Calpine Power Income Fund

Calpine Power Income Fund

November 15, 2006 03:45 ET

Calpine Power Income Fund Announces Court Approval of Tolling Agreement for Calgary Energy Centre

CALGARY, ALBERTA--(CCNMatthews - Nov. 15, 2006) - Calpine Power Income Fund (TSX:CF.UN) announces that Calpine Canada Power Ltd., its manager (the "Manager"), has obtained requisite approval from the court for the previously announced agreement (the "Tolling Agreement") entered into between its subsidiary, Calpine Power, L.P. ("CLP") and ENMAX Energy Corporation ("ENMAX Energy"), a subsidiary of ENMAX Corporation ("ENMAX"), to toll the capacity from the Calgary Energy Centre (the "Facility").

Commencement of the Tolling Agreement is scheduled to occur on January 1, 2007, subject to satisfaction of remaining conditions, including a requirement that the court approval not be stayed, set aside, overturned or adversely varied. ENMAX has guaranteed the obligations of ENMAX Energy over the entire term of the Tolling Agreement.

Selected Key Terms of the Tolling Agreement

Selected key terms of the Tolling Agreement are the following:

- The scheduled term is 20 years commencing January 1, 2007.

- ENMAX Energy is responsible to deliver all natural gas required to generate electricity from the Facility, including the cost and risk of procurement and transportation of gas.

- CLP will continue to own the Facility and will be responsible for operation of the Facility. Currently, the Manager is the operator of the Facility. ENMAX was granted naming rights to the Facility.

- CLP is entitled to a number of different fees and charges pursuant to the Tolling Agreement, as follows: (a) a monthly fixed charge; (b) a monthly fixed operations and maintenance ("O&M") charge; (c) a monthly fixed insurance charge; (d) a monthly variable O&M charge that is based upon hours of operation; (e) a monthly variable charge intended to compensate CLP for charges under its long term service agreement ("LTSA") with respect to the Facility that is based upon hours of operation; and (f) charges for each start-up of the Facility. Other than the monthly fixed charge, the charges are inflation adjusted annually and the insurance charge and the LTSA charge are subject to five year resets at then current fair market value rates.

- Charges other than the monthly fixed charge are intended to correlate to actual expenses that will be the responsibility of CLP under the Tolling Agreement.

- CLP has given an availability guarantee and will have its fixed payments reduced if it does not achieve guaranteed availability over specified periods. Additionally, there are heat rate and capacity bonuses receivable and penalties payable by CLP based upon Facility performance.

Impact on the Fund

The Tolling Agreement will result in lower revenue to CLP than was achieved by the predecessor tolling agreement with an affiliate of the Manager. For 2007, the fixed tolling charges are expected to provide a revenue contribution that is sufficient to permit CLP (with respect to its Class A Units) and the Fund to continue to make distributions at existing levels. Distributions have been suspended since early 2006 on the Class B Units which are owned by the Manager. CLP may commence distributions on the Class B Units in 2007.

The ability of CLP to sustain distributions on the Class A Units of CLP and the Fund to sustain distributions on its units, in each case at existing levels, will be subject to a number of factors, including satisfactory performance by the Facility and other direct and indirect assets of the Fund. Reference is made to assumptions and risks identified in the Fund's current continuous disclosure documents, which documents are referred to below.

The commencement of the Tolling Agreement will now permit proceedings to move forward with respect to the repudiation of the predecessor tolling agreement by an affiliate of the Manager. As previously announced, the Fund has filed a claim against the former tolling party that is to be adjudicated in the Companies' Creditors Arrangement Act (Canada) proceedings involving the Manager and certain of its affiliates.

Calpine Power Income Fund is an unincorporated open-ended trust that invests in electrical power assets. Calpine Power Income Fund indirectly owns interests in power generating facilities in British Columbia, Alberta and California, as well as a participating loan interest in a power plant in Ontario and a promissory note issued by Calpine Canada Power Ltd.

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 our website at

Forward-Looking Information Disclaimer

This news release may contain forward-looking information as defined under applicable Canadian securities laws, including information regarding possible events, conditions or results with respect to Calpine Power Income Fund. This information is subject to a number of assumptions and risks that may cause actual results to differ materially from the forward-looking information. Some of the factors that could cause such differences include the outcome of the voluntary reorganization filings by Calpine Corporation and applicable subsidiaries, including the Companies' Creditors Arrangement Act (Canada) proceedings of Calpine Canada Power Ltd. and certain of its affiliates, performance or non-performance by Calpine Corporation and applicable subsidiaries of contracts with Calpine Power Income Fund and its applicable subsidiaries or investees, legislative or regulatory developments, competition, general economic conditions and other assumptions and risks identified in the management discussion and analysis of Calpine Power Income Fund for the fiscal year ended December 31, 2005 and the fiscal quarters ended March 31, 2006, June 30, 2006 and September 30, 2006, and the annual information form dated April 19, 2006, each of which is available on and the Fund's website at

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