* 3Q09 In Line With Consensus - Calpine announced Adjusted EBITDA of $586
million for 3Q09. This is slightly above consensus of $578 million and
below our estimate of $602 million. The difference with our forecast was
mainly due to slightly lower than expected commodity margin in Texas.

* Guidance - Calpine slightly raised 2009E Adjusted EBITDA guidance
(midpoint) to $1,710-$1,735 million and initiated 2010E guidance at
$1,500-$1,600 million compared to our estimate of $1,449 million and
consensus of $1,465 million.

* Developments - Calpine announced a ten year contract with PG&E to
upgrade the Los Esteros power plant to a 300 MW CCGT from currently a 180
MW peaker. The company also increased the duration of its contracts in
California for 2,800 MW. These are incremental positives.

* Conclusions - We believe 3Q09 was a good quarter, with 2010E guidance
above consensus showing the strength of Calpine's hedges. The extension
and increase in contracts in California should help dissipate fears of
declining capacity revenues in that region. We believe guidance above
consensus and the contracts in California are positive headlines for the
stock. We reiterate our Buy rating and believe Calpine is well positioned
for a long term upswing in the power cycle from cyclical lows.