Calpine Power Income Fund
TSX : CF.UN

Calpine Power Income Fund

November 09, 2006 22:49 ET

Calpine Power Income Fund Announces Third Quarter 2006 Results and Cash Distribution for November 2006

CALGARY, ALBERTA--(CCNMatthews - Nov. 9, 2006) - Calpine Power Income Fund (TSX:CF.UN) today announced that the cash distribution for the month of November, 2006 will be $0.0818 per trust unit.



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Record Date Distribution Date Distribution per Unit
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November 30, 2006 December 20, 2006 $ 0.0818
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The above reflects distributions expected to be paid, however,
distributions are subject to change based upon actual conditions.
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MANAGEMENT'S DISCUSSION AND ANALYSIS

FORWARD-LOOKING INFORMATION

Certain information in this Management's Discussion and Analysis ("MD&A") is forward-looking and subject to risks and uncertainties. All the forward-looking statements are based upon the Manager's belief and assumptions based on information available at the time of assumption was made. By its nature, such forward-looking statements are subject to various risks and uncertainties. The results or events predicted in the forward-looking statements may differ from actual results or events. Factors which could cause actual results or events to differ materially from current expectations include, among other things, the ability of the Fund and the Partnership to successfully implement the Fund's strategic initiatives and whether such strategic initiatives will yield the expected benefits, the availability and price of energy commodities, regulatory decisions, competitive factors in the power industry, and the prevailing economic conditions in North America. Additionally, actual results or events predicted in the forward-looking statements will be affected by the outcome of the voluntary reorganization filings in Canada and the United States by Calpine and certain of its subsidiaries having contracts with the Fund and its subsidiaries or investees, as well as other factors identified herein. Certain material assumptions in making these forward-looking statements are disclosed in this MD&A, as well as in the MD&A prepared in connection with the Fund's and Partnership's 2005 financial statements ("the 2005 MD&A"), in particular under the headings "Outlook" and "Business Risks". The 2005 MD&A is contained in the Fund's 2005 Annual Report. Readers are cautioned not to place undue reliance on these forward-looking statements. The Fund and the Partnership each disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

The Calpine Power Income Fund (the "Fund") is an unincorporated open-ended trust established under the laws of Alberta. The Fund owns a 100% ownership interest in Calpine Commercial Trust ("CCT"), an unincorporated open-ended Trust established under the laws of Alberta. CCT in turn has a 70% ownership interest in Calpine Power, L.P. (the "Partnership"), as a result, the Fund indirectly owns interests in power generating facilities in British Columbia, Alberta, and an economic interest in a power plant in Ontario. CCT also owns a power generating facility in California and holds a promissory note issued by Calpine Canada Power Ltd. ("the Manager"). The power generation facilities owned by CCT and the Partnership are all modern and environmentally preferred, natural gas fired plants. The Fund, CCT and the Partnership are managed and administrated by the Manager.

The Fund's objective is to provide, on a per Trust Unit basis, a stable and sustainable flow of Distributable Cash of the Fund. To achieve this objective, the Manager seeks to maximize the efficiency and profitability of the facilities and acquire or develop future facilities in accordance with established acquisition and investment guidelines.

The following discussion and analysis as provided by Management should be read in conjunction with the unaudited consolidated financial statements and the notes thereto of the Fund and the Partnership for the three and nine months ended September 30, 2006 and 2005, which have been prepared in accordance with Canadian generally accepted accounting principles, and is based on information to November 9, 2006. The following discussion and analysis as provided by Management should also be read in conjunction with the audited consolidated financial statements and the notes thereto of the Fund and the Partnership for the years ended December 31, 2005 and 2004, which have been prepared in accordance with Canadian generally accepted accounting principles. All dollar amounts are shown in Canadian dollars unless otherwise specified. The financial statements noted above and additional information concerning the Fund is available at www.calpinepif.com or on SEDAR at www.sedar.com.

THIRD QUARTER HIGHLIGHTS

- The Fund declared distributions of $0.2454 per Trust Unit to Unitholders during the third quarter of 2006, consistent with $0.2454 declared distributions per Trust Unit in the third quarter of 2005.

- Short-term tolling agreements were entered into during in the quarter to toll the capacity of the Calgary Energy Centre. Tolling partners were TransAlta Energy Marketing Corporation ("TransAlta") for July and August and EPCOR Merchant and Capital L.P. ("EPCOR") for September.

- On September 29, 2006 a further short-term tolling agreement was entered into with EPCOR to toll the capacity of the Calgary Energy Centre until December 31, 2006.

- On October 24, 2006 the Manager announced it had entered into a 20 year tolling agreement with ENMAX Energy Corporation (ENMAX) to toll the capacity of the Calgary Energy Centre beginning on January 1, 2007. Commencement of the agreement is subject to certain conditions, including court approval.

- On September 4, 2006 a planned major maintenance and the implementation of capacity upgrades began at the Island Facility. During the outage it was determined that additional repair work was necessary on the heat recovery steam generator and in early November the additional timeframe was extended. The Island Facility is now expected to return to service in mid January 2007.

- The Trustees of the Fund adopted a unitholders rights plan ("the Plan") on August 12, 2006. The Plan was subsequently consented to by the Toronto Stock Exchange on August 31, 2006. The Plan was designed to ensure that all of the Unitholders are treated fairly in the event that a take- over bid is made for the Trust Units and that sufficient time and rights are available for the Fund's board of trustees and all Unitholders to fully evaluate any offer and pursue alternatives to maximize Unitholder value.

- CCT and the Partnership's power generation facilities, with the exception of the Island Facility as noted above, continued their strong and reliable operating performance in the third quarter of 2006 as demonstrated below.



Availability Generation (MWh)
------------------------------------------
Q3 2006 Q3 2005 Q3 2006 Q3 2005
------------ --------- --------- ---------

Calgary Energy Centre 100% 100% 387,293 97,398
Island Cogeneration Facility 64% 100% 326,635 518,044
Whitby Cogeneration Facility 92% 97% 88,751 74,248
King City Facility 100% 99% 232,254 201,922


At September 30, 2006, the Fund had 61,742,288 Trust Units outstanding which units trade on the Toronto Stock Exchange. Calpine Corporation ("Calpine"), does not own, directly or indirectly, any Trust Units.

SIGNIFICANT EVENTS

Calpine Credit Event

On December 20, 2005 Calpine and certain subsidiaries and affiliates filed for voluntary reorganization under Chapter 11 of the US Bankruptcy Code ("Chapter 11") and certain subsidiaries and affiliates of Calpine in Canada filed for voluntary reorganization under the Companies' Creditors Arrangement Act ("CCAA") in Canada including the Manager. Additional information on these proceedings is provided in the 2005 MD&A contained in the Fund's 2005 Annual Report as well as the Fund's Annual Information Form dated April 19, 2006 (the "AIF") and both the first and second quarter results of 2006.

On August 1, 2006 claims were submitted under the CCAA proceedings on behalf of both the Partnership and CCT. The details of the claims, as previously disclosed in the second quarter results, are noted below. There have been no updates on these claims as of November 9, 2006.

The Partnership submitted a claim under the CCAA proceedings against Calpine Energy Services Canada Partnership ("CESCP") and its partners with respect to the Calgary Energy Centre as a consequence of the repudiation on January 16, 2006 by CESCP of the original tolling agreement. The claim for payments under the original tolling agreement is in the amount of $769 million, before giving effect to mitigation of the claim through short-term and any long-term re-tolling of the capacity of Calgary Energy Centre and before discounting to provide for the net present value of the claim. The mitigation and discounting are expected to significantly reduce the claim by an amount that is undetermined but that is expected to be substantial. A claim for costs, expenses and legal fees incurred and to be incurred was also filed. The Partnership also submitted on August 1, 2006 a similar claim in Calpine's Chapter 11 proceedings against Calpine with respect to Calpine's guarantee of CESCP's obligations under original tolling agreement plus costs, expenses and legal fees.

Scheduled principal and interest payments due on the loan of approximately $35 million (the "Manager Loan") owing to CCT by the Manager for April 2006 were not received by May 3, 2006 which is an event of default under the Manager Loan. Scheduled interest and principal payments have not been received for the period from April 1 to October 31, 2006. The Manager estimates the loan to be fully collectible based upon the guarantee and security in place (as described further in the 2005 MD&A), subject to lifting of the stay of proceedings against the Manager, currently in effect until November 13, 2006. On July 25, 2006, the stay of proceedings against the Manager was temporarily lifted for the sole purpose of CCT making a demand of the Manager Loan. CCT subsequently made the demand and the stay was re-imposed. On August 1, 2006 CCT submitted a claim against the Manager under the CCAA proceedings for principal and interest in the amount $33.9 million, yield protection in the amount of $3.8 million and legal and accounting fees and expenses.

The Manager has advised CCT of its understanding that there is an intercompany loan of approximately $32.7 million payable by Calpine Canada Whitby Holdings Company ("CCWHC") to the Manager, the terms of which have not been formally documented. The Manager has also advised that it has considered such intercompany loan to be subordinated to the loan by the Partnership to CCWHC (the "Whitby Loan"). The Manager has not put in place documentation to evidence such subordination nor has it brought an application to the Court to recognize such subordination. CCWHC was not an applicant in the CCAA proceedings or the Chapter 11 proceedings. Additional information on such intercompany loan and subordination is provided in the Fund's AIF, 2005 MD&A as well as the 2006 first and second quarter results. On August 1, 2006, the Fund, CCT and the Partnership submitted a claim against the Manager under the CCAA proceedings seeking a declaration that such intercompany loan is subordinated to the Whitby Loan and certain other alternative relief including but not limited to unliquidated damages, as well as related costs and expenses.

The Fund, CCT and the Partnership have completed assessing other potential claims to submit with respect to obligations owed to them by Calpine and its subsidiaries and on August 1, 2006 they submitted various claims against the Manager under the CCAA proceedings and Calpine under the Chapter 11 proceedings. The Partnership submitted contingent and unliquidated claims against the Manager, and Calpine as guarantor, with respect to the heat rate indemnity relating to the Island Facility and related costs and expenses.

The Fund and the Partnership submitted contingent and unliquidated claims against the Manager with respect to the transfer fee relating to the Island Facility and related costs and expenses, and the Partnership submitted a similar contingent and unliquidated claim against Calpine relating to its guarantee of such transfer fee and related costs and expenses.

The Fund, CCT and the Partnership submitted a claim against the Manager seeking a declaration the Manager has breached and repudiated the Management Agreement and the Administrative Services Agreement, seeking a declaration that the Fund, CCT and the Partnership are entitled to terminate such agreements, and seeking related relief and costs and expenses of enforcement. The Manager disputes the allegations of breach and repudiation made by the Fund, CCT and CLP in relation to the Management and Administrative Services Agreements. It is the Manager's view that it has acted, and continues to act, in compliance with its obligations under these agreements. Further, the Manager disputes any allegation that its conduct could be construed as a repudiation of these agreements. The Manager intends to continue to fulfill its obligations to the Fund, CCT and CLP under these agreements.

Pursuant to an order granted in the CCAA proceedings, the Independent Trustees of CCT, on behalf of the Fund and CCT, and the directors of the general partner of CLP, on behalf of CLP, are authorized and responsible for filing and prosecuting claims against the Manager, Calpine and their affiliates.

On September 11, 2006, the Court extended the CCAA stay of proceedings previously extended by the Court in respect of the Manager and certain of its affiliates until November 13, 2006. The Manager will make application to the Court on November 14, 2006 to extend the CCAA stay of proceedings until March 20, 2007.

Island Facility Outage

On September 4, 2006 the Island Facility began a scheduled 37-day major maintenance event. In conjunction with the scheduled major maintenance event, the Manager is performing an additional upgrade to the Island Facility which is expected to increase output and improve efficiencies of the plant. This upgrade implementation, was to add approximately 16 days to the 37-day planned outage. The upgrade is expected to cost approximately $12 million subject to final test results upon completion. The first payment of $4.7 million due under the upgrade implementation agreement with Alstom was paid to Alstom in early September 2006. The cash was funded from the Maintenance Reserve and is intended to be re-allocated to that reserve on a monthly basis based on the incremental revenue realized from the upgrade. A second payment of $6 million will be effected by reducing the amount owing under the Alstom Settlement Agreement and therefore not require any direct payment of cash. The remaining payment amount will be determined and paid upon successful completion of the upgrade.

During the planned outage, extensive damage to the heat recovery steam generator was discovered. The damage is now being repaired and the repair work is expected to cost approximately $6 million. This repair work is expected to extend the initial 37 day outage by approximately two months and the Island Facility is now expected to return to service by mid January 2007. The Fund does not anticipate this extended outage to impact expected cash distributions to the Fund unitholders for the remainder of the year due to higher than anticipated earnings from other operations. Further discussion can be found in the Outlook section.



RESULTS OF OPERATIONS

CALPINE POWER INCOME FUND

Selected Quarterly
Information Three months Three months Nine months Nine months
(in 000's, other ended ended ended ended
than Trust Unit September September September September
information) 30, 2006 30, 2005 30, 2006 30, 2005
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Equity earnings from
Calpine Power, L.P. $ 11,608 $ 13,649 $ 32,160 $ 40,423
Finance income 4,382 4,613 13,260 13,976
Interest and other
income 1,475 1,921 4,667 6,133
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Total Revenue 17,465 20,183 50,087 60,532
Net Earnings 11,613 14,723 31,439 45,397
Net Earnings Per Trust
Unit 0.1881 0.2385 0.5092 0.7353

Weighted Average
Number of Trust Units
Outstanding 61,742,288 61,742,288 61,742,288 61,742,288

Total Assets 651,659 690,818 651,659 690,818
Total Long-term
Liabilities 79,138 88,808 79,138 88,808
Distributions Declared
Per Trust Unit 0.2454 0.2454 0.7362 0.7362


Total Revenue

Total revenue for the three and nine months ended September 30, 2006 was less than the total revenue for the three and nine months ended September 30, 2005 due to lower equity earnings from the Partnership. Equity earnings from the Partnership declined quarter to quarter due to the planned outage for major maintenance work at the Island Facility which commenced in September 2006. The decline on an annual basis is due to a number of factors including no revenue being earned by the Calgary Energy Centre from January 17, 2006 to February 15, 2006 following the repudiation of the original tolling agreement by CESCP, tolling revenue from the short-term tolls with EPCOR and TransAlta, being lower than the tolling revenue received from the CESCP toll last year, and the planned outage for major maintenance work in May 2006 at the Calgary Energy Centre. A detailed discussion of the Partnership's operating results can be found in the Calpine Power, L.P. section of this MD&A.

Finance income generated by the long-term lease (the "King City Lease") of the King City Facility to a subsidiary of Calpine ("Calpine King City") amounted to $4.4 million and $13.3 million for the three and nine months ended September 30, 2006. The decrease in finance income of $0.2 million and $0.7 million from the same periods in 2005 is due to finance income being recognized over a constant rate of return on a lower net investment in lease balance due to receipt of scheduled King City Lease payments as well as foreign exchange impacts.

Interest and other income relates mainly to interest earned, net of amortization of the discount, on the Manager Loan. Interest was earned on a lower outstanding loan balance as a result of scheduled principal repayments. Interest income decreased $0.4 million and $1.5 million for the three and nine months ended September 30, 2006 compared to the same periods in 2005. As at September 30, 2006, scheduled payments on the Manager Loan for the period April to September 2006 had not been received.

Net Earnings

Net earnings for the three and nine months ended September 30, 2006 decreased from the three and nine months ended September 30, 2005 due to lower equity earnings from the Partnership as well as increased management and administrative expenses, discussed below.



Selected Quarterly Three months Three months Nine months Nine months
Information ended ended ended ended
September September September September
(in 000's) 30, 2006 30, 2005 30, 2006 30, 2005
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Management and
administrative expenses $ 2,337 $ 523 $ 7,532 $ 2,159
Amortization 103 311 306 933
Interest on long-term debt 2,501 3,069 7,584 9,365
Interest 34 140 119 496
Future Income Taxes 908 1,595 3,330 2,384


Management and Administrative Expenses

Management and administrative expenses were $2.3 million and $7.5 million for the three and nine months ended September 30, 2006 compared to $0.5 million and $2.2 million for the same periods in 2005. Management and administrative expenses were up $1.8 million and $5.3 million due mainly to additional legal and advisory costs incurred as a result of the Calpine CCAA and Chapter 11 proceedings. The Fund and CCT are working with independent legal counsel, financial advisors and other consultants to assess and advise on possible implications of these proceedings to the Fund, CCT and the Partnership and to assist in assessing, making and litigating claims against Calpine and its subsidiaries, which claims were filed on August 1, 2006. Each of the claims seeks certain remedies and other costs and expenses which amounts cannot be fully determined until the related claims are determined.

Amortization

Amortization expenses attributable to the deferred financing costs of CCT's credit facility (the "Credit Facility") and the King City project finance loan ("King City Loan") were $0.1 million and $0.3 million for the three and nine months ended September 30, 2006. The cancellation of the $90 million acquisition tranche of the Credit Facility and expensing of related unamortized deferred financing costs in December 2005 resulted in a decrease in deferred financing costs.

Interest Expense

Interest on long-term debt of $2.5 million and $7.6 million for the three and nine months ended September 30, 2006 relates to interest accrued on the King City Loan. The decrease of $0.6 million and $1.8 million from the comparative period in 2005 is due to the impact of interest accrued on a lower outstanding loan balance as a result of scheduled principal repayments as well as changes in foreign exchange rates.

Interest expense of $34 thousand and $119 thousand for the three and nine months ended September 30, 2006 relates to standby charges on the undrawn balance of the Credit Facility. No amounts were drawn on the Credit Facility in the quarter.

Future Income Taxes

CCT recorded future tax expense of $0.9 million and $3.3 million on its income from the King City Facility for the three and nine months ended September 30, 2006, representing an effective tax rate of 40.75% . Future tax expense decreased $0.7 million from the three months ended September 30, 2005 due to lower taxable income from the King City Facility from the comparative quarter. Future tax expense for the nine months ended September 30, 2006 has increased $0.9 million from the comparative period in 2005 as a result of higher taxable income from the King City Facility in the current year to date period. No cash taxes are expected to be paid in 2006 in the US or Canada.



Selected Balance Sheet Information As at As at
Of Calpine Power Income Fund September 30, 2006 December 31, 2005
(in 000's)
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Cash and cash equivalents $ 10,020 $ 16,797
Loan to Calpine Canada Power Ltd. 30,441 32,188
Interest receivable 2,084 -
Net Investment in lease 141,976 152,555
Accrued interest on long-term debt 7,435 11,937
Long-term debt 77,443 93,257
Future income tax 9,369 6,445


The unrestricted cash balance of $10.0 million in the Fund at September 30, 2006 has decreased $6.8 million from the balance at December 31, 2005. The main reason for this decrease is the use of the Levelization Reserve to support cash distributions as no scheduled principal and interest payments on the Manager Loan have been received for the months of April to September 2006.

The Manager Loan balance has decreased by $2.0 million due to the collection of scheduled principal repayments in the first quarter of 2006. No payments have been received from the Manager after March 31, 2006. Interest of $2.1 million has been accrued on the Manager Loan since March 31, 2006. Management expects the loan to be fully collectible based upon the guarantee and security in place (as described further in the 2005 MD&A and the AIF) subject to lifting of the stay of proceedings against the Manager, currently in effect until November 13, 2006. On July 25, 2006, the stay of proceedings against the Manager was temporarily lifted for the sole purpose of CCT making a demand of the Manager Loan. CCT subsequently made the demand and the stay was re-imposed.

The King City net investment in lease decreased by $10.6 million reflecting $19.4 million of King City Lease receipts scheduled to be received on December 31, 2005 that actually were received on January 3, 2006, offset by finance income of $13.3 million accrued in the nine months ended September 30, 2006 and foreign exchange impacts.

Accrued interest of $11.9 million and principal repayments of $11.7 million relating to the King City Loan, scheduled for payment on December 31, 2005 were paid on January 3, 2006 in conjunction with the King City Lease receipts. The balance of $7.4 million at September 30, 2006 relates to accrued interest on the King City Loan for 2006.

Long-term debt, which is denominated in USD, decreased by $15.8 million due to the principal repayments on the King City Loan made on January 3, 2006 as well as to the impact of foreign exchange. Foreign exchange impacts on long-term debt are largely offset by foreign exchange impacts on the USD denominated portion of the net investment in lease.

The future income tax liability has increased $2.9 million since year end due to the future tax expense on the Fund's income from the King City Lease. No cash taxes were paid in the nine months ended September 30, 2006.



CALPINE POWER, L.P.

Selected Quarterly Three months Three months Nine months Nine months
Information ended ended ended ended
(in 000's, except per September September September September
Unit amounts) 30, 2006 30, 2005 30, 2006 30, 2005
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Electricity, capacity and
thermal revenue $ 20,579 $ 28,554 $ 63,168 $ 84,927
Interest 1,062 1,015 3,162 2,996
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Total Revenue 21,641 29,569 66,330 87,923

Net Earnings 11,608 19,224 33,928 56,934

Net Earnings Per Class A
Priority Unit 0.2232 0.2625 0.6184 0.7773
Net Earnings Per Class B
Subordinated Unit - 0.2502 0.0793 0.7409

Total Assets 621,473 660,566 621,473 660,566

Total Long-term
Liabilities 2,733 2,520 2,733 2,520
Distributions Declared
Per Class A Priority
Unit 0.2661 0.2549 0.7931 0.7699
Per Class B Subordinated
Unit - 0.2394 0.1124 0.7182


Total Revenue

Revenues for the three and nine months ended September 30, 2006 were down $7.9 million and $21.6 million from the same periods in 2005. Contributing to the decrease in revenue is the planned major maintenance event at the Island Facility in September 2006, and the Calgary Energy Centre in May 2006 as well as the impact of reduced tolling revenue from short-term tolling agreements, such revenue being lower than the tolling revenue from the original tolling agreement with CESCP, for the same periods in 2005. Revenue also decreased because of the non-payment of the tolling revenue for the Calgary Energy Centre for the period from January 17, 2006 to February 15, 2006, following the repudiation of the original tolling agreement by CESCP.

Interest earned on the loan to CCWHC (the "Whitby Loan") and other cash balances were $1.1 million and $3.2 million for the three and nine months ended September 30, 2006, consistent with the three and nine months ended September 30, 2005.

Net Earnings

Net earnings for the three and nine months ended September 30, 2006 each decreased 40% compared to the same periods last year due to the planned outage at the Island Facility in September 2006 for planned major maintenance work, lower tolling revenue quarter to quarter from short-term tolling agreements, the non-payment of tolling revenue for the Calgary Energy Centre for the period January 17, 2006 to February 15, 2006 following the repudiation of the Tolling Agreement by CESCP and the planned outage at the Calgary Energy Centre in May 2006.



Island Facility

Selected Quarterly Three months Three months Nine months Nine months
Information ended ended ended ended
September September September September
30, 2006 30, 2005 30, 2006 30, 2005
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Availability 64% 100% 86% 98%
Electricity generated
(MWh) 326,635 518,044 1,347,582(1) 1,536,924
Steam generated (GJ) 259,662 420,342 1,016,175 1,232,694

Summary of Financial
Results
(in '000s)
Revenues $ 8,770 $ 14,480 $ 38,203 $ 43,129
Operating and maintenance
expense 2,635 2,538 7,667 7,494
Depreciation and
accretion 3,005 3,082 9,011 9,237
Interest expense 1 170 1 435
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Net earnings $ 3,129 $ 8,690 $ 21,524 $ 25,963
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(1) Electricity generated was lower due to the 31 day period in May and
June 2006 when the Island Facility was dispatched off by BC Hydro.
During this period the Island Facility was paid for 187,238 MWh of
deemed electricity generation.


The Island Facility is a 240 MW combined cycle cogeneration plant located at Duncan Bay, near Campbell River, on Vancouver Island, British Columbia. Availability at the Island Facility in the three and nine months ended September 30, 2006 was 64% and 86% respectively. Plant availability was lower due to a planned maintenance outage that began September 4, 2006.

Revenues

Electricity generation revenue was $7.1 million and $30.4 million for the three and nine months ended September 30, 2006, compared to $11.0 million and $33.3 million for the three and nine months ended September 30, 2005. Electricity generation revenue is lower due to the planned maintenance outage that began September 4, 2006. The planned outage for maintenance and implementation of capacity upgrades was originally scheduled to be completed by the end of October 2006. During the planned outage, additional repair work was identified as being required on the heat recovery steam generator and the Island Facility is now expected to return to service until mid January 2007. Further discussion can be found in the Outlook section.

Revenue from steam sold to Catalyst Paper Corporation ("Catalyst") was $1.6 million and $7.8 million for the three and nine months ended September 30, 2006, compared to $3.5 million and $9.9 million in the three and nine months ended September 30, 2005. The decrease in revenue for both periods is a result of lower natural gas prices (which is a component of the price of steam sold to Catalyst) during the three months ended September 30, 2006 than in the three months ended September 30, 2005, as well as less steam delivered as a result of the planned maintenance outage that began September 4, 2006 as well as lower steam demand from Catalyst.

Expenses

Operating and maintenance expense attributable to the Island Facility was $2.6 million and $7.7 million for the three and nine months ended September 30, 2006, compared to $2.5 million and $7.5 million for the three and nine months ended September 30, 2005. The increase of $0.1 million and $0.2 million for the three and nine months ended September 30, 2006 is due to additional repair costs incurred during the planned maintenance outage in September 2006.

Depreciation expense attributable to the Island Facility was $3.0 million and $9.0 million for the three and nine months ended September 30, 2006, consistent with the $3.1 million and $9.2 million for the three and nine months ended September 30, 2005.



Calgary Energy Centre

Selected Quarterly Three months Three months Nine months Nine months
Information ended ended ended ended
September September September September
30, 2006 30, 2005 30, 2006 30, 2005
---------------------------------------------------------------------------
Availability 100% 100% 94% 99%
Electricity generated
(MWh) 387,293 97,398 666,169 256,827

Summary of Financial
Results
(in '000s)
Revenues $ 11,809 $ 14,074 $ 24,965 $ 41,798
Operating and maintenance
expense 1,848 2,100 8,033 6,214
Depreciation and
accretion 2,225 2,390 6,683 7,208
---------------------------------------------------------------------------
Net earnings $ 7,736 $ 9,584 $ 10,249 $ 28,376
---------------------------------------------------------------------------


The Calgary Energy Centre is a natural gas-fired combined cycle facility located in Calgary, Alberta. The Calgary Energy Centre has a capacity of 300 MW, consisting of 250 MW of base capacity plus 50 MW of peaking capacity.

Plant availability for the three and nine months ended September 30, 2006 was 100% and 94% respectively. The decreased availability in comparison to the nine months ended September 30, 2005 was due to the major maintenance Combustion Inspection (CI) completed in May 2006. There were no major maintenance inspections performed in 2005.

Revenues

Electricity revenues at the Calgary Energy Centre were $11.8 million and $25.0 million for the three and nine months ended September 30, 2006, compared to revenues for the three and nine months ended September 30, 2005 of $14.1 million and $41.8 million.

Revenue from January 1, 2006 to January 16, 2006 of $2.4 million was earned from the original tolling agreement with CESCP, a wholly-owned partnership of Calpine. On January 16, 2006 CESCP repudiated the agreement and no revenue was received for the period from January 17, 2006 to February 15, 2006. The Manager commenced a process to put in place a long-term tolling agreement for the Calgary Energy Centre in February 2006. The Manager also entered into a series of short-term tolling agreements to enable the capacity of the plant to be fully contracted until a replacement long-term tolling agreement was entered into.

On February 16, 2006, the Partnership entered into a short-term tolling agreement with EPCOR to toll the capacity of the Calgary Energy Centre until the end of June 2006. On July 1, 2006, a second short-term tolling agreement was entered into with TransAlta to toll the capacity from the Calgary Energy Centre until the end of August 2006. On August 28, 2006 a one month toll was entered into with EPCOR to toll the capacity from Calgary Energy Centre until September 30, 2006. On September 29, 2006 another short-term toll was entered into with EPCOR to toll the capacity from Calgary Energy Centre for the fourth quarter. On October 24, 2006 the Manager announced it had entered into a 20 year toll with ENMAX to toll the capacity of the Calgary Energy Centre beginning on January 1, 2007, subject to completion of various conditions, including court approval.

Expenses

Operating and maintenance expense attributable to the Calgary Energy Centre for the three and nine months ended September 30, 2006 was $1.8 million and $8.0 million compared to $2.1 million and $6.2 million for the three and nine months ended September 30, 2005. The decrease in expenditures for the three months ended September 30, 2006 is mainly due to lower property taxes quarter over quarter. The increase in expenditures for the nine months ended September 30, 2006 reflects the successful completion of the planned major maintenance completed in May 2006. The previous major maintenance work was completed in the spring of 2004.

Depreciation expense attributable to the Calgary Energy Centre was $2.2 million and $6.7 million for the three and nine months ended September 30, 2006 compared to $2.4 million and $7.2 million for the three and nine months ended September 30, 2005. The decrease over the prior year is due to a reassessment of the useful life of certain spare parts in 2005 and a resulting decrease in depreciation expense.



Selected Balance Sheet Information As at As at
of Calpine Power, L.P. (in 000's) September 30, 2006 December 31, 2005
---------------------------------------------------------------------------
Cash and cash equivalents $ 20,682 $ 27,903
Accounts receivable 5,327 6,426
Prepaid expenses 5,951 6,465
Capital assets 564,167 569,923
Accounts payable and accrued liabilities 7,745 10,807


Cash and cash equivalents decreased by $7.2 million to $20.7 million due mainly to the payment of the annual heat rate penalty of $7.8 million for the Island Facility due at the end of the contract year, April 12, 2006.

The accounts receivable balance at September 30, 2006 was lower than the balance at December 31, 2005 as a result of reduced invoiced revenue for the Island Facility which was down for planned major maintenance in September 2006.

Prepaid expenses related mainly to amounts paid in accordance with Long Term Service Agreements (LTSA). The amounts will be capitalized or expensed, as determined to be appropriate, when the next scheduled maintenance events occur at each plant. There was a maintenance event at the Calgary Energy Centre in May of 2006 and $0.8 million in prepayments were expensed at that time. The planned major maintenance outage at the Island Facility that commenced in September, has been extended as a result of the repair work being performed on the heat recovery steam generator and is now expected to be completed in mid January 2007. Prepayments of $3.8 million have been capitalized and are to be depreciated on a straight line basis over the term until the next major maintenance event.

Capital assets decreased over the balance at December 31, 2005 due to depreciation recognized in the nine months ended September 30, 2006 of $15.5 million, offset by capital additions for upgrades at the Island Facility of $5.7 million and $3.8 million for the major overhaul, partially completed at September 30, 2006.

The decrease in accounts payable and accrued liabilities at September 30, 2006 over the balance at December 31, 2005 was mainly reduced because of a lower heat rate penalty accrual for the Island Facility. The amount payable is accrued for a contract year ending every April. The accrued heat rate penalty for the 2006/2007 year is expected to be considerably lower due to the reduced hours of operation of the plant in May and June, 2006 pursuant to the Dispatch Agreement entered into earlier with BC Hydro, the outage for planned major maintenance and capital upgrades and the lower natural gas prices experienced in 2006, compared to 2005.



LIQUIDITY AND CAPITAL RESOURCES

Calpine Power Income Fund

Selected Quarterly Three months Three months Nine months Nine months
Information ended ended ended ended
September September September September
(in 000's) 30, 2006 30, 2005 30, 2006 30, 2005
---------------------------------------------------------------------------
Cash provided by
operating activities $ 11,094 $ 13,991 $ 41,887 $ 40,793
Cash provided by
investing activities 6 3,646 8,492 8,431
Cash used in financing
activities (15,151) (16,152) (57,114) (53,405)
Cash and cash equivalents 10,020 4,097 10,020 4,097
Restricted cash 1,040 5,482 1,040 5,482


Cash provided by operating activities was $11.1 million and $41.9 million for the three and nine months ended September 30, 2006, compared to $14.0 million and $40.8 million for the same periods in 2005, a decrease of $2.9 million and an increase of $1.1 million for the three and nine months ended September 30, 2006 respectively. The decrease quarter over quarter was due primarily to higher management and administrative expenses incurred as a result of legal and advisory costs relating to the Calpine CCAA and Chapter 11 proceedings. The increase year over year is mainly due to the timing of the King City Lease receipts and related interest payments on the King City Loan. The 2005 King City Lease receipts of $19.4 million were received on January 3, 2006 and in combination with restricted cash of $4.1 million, were used to fund principal payments of $11.7 million and interest payments of $11.9 million on the King City Loan on January 3, 2006.

Cash provided by investing activities totaled $8.5 million for the nine months ended September 30, 2006 reflecting CCT's receipt of scheduled principal repayments on the Manager Loan of $2.7 million for the first quarter of 2006 only and receipt of restricted cash that was used towards long-term debt repayment on January 3, 2006.

As part of the King City Transaction completed in 2004, CCT deposited US$4.6 million of the funds received from the transaction as restricted cash into a segregated account as required under the terms of the King City Loan. The funds were used to purchase government and high quality investments with maturities that coincided with certain annual payments due on the King City Loan. On January 3, 2006 US$3.9 million of these restricted cash reserves were used to pay principal and interest on the King City Loan.

Cash used in financing activities of CCT for the three and nine months ended September 30, 2006 totaled $15.2 million and $57.1 million, comprised of distributions paid of $15.2 million and $45.5 million as well as $11.7 million used to fund principal payments on the King City Loan on January 3, 2006. For the same periods in 2005, cash provided by financing activities totaled $16.2 million and $53.4 million, including $1.0 million and $8.0 million used to repay the drawn Credit Facility and $15.2 million and $45.4 million in distributions paid to Unitholders.

CCT has a $30 million Credit Facility that expires January 3, 2007. At September 30, 2006, no amounts were drawn on the Credit Facility.



Calpine Power L.P.
Selected Quarterly Information

Three months Three months Nine months Nine months
ended ended ended ended
September September September September
(in 000's) 30, 2006 30, 2005 30, 2006 30, 2005
---------------------------------------------------------------------------
Cash provided by
operating activities $ 23,197 $ 14,749 $ 46,307 $ 69,206
Cash provided by (used
in) investing activities (9,012) 1,056 (9,071) 867
Cash provided by (used
in) financing activities (13,526) (19,551) (44,559) (55,955)
Cash and cash equivalents 20,682 27,918 20,682 27,918


Cash generated by operating activities of $23.2 million and $46.3 million in the three and nine months ended September 30, 2006, compared to $14.8 million and $69.2 million for the comparative periods in 2005. Payments for the 2005/06 Island heat rate penalty, property taxes and insurance were made in the second quarter of 2006, compared to the third quarter of 2005, resulting in an increase in the quarter to quarter cash generated by operating activities. The decrease in the year to date amount is mainly due to the lower toll revenue received from short-term tolling agreements, compared to the revenue received in 2005 from the tolling agreement with CESCP and the loss of revenue from the Calgary Energy Centre for the period from January 17, 2006 to February 15, 2006.

Cash used in investing activities for the three and nine months ended September 30, 2006 increased by $10 million and $9.9 million compared to the same periods in 2005. The increase is primarily a result of an increase in capital expenditures in 2006 due to the capacity upgrade and major overhaul at the Island Facility.

Cash used in financing activities of the Partnership for the three and nine months ended September 30, 2006 decreased by $6.0 million and $11.4 million compared to the same periods in 2005. Distributions to Partnership Unitholders decreased by approximately $5.1 million and $10.9 million primarily due to the reduction in the Class B Subordinated Unit distributions during the three and nine months ended September 30, 2006. Distributions to A Unitholders remained consistent with amounts distributed in comparable periods in 2005.

Future Obligations

The Fund, CCT and the Partnership have not entered into any off-balance sheet arrangements.

DISTRIBUTABLE CASH AND DISTRIBUTIONS

Distributable Cash is not a measure under Canadian generally accepted accounting principles and there is no standardized measure of Distributable Cash. Distributable Cash, as presented, may not be comparable to similar measures presented by other companies. Distributable Cash has been presented to assist readers in determining possible future cash distributions. Distributable Cash cannot be assured and may vary.



Three months Three months Nine months Nine months
ended ended ended ended
Calpine Power September September September September
Income Fund 30, 2006 30, 2005 30, 2006 30, 2005
---------------------------------------------------------------------------
Net Cash provided by
operating activities $ 11,094 $ 13,991 $ 41,887 $ 40,793

Change in non-cash
working capital 3,135 1,664 667 5,576
----------------------------------------------------
FUNDS FROM OPERATIONS
BEFORE WORKING CAPITAL
CHANGES 14,229 15,655 42,554 46,369
(in 000's)
Add (Deduct):
Working capital (2,548) (1,878) 898 (4,713)
Levelization reserve 3,470 (1,297) 6,514 (4,216)
Payment of principal
on long term debt,
net of restricted
cash used - - (7,183) -
Receipt of principal
on Calpine Canada
Power Ltd. loan - 2,672 2,672 8,015
----------------------------------------------------

DISTRIBUTABLE CASH $ 15,151 $ 15,152 $ 45,455 $ 45,455
----------------------------------------------------
----------------------------------------------------
Weighted average
number of Trust Units
outstanding 61,742,288 61,742,288 61,742,288 61,742,288
----------------------------------------------------
----------------------------------------------------
Distributable Cash per
Trust Unit(1) $ 0.2454 $ 0.2454 $ 0.7362 $ 0.7362
----------------------------------------------------
(1) calculated as sum of monthly per unit distributions


The amount of Distributable Cash of the Fund to be distributed monthly to Unitholders is, as defined in the Fund Trust Indenture, based generally on the amount by which the Fund's cash on hand exceeds: (i) administration expenses of the Fund; (ii) amounts required for the business and operations including fees payable to the Manager under the Administration and Management Agreements; and (iii) any cash reserve which the Manager in its discretion determines is necessary to satisfy the Fund's current and anticipated obligations. The Fund pays monthly cash distributions to Unitholders on or about the 20th day of each month following the record date, which is the last business day of the preceding month.

Distributable Cash generated by the Fund totaled $15.2 million or $0.2454 per Trust Unit and $45.5 million or $0.7362 per Trust Unit for the three and nine months ended September 30, 2006, consistent with the same periods in 2005.

Working Capital

The working capital amount of $2.5 million for the three months ended September 30, 2006 includes $2.5 million of accrued interest payable on the King City Loan.



Levelization Reserve

Levelization Reserve
---------------------------------------------------------------------------
Balance at June 30, 2006 $ 12,027
Draws (3,588)
Income reinvested 118
---------------------------------------------------------------------------
Balance at September 30, 2006 $ 8,557
---------------------------------------------------------------------------


As at June 30, 2006 and September 30, 2006, the Levelization Reserve was invested entirely in guaranteed investment certificates. The CCT Trustees and the Manager are not subject to any mandatory requirements with respect to the timing or manner of utilization of the Levelization Reserve. If needed, the funds in the Levelization Reserve could be applied by CCT for other purposes.

In the third quarter of 2006, the Fund drew $3.6 million on the Levelization Reserve in order to ensure distributions remained consistent with 2005 levels. This draw was necessary due to the non-payment of the Manager Loan.



Three months Three months Nine months Nine months
ended ended ended ended
September September September September
Calpine Power, L.P. 30, 2006 30, 2005 30, 2006 30, 2005
---------------------------------------------------------------------------
Net Cash provided by
operating activities $ 23,197 $ 14,749 $ 46,307 $ 69,206

Change in non-cash
working capital (6,374) 9,897 3,213 4,088
-------------------------------------------------

FUNDS FROM OPERATIONS
BEFORE WORKING $ 16,823 $ 24,646 $ 49,520 $ 73,294
CAPITAL CHANGES
Add (Deduct):
(in '000s)
Capital expenditures (9,715) 99 (9,774) (179)
Maintenance reserve
(increase) decrease 2,928 (1,429) (277) (4,611)
Loan payable - (974) - (444)
Working capital and
management reserves 3,799 (3,753) 4,277 (12,017)
-------------------------------------------------
DISTRIBUTABLE CASH $ 13,835 $ 18,589 $ 43,746 $ 56,043
-------------------------------------------------
-------------------------------------------------
Allocation of
Distributable Cash
Class A Priority Units $ 13,835 $ 13,253 $ 41,241 $ 40,036
Class B Subordinated
Units - 5,336 2,505 16,007
-------------------------------------------------
$ 13,835 $ 18,589 $ 43,746 $ 56,043
-------------------------------------------------
-------------------------------------------------
Per Unit allocation of
Distributable Cash
Class A Priority Units $ 0.2661 $ 0.2549 $ 0.7931 $ 0.7699
-------------------------------------------------
Class B Subordinated
Units $ - $ 0.2394 $ 0.1124 $ 0.7182
-------------------------------------------------
-------------------------------------------------


The amount of Distributable Cash, as defined in the Calpine Power, L.P. Partnership Agreement, is to be distributed monthly and is based generally on the amount by which the Partnership's cash on hand exceeds: (i) management and administration expenses of the Partnership; (ii) amounts required for the business and operations of the Partnership and its facilities (including expenses payable to the Manager under the operating and maintenance agreements); and (iii) any cash reserve which the Manager in its discretion has determined is necessary to satisfy the Partnership's current and anticipated obligations, including a reserve for the estimated major maintenance expenditures. The Partnership distributes Distributable Cash of the Partnership in respect of each month to the partners of record on the last day of each month based on the priority rights of the partnership units. Payments are made on or about the 20th day after each record date. The target distributions per Class A Priority Unit and Class B Subordinated Unit increase annually by 1%.

The Partnership makes monthly cash distributions to both the Class A Priority Unitholders and Class B Subordinated Unitholders to the extent Distributable Cash is available. CCT, as the holder of Class A Priority Units in the Partnership, must be paid its target distribution before the Manager receives distributions on its Class B Subordinated Units. In addition, the Partnership makes a special distribution to the Class A Priority Unitholders equivalent to the amount of certain general and administrative expense of CCT. The Class B Subordinated Units represent a 30% economic interest in the Island Facility, the Calgary Energy Centre and the Whitby Loan and their entitlement to distributions is subordinated to that of Class A Priority Unitholders until 2022. In light of the Manager's CCAA proceedings, distributions declared on the Class B Subordinated Units for December 2005 through February 2006 were reduced to match the required monthly principal and interest payment required on the Manager Loan. No Class B Subordinated Unit distributions were declared for the months of March to September 2006.

Maintenance Reserve

The Partnership has established a Maintenance Reserve, the purpose of which is to substantially fund future maintenance costs. The annual increase or decrease in the Maintenance Reserve is deducted from or added to cash available for distribution. The Manager is not subject to any mandatory requirements with respect to the timing or manner of utilization of the Maintenance Reserve. If needed, the funds in the Maintenance Reserve could be applied by the Partnership for other purposes. In September 2006, the Manager drew $4.7 million from the Maintenance Reserve to fund the Island Facility upgrade.



Maintenance Reserve
---------------------------------------------------------------------------
Balance at June 30, 2006 $ 20,458
Draws (4,716)
Contributions 1,578
Income reinvested 210
---------------------------------------------------------------------------
Balance at September 30, 2006 $ 17,530
---------------------------------------------------------------------------


Working Capital and Management Reserves

Cash used to fund working capital for the three and nine months ended September 30, 2006 is lower than the three and nine months ended September 30, 2005 as cash reserves from 2005 were used to support distributions in the first and second quarter of 2006. Cash generated from operations was lower in the first quarter of 2006 as no tolling revenue was earned at the Calgary Energy Centre from January 17 to February 15, 2006.

TAX TREATMENT OF DISTRIBUTIONS

The Manager anticipates that for Canadian tax purposes, the taxable amounts of distributions to the Fund's Unitholders will be approximately 30% for 2006. The remaining amounts of the distributions reduce the adjusted cost base of the Trust Units, thereby providing a significant tax deferral for the Unitholders. The tax deferral arises primarily due to the ability of the Partnership to shelter its taxable income with capital cost allowance claims on the Facilities. In 2005, the taxable amount was 20%. The Manager anticipates that a higher proportion of cash distributions made by the Fund in the future will be included in the income of the Unitholders for income tax purposes. Further Fund acquisitions could serve to extend or reduce the tax-deferred horizon. The Fund recommends that Unitholders consult their tax advisors regarding the tax implications of their investment in Trust Units.

On October 31, 2006 Federal Finance Minister Jim Flaherty (the "Finance Minister") announced a proposal to apply a tax at the trust level on distributions of certain income from publicly traded income trusts at rates of tax comparable to the combined federal and provincial corporate tax and to treat such distributions as dividends to the unitholders. The Finance Minister said existing trusts would have a 4 year transition period and would not be subject to the new rules until 2011. Until such rules are released in legislative form and passed into law it is uncertain what the impact of such rules will be to the Trust and its Unitholders. However, assuming such proposals are ultimately enacted in the form proposed, the implementation of such proposals would be expected to result in adverse tax consequences to the Trust and certain of its Unitholders which would be materially different than the consequences previously described in our offering documents and would impact cash distributions from the Trust.

CRITICAL ACCOUNTING ESTIMATES

Preparation of both the Fund and Partnership's financial statements in conformity with Canadian generally accepted accounting principles requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and revenues and expenses for the period then ended. Additional information on critical accounting estimates may be found in the Fund's 2005 MD&A.

OUTLOOK

The Fund's overall financial performance for the remainder of 2006 is expected to be affected by the extended outage and repair work required at the Island Facility. Although the extended outage at the Island Facility will impact net income from that plant for the year, the Partnership is experiencing higher than anticipated earnings from other operations. Accordingly, it is not anticipated the extended Island Facility outage will impact cash distributions to Fund unitholders for the remainder of the year.

The Manager has conducted preliminary investigations with respect to potential sources of recovery for the HRSG problem referred to above. On a preliminary basis, the reduced revenue as a result of the HRSG problem is anticipated to be recoverable either through business interruption insurance coverage (which would be subject to a deductible) or from Alstom under availability guarantees pursuant to the Island Facility Construction Contract, or some combination of both. The repair costs as a result of the HRSG problem are anticipated to be recoverable either through all risk insurance coverage (which would be subject to a deductible) or from Alstom pursuant to obligations under the Island Facility Construction Contract, or some combination of both. The Manager is continuing to investigate and evaluate the Fund's rights to recovery from these sources.

The Manager is in discussions with Canada Customs and Revenue Agency ("CRA") regarding the filing positions taken for the 2002 taxation year by Calpine Island Cogeneration Limited Partnership ("ICLP"), primarily relating to the Alstom Settlement Agreement and the payment of the buy down amounts and liquidated damages amounts by Alstom Canada Inc. ("Alstom") there under relating to the Island Facility Construction Contract. An additional issue has been raised with respect to the receipt of prepayments by the predecessor to Calpine Power, L.P. ("CLP") under the tolling agreement with CESCA with respect to the Calgary Energy Centre, as prepayments were received by the predecessor to CLP prior to the commercial operations date in respect of the Calgary Energy Centre. The Manager is of the view that the filing positions taken by ICLP and the predecessor to CLP with respect to the 2002 taxation year are reasonable. At this time, the Manager believes that no liability is expected to arise from this matter.

As indicated, the stay in the CCAA proceedings has been extended to November 13, 2006. As part of any voluntary reorganization transaction implemented by the Manager under the CCAA proceedings, the Manager may dispose of its assets, including its interest in the Administration Agreement, the Management Agreement, the applicable Operating and Maintenance agreements to which it is a party and its Class B Subordinated Units of the Partnership, subject to certain consent rights of the Fund in relation to the agreements, although the Court has inherent jurisdiction to approve a sale transaction even if the Fund or CCT does not. Additionally, it is possible that creditors of Calpine subsidiaries who are applicants in the CCAA proceedings (including the Manager and CESCP) could apply to the Court to terminate the CCAA proceedings and seek to have the CCAA applicants petitioned into bankruptcy under the Bankruptcy Act (Canada), which would involve a liquidation of the applicants. Alternatively, it is possible that the Court could permit a liquidation of the CCAA applicants pursuant to CCAA proceedings.

BUSINESS RISKS

The Fund and the Partnership are exposed to a variety of business risks and continue to monitor these risks. Additional information on business risks may be found in the Fund's 2005 MD&A.



SUMMARY OF QUARTERLY RESULTS

Calpine Power Income Fund

(unaudited) 2006 2005
(in 000's) Q3 Q2 Q1 Q4
---------------------------------------------------------------------------

Revenue
Equity earnings from
Calpine Power, L.P. $ 11,608 $ 10,457 $ 10,095 $1,594(2)
Finance income(1) 4,382 4,418 4,460 4,543
Interest and other income 1,475 1,561 1,631 1,799
-----------------------------------------------
17,465 16,436 16,186 7,936
-----------------------------------------------

Expenses
Management and
administrative 2,337 2,550 2,645 1,501
Amortization 103 102 101 937
Accretion 28 28 28 27
Interest on long-term debt 2,501 2,507 2,576 2,998
Interest 34 34 51 107
Foreign exchange (59) (239) (9) (64)
Future income taxes 908 1,641 781 633
-----------------------------------------------
5,852 6,623 6,173 6,139
-----------------------------------------------

Net earnings $ 11,613 $ 9,813 $ 10,013 $ 1,797
-----------------------------------------------
-----------------------------------------------

Net earnings per Trust
Unit $ 0.1881 $ 0.1589 $ 0.1622 $ 0.0291
-----------------------------------------------
-----------------------------------------------

(unaudited) 2005 2004
(in 000's) Q3 Q2 Q1 Q4
---------------------------------------------------------------------------

Revenue
Equity earnings from
Calpine Power, L.P. $ 13,649 $ 12,766 $ 14,008 $ 13,292
Finance income 4,613 4,714 4,649 4,843
Interest and other income 1,921 2,052 2,160 2,198
-----------------------------------------------
20,183 19,532 20,817 20,333
-----------------------------------------------

Expenses
Management and
administrative 523 637 999 1,620
Amortization 311 311 311 311
Accretion 27 28 19 27
Interest on long-term debt 3,069 3,171 3,125 3,132
Interest 140 160 196 237
Initial lease cost - - - -
Foreign exchange (205) 86 (157) 20
Future income taxes 1,595 362 427 1,666
-----------------------------------------------
5,460 4,755 4,920 7,013
-----------------------------------------------

Net earnings $ 14,723 $ 14,777 $ 15,897 $ 13,320
-----------------------------------------------
-----------------------------------------------

Net earnings per Trust
Unit $ 0.2385 $ 0.2393 $ 0.2575 $ 0.2157
-----------------------------------------------
-----------------------------------------------

(1) Finance income is earned from the lease of the King City Facility to
Calpine King City.

(2) Reflects impact of the $16.0 million allowance for potential
impairment of the Whitby Loan on the Fund's share of Partnership
earnings.


Calpine Power, L.P

(unaudited) 2006 2005
(in 000's) Q3 Q2 Q1 Q4
---------------------------------------------------------------------------

Revenue
Electricity, capacity
and thermal $ 20,579 $ 21,430 $ 21,159 $ 27,146
Interest - Whitby 851 836 792 817
Interest - Other 211 259 213 213
-----------------------------------------------
21,641 22,525 22,164 28,176
-----------------------------------------------

Expenses
Operating and
maintenance 4,483 6,420 4,797 5,110
Allowance for impairment
of loan to Calpine - - - 16,000
Canada Whitby Holdings
Company (1)
Depreciation 5,175 5,174 5,181 5,424
Accretion 55 55 54 51
General and
administrative 333 506 267 43
Interest 2 - 2 119
Foreign Exchange (15) (87) - 7
-----------------------------------------------
10,033 12,068 10,301 26,754
-----------------------------------------------

Net earnings 11,608 $ 10,457 $ 11,863 $ 1,422
-----------------------------------------------
-----------------------------------------------

Net earnings per Unit
Class A Priority Unit 0.2232 $ 0.2010 $ 0.1941 $ 0.0307
Class B Subordinated
Unit - $ - $ 0.0793 $ (0.0077)

(unaudited) 2005 2004
(in 000's) Q3 Q2 Q1 Q4
---------------------------------------------------------------------------

Revenue
Electricity, capacity
and thermal $ 28,554 $ 27,598 $ 28,775 $ 28,467
Interest - Whitby 837 846 837 846
Interest - Other 178 171 127 143
-----------------------------------------------
29,569 28,615 29,739 29,456
-----------------------------------------------

Expenses
Operating and
maintenance 4,638 4,733 4,336 4,836
Depreciation 5,422 5,471 5,402 5,104
Accretion 50 50 50 46
General and
administrative 137 163 152 604
Interest 148 158 164 107
Foreign Exchange (50) (13) (22) 157
-----------------------------------------------
10,345 10,562 10,082 10,854
-----------------------------------------------

Net earnings $ 19,224 $ 18,053 $ 19,657 $ 18,602
-----------------------------------------------
-----------------------------------------------

Net earnings per Unit
Class A Priority Unit $ 0.2625 $ 0.2455 $ 0.2694 $ 0.2556
Class B Subordinated
Unit $ 0.2502 $ 0.2372 $ 0.2535 $ 0.2383

(1) Reflects impact of the $16.0 million allowance for potential impairment
of the Whitby Loan on the Fund's share of Partnership earnings.


The Partnership's revenues are subject to seasonality from its Island
Facility, which typically earns more revenue during winter months due to
increased requested output from contract counterparties.


CALPINE POWER INCOME FUND
CONSOLIDATED BALANCE SHEETS
(thousands)

As at As at
September 30, 2006 December 31, 2005
---------------------------------------------------------------------------
(unaudited)

ASSETS

Current Assets
Cash and cash equivalents $ 10,020 $ 16,797
Restricted cash 1,040 5,597
Distributions receivable 4,973 4,519
Accounts receivable 628 271
Loan to Calpine Canada Power Ltd.,
current portion (Note 2) - 2,337
Net investment in lease, current
portion 892 20,712
Prepaid expenses 311 221
---------------------------------
17,864 50,454

Interest receivable on loan to
Calpine Canada Power Ltd. (Note 2) 2,084 -
Investment in Calpine Power, L.P.
(Note 3) 456,546 465,627
Net investment in lease, less
current portion 141,084 131,843
Loan to Calpine Canada Power Ltd.,
less current portion (Note 2) 30,441 29,851
Land 1,870 1,870
Capital Assets 25 -
Deferred financing costs 1,745 2,052
---------------------------------
$ 651,659 $ 681,697
---------------------------------
---------------------------------

LIABILITIES AND UNITHOLDERS' EQUITY

Current Liabilities
Distributions payable $ 5,051 $ 5,051
Accounts payable and accrued
liabilities 3,025 1,669
Accrued interest on long-term debt 7,435 11,937
Long-term debt, current portion 9,046 21,216
---------------------------------
24,557 39,873
Future income tax 9,369 6,445
Asset retirement liability 1,372 1,358
Long-term debt, less current
portion 68,397 72,041
---------------------------------
103,695 119,717
Unitholders' equity 547,964 561,980
---------------------------------
$ 651,659 $ 681,697
---------------------------------
---------------------------------

See accompanying notes to the consolidated financial statements


CALPINE POWER INCOME FUND
CONSOLIDATED STATEMENTS OF EARNINGS AND UNITHOLDERS' EQUITY
(thousands, except for Trust Units and per Trust Unit amounts)
(unaudited)


Three months Three months Nine months Nine months
ended ended ended ended
September September September September
30, 2006 30, 2005 30, 2006 30, 2005
---------------------------------------------------------------------------
REVENUES
Equity earnings from
Calpine Power, L.P. $ 11,608 $ 13,649 $ 32,160 $ 40,423
Finance income 4,382 4,613 13,260 13,976
Interest and other
income 1,475 1,921 4,667 6,133
---------------------------------------------------
17,465 20,183 50,087 60,532
---------------------------------------------------

EXPENSES
Management and
administrative 2,337 523 7,532 2,159
Depreciation and
amortization 103 311 306 933
Accretion 28 27 84 74
Interest on long-term
debt 2,501 3,069 7,584 9,365
Interest 34 140 119 496
Foreign exchange gain (59) (205) (307) (276)
---------------------------------------------------
4,944 3,865 15,318 12,751
---------------------------------------------------

EARNINGS BEFORE FUTURE
INCOME TAXES 12,521 16,318 34,769 47,781
---------------------------------------------------
Future income taxes 908 1,595 3,330 2,384
---------------------------------------------------

NET EARNINGS 11,613 14,723 31,439 45,397

UNITHOLDERS' EQUITY,
BEGINNING OF PERIOD 551,502 575,763 561,980 575,392

Distributions (15,151) (15,152) (45,455) (45,455)
---------------------------------------------------

UNITHOLDERS' EQUITY,
END OF PERIOD $ 547,964 $ 575,334 $ 547,964 $ 575,334
---------------------------------------------------
---------------------------------------------------

Weighted average
number of Trust
Units outstanding 61,742,288 61,742,288 61,742,288 61,742,288
---------------------------------------------------
---------------------------------------------------
Net earnings per Trust
Unit $ 0.1881 $ 0.2385 $ 0.5092 $ 0.7353
---------------------------------------------------
---------------------------------------------------

See accompanying notes to the consolidated financial statements


CALPINE POWER INCOME FUND
CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands)
(unaudited)

Three months Three months Nine months Nine months
ended ended ended ended
September September September September
30, 2006 30, 2005 30, 2006 30, 2005
---------------------------------------------------------------------------
OPERATING ACTIVITIES
Net earnings $ 11,613 $ 14,723 $ 31,439 $ 45,397
Adjustments for
non-cash items:
Equity earnings from
Calpine Power, L.P. (11,608) (13,649) (32,160) (40,423)
Depreciation and
amortization 103 311 306 933
Amortization of
discount on loan to
Calpine Canada
Power Ltd. (282) (388) (925) (1,242)
Accretion 28 27 84 74
Foreign exchange gain (59) (205) (307) (276)
Future income taxes 908 1,595 3,330 2,384
Distributions received
from Calpine Power, L.P. 13,526 13,241 40,787 39,522
Change in non-cash
working capital
(Note 4) (3,135) (1,664) (667) (5,576)
-------------------------------------------------
Net cash provided by
operating activities 11,094 13,991 41,887 40,793
-------------------------------------------------

INVESTING ACTIVITIES
Capital assets - - (27) -
Receipt of principal
on loan to Calpine
Canada Power Ltd. - 2,672 2,672 8,015
Loan to Calpine
Power, L.P. - - - (4,007)
Lease receipts - - 1,351 -
Receipt of principal
on loan to Calpine
Power L.P. - 974 - 4,451
Receipt of restricted
cash for long-term debt
repayment - - 4,508 -
Change in non-cash
working capital
(Note 4) 6 - (12) (28)
-------------------------------------------------
Net cash provided
by investing
activities 6 3,646 8,492 8,431
-------------------------------------------------

FINANCING ACTIVITIES
Distributions paid (15,151) (15,152) (45,455) (45,405)
Repayment on Credit
Facility - (1,000) - (8,000)
Payment of principal
on long-term debt - - (11,659) -
-------------------------------------------------
Net cash used in
financing
activities (15,151) (16,152) (57,114) (53,405)
-------------------------------------------------

Foreign exchange (gain)
loss on cash held in a
foreign currency (3) (46) (42) 140
-------------------------------------------------

INCREASE (DECREASE) IN
CASH AND CASH
EQUIVALENTS (4,054) 1,439 (6,777) (4,041)
Cash and cash
equivalents,
beginning of period 14,074 2,658 16,797 8,138
-------------------------------------------------
CASH AND CASH
EQUIVALENTS, END OF
PERIOD $ 10,020 $ 4,097 $ 10,020 $ 4,097
-------------------------------------------------
-------------------------------------------------
Represented by:
Cash and cash
equivalents $ 10,020 4,097 $ 10,020 $ 4,097
-------------------------------------------------
$ 10,020 $ 4,097 $ 10,020 $ 4,097
-------------------------------------------------
-------------------------------------------------
SUPPLEMENTARY CASH
FLOW INFORMATION
Taxes paid $ - $ - $ - $ -
Interest received $ 116 $ 1,476 $ 1,511 $ 4,890
Interest paid $ 34 $ 140 $ 11,964 $ 356

See accompanying notes to the consolidated financial statements


CALPINE POWER INCOME FUND
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 AND 2005
(tabular amounts are in thousands except for Trust Units
and per Trust Unit amounts)
(unaudited)


1. SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements of the Calpine Power Income Fund (the "Fund") have been prepared by Calpine Canada Power Ltd. (the "Manager") in accordance with Canadian generally accepted accounting principles. The accounting policies applied are consistent with those outlined in the Fund's annual financial statements for the year ended December 31, 2005. These consolidated financial statements for the three and nine months ended September 30, 2006 do not include all disclosures required in the annual consolidated financial statements in the Fund's 2005 Annual Report.

The Fund is not subject to any seasonality in its earnings except as may be derived from its investment in Calpine Power, L.P. (the "Partnership"), which earns more revenue during winter months due to increased requested output from contract counterparties. Partnership revenue to date in 2006 has not reflected this seasonality and the Partnership has actually earned less revenue in the winter months with repudiation of contracts by certain counterparties and more revenue in the summer months from short-term contracts currently in place. Therefore, these interim financial statements may not be indicative or representative of the financial results which may occur for the full year.

2. LOAN TO CALPINE CANADA POWER LTD.

The loan (the "Manager Loan") is a full recourse obligation of the Manager and is secured by a pledge of the Manager's limited partnership interest in the Partnership, including the Manager's right to receive distributions under the Class B Subordinated Units of the Partnership. In addition, the Manager affiliate that is the lessee of the King City Facility has provided the Fund with a limited recourse guarantee of the Manager's obligations under the loan and granted the Fund a subordinated security interest in its annual cash from operations. On December 20, 2005, the Manager filed for voluntary reorganization under the Canadian Companies' Creditors Arrangement Act ("CCAA"). As a result of these reorganization proceedings an event of default has occurred under the terms of the Manager Loan. Management estimates the loan to be fully collectible based upon the guarantee and security in place subject to the lifting of the stay of proceedings against the Manager, currently in effect until November 13, 2006. Amounts due and collected up to March 31, 2006 were classified as current at December 31, 2005 with the remaining balance classified as long-term. All scheduled principal and interest payments up to March 31, 2006 were received. Scheduled principal and interest payments due on the Manager Loan for April 2006 were not received by May 3, 2006 and an event of default by the Manager has occurred. Scheduled interest and principal payments were not received for months April to September 2006.

3. INVESTMENT IN CALPINE POWER, L.P.

On August 29, 2002, the Fund purchased 52,001,351 Class A Priority Units of the Partnership representing a 70% partnership interest.

As at September 30, 2006 and December 31, 2005, the equity investment in Calpine Power, L.P. was comprised as follows:



---------------------------------------------------------------------------
Investment in Calpine Power, L.P. at December 31, 2005 $ 465,627
Equity Earnings from Calpine Power, L.P. 32,160
Distributions received and receivable from Calpine Power, L.P. (41,241)
---------------------------------------------------------------------------
As at September 30, 2006 $ 456,546
--------------------
--------------------

4. CHANGE IN NON-CASH WORKING CAPITAL

Three months Three months Nine months Nine months
Change in ended ended ended ended
non-cash September September September September
working capital 30, 2006 30, 2005 30, 2006 30, 2005
---------------------------------------------------------------------------
Operating Activities
Accrued Finance income $ (4,382) $ (4,613) $ 4,817 $ (13,976)
Accounts receivable (457) (11) (345) (87)
Prepaid expenses (242) (246) (90) (48)
Interest receivable (1,042) 4 (2,084) 195
Interest payable on
long-term debt 2,501 3,069 (4,321) 9,336
Accounts payable 487 133 1,356 (996)
------------------------------------------------------
$ (3,135) $ (1,664) $ (667) $ (5,576)
------------------------------------------------------
Investing Activities
Interest receivable on $ 6 - $ (12) $ (28)
------------------------------------------------------
------------------------------------------------------

5. SEGMENTED INFORMATION

Three months Three months Nine months Nine months
ended ended ended ended
September September September September
30, 2006 30, 2005 30, 2006 30, 2005
---------------------------------------------------------------------------
Revenue
Canada $ 13,055 $ 15,498 $36,742 $ 46,341
United States 4,410 4,685 13,345 14,191
------------------------------------------------------
$ 17,465 $ 20,183 $50,087 $ 60,532
------------------------------------------------------


As at As at
September 30,2006 December 31,2005
---------------------------------------------------------------------------
Total Assets
Canada $ 505,030 $ 519,833
United States 146,629 161,864
---------------------------------------
$ 651,659 $ 681,697
---------------------------------------


6. COMMITMENTS AND CONTINGENCIES

Certain entities related to the Fund are currently subject to a taxation audit by a tax authority. At this time, management believes that no liability is expected to arise from the audit. However, management will continue to evaluate this estimate and any changes to the estimate will be recorded in the period when such amounts are known.

7. COMPARATIVE FIGURES

Certain comparative figures have been reclassified to be consistent with the current period's presentation.

8. SUBSEQUENT EVENTS

On October 31, 2006 Federal Finance Minister Jim Flaherty (the "Finance Minister") announced a proposal to apply a tax at the trust level on distributions of certain income from publicly traded income trusts at rates of tax comparable to the combined federal and provincial corporate tax and to treat such distributions as dividends to the unitholders. The Finance Minister said existing trusts would have a 4 year transition period and would not be subject to the new rules until 2011. Until such rules are released in legislative form and passed into law it is uncertain what the impact of such rules will be to the Trust and its Unitholders. However, assuming such proposals are ultimately enacted in the form proposed, the implementation of such proposals would be expected to result in adverse tax consequences to the Trust and certain of its Unitholders which would be materially different than the consequences previously described in our offering documents and would impact cash distributions from the Trust.



CALPINE POWER, L.P.
CONSOLIDATED BALANCE SHEETS
(thousands)

As at As at
September 30, December 31,
2006 2005
---------------------------------------------------------------------------
ASSETS (unaudited)

Current Assets
Cash and cash equivalents $ 20,682 $ 27,903
Accounts receivable 5,327 6,426
Interest receivable 1,424 2,221
Inventory 2,883 2,650
Prepaid expenses 5,951 6,465
--------------------------------------
36,267 45,665

Loan to Calpine Canada Whitby
Holdings Company, net of $16
million allowance for impairment 21,039 19,414

Capital assets 564,167 569,923
--------------------------------------
$ 621,473 $ 635,002
--------------------------------------
--------------------------------------


LIABILITIES AND PARTNERS' EQUITY

Current Liabilities
Distributions payable $ 4,973 $ 5,785
Accounts payable and accrued liabilities 7,745 10,807
--------------------------------------
12,718 16,592

Asset retirement liability 2,733 2,570
--------------------------------------

15,451 19,162

Partners' equity (Note 3) 606,022 615,840
--------------------------------------

$ 621,473 $ 635,002
--------------------------------------

See accompanying notes to the consolidated financial statements.


CALPINE POWER, L.P.
CONSOLIDATED STATEMENTS OF EARNINGS AND PARTNERS' EQUITY
(thousands, except for per Unit amounts)
(unaudited)

Three months Three months Nine months Nine months
ended ended ended ended
September September September September
30, 2006 30, 2005 30, 2006 30, 2005
---------------------------------------------------------------------------
REVENUES
Electricity, capacity
and thermal $ 20,579 $ 28,554 $ 63,168 $ 84,927
Interest - Whitby 851 837 2,479 2,520
- Other Income 211 178 683 476
--------------------------------------------------
21,641 29,569 66,330 87,923
--------------------------------------------------

EXPENSES

Operating and maintenance 4,483 4,638 15,700 13,707
Depreciation 5,175 5,422 15,530 16,295
Accretion 55 50 164 150
Interest 2 148 4 470
General and administrative 333 137 1,106 452
Foreign exchange gain (15) (50) (102) (85)
--------------------------------------------------
10,033 10,345 32,402 30,989
--------------------------------------------------

NET EARNINGS 11,608 19,224 33,928 56,934

PARTNERS' EQUITY,
BEGINNING OF PERIOD 608,249 631,609 615,840 631,353

Distributions (13,835) (18,589) (43,746) (56,043)
--------------------------------------------------

PARTNERS' EQUITY, END
OF PERIOD $ 606,022 $ 632,244 $ 606,022 $ 632,244
--------------------------------------------------
--------------------------------------------------

Net earnings per Unit
(Note 3):
Class A Priority Unit $ 0.2232 $ 0.2625 $ 0.6184 $ 0.7773
--------------------------------------------------
--------------------------------------------------

Class B Subordinated
Unit $ - $ 0.2502 $ 0.0793 $ 0.7409
--------------------------------------------------
--------------------------------------------------

See accompanying notes to the consolidated financial statements.


CALPINE POWER, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(thousands)
(unaudited)

Three months Three months Nine months Nine months
ended ended ended ended
September September September September
30, 2006 30, 2005 30, 2006 30, 2005
---------------------------------------------------------------------------
OPERATING ACTIVITIES
Net earnings $ 11,608 $ 19,224 $ 33,928 $ 56,934
Adjustments for
non-cash items:
Depreciation 5,175 5,422 15,530 16,295
Accretion 55 50 164 150
Foreign exchange gain (15) (50) (102) (85)
Change in non-cash working
capital relating to
operating activities
(Note 2) 6,374 (9,897) (3,213) (4,088)
--------------------------------------------------

Net cash provided by
operating activities 23,197 14,749 46,307 69,206
--------------------------------------------------

INVESTING ACTIVITIES
Loan to Calpine Canada
Whitby Holdings Company 703 1,090 703 1,090

Capital expenditures (9,715) 99 (9,774) (179)

Change in non-cash
working capital
relating to investing
activities(Note 2) - (133) - (44)
--------------------------------------------------

Net cash (used in)
provided by investing
activities (9,012) 1,056 (9,071) 867
--------------------------------------------------

FINANCING ACTIVITIES
Distributions (13,526) (18,577) (44,559) (55,511)
Loan payable - - - 4,007
Payment of principal
on loan payable - (974) - (4,451)
--------------------------------------------------

Net cash used in
financing activities (13,526) (19,551) (44,559) (55,955)
--------------------------------------------------

Foreign exchange gain on
cash held in
foreign currency 15 50 102 85
--------------------------------------------------

INCREASE (DECREASE) IN
CASH AND CASH
EQUIVALENTS 674 (3,696) (7,221) 14,203

Cash and cash
equivalents, beginning
of period 20,008 31,614 27,903 13,715
--------------------------------------------------

CASH AND CASH
EQUIVALENTS,
END OF PERIOD $ 20,682 $ 27,918 $ 20,682 $ 27,918
--------------------------------------------------
--------------------------------------------------

SUPPLEMENTARY CASH
FLOW INFORMATION
Interest received $ 914 $ 1,268 $ 2,321 $ 4,966
Interest paid $ - $ 150 $ - $ 511

See accompanying notes to the consolidated financial statements


CALPINE POWER, L.P.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2006 and 2005
(tabular amounts are in thousands except for per Unit amounts)
(unaudited)


1. SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements of the Calpine Power, L.P. (the "Partnership") have been prepared by Calpine Canada Power Ltd. (the "Manager") in accordance with Canadian generally accepted accounting principles. The accounting policies applied are consistent with those outlined in the Partnership's annual financial statements for the year ended December 31, 2005. These consolidated financial statements for the three and nine months ended September 30, 2006 do not include all disclosures required in the annual consolidated financial statements of the Partnership in the 2005 Calpine Power Income Fund (the "Fund") Annual Report.

The Partnership's earnings are subject to seasonality from its Island Facility, which earns more revenue during winter months due to increased requested output from contract counterparties. Partnership revenue to date in 2006 has not reflected this seasonality and the Partnership has actually earned less revenue in the winter months with repudiation of contracts by certain counterparties and more revenue in the summer months from short-term contracts currently in place. Therefore, these interim financial statements may not be indicative or representative of the financial results which may occur for the full year.



2. CHANGE IN NON-CASH WORKING CAPITAL

Three months Three months Nine months Nine months
Change in ended ended ended ended
non-cash September September September September
working capital 30, 2006 30, 2005 30, 2006 30, 2005
---------------------------------------------------------------------------
Operating activities:
Accounts receivable $ 3,954 $ (564) $ 1,099 $ 526
Interest receivable (852) (837) (1,531) 844
Prepaid expenses 3,112 (2,611) 514 (4,583)
Accounts payable and
accrued liabilities 245 (5,884) (3,062) (553)
Interest payable - (4) - (195)
Inventory (85) 3 (233) (127)
--------------------------------------------------
$ 6,374 $ (9,897) $ (3,213) $ (4,088)
--------------------------------------------------
--------------------------------------------------
Investing activities:
Accounts payable
- accrued capital $ - $ (133) $ - $ (44)
--------------------------------------------------
--------------------------------------------------


3. PARTNERS' EQUITY

The Partnership is authorized to issue an unlimited number of Class A Priority Units and an unlimited number of Class B Subordinated Units. For the three and nine months ended September 30, 2006, the Fund subsidiary that is the holder of Class A Priority Units, Calpine Commercial Trust ("CCT"), received the first $0.0806 of Distributable Cash per Class A Priority Unit per month (in addition to certain management and administrative expenses incurred by the Fund) on a cumulative basis in priority to any payments on the Class B Subordinated Units. For the three and nine months ended September 30, 2006, the holder of Class B Subordinated Units, the Manager, was entitled to receive up to $0.0806 of Distributable Cash per Class B Subordinated Unit per month which amounts accumulate for a fiscal year (and if unpaid at the end of a fiscal year, this entitlement terminates for such fiscal year) following the priority payment of Distributable Cash to the holder of Class A Priority Units. Each year until 2022, the Distributable Cash target entitlements increase at an annual rate of 1%. Holders of Class A Priority Units and Class B Subordinated Units are entitled to share equally, on a class basis, any Distributable Cash in excess of their target entitlements in any calendar year.



Class A Units Class B Units Total
---------------------------------------------------------------------------
As at December 31, 2005 $ 465,627 $ 150,213 $ 615,840
Net earnings 32,160 1,768 33,928
Distributions declared (41,241) (2,505) (43,746)
----------------------------------------------
As at September 30, 2006 $ 456,546 $ 149,476 $ 606,022
----------------------------------------------
----------------------------------------------


Net earnings per Class A Priority Unit and Class B Subordinated Unit for the three months ended September 30, 2006 have been calculated based on a weighted average of 52,001,352 Class A Priority Units (September 30, 2005 - 52,001,352) and 22,286,294 Class B Subordinated Units (September 30, 2005 - 22,286,294).

4. SUBSEQUENT EVENTS

On October 24, 2006 the Manager announced it had entered into a 20 year tolling agreement with ENMAX Energy Corporation (ENMAX) to toll the capacity of the Calgary Energy Centre beginning on January 1, 2007. Commencement of the agreement is subject to certain conditions, including court approval.

Contact Information

  • Calpine Power Income Fund
    Toby Austin
    President and Chief Financial Officer
    (403) 296-1411
    Email: ir@calpinecanada.com
    or
    Calpine Power Income Fund
    Lisa Winslow
    Interim Chief Financial Officer
    (403) 296-1415
    Website: www.calpinepif.com