Calpine Power Income Fund
TSX : CF.UN

Calpine Power Income Fund

January 31, 2007 00:27 ET

Calpine Power Income Fund: Harbinger's Fund-Supported Offer for CCPL Assets Wins Court Approval

Court Approval Removes Significant Condition to Harbinger's Acquisition of the Fund

CALGARY, ALBERTA--(CCNMatthews - Jan. 31, 2007) - The Board of Trustees of Calpine Commercial Trust, on behalf of Calpine Power Income Fund (TSX:CF.UN), today announced that the Court of Queen's Bench of Alberta has approved HCP Acquisition Inc.'s ("Harbinger") $135 million bid for certain assets of Calpine Canada Power Ltd. ("CCPL"). Harbinger's offer was made with the support of the Fund. CCPL is a subsidiary of insolvent Calpine Corporation of San Jose, CA.

The approval, part of a court-ordered auction process under CCPL's Canadian insolvency proceedings, removes a significant condition to the previously disclosed, Board-supported offer by Harbinger to acquire the trust units of the Fund for $13.00 per trust unit.

"Today's court approval is an important step forward for Harbinger's proposed $13.00 per unit acquisition of the Fund," said Robert Hodgins, Chairman of the Board of Trustees. "Harbinger's offer represents a 24.4% premium over the pre-bid price, and is a positive outcome for unitholders."

Harbinger's successful bid in the auction allows it to acquire CCPL's contracts to manage the Fund and operate certain of its facilities, and to acquire CCPL's 30% subordinated ownership interest in Calpine Power, L.P., a limited partnership in which the Fund has a 70% priority ownership interest.

The next steps in Harbinger's process for the take-over of the Fund are for Harbinger to file and deliver to unitholders a Notice of Variation and Extension amending its original offer for the Fund of $12.25 per unit announced in December, and for the Board of Trustees to file and deliver to unitholders a Notice of Change to its Trustees' Circular which will recommend, based in part on the fairness opinion of the financial advisor to the Board of Trustees, that unitholders accept the revised Harbinger offer. The Trustees expect these steps to take place by February 1, 2007.

As previously disclosed, the Harbinger take-over bid for the Fund will be open for acceptance for at least 10 days following the filing and delivery of Harbinger's Notice of Variation and Extension, and specific details concerning the expiry time of the take-over bid will be contained in that Notice. Completion of the Harbinger bid is subject to certain conditions, including, among other things, a sufficient number of the Fund's trust units being tendered to the offer such that Harbinger would own at least 66 2/3% of the outstanding trust units, receipt of all necessary regulatory approvals and no material adverse changes concerning the Fund. Under the terms of the support agreement, the Fund has agreed to defer the separation time of the rights issued under the Fund's unitholder rights plan in respect of Harbinger's offer for the Fund and to waive, suspend the operation of or otherwise render the rights plan inoperative against the Harbinger offer for the Fund.

Assuming the Harbinger offer for the Fund is completed as expected in mid-February, unitholders of record on January 31, 2007 will be entitled to a previously declared monthly cash distribution of $0.0818 per unit payable February 20, 2007, even if they tender their Trust Units to the Harbinger offer prior to the February 20 payment date.

About Calpine Power Income Fund

Calpine Power Income Fund is an unincorporated open-ended trust that invests in electrical power assets. The Fund indirectly owns interests in power generating facilities in British Columbia, Alberta and California. In addition, the Fund owns a participating loan interest in a power plant in Ontario and has made a loan to Calpine Canada Power Ltd. The Fund is managed by Calpine Canada Power Ltd., which is headquartered in Calgary, Alberta. The Fund has 61,742,288 Trust Units outstanding.

The Calpine Power Income Fund units are listed on the Toronto Stock Exchange under the symbol CF.UN. For further information on the Fund, please visit its website at www.calpinepif.com.

Forward-Looking Information Disclaimer

This news release may contain forward-looking information or forward-looking statements as defined under applicable securities laws. Such information and statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information or statements. Such forward-looking information and statements are based on the Fund's current internal expectations, estimates, projections, assumptions and beliefs and the Fund believes the expectations reflected in such forward-looking information and statements are reasonable. However, no assurance can be given that these expectations will prove to be correct and the forward-looking information or statements included in this news release should not be unduly relied upon. Such forward-looking information and statements speak only as of the date of this news release and none of the Fund, the trustees of Calpine Commercial Trust or CCPL undertakes any obligation to publicly update or revise any forward looking information or statements contained in this news release, except as required by applicable laws.

In particular, among other matters, this news release may contain forward-looking information and statements with respect to certain conditions that must be satisfied as a condition of Harbinger making or completing the amended offer. The actual results and outcomes of such matters could differ materially from those anticipated in the forward-looking information and statements contained in this news release as a result of both known and unknown risks, including risks that the required court, regulatory and third party approvals necessary to complete the amended Harbinger offer may not be obtained or that the other conditions to Harbinger's offer may not be satisfied.

Additional risk factors regarding the forward-looking information set forth above, the business and affairs of the Fund and its subsidiaries and an investment in the Trust Units are contained in the Fund's Trustees' Circular dated January 4, 2007, the Fund's annual information form dated April 19, 2006, the Fund's management's discussion and analysis for both the year ended December 31, 2005 and the fiscal quarters ended March 31, 2006, June 30, 2006 and September 30, 2006, and the material change report of the Fund dated November 14, 2006, copies of which are available through the internet on the Fund's SEDAR profile at www.sedar.com. Readers are also referred to the risk factors contained in other documents the Fund files from time to time with securities regulatory authorities, copies of which are also available through the internet on the Fund's SEDAR profile at www.sedar.com.

The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement.

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