Calpine Power Income Fund

Calpine Power Income Fund

December 19, 2006 20:40 ET

Calpine Power Income Fund Responds to Harbinger's Announced Intention to Make an Unsolicited Offer

CALGARY, ALBERTA--(CCNMatthews - Dec. 19, 2006) - The Trustees of Calpine Power Income Fund (TSX:CF.UN) today advised unitholders not to take any action until further notice with respect to the announcement earlier today by Harbinger Capital Partners, an investment firm based in New York, that it intends to make an unsolicited offer for the Fund.

Robert Hodgins, Chairman of the Board of Trustees of the Fund, said, "The Board of Trustees will carefully consider any offer by Harbinger, if and when it is made, and will make a recommendation to unitholders in due course. As a major creditor in San Jose-based Calpine Corporation's insolvency proceedings, Harbinger has a deep understanding of the substantial unrealized value within the Fund and its various claims against Calpine Corporation and its subsidiaries. As trustees for the Fund, we are working to maximize that value for the benefit of our unitholders by, among other things, exploring alternative potential value-maximizing transactions."

Mr. Hodgins added, "The Fund's strong performance over the past year positions us well as we go into this process."

Since December 22, 2005, the day after Calpine Corporation commenced its voluntary reorganization under Chapter 11 of the US Bankruptcy Code, the Fund has maintained its monthly distributions and its units have increased in value by 45.7%, as of the close of market today.

The Fund advises unitholders to not deposit any units to the Harbinger offer, if and when it commences, and to not take any other action concerning the offer until unitholders have received further communications from the Board of Trustees. After the commencement of the offer, the Fund will issue a Directors' Circular that will contain important information for unitholders, including the Board's recommendation regarding the offer.

As part of its ongoing program to protect and build unitholder value, the Fund has been working closely with BMO Capital Markets as its financial advisor, and Blake, Cassels and Graydon LLP, as its legal advisor over the past year. Each firm will continue to assist the Fund with respect to the response to any offer and in the consideration by the Board of Trustees of alternative potential transactions.

Pursuant to the authority delegated to them by the Fund Delegation Agreement dated August 29, 2002, among Calpine Commercial Trust (CCT), the Fund and Computershare Trust Company of Canada, the CCT Board of Trustees has the authority and duty to act on behalf of the Fund undertaking all matters in connection with any take-over bid, business combination or other related matter.

Each and all of the five members of the Board of Trustees is independent of the Fund's Manager and is independent of Calpine Corp.

About Calpine Power Income Fund

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

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

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 including Calpine Energy Services Canada Partnership, 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 and the assumptions and risks identified in the material change report of the Fund dated November 14, 2006 and available on

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