July 22, 2003
CALPINE
Wyoming Pipeline Authority
Calpine CorporationKEY ISSUES FOR NATURAL GAS AND POWER
COLIN COEDIRECTOR, FUELS
July 22, 2003R060308 2
CALPINE
CALPINE OVERVIEWCALPINE OVERVIEW
July 22, 2003R060308 3
CALPINE
FORWARD LOOKING STATEMENT
Certain of the information discussed in this presentation may contain forward-looking statements regarding future events or the future financial performance of Calpine Corporation. We wish to caution you that these statements are only estimates and that actual events or results may differ materially. We refer you to the documents the Company files from time to time with the Securities and Exchange Commission, specifically the Company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. These documents contain and identify important factors that could cause the Company’s actual future results to differ materially from those contained in such forward-looking statements.
July 22, 2003R060308 4
CALPINE
FOCUSED STRATEGY
North America Power Markets
Modern, Gas-Fired Plants
Wholesale Markets
Balanced Gas / Power Portfolio
July 22, 2003R060308 5
CALPINE
To Paraphrase Mark Twain….“rumors of our death …”
2001 provides a challenging year:
Weak Economy – poor spark spreadsThe Enron shock affects confidenceEquity Financing option vanishesDebt Financing Challenges
But we have survived – “what doesn’t kill you makes you stronger”
July 22, 2003R060308 6
CALPINE
Spark Spreads – an overview
Efficiency Factor = Heat Rate 7000 HRt vs 10,000 HRt per hour Gas price x my HRt = my cost 7000 HRt x $5.00 = $35 MW If market is a 10,000 HRt = $50 MW My “spark spread” is $50 – 35 =$15 $15/MW/hr x 24 x 500 MW = $180k 84,000 MMBtu/d vs 120,000/day
July 22, 2003R060308 7
CALPINE
FINANCIAL GROWTH
19,046 $7,458
July 22, 2003R060308 8
CALPINE
LONG-TERM OUTLOOKREMAINS ATTRACTIVE
Electricity is a Vital Component of Our Society
Consumption is Up (1)
4.11% - 2002 Over 2001 3.48% - YTD 2003 Over Same Period in 2002
Significant New Project Cancellations
Continued Pressure on Aging, Polluting Fleet
Prices Trending Upward
(1) Source: Edison Electric Institute
July 22, 2003R060308 9
CALPINE
CALPINE’S GROWING PORTFOLIO
Net Megawatts
Assumes No New Projects
3,3555,849
11,130
19,05023,250
27,15529,940
4,400
13,400
15,200
9,750
6,6902,785
1999 2000 2001 2002 2003 2004 2005
In Operation In Construction
7,755
19,249
26,330
28,80029,940 29,94029,940
July 22, 2003R060308 10
CALPINE
CALPINE’S POWER PORTFOLIO
In Operation
3
1
1
1
12
3
1
2
1
39
1
1
1
1
11
2
1
1
1
2
1
2
1
2
1
1
3
4
2
1
1
3
1
1
86
Under Construction
18
1
11
July 22, 2003R060308 11
CALPINE
CALPINE CORPORATION —A PREMIER POWER COMPANY
(1) Source: Platts’ “202 Independent Power Companies”
23,929
3,671
Calpine ExelonGeneration
NRG Energy PSEGGlobal/Power
Mirant
Largest U.S. Independent Power Companies (1)
27,600
20,686
17,831
15,006 14,441
Coal CCGT Other
July 22, 2003R060308 12
CALPINE
CALPINE’S GROWINGGAS CONSUMPTION
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
Mmbtu/Day
2001 2002 2003 2004 2005
Year
* 2004 Consumption Approximately Equal to 22 mmtpy
*
July 22, 2003R060308 13
CALPINE
CALPINE’S GAS PORTFOLIO
1 tcf of Proved Reserves
Provides Hedge to Fixed-Price Revenue Contracts
Exploit Proved Reserves
Value in Excess of $1.3 Billion
Active Producer Services Group
July 22, 2003R060308 14
CALPINE
CURRENT CALPINE GAS RESERVES & PRODUCTION LEVELS
950 Bcfe 278 Mmcfe/day
July 22, 2003R060308 15
CALPINE
ECONOMIC AND REGULATORY BARRIERS IN MEETING DEMANDS FOR NATURAL GAS
Capital Markets — Credit
Commodity Markets — Indexes
Supply/Demand — Perspectives
July 22, 2003R060308 16
CALPINE
CAPITAL MARKETS — CREDIT
Tightened Capital Markets
Credit Downgrades
Increased Credit Requirements
FERC Actions
NAESB Efforts
Pipeline Expansions
July 22, 2003R060308 17
CALPINE
COMMODITY MARKETS — INDEXES
Fewer Participants
Reduced Transparency and Confidence
Price Indexes
July 22, 2003R060308 18
CALPINE
GAS PRODUCTION -THAT 70’S SHOW
Gas: Enough for Present Customers,but How About the New Ones?
— Nation’s Business, July 1971
Natural Gas Users Howl Over Shortages
— Business Week; November 17, 1973
We’re Running Out of Gas
— The New York Times Magazine; March 19, 1972
July 22, 2003R060308 19
CALPINE
U.S. 2002 TOTAL GAS CONSUMPTION
Total U.S. Natural Deliveries January-November 2002 (U.S. EIA)
July 22, 2003R060308 20
CALPINE
U.S. POWER MARKET – GAS FOCUS
Huge Market
Growing Demand
Inefficient Plants
Environmental Concerns
July 22, 2003R060308 21
CALPINE
EMISSIONS
UnitsNatural Gas(combined-cycle)
New CoalPercent Reduction(% gas cleaner than coal)
Plant Heat Rate (net) Btu/kWh 7,000 8,800
Nitrogen Oxide (NOx)lb/mmBtulb/mwh
0.00920.064
0.070.616
86.9%89.5%
Sulfur Dioxide (SO2)lb/mmBtulb/mwh
0.00060.0042
0.161.4080
99.6%99.7%
Carbon Dioxide (CO2)lb/mmBtulb/mwh
118.9832
2061,813
42.3%54.1%
Carbon Monoxide (CO)lb/mmBtulb/mwh
0.00670.047
0.121.0560
94.4%95.56%
Mercury (Hg)lb/mmBtulb/mwh
00
0.00000230.000020
100.0%100.0%
Respirable Particulates (PM)
lb/mmBtu 0.015 0.018 16.7%
July 22, 2003R060308 22
CALPINE
CONCLUSIONS
Gas Fired Electric Generation Will Grow
Natural Gas Production Must Increase
Pipeline Infrastructure Must be Proactive
Creative Gas Contracting Needed
July 22, 2003
CALPINE
CALPINE