements for the three months and nine months ended
September 30, 2004 are herein restated to correct revenue, gross profit, income from
operations and net income (loss), which had been overstated due to the billing error discussed
above. 4. Summary of Significant Accounting Policies
 Principles
of Consolidation
 Use of Estimates in Preparation of Financial Statements
 Restricted Cash
 10




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##### Table of Contents



Effective Tax Rate 
 Revenue Recognition
  New Accounting Pronouncements
 SFAS No. 154
   FIN 47
  5. Property, Plant and Equipment, Net
  September 30,
    
    
    December 31,2005
    
    
    2004Buildings, machinery and equipment
    
    $
    6,716,431
    
    
    $
    5,917,575Less: Accumulated depreciation and amortization
    
    
    (469,582
    )
    
    
    (338,172
    )6,246,849
    
    
    
    5,579,403Land
    
    
    7,854
    
    
    
    7,854Construction in progress
    
    
    1,612
    
    
    
    707,172Property, plant and equipment, net
    
    $
    6,256,315
    
    
    $
    6,294,429
   Buildings, Machinery, and Equipment
 11




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##### Table of Contents



Major Maintenance 
 Impairment Evaluation
   6. Notes Payable, Term Loans and Other Financings
  Carrying Amount atFace Amount
    
    Description
    
    Interest Rate
    
    September 30, 2005$
    235.0
    
    million
    
    First Priority Secured Floating Rate Notes Due 2009
    
    LIBOR plus 375 basis points
    
    $
    235.0
    
    
    million$
    640.0
    
    million
    
    Second Priority Secured Floating Rate Notes Due 2010
    
    LIBOR plus 575 basis points
    
    $
    632.8
    
    
    million$
    680.0
    
    million
    
    Third Priority Secured Floating Rate Notes Due 2011
    
    LIBOR plus 900 basis points
    
    $
    680.0
    
    
    million$
    150.0
    
    million

    
    Third Priority Secured Notes Due 2011
    
    11.50%
    
    $
    150.0
    
    
    million$
    600.0
    
    million
    
    First Priority Secured Term Loans due 2009
    
    LIBOR plus 375 basis points(1)
    
    $
    600.0
    
    
    million$
    100.0
    
    million
    
    Second Priority Secured Term Loans due 2010
    
    LIBOR plus 575 basis points(2)
    
    $
    98.9
    
    
    million$
    2,405.0
    
    million
    
    
    
    
    
    $
    2,396.7
    
    
    million
 
 (1)
    
    The Company may also elect a Base Rate plus 275 basis points.(2)
    
    The Company may also elect a Base Rate plus 475 basis points.  Other Financings
  12




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##### Table of Contents



7. Significant Customers
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2004
    
    
    
    
    
    
    20042005
    
    
    (Restated)
    
    
    2005
    
    
    (Restated)Revenues:CES
    
    $
    813,715
    
    
    $
    428,888
    
    
    $
    1,521,056
    
    
    $
    942,784
  8. Related Party Transactions
  13




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##### Table of Contents



9. Derivative Instruments
   September 30,2005Current derivative assets
    
    $
    12,742Long-term derivative assets
    
    
    15,219Total derivative assets
    
    $
    27,961
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004Unrealized mark-to-market gain (loss)
    
    $
    (360
    )
    
    $
    (574
    )
    
    $
    (2,083
    )
    
    $
    (2,495
    )Realized mark-to-market loss
    
    
    (130
    )
    
    
    
    
    
    
    (5,871
    )
    
    
    Total mark-to-market activities, net
    
    $
    (490
    )
    
    $
    (574
    )
    
    $
    (7,954
    )
    
    $
    (2,495
    )
 10. Commitments and Contingencies
 Commitments
 14




---



##### Table of Contents



Litigation
  Estate of Jones, et al. v. Calpine Corporation
 Solutia Bankruptcy
 15




---



##### Table of Contents



Panda Energy International, Inc., et al. v. Calpine Corporation, et al.
  11. Guarantor Subsidiaries  Supplemental Consolidating Financial Statements
   16




---



##### Table of Contents



CALPINE
GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine CalGen Holdings, Inc.)
 SUPPLEMENTAL CONSOLIDATING CONDENSED BALANCE SHEET
September 30, 2005
(in thousands)
 CalpineCalpine
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    GeneratingGenerating
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Company,Company,
    
    
    Subsidiary
    
    
    Other
    
    
    Consolidating
    
    
    LLCLLC
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedASSETSCurrent assets:Cash and cash equivalents
    
    $
    158,928
    
    
    $
    24
    
    
    $
    3
    
    
    $
    
    
    
    $
    158,955Restricted cash, current portion
    
    
    
    
    
    
    
    
    
    
    58
    
    
    
    
    
    
    
    58Accounts receivable, net
    
    
    26,757
    
    
    
    69,688
    
    
    
    125
    
    
    
    
    
    
    
    96,570Accounts receivable, net  related party
    
    
    
    
    
    
    302,936
    
    
    
    
    
    
    
    (222,072
    )
    
    
    80,864Notes receivable, current portion
    
    
    
    
    
    
    394
    
    
    
    
    
    
    
    
    
    
    
    394Inventories
    
    
    
    
    
    
    18,839
    
    
    
    1,178
    
    
    
    
    
    
    
    20,017Current derivative assets
    
    
    12,742
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,742Prepaid and other current assets
    
    
    881
    
    
    
    9,056
    
    
    
    691
    
    
    
    
    
    
    
    10,628Total current assets
    
    
    199,308
    
    
    
    400,937
    
    
    
    2,055
    
    
    
    (222,072
    )
    
    
    380,228Property, plant and equipment, net
    
    
    4
    
    
    
    5,936,996
    
    
    
    319,315
    
    
    
    
    
    
    
    6,256,315Investment in affiliates
    
    
    4,125,175
    
    
    
    
    
    
    
    
    
    
    
    (4,125,175
    )
    
    
    Notes receivable, net of current portion
    
    
    
    
    
    
    19,082
    
    
    
    
    
    
    
    
    
    
    
    19,082Notes receivable  affiliate
    
    
    2,437,194
    
    
    
    
    
    
    
    
    
    
    
    (2,437,194
    )
    
    
    Restricted cash, net of current portion
    
    
    
    
    
    
    
    
    
    
    95
    
    
    
    
    
    
    
    95Deferred financing costs, net
    
    
    42,920
    
    
    
    40,950
    
    
    
    1,970
    
    
    
    (42,920
    )
    
    
    42,920Long-term derivative assets
    
    
    15,219
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,219Deferred tax asset
    
    
    
    
    
    
    16,310
    
    
    
    1,362
    
    
    
    
    
    
    
    17,672Other assets
    
    
    
    
    
    
    38,144
    
    
    
    
    
    
    
    
    
    
    
    38,144Total assets
    
    $
    6,819,820
    
    
    $
    6,452,419
    
    
    $
    324,797
    
    
    $
    (6,827,361
    )
    
    $
    6,769,675LIABILITIES AND MEMBERS EQUITYCurrent liabilities:Accounts payable
    
    $
    55,681
    
    
    $
    69,048
    
    
    $
    2,607
    
    
    $
    
    
    
    $
    127,336Accounts payable  related party
    
    
    175,080
    
    
    
    
    
    
    
    46,992
    
    
    
    (222,072
    )
    
    
    Notes payable, current portion
    
    
    
    
    
    
    171
    
    
    
    
    
    
    
    
    
    
    
    171Accrued interest payable
    
    
    83,394
    
    
    
    79,568
    
    
    
    3,826
    
    
    
    (83,394
    )
    
    
    83,394Deferred tax liability
    
    
    
    
    
    
    16,310
    
    
    
    1,362
    
    
    
    
    
    
    
    17,672Other current liabilities
    
    
    
    
    
    
    3,570
    
    
    
    193
    
    
    
    
    
    
    
    3,763Total current liabilities
    
    
    314,155
    
    
    
    168,667
    
    
    
    54,980
    
    
    
    (305,466
    )
    
    
    232,336Notes payable, net of current portion
    
    
    
    
    
    
    1,943
    
    
    
    
    
    
    
    
    
    
    
    1,943Priority notes and term loans
    
    
    2,396,720
    
    
    
    2,286,631
    
    
    
    110,089
    
    
    
    (2,396,720
    )
    
    
    2,396,720Deferred revenue
    
    
    
    
    
    
    7,832
    
    
    
    
    
    
    
    
    
    
    
    7,832Other liabilities
    
    
    
    
    
    
    21,899
    
    
    
    
    
    
    
    
    
    
    
    21,899Total liabilities
    
    
    2,710,875
    
    
    
    2,486,972
    
    
    
    165,069
    
    
    
    (2,702,186
    )
    
    
    2,660,730Members equity
    
    
    4,108,945
    
    
    
    3,965,447
    
    
    
    159,728
    
    
    
    (4,125,175
    )
    
    
    4,108,945Total liabilities and members equity
    
    $
    6,819,820
    
    
    $
    6,452,419
    
    
    $
    324,797
    
    
    $
    (6,827,361
    )
    
    $
    6,769,675
 17




---



##### Table of Contents



CALPINE
GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine CalGen Holdings, Inc.)
 SUPPLEMENTAL CONSOLIDATING CONDENSED BALANCE SHEET
December 31, 2004
(in thousands)
 CalpineCalpine
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    GeneratingGenerating
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Company,Company,
    
    
    Subsidiary
    
    
    Other
    
    
    Consolidating
    
    
    LLCLLC
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedASSETSCurrent assets:Cash and cash equivalents
    
    $
    64,510
    
    
    $
    28
    
    
    $
    
    
    
    $
    
    
    
    $
    64,538Accounts receivable, net
    
    
    
    
    
    
    59,302
    
    
    
    18
    
    
    
    
    
    
    
    59,320Accounts receivable, net  related party
    
    
    62,131
    
    
    
    119,589
    
    
    
    
    
    
    
    (181,120
    )
    
    
    600Notes receivable, current portion
    
    
    
    
    
    
    367
    
    
    
    
    
    
    
    
    
    
    
    367Inventories
    
    
    
    
    
    
    18,456
    
    
    
    1,145
    
    
    
    
    
    
    
    19,601Current derivative assets
    
    
    9,272
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,272Prepaid and other current assets
    
    
    62
    
    
    
    21,019
    
    
    
    88
    
    
    
    
    
    
    
    21,169Total current assets
    
    
    135,975
    
    
    
    218,761
    
    
    
    1,251
    
    
    
    (181,120
    )
    
    
    174,867Property, plant and equipment, net
    
    
    7
    
    
    
    5,969,576
    
    
    
    324,846
    
    
    
    
    
    
    
    6,294,429Investment in affiliates
    
    
    4,051,326
    
    
    
    
    
    
    
    
    
    
    
    (4,051,326
    )
    
    
    Notes receivable, net of current portion
    
    
    
    
    
    
    19,381
    
    
    
    
    
    
    
    
    
    
    
    19,381Notes receivable  affiliate
    
    
    2,397,160
    
    
    
    
    
    
    
    
    
    
    
    (2,397,160
    )
    
    
    Deferred financing costs, net
    
    
    51,496
    
    
    
    49,329
    
    
    
    2,167
    
    
    
    (51,496
    )
    
    
    51,496Long-term derivative assets
    
    
    26,644
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,644Deferred tax asset
    
    
    
    
    
    
    16,310
    
    
    
    1,362
    
    
    
    
    
    
    
    17,672Other assets
    
    
    
    
    
    
    54,245
    
    
    
    
    
    
    
    
    
    
    
    54,245Total assets
    
    $
    6,662,608
    
    
    $
    6,327,602
    
    
    $
    329,626
    
    
    $
    (6,681,102
    )
    
    $
    6,638,734LIABILITIES AND MEMBERS EQUITYCurrent liabilities:Accounts payable
    
    $
    31,809
    
    
    $
    66,880
    
    
    $
    523
    
    
    $
    
    
    
    $
    99,212Accounts payable  related party
    
    
    140,153
    
    
    
    
    
    
    
    40,967
    
    
    
    (181,120
    )
    
    
    Notes payable, current portion
    
    
    
    
    
    
    168
    
    
    
    
    
    
    
    
    
    
    
    168Accrued interest payable
    
    
    53,324
    
    
    
    51,028
    
    
    
    2,296
    
    
    
    (53,324
    )
    
    
    53,324Deferred tax liability
    
    
    
    
    
    
    16,310
    
    
    
    1,362
    
    
    
    
    
    
    
    17,672Other current liabilities
    
    
    
    
    
    
    2,871
    
    
    
    99
    
    
    
    
    
    
    
    2,970Total current liabilities
    
    
    225,286
    
    
    
    137,257
    
    
    
    45,247
    
    
    
    (234,444
    )
    
    
    173,346Notes payable, net of current portion
    
    
    
    
    
    
    2,109
    
    
    
    
    
    
    
    
    
    
    
    2,109Priority notes and term loans
    
    
    2,395,332
    
    
    
    2,285,307
    
    
    
    110,025
    
    
    
    (2,395,332
    )
    
    
    2,395,332Deferred revenue
    
    
    
    
    
    
    5,671
    
    
    
    
    
    
    
    
    
    
    
    5,671Other liabilities
    
    
    
    
    
    
    20,286
    
    
    
    
    
    
    
    
    
    
    
    20,286Total liabilities
    
    
    2,620,618
    
    
    
    2,450,630
    
    
    
    155,272
    
    
    
    (2,629,776
    )
    
    
    2,596,744Members equity
    
    
    4,041,990
    
    
    
    3,876,972
    
    
    
    174,354
    
    
    
    (4,051,326
    )
    
    
    4,041,990Total liabilities and members equity
    
    $
    6,662,608
    
    
    $
    6,327,602
    
    
    $
    329,626
    
    
    $
    (6,681,102
    )
    
    $
    6,638,734
 18




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##### Table of Contents



CALPINE
GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine CalGen Holdings, Inc.)
 SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
For the three months ended September 30, 2005
(in thousands)
 CalpineCalpine
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    GeneratingGenerating
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Company,Company,
    
    
    Subsidiary
    
    
    Other
    
    
    Consolidating
    
    
    LLCLLC
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedRevenue:Electricity and steam revenue  related party
    
    $
    
    
    
    $
    791,249
    
    
    $
    22,466
    
    
    $
    
    
    
    $
    813,715Electricity and steam revenue  third-party
    
    
    
    
    
    
    139,765
    
    
    
    
    
    
    
    
    
    
    
    139,765Total electricity and steam revenue
    
    
    
    
    
    
    931,014
    
    
    
    22,466
    
    
    
    
    
    
    
    953,480Mark-to-market activity, net
    
    
    (490
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (490
    )Other revenue
    
    
    
    
    
    
    824
    
    
    
    
    
    
    
    
    
    
    
    824Total revenue
    
    
    (490
    )
    
    
    931,838
    
    
    
    22,466
    
    
    
    
    
    
    
    953,814Cost of revenue:Plant operating expense  related party
    
    
    
    
    
    
    43,091
    
    
    
    3,646
    
    
    
    
    
    
    
    46,737Fuel expense
    
    
    
    
    
    
    662,645
    
    
    
    17,359
    
    
    
    
    
    
    
    680,004Purchased power expense
    
    
    
    
    
    
    269
    
    
    
    
    
    
    
    
    
    
    
    269Depreciation and amortization expense
    
    
    
    
    
    
    45,915
    
    
    
    2,107
    
    
    
    
    
    
    
    48,022Total cost of revenue
    
    
    
    
    
    
    751,920
    
    
    
    23,112
    
    
    
    
    
    
    
    775,032Gross profit (loss)
    
    
    (490
    )
    
    
    179,918
    
    
    
    (646
    )
    
    
    
    
    
    
    178,782Long-term service agreement cancellation charge
    
    
    
    
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    (4
    )Sales, general and administrative expense 
related party
    
    
    345
    
    
    
    3,602
    
    
    
    172
    
    
    
    
    
    
    
    4,119Income (loss) from operations
    
    
    (835
    )
    
    
    176,320
    
    
    
    (818
    )
    
    
    
    
    
    
    174,667Interest expense  third party
    
    
    61,358
    
    
    
    58,538
    
    
    
    2,820
    
    
    
    (61,358
    )
    
    
    61,358Interest (income)
    
    
    (62,464
    )
    
    
    (476
    )
    
    
    
    
    
    
    61,358
    
    
    
    (1,582
    )Equity income in subsidiary
    
    
    113,932
    
    
    
    
    
    
    
    
    
    
    
    (113,932
    )
    
    
    Other expense (income), net
    
    
    (89
    )
    
    
    621
    
    
    
    67
    
    
    
    
    
    
    
    599Income (loss) before income taxes
    
    
    114,292
    
    
    
    117,637
    
    
    
    (3,705
    )
    
    
    (113,932
    )
    
    
    114,292Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    114,292
    
    
    $
    117,637
    
    
    $
    (3,705
    )
    
    $
    (113,932
    )
    
    $
    114,292
 19




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##### Table of Contents



CALPINE
GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine CalGen Holdings, Inc.)
 SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
For the nine months ended September 30, 2005
(in thousands)
 CalpineCalpine
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    GeneratingGenerating
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Company,Company,
    
    
    Subsidiary
    
    
    Other
    
    
    Consolidating
    
    
    LLCLLC
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedRevenue:Electricity and steam revenue  related party
    
    $
    
    
    
    $
    1,474,499
    
    
    $
    46,557
    
    
    $
    
    
    
    $
    1,521,056Electricity and steam revenue  third-party
    
    
    
    
    
    
    374,495
    
    
    
    
    
    
    
    
    
    
    
    374,495Total electricity and steam revenue
    
    
    
    
    
    
    1,848,994
    
    
    
    46,557
    
    
    
    
    
    
    
    1,895,551Mark-to-market activity, net
    
    
    (7,954
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,954
    )Sale of purchased power
    
    
    
    
    
    
    5,459
    
    
    
    
    
    
    
    
    
    
    
    5,459Other revenue
    
    
    
    
    
    
    2,472
    
    
    
    
    
    
    
    
    
    
    
    2,472Total revenue
    
    
    (7,954
    )
    
    
    1,856,925
    
    
    
    46,557
    
    
    
    
    
    
    
    1,895,528Cost of revenue:Plant operating expense  related party
    
    
    
    
    
    
    151,123
    
    
    
    10,641
    
    
    
    
    
    
    
    161,764Fuel expense
    
    
    
    
    
    
    1,322,334
    
    
    
    35,705
    
    
    
    
    
    
    
    1,358,039Purchased power expense
    
    
    
    
    
    
    7,582
    
    
    
    
    
    
    
    
    
    
    
    7,582Depreciation and amortization expense
    
    
    
    
    
    
    126,337
    
    
    
    6,053
    
    
    
    
    
    
    
    132,390Total cost of revenue
    
    
    
    
    
    
    1,607,376
    
    
    
    52,399
    
    
    
    
    
    
    
    1,659,775Gross profit (loss)
    
    
    (7,954
    )
    
    
    249,549
    
    
    
    (5,842
    )
    
    
    
    
    
    
    235,753Long-term service agreement cancellation charge
    
    
    
    
    
    
    23,860
    
    
    
    
    
    
    
    
    
    
    
    23,860Sales, general and administrative expense 
related party
    
    
    740
    
    
    
    9,648
    
    
    
    501
    
    
    
    
    
    
    
    10,889Income (loss) from operations
    
    
    (8,694
    )
    
    
    216,041
    
    
    
    (6,343
    )
    
    
    
    
    
    
    201,004Interest expense  third party
    
    
    167,415
    
    
    
    159,337
    
    
    
    8,078
    
    
    
    (167,415
    )
    
    
    167,415Interest (income)
    
    
    (168,958
    )
    
    
    (1,436
    )
    
    
    
    
    
    
    167,415
    
    
    
    (2,979
    )Equity income in subsidiary
    
    
    41,640
    
    
    
    
    
    
    
    
    
    
    
    (41,640
    )
    
    
    Other expense (income), net
    
    
    (257
    )
    
    
    1,828
    
    
    
    251
    
    
    
    
    
    
    
    1,822Income (loss) before income taxes
    
    
    34,746
    
    
    
    56,312
    
    
    
    (14,672
    )
    
    
    (41,640
    )
    
    
    34,746Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    34,746
    
    
    $
    56,312
    
    
    $
    (14,672
    )
    
    $
    (41,640
    )
    
    $
    34,746
 20




---



##### Table of Contents



CALPINE
GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine CalGen Holdings, Inc.)
 SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
For the three months ended September 30, 2004
(Restated, in thousands)
 CalpineCalpine
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    GeneratingGenerating
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Company,Company,
    
    
    Subsidiary
    
    
    Other
    
    
    Consolidating
    
    
    LLCLLC
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedRevenue:Electricity and steam revenue  related party
    
    $
    
    
    
    $
    428,332
    
    
    $
    556
    
    
    $
    
    
    
    $
    428,888Electricity and steam revenue  third-party
    
    
    
    
    
    
    122,817
    
    
    
    
    
    
    
    
    
    
    
    122,817Total electricity and steam revenue
    
    
    
    
    
    
    551,149
    
    
    
    556
    
    
    
    
    
    
    
    551,705Mark-to-market activity, net
    
    
    (574
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (574
    )Sale of purchased power
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other revenue
    
    
    
    
    
    
    824
    
    
    
    
    
    
    
    
    
    
    
    824Total revenue
    
    
    (574
    )
    
    
    551,973
    
    
    
    556
    
    
    
    
    
    
    
    551,955Cost of revenue:Plant operating expense  related party
    
    
    
    
    
    
    38,020
    
    
    
    36
    
    
    
    
    
    
    
    38,056Fuel expense
    
    
    
    
    
    
    384,407
    
    
    
    940
    
    
    
    
    
    
    
    385,347Purchased power expense
    
    
    
    
    
    
    446
    
    
    
    
    
    
    
    
    
    
    
    446Depreciation and amortization expense
    
    
    
    
    
    
    38,881
    
    
    
    343
    
    
    
    
    
    
    
    39,224Total cost of revenue
    
    
    
    
    
    
    461,754
    
    
    
    1,319
    
    
    
    
    
    
    
    463,073Gross profit (loss)
    
    
    (574
    )
    
    
    90,219
    
    
    
    (763
    )
    
    
    
    
    
    
    88,882Sales, general and administrative expense  related party
    
    
    243
    
    
    
    1,902
    
    
    
    56
    
    
    
    
    
    
    
    2,201Income (loss) from operations
    
    
    (817
    )
    
    
    88,317
    
    
    
    (819
    )
    
    
    
    
    
    
    86,681Interest expense  related party
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest expense  third party
    
    
    41,170
    
    
    
    40,798
    
    
    
    377
    
    
    
    (41,170
    )
    
    
    41,175Interest (income)
    
    
    (41,272
    )
    
    
    (342
    )
    
    
    
    
    
    
    41,170
    
    
    
    (444
    )Equity income in subsidiary
    
    
    45,869
    
    
    
    
    
    
    
    
    
    
    
    (45,869
    )
    
    
    Other expense (income), net
    
    
    (45
    )
    
    
    796
    
    
    
    
    
    
    
    
    
    
    
    751Income before income taxes
    
    
    45,199
    
    
    
    47,065
    
    
    
    (1,196
    )
    
    
    (45,869
    )
    
    
    45,199Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income
    
    $
    45,199
    
    
    $
    47,065
    
    
    $
    (1,196
    )
    
    $
    (45,869
    )
    
    $
    45,199
 21




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##### Table of Contents



CALPINE
GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine CalGen Holdings, Inc.)
 SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
For the nine months ended September 30, 2004
(Restated, in thousands)
 CalpineCalpine
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    GeneratingGenerating
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Company,Company,
    
    
    Subsidiary
    
    
    Other
    
    
    Consolidating
    
    
    LLCLLC
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedRevenue:Electricity and steam revenue  related party
    
    $
    
    
    
    $
    942,228
    
    
    $
    556
    
    
    $
    
    
    
    $
    942,784Electricity and steam revenue  third-party
    
    
    
    
    
    
    339,062
    
    
    
    
    
    
    
    
    
    
    
    339,062Total electricity and steam revenue
    
    
    
    
    
    
    1,281,290
    
    
    
    556
    
    
    
    
    
    
    
    1,281,846Mark-to-market activity, net
    
    
    (2,495
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,495
    )Sale of purchased power
    
    
    
    
    
    
    2,860
    
    
    
    
    
    
    
    
    
    
    
    2,860Other revenue
    
    
    
    
    
    
    2,472
    
    
    
    
    
    
    
    
    
    
    
    2,472Total revenue
    
    
    (2,495
    )
    
    
    1,286,622
    
    
    
    556
    
    
    
    
    
    
    
    1,284,683Cost of revenue:Plant operating expense  related party
    
    
    
    
    
    
    134,745
    
    
    
    36
    
    
    
    
    
    
    
    134,781Fuel expense
    
    
    
    
    
    
    886,635
    
    
    
    940
    
    
    
    
    
    
    
    887,575Purchased power expense
    
    
    
    
    
    
    3,014
    
    
    
    
    
    
    
    
    
    
    
    3,014Depreciation and amortization expense
    
    
    
    
    
    
    110,617
    
    
    
    343
    
    
    
    
    
    
    
    110,960Total cost of revenue
    
    
    
    
    
    
    1,135,011
    
    
    
    1,319
    
    
    
    
    
    
    
    1,136,330Gross profit (loss)
    
    
    (2,495
    )
    
    
    151,611
    
    
    
    (763
    )
    
    
    
    
    
    
    148,353Sales, general and administrative expense 
related party
    
    
    532
    
    
    
    7,486
    
    
    
    1,218
    
    
    
    
    
    
    
    9,236Income (loss) from operations
    
    
    (3,027
    )
    
    
    144,125
    
    
    
    (1,981
    )
    
    
    
    
    
    
    139,117Interest expense  related party
    
    
    
    
    
    
    72,026
    
    
    
    147
    
    
    
    
    
    
    
    72,173Interest expense  third party
    
    
    80,035
    
    
    
    110,413
    
    
    
    401
    
    
    
    (80,035
    )
    
    
    110,814Interest (income)
    
    
    (80,203
    )
    
    
    (1,771
    )
    
    
    
    
    
    
    80,035
    
    
    
    (1,939
    )Equity loss in subsidiary
    
    
    (39,471
    )
    
    
    
    
    
    
    
    
    
    
    39,471
    
    
    
    Other (income), net
    
    
    (63
    )
    
    
    399
    
    
    
    
    
    
    
    
    
    
    
    336Loss before income taxes
    
    
    (42,267
    )
    
    
    (36,942
    )
    
    
    (2,529
    )
    
    
    39,471
    
    
    
    (42,267
    )Income taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    $
    (42,267
    )
    
    $
    (36,942
    )
    
    $
    (2,529
    )
    
    $
    39,471
    
    
    $
    (42,267
    )
 22




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##### Table of Contents



CALPINE
GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine CalGen Holdings, Inc.)
 SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
For the nine months ended September 30, 2005
(in thousands)
 CalpineCalpine
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    GeneratingGenerating
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Company,Company,
    
    
    Subsidiary
    
    
    Other
    
    
    Consolidating
    
    
    LLCLLC
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedCash flows from operating activities:Net income (loss)
    
    $
    34,746
    
    
    $
    56,312
    
    
    $
    (14,672
    )
    
    $
    (41,640
    )
    
    $
    34,746Adjustments to reconcile net loss to net cash provided by operating
activities:Depreciation and amortization
    
    
    
    
    
    
    126,337
    
    
    
    6,053
    
    
    
    
    
    
    
    132,390Amortization of discount and deferred financing costs
    
    
    9,499
    
    
    
    9,238
    
    
    
    261
    
    
    
    (9,499
    )
    
    
    9,499Mark-to-market activities, net
    
    
    7,954
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,954Long -term service agreement cancellation charge
    
    
    
    
    
    
    23,860
    
    
    
    
    
    
    
    
    
    
    
    23,860Equity
(income) in subsidiary
    
    
    (41,640
    )
    
    
    
    
    
    
    
    
    
    
    41,640
    
    
    
    Change in operating assets and liabilities:Accounts receivable
    
    
    (26,757
    )
    
    
    (10,386
    )
    
    
    (107
    )
    
    
    
    
    
    
    (37,250
    )Accounts receivable, net related party
    
    
    97,058
    
    
    
    (171,077
    )
    
    
    6,025
    
    
    
    
    
    
    
    (67,994
    )Inventories
    
    
    
    
    
    
    (383
    )
    
    
    (33
    )
    
    
    
    
    
    
    (416
    )Prepaid and other current assets
    
    
    (815
    )
    
    
    (801
    )
    
    
    (603
    )
    
    
    
    
    
    
    (2,219
    )Other assets
    
    
    
    
    
    
    5,928
    
    
    
    
    
    
    
    
    
    
    
    5,928Accounts payable
    
    
    23,872
    
    
    
    4,219
    
    
    
    2,130
    
    
    
    
    
    
    
    30,221Accrued interest payable
    
    
    30,070
    
    
    
    28,540
    
    
    
    1,530
    
    
    
    (30,070
    )
    
    
    30,070Other accrued liabilities
    
    
    
    
    
    
    4,476
    
    
    
    94
    
    
    
    
    
    
    
    4,570Net cash provided by (used in) operating activities
    
    
    133,987
    
    
    
    76,263
    
    
    
    678
    
    
    
    (39,569
    )
    
    
    171,359Cash flows from investing activities:Loans to
subsidiaries for project financing
    
    
    (40,034
    )
    
    
    
    
    
    
    
    
    
    
    40,034
    
    
    
    Increase in restricted cash
    
    
    
    
    
    
    
    
    
    
    (153
    )
    
    
    
    
    
    
    (153
    )Purchases of property , plant and equipment
    
    
    465
    
    
    
    (76,101
    )
    
    
    (522
    )
    
    
    (465
    )
    
    
    (76,623
    )Net cash used in investing activities
    
    
    (39,569
    )
    
    
    (76,101
    )
    
    
    (675
    )
    
    
    39,569
    
    
    
    (76,776
    )Cash flows from financing activities:Repayments on notes payable
    
    
    
    
    
    
    (166
    )
    
    
    
    
    
    
    
    
    
    
    (166
    )Net cash used in financing activities
    
    
    
    
    
    
    (166
    )
    
    
    
    
    
    
    
    
    
    
    (166
    )Net increase (decrease) in cash and cash equivalents
    
    
    94,418
    
    
    
    (4
    )
    
    
    3
    
    
    
    
    
    
    
    94,417Cash and cash equivalents, beginning of period
    
    
    64,510
    
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    64,538Cash and cash equivalents, end of period
    
    $
    158,928
    
    
    $
    24
    
    
    $
    3
    
    
    $
    
    
    
    $
    158,955
 23




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##### Table of Contents



CALPINE
GENERATING COMPANY, LLC
(a wholly-owned subsidiary of Calpine CalGen Holdings, Inc.)
 SUPPLEMENTAL CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
For the nine months ended September 30, 2004
(Restated, in thousands)
 Calpine
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    GeneratingGenerating
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Company,Company,
    
    
    Subsidiary
    
    
    Other
    
    
    Consolidating
    
    
    LLCLLC
    
    
    Guarantors
    
    
    Subsidiaries
    
    
    Adjustments
    
    
    ConsolidatedCash flows from operating activities:Net loss
    
    $
    (42,267
    )
    
    $
    (36,942
    )
    
    $
    (2,529
    )
    
    $
    39,471
    
    
    $
    (42,267
    )Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    
    
    
    
    110,617
    
    
    
    343
    
    
    
    
    
    
    
    110,960Amortization of discount and deferred
financing costs
    
    
    7,238
    
    
    
    6,633
    
    
    
    605
    
    
    
    (7,238
    )
    
    
    7,238Write-off of deferred financing costs
    
    
    
    
    
    
    12,457
    
    
    
    
    
    
    
    
    
    
    
    12,457Mark-to-market activities, net
    
    
    2,495
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,495Interest on subordinated parent debt
    
    
    
    
    
    
    72,026
    
    
    
    147
    
    
    
    
    
    
    
    72,173Equity loss in subsidiary
    
    
    39,471
    
    
    
    
    
    
    
    
    
    
    
    (39,471
    )
    
    
    Change in operating assets and liabilities:Accounts receivable
    
    
    
    
    
    
    (5,248
    )
    
    
    
    
    
    
    
    
    
    
    (5,248
    )Accounts receivable, net  related party
    
    
    129,845
    
    
    
    (143,969
    )
    
    
    19,416
    
    
    
    
    
    
    
    5,292Inventories
    
    
    
    
    
    
    (2,573
    )
    
    
    (151
    )
    
    
    
    
    
    
    (2,724
    )Prepaid and other current assets
    
    
    (48
    )
    
    
    (10,886
    )
    
    
    (1,469
    )
    
    
    
    
    
    
    (12,403
    )Other assets
    
    
    (20,422
    )
    
    
    (17,771
    )
    
    
    
    
    
    
    20,422
    
    
    
    (17,771
    )Accounts payable
    
    
    13,263
    
    
    
    20,372
    
    
    
    (3,358
    )
    
    
    
    
    
    
    30,277Accrued interest payable
    
    
    73,269
    
    
    
    69,936
    
    
    
    3,234
    
    
    
    (73,269
    )
    
    
    73,170Other accrued liabilities
    
    
    
    
    
    
    407
    
    
    
    66
    
    
    
    
    
    
    
    473Net cash provided by (used in)
operating activities
    
    
    202,844
    
    
    
    75,059
    
    
    
    16,304
    
    
    
    (60,085
    )
    
    
    234,122Cash flows from investing activities:Loans to
subsidiaries for project financing (1)
    
    
    (2,430,400
    )
    
    
    
    
    
    
    
    
    
    
    2,430,400
    
    
    
    Increase in restricted cash
    
    
    
    
    
    
    152,290
    
    
    
    
    
    
    
    
    
    
    
    152,290Purchases of derivative asset
    
    
    (45,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (45,000
    )Purchases of property, plant and equipment
    
    
    (704
    )
    
    
    (218,138
    )
    
    
    (44,280
    )
    
    
    696
    
    
    
    (262,426
    )Net cash used in investing activities
    
    
    (2,476,104
    )
    
    
    (65,848
    )
    
    
    (44,280
    )
    
    
    2,431,096
    
    
    
    (155,136
    )Cash flows from financing activities:Financing costs
    
    
    (59,389
    )
    
    
    (56,626
    )
    
    
    (2,763
    )
    
    
    59,389
    
    
    
    (59,389
    )Repayment on notes payable
    
    
    
    
    
    
    (162
    )
    
    
    
    
    
    
    
    
    
    
    (162
    )Borrowings from subordinated parent debt
    
    
    
    
    
    
    29,935
    
    
    
    16,878
    
    
    
    
    
    
    
    46,813Repayments of subordinated parent debt
    
    
    
    
    
    
    (131,096
    )
    
    
    (107,041
    )
    
    
    
    
    
    
    (238,137
    )Borrowings
from project financing
    
    
    2,393,900
    
    
    
    2,283,896
    
    
    
    110,004
    
    
    
    (2,393,900
    )
    
    
    2,393,900Repayment on revolver line of credit
    
    
    (81,000
    )
    
    
    (66,444
    )
    
    
    (14,556
    )
    
    
    81,000
    
    
    
    (81,000
    )Borrowings
from revolver line of credit
    
    
    117,500
    
    
    
    92,049
    
    
    
    25,451
    
    
    
    (117,500
    )
    
    
    117,500Borrowings from credit facility
    
    
    
    
    
    
    178,995
    
    
    
    
    
    
    
    
    
    
    
    178,995Repayments on credit facility
    
    
    
    
    
    
    (2,379,353
    )
    
    
    
    
    
    
    
    
    
    
    (2,379,353
    )Net cash provided by (used in)
financing activities
    
    
    2,371,011
    
    
    
    (48,806
    )
    
    
    27,973
    
    
    
    (2,371,011
    )
    
    
    (20,833
    )Net increase (decrease) in cash and cash equivalents
    
    
    97,751
    
    
    
    (39,595
    )
    
    
    (3
    )
    
    
    
    
    
    
    58,153Cash and cash equivalents, beginning of period
    
    
    
    
    
    
    39,595
    
    
    
    3
    
    
    
    
    
    
    
    39,598Cash and cash equivalents, end of period
    
    $
    97,751
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    97,751
 
 (1)
    
    The Company has
revised the 2004 Calpine Generating Company, LLC statement of cash
flows to reflect loans to subsidiaries for project financing and the
related consolidating adjustment as investing activities rather than
an adjustment of operating activities as previously presented.
 24




---



##### Table of Contents



Item 2. Managements Discussion and Analysis (MD&A) of Financial Condition and Results of
Operations.
 In addition to historical information, this report contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. We use words such as believe, intend, expect,
anticipate, plan, may, will and similar expressions to identify forward-looking statements.
Such statements include, among others, those concerning our expected financial performance and
strategic and operational plans, as well as all assumptions, expectations, predictions, intentions
or beliefs about future events. You are cautioned that any such forward-looking statements are not
guarantees of future performance and that a number of risks and uncertainties could cause actual
results to differ materially from those anticipated in the forward-looking statements. Such risks
and uncertainties include, but are not limited to, (i) the timing and extent of deregulation of
energy markets and the rules and regulations adopted on a transitional basis 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)
uncertainties associated with cost estimates, that actual costs may be higher than estimated, (vii)
development of lower-cost power plants or of a lower cost means of operating a fleet of power
plants by our competitors, (viii) uncertainties associated with estimates of sources and uses of
cash, that actual sources may be lower and actual uses may be higher than estimated, (ix) present
and possible future claims, litigation and enforcement actions, (x) effects of the application of
regulations, including changes in regulations or the interpretation thereof, (xi) risks related to
the ability of Calpine and its affiliates to continue to perform under the various affiliate
agreements including the Index Based Gas Sale and Power Purchase Agreement (the Index Based
Agreement) and the WECC Fixed Price Gas Sale and Power Purchase Agreement (the Fixed Price
Agreement) with Calpine Energy Services, L.P.
(CES), (xii) restrictions imposed by the instruments
governing our debt, and (xiii) other risks identified in this
report. You should also carefully review the risks described in other reports that we file with the
Securities and Exchange Commission, including without limitation our annual report on Form 10-K for
the year ended December 31, 2004 and our Registration Statement on 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.
   Restatement
  Executive Overview
  25




---



##### Table of Contents



Results of Operations
 Three Months Ended September 30, 2005, Compared to Three Months Ended September 30, 2004
  Revenue
 Three Months EndedSeptember 30,2005
    
    
    2004
    
    
    $ Change
    
    
    % ChangeElectricity and steam revenue  related party
    
    $
    813.7
    
    
    $
    428.9
    
    
    $
    384.8
    
    
    
    89.7
    %Electricity and steam revenue  third-party
    
    
    139.8
    
    
    
    122.8
    
    
    
    17.0
    
    
    
    13.8
    %Mark-to-market activity, net
    
    
    (0.5
    )
    
    
    (0.6
    )
    
    
    0.1
    
    
    
    16.7
    %Other revenue
    
    
    0.8
    
    
    
    0.8
    
    
    
    
    
    
    
    Total revenue
    
    $
    953.8
    
    
    $
    551.9
    
    
    $
    401.9
    
    
    
    72.8
    %
    Cost of Revenue
 Three Months EndedSeptember 30,2005
    
    
    2004
    
    
    $ Change
    
    
    % ChangePlant operating expense
    
    $
    46.7
    
    
    $
    38.1
    
    
    $
    (8.6
    )
    
    
    (22.6
    )%Fuel expense
    
    
    680.0
    
    
    
    385.4
    
    
    
    (294.6
    )
    
    
    (76.4
    )%Purchased power expense
    
    
    0.3
    
    
    
    0.4
    
    
    
    0.1
    
    
    
    25.0
    %Depreciation and amortization expense
    
    
    48.0
    
    
    
    39.2
    
    
    
    (8.8
    )
    
    
    (22.4
    )%Total cost of revenue
    
    $
    775.0
    
    
    $
    463.1
    
    
    $
    (311.9
    )
    
    
    (67.4
    )%
 26




---



##### Table of Contents



Other (Income)/Expenses
 Three Months EndedSeptember 30,2005
    
    
    2004
    
    
    $ Change
    
    
    % ChangeSales, general and administrative expense
    
    $
    4.1
    
    
    $
    2.2
    
    
    $
    (1.9
    )
    
    
    (86.4
    )%Interest expense, third-party
    
    
    61.4
    
    
    
    41.2
    
    
    
    (20.2
    )
    
    
    (49.0
    )%Interest (income)
    
    
    (1.6
    )
    
    
    (0.4
    )
    
    
    1.2
    
    
    
    300.0
    %Other expense (income), net
    
    
    0.6
    
    
    
    0.8
    
    
    
    0.2
    
    
    
    25.0
    %
   Nine Months Ended September 30, 2005, Compared to Nine Months Ended September 30, 2004
  Revenue
 Nine Months EndedSeptember 30,2005
    
    
    2004
    
    
    $ Change
    
    
    % ChangeElectricity and steam revenue  related party
    
    $
    1,521.0
    
    
    $
    942.8
    
    
    $
    578.2
    
    
    
    61.3
    %Electricity and steam revenue  third-party
    
    
    374.5
    
    
    
    339.0
    
    
    
    35.5
    
    
    
    10.5
    %Mark-to-market activity, net
    
    
    (8.0
    )
    
    
    (2.5
    )
    
    
    (5.5
    )
    
    
    (220.0
    )%Sale of purchased power
    
    
    5.5
    
    
    
    2.9
    
    
    
    2.6
    
    
    
    89.7
    %Other revenue
    
    
    2.5
    
    
    
    2.5
    
    
    
    
    
    
    
    Total revenue
    
    $
    1,895.5
    
    
    $
    1,284.7
    
    
    $
    610.8
    
    
    
    47.5
    %
  27




---



##### Table of Contents



Cost of Revenue
 Nine Months EndedSeptember 30,2005
    
    
    2004
    
    
    $ Change
    
    
    % ChangePlant operating expense
    
    $
    161.8
    
    
    $
    134.8
    
    
    $
    (27.0
    )
    
    
    (20.0
    )%Fuel expense
    
    
    1,358.0
    
    
    
    887.5
    
    
    
    (470.5
    )
    
    
    (53.0
    )%Purchased power expense
    
    
    7.6
    
    
    
    3.0
    
    
    
    (4.6
    )
    
    
    (153.3
    )%Depreciation and amortization expense
    
    
    132.4
    
    
    
    111.0
    
    
    
    (21.4
    )
    
    
    (19.3
    )%Total cost of revenue
    
    $
    1,659.8
    
    
    $
    1,136.3
    
    
    $
    (523.5
    )
    
    
    (46.1
    )%
   28




---



##### Table of Contents



Other (Income)/Expenses
 Nine Months EndedSeptember 30,2005
    
    
    2004
    
    
    $ Change
    
    
    % ChangeLong-term service agreement cancellation charge
    
    $
    23.9
    
    
    $
    
    
    
    $
    (23.9
    )
    
    
    (100.0
    )%Sales, general and administrative expense
    
    
    10.9
    
    
    
    9.2
    
    
    
    (1.7
    )
    
    
    (18.5
    )%Interest expense  related party
    
    
    
    
    
    
    72.2
    
    
    
    72.2
    
    
    
    100.0
    %Interest expense  third-party
    
    
    167.4
    
    
    
    110.8
    
    
    
    (56.6
    )
    
    
    (51.1
    )%Interest (income)
    
    
    (3.0
    )
    
    
    (1.9
    )
    
    
    1.1
    
    
    
    57.9
    %Other expense (income), net
    
    
    1.8
    
    
    
    0.3
    
    
    
    (1.5
    )
    
    
    (500.0
    )%
     Liquidity and Capital Resources
   29




---



##### Table of Contents



Cash Flow Activities
 30




---



##### Table of Contents



Nine Months Ended September 30,2005
    
    
    2004(In thousands)Beginning cash and cash equivalents
    
    $
    64.5
    
    
    $
    39.6Net cash provided by (used in):Operating activities
    
    
    171.4
    
    
    
    234.1Investing activities
    
    
    (76.8
    )
    
    
    (155.1
    )Financing activities
    
    
    (0.2
    )
    
    
    (20.8
    )Net increase in cash and cash equivalents
    
    
    94.4
    
    
    
    58.2Ending cash and cash equivalents
    
    $
    158.9
    
    
    $
    97.8
    Revolving Credit Facilities
 Working Capital
 Credit Considerations
  Capital Expenditures and Sources
 31




---



##### Table of Contents



Distributions to Sole Member
 Capital Availability
 Long-term service agreement cancellation 
 Compliance
with Covenants
 Performance Indicators
 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.
 32




---



##### Table of Contents



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.
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(In thousands)
    
    
    (In thousands)Operating Performance Metrics:Total deliveries of power:MWh generated and delivered
    
    
    10,295
    
    
    
    8,767
    
    
    
    22,869
    
    
    
    21,375Average availability
    
    
    96.5
    %
    
    
    98.1
    %
    
    
    91.2
    %
    
    
    93.2
    %Average baseload capacity factor:Average total MW in operation
    
    
    9,782
    
    
    
    8,833
    
    
    
    9,360
    
    
    
    8,440Less: Average MW of pure peakers
    
    
    513
    
    
    
    513
    
    
    
    513
    
    
    
    513Average baseload MW in operation
    
    
    9,269
    
    
    
    8,320
    
    
    
    8,847
    
    
    
    7,927Hours in the period
    
    
    2,208
    
    
    
    2,208
    
    
    
    6,552
    
    
    
    6,576Potential baseload generation (MWh)
    
    
    20,467
    
    
    
    18,371
    
    
    
    57,965
    
    
    
    52,126Actual total generation (MWh)
    
    
    10,295
    
    
    
    8,767
    
    
    
    22,869
    
    
    
    21,375Less: Actual pure peakers
generation (MWh)
    
    
    25
    
    
    
    18
    
    
    
    30
    
    
    
    28Actual baseload generation (MWh)
    
    
    10,270
    
    
    
    8,749
    
    
    
    22,839
    
    
    
    21,347Average baseload capacity factor
    
    
    50.2
    %
    
    
    47.6
    %
    
    
    39.4
    %
    
    
    41.0
    %Average heat rate for gas-fired power
plants (excluding peakers) (Btus/KWh):Not steam adjusted
    
    
    7,777
    
    
    
    7,926
    
    
    
    8,048
    
    
    
    7,976Steam adjusted
    
    
    7,130
    
    
    
    7,153
    
    
    
    7,140
    
    
    
    7,151Average all-in realized electric price:Electricity and steam revenue
    
    $
    953,480
    
    
    $
    551,705
    
    
    $
    1,895,551
    
    
    $
    1,281,846Spread on sales of purchased power
for hedging and optimization
    
    
    (269
    )
    
    
    (446
    )
    
    
    (2,123
    )
    
    
    (154
    )Adjusted electricity and steam
revenue (in thousands)
    
    $
    953,211
    
    
    $
    551,259
    
    
    $
    1,893,428
    
    
    $
    1,281,692MWh generated (in thousands)
    
    
    10,295
    
    
    
    8,767
    
    
    
    22,869
    
    
    
    21,375Average all-in realized electric
price per MWh
    
    $
    92.59
    
    
    $
    62.88
    
    
    $
    82.79
    
    
    $
    59.96
 33




---



##### Table of Contents



Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(In thousands)
    
    
    (In thousands)Adjusted fuel expense
    
    $
    679,719
    
    
    $
    385,347
    
    
    $
    1,357,753
    
    
    $
    887,575Million Btus (MMBtu) of fuel consumed by
generating plants (in thousands)
    
    
    79,871
    
    
    
    69,338
    
    
    
    183,801
    
    
    
    170,273Average adjusted cost of natural gas per MMBtu
    
    $
    8.51
    
    
    $
    5.56
    
    
    $
    7.39
    
    
    $
    5.21MWh generated (in thousands)
    
    
    10,295
    
    
    
    8,767
    
    
    
    22,869
    
    
    
    21,375Average adjusted cost of fuel burned by power plants
per MWh
    
    $
    66.02
    
    
    $
    43.96
    
    
    $
    59.37
    
    
    $
    41.52Average spark spread:Adjusted electricity and steam revenue (in thousands)
    
    $
    953,211
    
    
    $
    551,259
    
    
    $
    1,893,428
    
    
    $
    1,281,692Less: Fuel expense (in thousands)
    
    
    679,719
    
    
    
    385,347
    
    
    
    1,357,753
    
    
    
    887,575Less: Realized amortization expense on
Index Hedge (in thousands)
    
    
    416
    
    
    
    
    
    
    
    6,157
    
    
    
    Spark spread (in thousands)
    
    $
    273,076
    
    
    $
    165,912
    
    
    $
    529,518
    
    
    $
    394,117MWh generated (in thousands)
    
    
    10,295
    
    
    
    8,767
    
    
    
    22,869
    
    
    
    21,375Average spark spread per MWh
    
    $
    26.53
    
    
    $
    18.93
    
    
    $
    23.15
    
    
    $
    18.44Average POX per normalized MWh (for comparison purposes we
also include POX per actual MWh):Average total consolidated MW in operations
    
    
    9,782
    
    
    
    8,833
    
    
    
    9,360
    
    
    
    8,440Hours in the period
    
    
    2,208
    
    
    
    2,208
    
    
    
    6,552
    
    
    
    6,576Total potential MWh
    
    
    21,600
    
    
    
    19,504
    
    
    
    61,326
    
    
    
    55,500Normalized MWh (at 70% capacity factor)
    
    
    15,120
    
    
    
    13,653
    
    
    
    42,928
    
    
    
    38,850POX
    
    $
    46,717
    
    
    $
    38,059
    
    
    $
    161,611
    
    
    $
    134,784POX per normalized MWh
    
    $
    3.09
    
    
    $
    2.79
    
    
    $
    3.76
    
    
    $
    3.47POX per actual MWh
    
    $
    4.54
    
    
    $
    4.34
    
    
    $
    7.07
    
    
    $
    6.31
 Financial Market Risks
 Debt Financing
  Fair Value2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    Thereafter
    
    
    9/30/2005(1)First Priority Secured Floating Rate Notes Due 2009 (2)
    
    $
    
    
    
    $
    
    
    
    $
    1,175
    
    
    $
    2,350
    
    
    $
    231,475
    
    
    $
    
    
    
    $
    235,000Second Priority Secured Floating Rate Notes Due 2010 (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,200
    
    
    
    6,400
    
    
    
    623,239
    
    
    
    632,839Third Priority Secured Floating Rate Notes Due 2011 (2)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    680,000
    
    
    
    680,000Total Floating Rate Notes (2)
    
    
    
    
    
    
    
    
    
    
    1,175
    
    
    
    5,550
    
    
    
    237,875
    
    
    
    1,303,239
    
    
    
    1,547,839First Priority Secured Term Loans Due 2009 (3)
    
    
    
    
    
    
    
    
    
    
    3,000
    
    
    
    6,000
    
    
    
    591,000
    
    
    
    
    
    
    
    600,000Second Priority Secured Term Loans Due 2010 (3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    500
    
    
    
    1,000
    
    
    
    97,381
    
    
    
    98,881Total Floating Rate Term Loans (3)
    
    
    
    
    
    
    
    
    
    
    3,000
    
    
    
    6,500
    
    
    
    592,000
    
    
    
    97,381
    
    
    
    698,881Grand total variable-rate debt instruments
    
    $
    
    
    
    $
    
    
    
    $
    4,175
    
    
    $
    12,050
    
    
    $
    829,875
    
    
    $
    1,400,620
    
    
    $
    2,246,720
 
 (1)
    
    Fair value equals carrying value, which is the aggregate principal amount subject to variable
rate risk.(2)
    
    Interest rate based on LIBOR plus a spread.(3)
    
    Interest rate based on LIBOR plus a spread; however the Company may elect the Base Rate plus
a spread (see Note 6 of the Notes to Consolidated Condensed Financial Statements). 34




---



##### Table of Contents



Derivatives
   Fair value of contracts outstanding at December 31, 2004
    
    $
    35,916Amortization during the period, net (1)
    
    
    (5,871
    )Changes in fair value attributable to price movements, net
    
    
    (2,084
    )Fair value of contracts outstanding at September 30, 2005 (2)
    
    $
    27,961
 
 (1)
    
    Non-cash losses from roll-off (amortization) of deferred premium (see discussion in Note 9 to
the financial statements).(2)
    
    Net derivative assets as reported in Note 9 of the Notes to the Consolidated Condensed
Financial Statements.  Fair Value Source
    
    2005
    
    
    2006-2007
    
    
    2008-2009
    
    
    After 2009
    
    
    TotalPrices actively quoted
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Prices provided by other external sources
    
    
    3,401
    
    
    
    24,560
    
    
    
    
    
    
    
    
    
    
    
    27,961Prices based on models and other valuation methods
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total fair value
    
    $
    3,401
    
    
    $
    24,560
    
    
    $
    
    
    
    $
    
    
    
    $
    27,961
    Fair ValueAfter 10% AdverseFair Value
    
    Price ChangeOther mark-to-market activity
    
    $
    27,961
    
    
    $
    26,832
   35




---



##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  
 Item 4. Controls and Procedures.
 Disclosure Controls and Procedures
   Changes in Internal Control over Financial Reporting
   36




---



##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings.
  
 Item 6. Exhibits.
   37




---



##### Table of Contents



By:
    
    /s/ ROBERT D. KELLYRobert D. KellyDate: November 14, 2005
    
    
    
    Executive Vice President and Chief FinancialOfficer (Principal Financial Officer)By:
    
    /s/ CHARLES B. CLARK, JR.Charles B. Clark, Jr.Date: November 14, 2005
    
    
    
    Senior Vice President and Corporate Controller(Principal Accounting Officer)
 38




---



##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description3.1
    
    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.*
 39




---



##### Table of Contents



ExhibitNumber
    
    Description3.25
    
    Certificate of Amendment to Certificate of Formation of Calpine Channel Energy Center GP, LLC.*3.26
    
    Certificate of Formation of Calpine Channel Energy Center LP, LLC.*3.27
    
    Certificate of Amendment to Certificate of Formation of Calpine Channel Energy Center LP, LLC.*3.28
    
    Certificate of Formation of Channel Power GP, LLC.*3.29
    
    Certificate of Amendment to Certificate of Formation of Channel Power GP, LLC.*3.30
    
    Certificate of Limited Partnership of Channel Power, LP.*3.31
    
    Certificate of Amendment to Certificate of Limited Partnership of Channel Power, LP.*3.32
    
    Certificate of Formation of Columbia Energy LLC.*3.33
    
    Certificate of Amendment to Certificate of Formation of Columbia Energy LLC.*3.34
    
    Certificate of Amendment to Certificate of Formation of Columbia Energy LLC.*3.35
    
    Certificate of Limited Partnership of Corpus Christi Cogeneration LP.*3.36
    
    Certificate of Amendment to Certificate of Limited Partnership of Corpus Christi Cogeneration LP.*3.37
    
    Certificate of Amendment to Certificate of Limited Partnership of Corpus Christi Cogeneration LP.*3.38
    
    Certificate of Formation of Nueces Bay Energy LLC.*3.39
    
    Certificate of Amendment to Certificate of Formation of Nueces Bay Energy LLC.*3.40
    
    Certificate of Amendment to Certificate of Formation of Nueces Bay Energy LLC.*3.41
    
    Amended and Restated Certificate of Formation of Calpine Northbrook Southcoast Investors, LLC (f/k/a Skygen
Southcoast Investors LLC).*3.42
    
    Certificate of Amendment to Certificate of Formation of Calpine Northbrook Southcoast Investors, LLC (f/k/a
Skygen Southcoast Investors LLC).*3.43
    
    Certificate of Formation of Calpine Corpus Christi Energy GP, LLC.*3.44
    
    Certificate of Amendment to Certificate of Formation of Calpine Corpus Christi Energy GP, LLC.*3.45
    
    Certificate of Limited Partnership of Calpine Corpus Christi Energy, LP.*3.46
    
    Certificate of Amendment to Certificate of Limited Partnership of Calpine Corpus Christi Energy, LP.*3.47
    
    Certificate of Formation of Decatur 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).*
 40




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##### Table of Contents



ExhibitNumber
    
    Description3.53
    
    Certificate of Amendment to Certificate of Formation of CalGen Project Equipment Finance Company Two, LLC
(f/k/a CCFC II Project Equipment Finance Company Two, LLC).*3.54
    
    Certificate of Amendment to Certificate of Formation of CalGen Project Equipment Finance Company Two, LLC
(f/k/a CCFC II Project Equipment Finance Company Two, LLC).*3.55
    
    Amended and Restated Certificate of Limited Partnership of Freestone Power Generation LP.*3.56
    
    Certificate of Formation of Calpine Freestone, LLC.*3.57
    
    Certificate of Formation of CPN Freestone, LLC.*3.58
    
    Certificate of Formation of Calpine Freestone Energy GP, LLC.*3.59
    
    Certificate of Amendment to Certificate of Formation of Calpine Freestone Energy GP, LLC.*3.60
    
    Certificate of Limited Partnership of Calpine Freestone Energy, LP.*3.61
    
    Certificate of Amendment to Certificate of Limited Partnership of Calpine Freestone Energy, LP.*3.62
    
    Amended and Restated Certificate of Limited Partnership of Calpine Power Equipment LP.*3.63
    
    Amended and Restated Certificate of Formation of Los Medanos Energy Center LLC (f/k/a Pittsburg District Energy
Facility, LLC).*3.64
    
    Certificate of Amendment to Certificate of Formation of Los Medanos Energy Center LLC (f/k/a Pittsburg District
Energy Facility, LLC).*3.65
    
    Certificate of Formation of CalGen Project Equipment Finance Company One, LLC (f/k/a CCFC II Project Equipment
Finance Company One, LLC).*3.66
    
    Certificate of Amendment to Certificate of Formation of CalGen Project Equipment Finance Company One, LLC
(f/k/a CCFC II Project Equipment Finance Company One, LLC).*3.67
    
    Certificate of Amendment to Certificate of Formation of CalGen Project Equipment Finance Company One, LLC
(f/k/a CCFC II Project Equipment Finance Company One, LLC).*3.68
    
    Certificate of Formation of Morgan Energy Center, LLC.*3.69
    
    Certificate of Amendment to Certificate of Formation of Morgan Energy Center, LLC.*3.70
    
    Certificate of Formation of Pastoria Energy Facility L.L.C.*3.71
    
    Certificate of Amendment to Certificate of Formation of Pastoria Energy Facility L.L.C.*3.72
    
    Certificate of Amendment to Certificate of Formation of Pastoria Energy Facility L.L.C.*3.73
    
    Amended and Restated Certificate of Formation of Calpine Pastoria Holdings, LLC (f/k/a Pastoria Energy Center,
LLC).*3.74
    
    Certificate of Amendment to Certificate of Formation of Calpine Pastoria Holdings, LLC (f/k/a Pastoria Energy
Center, LLC).*3.75
    
    Amended and Restated Certificate of Limited Partnership of Calpine Oneta Power, L.P. (f/k/a Panda Oneta Power,
L.P.).*3.76
    
    Certificate of Amendment to Certificate of Limited Partnership of Calpine Oneta Power, L.P. (f/k/a Panda Oneta
Power, L.P.).*3.77
    
    Amended and Restated Certificate of Formation of Calpine Oneta Power I, LLC (f/k/a Panda Oneta Power I, LLC).*3.78
    
    Certificate of Amendment to Certificate of Formation of Calpine Oneta Power I, LLC (f/k/a Panda Oneta Power I,
LLC).*
 41




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##### Table of Contents



ExhibitNumber
    
    Description3.79
    
    Amended and Restated Certificate of Formation of Calpine Oneta Power II, LLC (f/k/a Panda Oneta Power II, LLC).*3.80
    
    Certificate of Amendment to Certificate of Formation of Calpine Oneta Power II, LLC (f/k/a Panda Oneta Power
II, LLC).*3.81
    
    Certificate of Formation of Zion Energy LLC.*3.82
    
    Certificate of Amendment to Certificate of Formation of Zion Energy LLC.*3.83
    
    Certificate of Amendment to Certificate of Formation of Zion Energy LLC.*3.84
    
    Certificate of Formation of CalGen Project Equipment Finance Company Three, LLC (f/k/a CCFC II Project
Equipment Finance Company Three, LLC).*3.85
    
    Certificate of Amendment to Certificate of Formation of CalGen Project Equipment Finance Company Three, LLC
(f/k/a CCFC II Project Equipment Finance Company Three, LLC).*3.86
    
    Certificate of Amendment to Certificate of Formation of CalGen Project Equipment Finance Company Three, LLC
(f/k/a CCFC II Project Equipment Finance Company Three, LLC).*3.87
    
    Amended and Restated Certificate of Formation of CalGen Equipment Finance Holdings, LLC (f/k/a CCFC II Leasing
Holdings, LLC and CCFC II Equipment Finance Holdings, LLC).*3.88
    
    Certificate of Amendment to Certificate of Formation of CalGen Equipment Finance Holdings, LLC (f/k/a CCFC II
Leasing Holdings, LLC and CCFC II Equipment Finance Holdings, LLC).*3.89
    
    Certificate of Amendment to Amended and Restated Certificate of Formation of CalGen Equipment Finance Holdings,
LLC (f/k/a CCFC II Leasing Holdings, LLC and CCFC II Equipment Finance Holdings, LLC).*3.90
    
    Amended and Restated Certificate of Formation of CalGen Equipment Finance Company, LLC (f/k/a CCFC II Leasing
Company, LLC and CCFC II Equipment Finance Company, LLC)*3.91
    
    Certificate of Amendment to Certificate of Formation of CalGen Equipment Finance Company, LLC (f/k/a CCFC II
Leasing Company, LLC and CCFC II Equipment Finance Company, LLC).*3.92
    
    Certificate of Amendment to Amended and Restated Certificate of Formation of CalGen Equipment Finance Company,
LLC (f/k/a CCFC II Leasing Company, LLC and CCFC II Equipment Finance Company, LLC).*3.93
    
    Limited Liability Company Operating Agreement of 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.*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.*
 42




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##### Table of Contents



ExhibitNumber
    
    Description3.104
    
    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 Agreementof Los Medanos Energy Center LLC.*3.123
    
    Limited Liability Company Operating Agreement of CalGen ProjectEquipment Finance Company One, LLC.*3.124
    
    Amended and Restated Limited Liability Company Operating Agreementof 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 ProjectEquipment Finance Company Three, LLC.*3.132
    
    Limited Liability Company Operating Agreement of CalGen EquipmentFinance Holdings, LLC.*
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##### Table of Contents



ExhibitNumber
    
    Description3.133
    
    Limited Liability Company Operating Agreement of CalGen EquipmentFinance Company, LLC.*31.1
    
    Certification of the Chief Executive Officer and Presidentpursuant to Rule 13a-14(a) or Rule 15d-14(a) under
the SecuritiesExchange Act of 1934, as adopted pursuant to Section 302 of theSarbanes-Oxley Act of 2002.31.2
    
    Certification of the Executive Vice President and Chief FinancialOfficer pursuant to Rule 13a-14(a) or Rule
15d-14(a) under theSecurities Exchange Act of 1934, as adopted pursuant to Section302 of the Sarbanes-Oxley Act
of 2002.32.1
    
    Certification of Chief Executive Officer and Chief FinancialOfficer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002.
 
 
    
    Filed herewith*
    
    Incorporated by reference to the Registrants Registration Statement on Form S-4 (Registration No 333-117335),
filed with the SEC on July 13, 2004. 44